Standing Deposit Facility aims to drain surplus cash at a rate lower than repo rate without need for any collateral.
Bank customers across the nation have complained that several banks are refusing to accept more than the said amount despite providing detailed explanations. (Photo: PTI/File)
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.
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