Banks turning to SDF over liquidity mismatch and 24x7 RTGS facility

The liquidity mismatch in the banking system, together with the round-the-clock Real Time Gross Settlement System (RTGS) facility, are compelling banks to place funds in the standing deposit facility (SDF) rather than participating in the call market, according to market participants.

Banks earn less for keeping money in SDF, at 6.25 per cent, while call money rates hover around 6.70 per cent.

“The liquidity is skewed within the system. When you are dealing in the call money market, you have to have counterparty limits to lend to another bank. So, if you have exhausted counterparty limits, you may not be