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  Business   Economy  23 Mar 2017  Fin Min calls banks to discuss new facility to drain cash

Fin Min calls banks to discuss new facility to drain cash

PTI
Published : Mar 23, 2017, 12:48 pm IST
Updated : Mar 23, 2017, 12:48 pm IST

Standing Deposit Facility aims to drain surplus cash at a rate lower than repo rate without need for any collateral.

Representational image.
 Representational image.

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.

Tags: finance ministry, rbi, reserve bank, banks, stressed assets
Location: India, Delhi, New Delhi