Finance Ministry calls banks to discuss new facility to drain cash
23 March 2017 7:07 AM GMT
Standing Deposit Facility aims to drain surplus cash at a rate lower than repo rate without need for any collateral.
12 public sector banks including PNB, Bank of India and Indian Bank have lined up plans for raising funds from markets.
New Delhi: The finance ministry has called bankers into a meeting on Friday to discuss setting up a new facility to absorb surplus cash in the banking system, according to a letter sent to all heads of lenders seen by Reuters on Thursday.
The finance ministry wants to discuss implementing a new framework called a "standing deposit facility" that would drain the surplus cash at a rate lower than the repo rate without the need for any collateral, the letter said.
The proposal on draining surplus cash through such a facility had previously been mooted by the Reserve Bank of India.
Banks have seen a surge in cash deposits after Prime Minister Narendra Modi last year banned higher-value note bills.
( Source : reuters )
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