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    Question

    Recently, the Reserve Bank of India has been mulling over the idea of introducing Standing Deposit Facility (SDF) which aims to: 

    A to reduce the excess liquidity in the system Correct Answer Incorrect Answer
    B absorb additional liquidity with the banks by allowing them to park funds with the RBI. Correct Answer Incorrect Answer
    C increase the savings in the economy by providing new instruments. Correct Answer Incorrect Answer
    D boost the slowing economy by mobilizing investments in infrastructure Correct Answer Incorrect Answer

    Solution

    The main purpose of SDF is to reduce the excess liquidity in the system, and control inflation.

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