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High SDF balances signal asymmetric liquidity conditions

Business Standard

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April 23, 2025

RBI report highlights precautionary cash hoarding and uneven fund distribution in banking system

- ANUPREKSHA JAIN

High SDF balances signal asymmetric liquidity conditions

The increased share of the standing deposit facility (SDF) in absorption by the Reserve Bank of India (RBI) shows greater precautionary demand for funds on the part of banks, the central bank has said in a report titled "Three Years of the Standing Deposit Facility: Some Insights", released on Tuesday.

The report, authored by RBI staffers, does not represent the views of the central bank.

Banks' placement of funds in March under the facility averaged ₹2.13 trillion, higher than the ₹1.12 trillion in the previous month.

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