As a result of these developments, RBI could use OMO as an effective instrument for liquidity management including to curb short-term volatilities in the foreign exchange market. Another important and significant change introduced during the period is the reactivation of the Bank Rate by initially linking it to all other rates including the Reserve Bank's refinance rates (April 1997).
The subsequent introduction of fixed rate repo (December 1997) helped in creating an informal corridor in the money market, with the repo rate as floor and the Bank Rate as the ceiling. The use of these two instruments in conjunction with OMO enabled RBI to keep the call rate within this informal corridor for most of the time.