India Government Said to Oppose RBI's New Cash Tool Proposal
- India said concerned SDF may dilute monetary panel’s powers
- RBI in April said it was awaiting government’s nod on measure
A security guard stands at the gate of the Reserve Bank of India headquarters in New Delhi.
Photographer: Anindito Mukherjee/BloombergThe Indian central bank’s proposal to introduce a new liquidity tool to help manage a banking system flooded with surplus cash is facing opposition from the government, according to people with knowledge of the matter.
The government is concerned that the so-called Standing Deposit Facility, or SDF, will give the Reserve Bank of India the discretion to set an interest rate outside the purview of the monetary policy panel, two of the people said, asking not to be identified as the matter isn’t public. Allowing the facility could also lead to the possibility of the SDF rate becoming the main operative measure in times of excess liquidity, the people said.