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RBI to Operationalise SDF

Published on April 12, 2022
Current Context: RBI has taken a game-changer decision to replace the reverse repo with Standing Deposit Facility (SDF).
RBI to Operationalise SDF
  • RBI has come up with SDF as a replacement to reverse repo. While Reverse Repo is a tool to absorb liquidity from the market by RBI with collateral as a payment to the Scheduled Commercial Banks (SCBs), SDF on the other hand does not require any collateral.
  • The idea of the Standing Deposit Facility was given by the Urjit Patel Committee in 2014.
  • It was later introduced via Finance Bill 2018. Like reverse repo, SDF has also pegged 25 basis points below the Repo rate.

Question:

Q.1 Which committee recommended the introduction of the Standing Deposit Facility?
a. Vijay Kelkar Committee
b. L. K Jha Committee
c. Urjit Patel Committee
d. Bimal Jalan Committee
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