The LAF was operated through overnight fixed rate repo and reverse repo from November 2004. The LAF helped to develop interest rate as an instrument of monetary transmission. In the process, two major weaknesses came to the fore. First was the lack of a single policy rate. The operating policy rate alternated between repo and reverse repo rates depending upon the prevailing liquidity condition.
Innovation is not just the provision of new products or the creation of a new customer experience. It goes beyond this. It implies doing things differently right across the entire business model. Archaic structures need to be dismantled, and old mindsets discarded, to create a new, nurturing environment. Consolidated IT platforms will provide the launch pad for new successive waves of change.