RBI declares reversal of liquidity facilities on weekends, holidays from Dec 30

Earlier when funds parked in SDF and taken from MSF on Friday, they used to get reversed on Monday but now this will get reversed on weekends.

The Reserve Bank of India (RBI) on December 8 announced reversal of liquidity facilities on weekends and holidays from December 30.

“We propose to allow reversal of liquidity facilities under both Standing Deposit Facility (SDF) and Marginal Standing Facility (MSF) even during weekends and holidays with effect from December 30, 2023," Governor Shaktikanta Das said in his Monetary Policy announcement.

Das said that this to facilitate better fund management by banks. “The measure to be reviewed after six months.”

Earlier, when funds parked in SDF and taken from MSF on Fridays, they used to get reversed on Mondays, but now this will get reversed on weekends.

MPC decision

The Reserve Bank of India on December 8 left its key interest rate unchanged for the fifth time in a row, citing a potential resurgence in inflation and signalling that price stability remained its primary objective.

The Reserve Bank of India's Monetary Policy Committee (MPC), as expected, kept the repo rate, at which banks borrow short-term funds from the central bank, at 6.5 percent, as prices remained higher than the central bank’s medium-term target of 4 percent inflation.

The MPC had raised the rate by 250 basis points last time in May 2022.