According to sources, to this effect, an in-house committee has been set up and the recommendations are likely to be announced within a week's time. Sources added that the RBI is working towards a stand by facility for the primary dealers that might include a back stop facility for borrowing from the central bank at a penal rate of interest of at least 2 per cent above the prevailing call money rate.

According to dealers, the roll over of repos is also likely to be introduced so that liquidity can be availed using the same security more than once in a day after netting. Moreover, the minimum bid size of repos might be reduced to Rs 5 crore as against the prevailing lot size of Rs 10 crore.

The RBI is also actively considering a second auction in a day exclusively for the primary dealers so as to facilitate active participation by the primary dealers who find it difficult to enter the first auction and end up borrowing at higher rate.

Primary dealers have also suggested that the RBI should provide them with information in advance about the ways and means requirement of the government. This precisely means information regarding the auction amount, date, timing should be intimated beforehand.

The time period for the repos, which at present is overnight, is likely to be extended for a longer period of one month so as to make the instrument more liquid for the market players.

However, the recommendation of extending the liquidity adjustment facility for 14 day period has assumed controversial dimension. While, some players have opted for it, most of the dealers feel it will obstruct the flow of money in the market. This will hamper the market players from having a clear view of the exact liquidity in the system.