Daily Current Affairs : 9th April 2022

Daily Current Affairs for UPSC CSE

Topics Covered

  1. Foreign Contribution Regulation Act
  2. Monetary Policy of RBI
  3. Fortified Rice
  4. Lookout Circular
  5. Solid Fuel Ducted Ramjet (SFDR)
  6. Facts for Prelims
    1. Standing Deposit Facility

1 . Foreign Contribution regulation Act

Context :

The Supreme Court on Friday upheld amendments introducing restrictions in the Foreign Contribution (Regulation) Act (FCRA) while holding that no one has a fundamental or absolute right to receive foreign contributions.

About the Issue

  • SC upheld amendments in the petition challenging amendments to the Foreign Contributions Regulations law in 2020
  • The petitions argued that the amendments severely restricted the use of foreign funds by NGOs for their activities and transfer to other philanthropic organisations within the country.
  • The petitioners, including individuals and NGOs engaged in cultural, educational, religious activities, argued that the amendments suffered from the “vice of ambiguity, over-breadth or over-governance” and violated their fundamental rights. They said the new regime amounts to a blanket ban on the capacity of intermediary organisations in India to distribute foreign donations to smaller and less visible NGOs.
  • The restrictions involve a bar on using operational FCRA accounts to get foreign contributions and mandatory production of the Aadhaar card for registration under the FCRA. They require NGOs and recipients to open a new FCRA account at a specified branch of the State Bank of India in New Delhi as a “one-point entry” for foreign donations.

Key observations of the Judgement

  • Court reasoned that unbridled inflow of foreign funds may destabilise the sovereignty of the nation. Court countered that the amendments only provide a strict regulatory framework to moderate the inflow of foreign funds.
  • ‘No absolute right : No one can be heard to claim a vested right to accept foreign donations, much less an absolute right
  • Permitting inflow of foreign contribution, which is a donation, is a matter of policy of the State backed by law, the top court held. It was open for the State to even have a regime which may completely prohibit receipt of foreign donation, as no right inheres in the citizen to receive foreign donations. Besides, the court said, anyone wanting foreign contributions cannot be said to be engaged in “usual or ordinary business”.
  • O ne of the amendments criticised by NGOs involved a bar on operating existing FCRA accounts in scheduled banks of their convenience and the opening of a new bank account at the State Bank of India branch at Sansad Marg in New Delhi. Foreign donations can be remitted from abroad only through this “primary” account in this particular branch and no other.
  • But the court said FCRA account operators could not claim the right of continuity of a “deficient and flawed framework”. Opening an account at the Sansad Marg branch was only a one-time exercise to ensure inflow of foreign contribution through one channel only.

About FCRA

  • Foreign Contribution (Regulation) Act, 1976 (FCRA) was enacted in the year 1976 with the prime objective of regulating the acceptance and utilization of foreign contribution and foreign hospitality by persons and associations working in the important areas of national life.
  • Foreign contribution is the donation or transfer of any currency, security or article (of beyond a specified value) by a foreign source.
  • The amendment seeks to make specific changes to the FCRA law, first introduced in 2010 and whose rules were amended in 2012, 2015 and 2019.
  • The law provides the framework under which organisations in India can receive and utilise grants from foreign sources. 

FCRA 2020 Amendments

  • The Foreign Contribution Regulation Act (FCRA) 2010 regulates the acceptance and use of foreign contributions by certain individuals, associations and companies. It also aims to prohibit the acceptance and use of foreign contributions for activities that are detrimental to national interest and for matters connected thereto.
  • The FCRA predominantly regulates the activities of non-governmental organisations (NGOs) that receive foreign contributions, donations or hospitality.
  • However, certain instances have been reported wherein violations of the FCRA have been found and consequently the government cancelled various NGOs’ registrations. Thus, in order to bring greater transparency and strengthen the compliance mechanism for such organisations, on 29 September 2020 the central government notified the Foreign Contribution (Regulation) Amendment Act 2020 to amend certain provisions of the FCRA.
  • The amendment act aims to:
    • strengthen organisations’ compliance mechanisms;
    • enhance transparency and accountability in the use of foreign contributions; and
    • prevent the misuse of funds received from foreign contributions by certain organisations and instead promote the use of such funds by genuine NGOs which are working to improve the welfare of society.

