SORR vs WACR: Bankers Seek New RBI Overnight Benchmark
Why in the news
Ahead of the April 2025 policy meeting, bankers pressed RBI to move to a secured overnight rate, relax the cash reserve ratio and clarify its liquidity stance.
Key facts
- Demand: replace WACR with SORR as the overnight benchmark; RBI is reviewing domestic rupee benchmarks, including MIBOR.
- An earlier RBI committee backed benchmarks built on secured markets such as basket repo and TREP.
- CRR was cut from 4.5% to 4% in two phases in December 2024; banks sought a further cut because of GST and advance-tax outflows.
- MPC meeting: April 7-9; repo rate stood at 6.25% after the February cut, and a 25 bps reduction was expected.
Liquidity position
| Date | RBI net liquidity |
|---|---|
| 2 December 2024 | Deficit of ₹89,451 crore |
| 2 April 2025 | Surplus of ₹1,93,088.61 crore |
- Bankers saw about ₹1.8 trillion outflows near April 20, which could wipe out the surplus (₹1.93 trillion).
- They asked RBI to spell out its comfort level of liquidity relative to NDTL (Net Demand and Time Liabilities).
- RBI skipped its 14-day main operation for April 4-17.
RBI liquidity tools
- Dollar-rupee swaps, OMOs, VRR auctions; VRRR expected next to absorb surplus.
Deposit rates
- SBI withdrew its 400-day Amrit Kalash FD (7.10%) from April 1.
- HDFC Bank trimmed FD rates by 35 bps (35-month) and 40 bps (55-month); Yes Bank cut 25 bps on select tenures.
Exam angle
- Proposed benchmark: SORR; current one: WACR.
- CRR: 4%; repo: 6.25%.