•  First and foremost, it helped the transition from direct instruments of monetary control to indirect and, in the process, certain dead weight loss for the system was saved.
•  Second, it has provided monetary authorities with greater flexibility in determining both the quantum of adjustment as well as the rates by responding to the needs of the system on a daily basis. •  Third, it enabled the Reserve Bank to modulate the supply of funds on a daily basis to meet day-to-day liquidity mismatches.