Key changes that have been introduced under the amendment act

Transfer of foreign contributions

  • Section 7 of the FCRA allowed persons authorised to receive foreign contributions to transfer such contribution, or part thereof, to:
    • registered persons which were in receipt of a certificate under the FCRA; or
    • unregistered persons, provided that the central government’s prior approval for the transfer had been obtained.
  • However, the amendment act restricts the transfer of foreign contributions to any other person whether or not the transferee is registered under the FCRA or has obtained the central government’s approval.
  • While this amendment aims to ensure that foreign funding is not diverted and will be used only by the organisation which has received the foreign contribution, this amendment will have severe implications for smaller NGOs which mostly depend on larger NGOs for their contributions to help them fulfil their objectives.

Reduced limit for administrative expenses

  • The amendment act has reduced the limit for administrative expenses from 50% to 20% to ensure that the funds forming part of foreign contributions are used for the objective for which they are primarily received.
  • The amendment might pose a challenge for larger NGOs since they have heavy administrative expenses considering their sizable workforce and the costs associated with projects and filing reports.

Government’s power to restrict foreign contribution recipients from using or receiving funds

  • Previously, if a person was found guilty of violating the FCRA, the central government’s approval was required for them to be able use or receive the unused or unreceived foreign contribution.
  • The amendment act has given the central government the power to restrict the usage of unused foreign contribution for persons which have been granted prior permission to receive such contribution if, based on any information or report and after holding a summary inquiry, the government believes that such person has contravened the FCRA and the amendment act.

New identification requirements

  • The amendment act has inserted a new Section 12A in the FCRA, which provides that any person seeking permission, registration or renewal of registration must provide:
    • the Aadhaar cards of all its office bearers, directors or key functionaries as an identification document; or
    • a copy of a passport or an overseas citizen of India card in case of foreigners.

Suspension of registration certificates

  • Further, the amendment act has revised the number of days for which the central government may suspend a person’s registration certificate if they violate the FCRA.
  • The limit has been increased to a maximum of 360 days from the earlier cap of a maximum of 180 days.

Surrender of certificates

  • The amendment act has inserted a new Section 14A for the surrender of certificates.
  • If such a request is made, the central government may permit any person to surrender their registration certificate.
  • However, prior to granting such permission, the central government may make such inquiry as it deems fit and, if it is satisfied that such person has not contravened the FCRA and the management of their foreign contribution and assets, if any, created out of such contribution has been vested in an authority prescribed by the government, allow the surrender of certificates.

New FCRA accounts

  • To streamline the flow of receiving foreign contributions and bring more transparency, the amendment act has introduced a new Section 17 which provides that foreign contributions must be received only in an account specifically designated by a bank as an ‘FCRA account’.
  • The FCRA account must be opened with the main New Delhi branch of the State Bank of India (11 Sansad Marg, New Delhi 110001).
  • Further, other than the foreign contribution, no other funds should be received or deposited in this account.
  • It is a great move by the government to monitor the funds that flow through a centralised channel but there is also a challenge for organisations scattered in various parts of the country to open a bank account in a particular state as this will increase their overhead costs.

Prohibition to accept foreign contribution: 

  • Under the Act, certain persons are prohibited to accept any foreign contribution.  These include: election candidates, editor or publisher of a newspaper, judges, government servants, members of any legislature, and political parties, among others. 
  • The amendment adds public servants (as defined under the Indian Penal Code) to this list. 
  • Public servant includes any person who is in service or pay of the government, or remunerated by the government for the performance of any public duty.

Renewal of license

  • Under the Act, every person who has been given a certificate of registration must renew the certificate within six months of expiration.  
  • The amendment provides that the government may conduct an inquiry before renewing the certificate to ensure that the person making the application:
    • is not fictitious or benami,
    • has not been prosecuted or convicted for creating communal tension or indulging in activities aimed at religious conversion, and
    • has not been found guilty of diversion or misutilisation of funds, among others conditions.

