RBI considers standing deposit facility to manage extra liquidity

No firm decision has been reached on this, said sources. The SDF, when introduced, will become the lower bound of the corridor for the liquidity management window.

The Reserve Bank of India (RBI) is actively considering introducing Standing Deposit Facility (SDF) for liquidity management, based on which banks can park as much money as they want without getting collateral, and at a lower rate than the reverse repo.

However, no decision has been taken yet, said banking sources. The SDF, when introduced, will become the lower bound of the corridor for the liquidity management window.
 

This is being considered for two reasons. One, the RBI contends that banks are unlikely to lend in a risk-averse environment, no matter what the reverse repo rate, and if the government