Similarly, once the repo market develops, PDs should reduce and in fact consider eliminating their access to the call money market. There is an opinion that such restrictions of access to call money in Indian conditions would add to stability in financial markets and help develop term money market.
A final decision would no doubt be taken after discussions in Technical Advisory Committee on financial markets of RBI, and further consultations with market participants. Liquidity Adjustment Facility RBI influences liquidity on a day-to-day basis through LAF and is using this facility as an effective flexible instrument for smoothening interest rates.