2 . Monetary Policy of RBI

Context : The Reserve Bank on Friday held benchmark interest rates and retained its ‘accommodative’ stance, even as it emphasised it was pivoting to focus on ‘withdrawal of accommodation to ensure that inflation remains within the target’.

Details of the Monetary Policy

  • The RBI raised its forecast for inflation in FY23 to 5.7% from its February projection of 4.5%.
  • The central bank also lowered its growth estimate for the current fiscal to 7.2% from the 7.8% forecast earlier.
  • RBI stressed that it would now turn its focus to the “withdrawal of accommodation to ensure that inflation remains within the target going forward”.
  • “The stance continues to be accommodative but RBI has also started withdrawing some of the accommodation it had provided in the last two years, though gradually.
  • MPC had decided to revise the inflation projections for FY23 upwards with the estimate for Q1 at 6.3%; Q2 at 5.8%; Q3 at 5.4%; and Q4 at 5.1% due to “war-induced factors”.
  • MPC voted unanimously to keep the policy repo rate unchanged at 4%.
  • The RBI’s liquidity management is characterised by two-way operations: through variable rate reverse repo (VRRR) auctions of varying maturities to absorb liquidity, and variable rate repo (VRR) auctions to meet transient liquidity shortages and offset mismatches.
  • In this review, the RBI has introduced the Standing Deposit Facility (SDF) – a new tool for absorbing liquidity – at an interest rate of 3.75%. So while the MPC maintained status quo on the repo rate and kept the stance accommodative, it signaled the normalisation of the liquidity adjustment facility (LAF) corridor by introducing the SDF as the floor rate in place of the fixed rate reverse repo (FRRR), which was kept unchanged at 3.35%.
  • Analysts said this would enable the central bank to mop up liquidity without providing any collateral. Both the standing facilities viz., the MSF and SDF, will be available on all days of the week, throughout the year.

About Monetary Policy

  • MonetaryPolicy refers to the use of monetary instruments under the control of the centralbank to influence variables, such as interest rates, money supply and availabilityof credit, with a view to achieving the objectives of the policy

Monetary Policy Committee

  • Section 45ZB of the amended RBI Act, 1934, also provides for an empowered six-member Monetary Policy Committee (MPC) to be constituted by the Central Government .
  • The Government, accordingly, constituted the six member MPC in September 2016.
  • The Monetary Policy Committee shall consist of:
    • the Governor of the RBI;
    • Deputy Governor of the RBI in charge of Monetary Policy;
    • one officer of the RBI to be nominated by the Central Board; 
    • three persons to be appointed by the Central Government 
  • The Monetary Policy Committee has been entrusted with the statutory duty to determine the Policy Rate required to achieve the inflation target.
  • The Reserve Bank’s Monetary Policy Department(MPD) assists the MPC in formulating the monetary policy.
  • Under the amended RBI Act, the MPC is required to meet at least four times in a year.
  • The quorum for the meeting of the MPC is four members. Each member of the MPC has one vote, and in the event of an equality of votes, the Governor of the RBI has a second or casting vote.
  • The decision of the Monetary Policy Committee is binding on the RBI and the RBI shall publish a document explaining the steps to be taken by it to implement the decisions of the Monetary Policy Committee

