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Question

In April 2022, RBI introduced the Standing Deposit Facility (SDF). What is the major objective behind this?

A it allowed banks to borrow from RBI without any interest Correct Answer Incorrect Answer
B it allowed banks to borrow from RBI without any collateral Correct Answer Incorrect Answer
C it allowed for the deposit of excess funds by banks with the RBI without the necessity of collateral in the form of government securities Correct Answer Incorrect Answer
D Both a & c Correct Answer Incorrect Answer
E None of the above Correct Answer Incorrect Answer

Solution

In its April 2022 meeting, the committee introduced the Standing Deposit Facility (SDF), which allowed for the deposit of excess funds by banks with the RBI without the necessity of collateral in the form of government securities, thereby allowing effective liquidity management in a collateral-free manner.

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