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Liquidity withdrawal will be done in multi-year time frame: RBI Governor

Liquidity withdrawal will be done in multi-year time frame: RBI Governor

The Reserve Bank of India (RBI) has implemented a 3.75 percent Standing Deposit Facility (SDF) as part of its liquidity management strategy. The Central bank has introduced the Standing Deposit Facility (SDF) at 3.75 percent to absorb excess liquidity. It has also decided to restore the Liquidity Adjustment Facility (LAF) corridor and Marginal Standing Facility (MSF) at 4.25 percent.

The RBI Governor said the introduction of Standing Deposit Facility would provide symmetry to operating framework of monetary policy.

Stating that the economic activity is barely above pre-pandemic levels but continues to steadily recover, RBI Governor Shaktikanta Das said the Central bank would engage in a gradual withdrawal of liquidity over a multi-year timeframe beginning this year

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