 Direct and Indirect instruments used for implementing monetary Policy

  • Repo Rate : The (fixed) interest rate at which the Reserve Bank provides overnight liquidity to banks against the collateral of government and other approved securities under the Liquidity Adjustment Facility (LAF).
  • Reverse Repo Rate : The (fixed) interest rate at which the Reserve Bank absorbs liquidity, on an overnight basis, from banks against the collateral of eligible government securities under the LAF
  • Liquidity Adjustment Facility (LAF) : The LAF consists of overnight as well as term repo auctions. Progressively, the Reserve Bank has increased the proportion of liquidity injected under variable rate repo auctions across the range of tenors. The aim of term-repo is to help develop the inter-bank term-money market, which in turn can set market-based benchmarks for pricing of loans and deposits, and hence improve transmission of monetary policy. The RBI also conducts variable interest-rate reverse-repo auctions, as necessitated under market conditions.
  • Marginal Standing Facility (MSF) : A facility under which scheduled commercial banks can borrow additional amount of overnight money from the Reserve Bank by dipping into their Statutory Liquidity Ratio (SLR) portfolio up to a limit at a penal rate of interest. This provides a safety valve against unanticipated liquidity shocks to the banking system
  • Corridor : The MSF rate and reverse repo rate determine the corridor for the daily movement in the weighted average call money rate.Bank Rate : It is the rate at which the Reserve Bank is ready to buy or re discount bills of exchange or other commercial papers. The Bank Rate is published under Section 49 of the Reserve Bank of India Act, 1934. This rate has been aligned to the MSF rate and, therefore, changes automatically as and when the MSF rate changes alongside policy repo rate changes.
  • Cash Reserve Ratio (CRR) : The average daily balance that a bank is required to maintain with the Reserve Bank as a share of such per cent of its Net demand andtime liabilities (NDTL) that the Reserve Bank may notify from time to time in theGazette of India.
  • Statutory Liquidity Ratio (SLR) : The share of NDTL that a bank is required tomaintain in safe and liquid assets, such as, unencumbered government securities, cash and gold. Changes in SLR often influence the availability ofresources in the banking system for lending to the private sector.
  • Open Market Operations (OMOs): These include both, outright purchase andsale of government securities, for injection and absorption of durable liquidity,respectively.
  • Market Stabilisation Scheme (MSS): This instrument for monetary management was introduced in 2004. Surplus liquidity of a more enduring nature arising from large capital inflows is absorbed through sale of short-dated government securities and treasury bills. The cash so mobilised is held in a separate government account with the Reserve Bank

Policy Stances of RBI

  • Accommodative Stance
    • Accommodative stance means the central bank is telling the market to expect a rate cut anytime
    • Usually, this policy is adopted when there is slowdown in the economy.
  • Neutral stance
    • Neutral stance doesn’t have any particular meaning. This means anything can happen anytime means the RBI would have the flexibility to either increase or decrease the policy rates
  • Tight and Calibrated Tightening stance
    • Tight – It indicates an impending rate hike
    • Calibrated Tightening – RBI would either keep the rates constant or increase the rates.

3 . Fortified Rice

Context : The Union Cabinet on approved a scheme to distribute fortified rice under government programmes. Food Corporation of India and state agencies have already procured 88.65 LMT (lakh tonnes) of fortified rice for supply and distribution. In last year’s Independence Day speech, Prime Minister Narendra Modi had announced the fortification of rice distributed under various government schemes, including the public distribution system (PDS) and midday meals in schools, by 2024.

What is rice fortification?

  • The Food Safety and Standards Authority of India (FSSAI) defines fortification as “deliberately increasing the content of essential micronutrients in a food so as to improve the nutritional quality of food and to provide public health benefit with minimal risk to health”
  • Various technologies are available to add micronutrients to regular rice, such as coating, dusting, and ‘extrusion’. The last mentioned involves the production of fortified rice kernels (FRKs) from a mixture using an ‘extruder’ machine. It is considered to be the best technology for India.
  • The fortified rice kernels are blended with regular rice to produce fortified rice.

How does the extrusion technology to produce FRK work?

  • Dry rice flour is mixed with a premix of micronutrients, and water is added to this mixture. The mixture is passed through a twin-screw extruder with heating zones, which produces kernels similar in shape and size to rice. These kernels are dried, cooled, and packaged for use. FRK has a shelf life of at least 12 months.
  • As per guidelines issued by the Ministry of Consumer Affairs, Food and Public Distribution, the shape and size of the fortified rice kernel should “resemble the normal milled rice as closely as possible”. According to the guidelines, the length and breadth of the grain should be 5 mm and 2.2 mm respectively.

But why does rice have to be fortified in the first place?

  • India has very high levels of malnutrition among women and children. According to the Food Ministry, every second woman in the country is anaemic and every third child is stunted.
  • Fortification of food is considered to be one of the most suitable methods to combat malnutrition. Rice is one of India’s staple foods, consumed by about two-thirds of the population. Per capita rice consumption in India is 6.8 kg per month. Therefore, fortifying rice with micronutrients is an option to supplement the diet of the poor.

What are the standards for fortification?

