RBI says higher SDF balances reflect asymmetry in bank liquidity

The Reserve Bank of India (RBI) has stated that higher balances in the Standing Deposit Facility (SDF) reflect an asymmetry in bank liquidity. The SDF is a tool used by the RBI to absorb excess liquidity from the banking system. The RBI's observation suggests that some banks are holding significantly more liquid funds than others, leading to this uneven distribution within the financial system. This could have implications for interbank lending rates and overall monetary policy transmission.