Difference Between Reverse Repo Rate and Standing Deposit Facility? | Mint Primer

In April 2022, the Reserve Bank of India (RBI) launched the standing deposit facility (SDF) as a mechanism to curb inflation by absorbing liquidity. The ‘Expert Committee to Revise and Strengthen the Monetary Policy Framework’ advocated the SDF as a liquidity management tool in January 2014. However, Section 17 of the RBI Act of 1934 was modified in 2018 to allow the RBI to introduce this instrument, which was now brought into action in 2022. The central bank's decision to deploy SDF raises a significant dilemma, though, as the reverse repo rate can also be used to absorb liquidity. Let us start this discussion by explaining what is a SDF and how it is different from a reverse repo facility. #reversereporate #standingdepositfacility #rbi #finance #mint Subscribe Now For Latest Updates- https://tinyurl.com/lbw8nze