  • Under the Ministry’s guidelines, 10 g of FRK must be blended with 1 kg of regular rice.
  • According to FSSAI norms, 1 kg of fortified rice will contain the following: iron (28 mg-42.5 mg), folic acid (75-125 microgram), and vitamin B-12 (0.75-1.25 microgram). Rice may also be fortified with zinc (10 mg-15 mg), vitamin A (500-750 microgram RE), vitamin B-1 (1 mg-1.5 mg), vitamin B-2 (1.25 mg-1.75 mg), vitamin B-3 (12.5 mg-20 mg) and vitamin B-6 (1.5 mg-2.5 mg) per kg.

Does fortified rice have to be cooked differently?

  • The cooking of fortified rice does not require any special procedure. The rice needs to be cleaned and washed in the normal way before cooking. After cooking, fortified rice retains the same physical properties and micronutrient levels as it had before cooking.

What is India’s capacity for fortification?

  • At the time of the PM’s announcement last year, nearly 2,700 rice mills had installed blending units for production of fortified rice, and India’s blending capacity stood at 13.67 lakh tonnes in 14 key states, according to figures provided by the Ministry. FRK production had increased rapidly from 7,250 tonnes to 60,000 tonnes within 2 years.
  • The cost of upgrading an existing rice mill varies in accordance with the volume of fortified rice produced. An investment of Rs 15-20 lakh would be required to upgrade a rice mill of operating capacity 4-5 tonnes/hour, the Ministry had said last year. The Ministry had estimated that the cost of producing FRK with iron, folic acid, and vitamin B-12 would be around Rs 0.60 per kg.

How can a beneficiary distinguish between fortified rice and regular rice?

  • Fortified rice will be packed in jute bags with the logo (‘+F’) and the line “Fortified with Iron, Folic Acid, and Vitamin B12”.

4 . Look Out Circular

Context : A district court in Delhi on Friday stayed a magistrate’s order directing the CBI to withdraw its Look Out Circular (LOC) against former Amnesty International India chief Aakar Patel, and asked him not to leave the country without the permission of the court.

What is a Look Out Circular?

  • An LOC is issued to prevent a person from leaving the country.
  • It is issued by various agencies and government bodies to the Bureau of Immigration (BoI) in a prescribed format with details of the person who it intends to prevent from going abroad.
  • The BoI maintains a register of such circulars which is informally called the exit control list. Once a person against whom an LOC has been issued reaches immigration, the BoI is expected to inform the agency that has issued the LOC. The BoI is not authorised to arrest or detain anyone.
  • The next course of action is decided by the agency that has issued the LOC. An LOC is valid for only one year and has to be reissued after it expires.

Who can issue such a circular against a citizen of India?

  • According to the Ministry of Home Affairs, LOCs are initiated by a large number of authorised officers who include an officer not below the rank of Deputy Secretary to the Government of India; or an officer not below the rank of Joint Secretary in the State Government; or District Magistrate; or Superintendent of Police; or designated officers of various law-enforcing and security agencies; or designated officer of Interpol; or an officer not below the rank of Additional Director in SFIO, Ministry of Corporate Affairs; or an officer not below the rank of Chairman /Managing Director/chief Executive of any Public Sector Bank; or as per directions of any criminal court in India.
  • Apart from state police, LOCs can be issued by the CBI, National Investigation Agency (NIA), Enforcement Directorate, Narcotics Control Bureau, Directorate of Revenue Intelligence, Central Board of Direct Taxes, Central Board of Excise and Customs; the Intelligence Bureau; and Research & Analysis Wing. Amnesty International India Chair Aakar Patel (File)

Under what circumstances is one issued?

  • Following a Delhi High Court order, in 2010, the MHA issued an office memorandum that said recourse to LOC was to be taken in “cognisable offences under IPC (Indian Penal Code) or other penal laws”. It said the issuing agency is supposed to provide reasons for opening an LOC in the prescribed proforma “without which the subject of an LOC will not be arrested/detained”.
  • In cases where there is no cognisable offence under IPC or other penal laws, it said, “the LOC subject cannot be detained/ arrested or prevented from leaving the country. The originating agency can only request that they be informed about the arrival / departure of the subject in such cases.
  • Before this office memorandum was issued, the Delhi High Court had issued certain guidelines on LOCs in connection with a case it was hearing. While it had mentioned the need for a cognisable offence, it had said an LOC was to be issued “where the accused was deliberately evading arrest or not appearing in the trial court despite NBWs and other coercive measures and there was likelihood of the accused leaving the country to evade trial/arrest.”
  • The Home Ministry’s office memorandum in 2010 added another category of “exceptional circumstances”, where an LOC can be issued without complete parameters and /or case details against “terrorists, anti national elements, etc in larger national interest”

What law governs the issuance of an LOC?

