RBI bolsters liquidity framework with standing facility
New deposit facility will play a role in both monetary and financial stability
The Reserve Bank of India has set up a new standing deposit facility (SDF), in a move it says will strengthen its monetary policy and add a new line of defence for financial stability.
The central bank unveiled the facility on April 8 at its regular monetary policy meeting. Policy-makers kept the main rate on hold at 4% and introduced the new deposit facility as the floor underneath the policy rate, at 3.75%. Previously, a reverse repo facility played a similar role.
Central bank governor
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