Current Affairs · Monetary Policy
The Standing Deposit Facility (SDF) introduced by RBI in 2022 differs from the Reverse Repo Rate in which fundamental way?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1SDF is used for borrowing by banks from RBI; Reverse Repo is for lending to RBI
- 2SDF allows RBI to absorb excess liquidity from banks without providing collateral; Reverse Repo required collateral✓
- 3SDF carries higher interest rate than Reverse Repo rate
- 4SDF is applicable only to scheduled commercial banks while Reverse Repo applies to all financial institutions
Correct answer
SDF allows RBI to absorb excess liquidity from banks without providing collateral; Reverse Repo required collateral
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