Fourth, a fixed interest rate corridor set by MSF rate and reverse repo rate, reduces uncertainty and communication difficulties and helps keep the overnight average call money rate close to the repo rate. Let me now turn to a brief evaluation of the experience with the new operating procedure.
In the implementation of the new procedure, the Reserve Bank prefers to keep the systemic liquidity in deficit mode as monetary transmission is found to be more effective in this situation (RBI, 2011).4 The Reserve Bank also announced an indicative liquidity comfort zone of (+)/(–) 1.0 per cent of net demand and time liabilities (NDTL) of banks.