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What is Standing Deposit Facility? RBI’s new tool to pump out excess liquidity EXPLAINED

What is Standing Deposit Facility? RBI’s new tool to pump out excess liquidity EXPLAINED

In its first bi-monthly monetary policy meeting for FY 2023, the Reserve Bank of India announced a new tool to absorb excess liquidity from the system – Standing Deposit Facility (SDF). Through this new tool the central bank can absorb excess liquidity from the commercial banks, which is currently hovering at about Rs 8.5 lakh crore, without an exchange of collateral like government-backed securities (G-Secs).

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