  • There is no specific law. An LOC is issued based on guidelines set by the Home Ministry through letters and office memorandum issued in 1979, 2000 and 2010.
  • In several court cases, the alleged misuse of the power to issue an LOC has been argued and it has been said that the inappropriate exercise of the power is due to absence of a law governing it.

Does the subject have the right to be informed about the reasons for the LOC?

  • There is no guideline regarding this mentioned in any government order. While the LOC-issuing authority has to record the reasons in the prescribed proforma to be given to the BoI, there is no specific provision for informing the subject. Since there is no law governing issuance of LOC, this is a grey area.
  • “Fundamentally, an LOC is not to be issued against anyone and everyone who is accused of a crime. The intention is to prevent a person not cooperating with investigations from flying abroad. It is immaterial whether a person evading an investigating agency is aware of an LOC or not,” a CBI officer said.

Does an LOC mean you can be arrested?

  • The aim of LoC is merely to prevent a person from leaving the country. Once that is prevented, the BoI informs the concerned agency, which may or may not arrest the person. “The idea of LOC is to ensure episodes like Vijay Mallya and Nirav Modi do not happen, where big offenders leave the country never to return. After they are stopped, they may be just asked to join the investigation and not really arrested,

When can a court set aside an LOC?

  • Courts can quash an LOC if it has not been issued in the prescribed format, or by the authorised agency or officer.
  • It can also set aside an LOC if it feels the grounds for issuance of the LOC are not fulfilled. This basically means if the court is of the opinion that despite a criminal case against the subject, he or she is not a flight risk and has been cooperating with the investigating agency, it might quash the LOC.

5 . Solid Fuel Ducted Ramjet

Context : India on Friday successfully flight tested Solid Fuel Ducted Ramjet (SFDR) booster, a missile system, at the Integrated Test Range (ITR) in Chandipur off the Odisha coast here. The SFDR-based propulsion enables the missile to intercept aerial threats at supersonic speeds and the test demonstrated reliable functioning of all components, the Defence Research and Development Organisation (DRDO) said.

How Solid Fuel Ducted Ramjet works

  •  SFDR uses a ramjet propulsion system to react with the solid propellant as air, that acts as oxidizer flows through a solid propellant duct.
  • The design of the SFDR propulsion allows for throttling up and down, enabling the missile to increase the speed as it reaches the terminal phase of the flight, or when sharp turns are required in pursuit of highly maneuvering targets.
  • Compared to conventional rockets that must carry a propellant and oxidizer – Ramjet, like a jet engine, uses the air as an oxidizer thus eliminates the weight of that fuel. Therefore, such missile can carry more fuel or use a smaller propulsion unit.
  • With more fuel stored on board, longer burn time is achieved, resulting in higher velocity, that enabling missiles to fly farther and maintain good kinematic performance through the endgame, being able to chase a target through a series of high G maneuvers.
  • Relying on solid propellant the system avoids flameout risk through such maneuvers, that jets engines or ramjets are subjected to.
  • SFDR propulsion is a key technology for the development of extended range missiles such as surface-to-air and long-range air-to-air missiles


  • The major difference between this missile and the regular air-to-air missiles is the air breathing ramjet propulsion technology, which helps propel the missile at high supersonic speeds (above Mach 2) for engaging targets at long ranges

Uses of SFDR for India

  • Possible uses for the Indian SFDR are in future variants of missiles, including an advanced version of the ASTRA beyond visual range AAM (BVRAAM) expected to extend the Astra Km 175 km range to 150 km in the Mk-3 version.
  • According to the DRDO, the SFDR has a range of 120 km with a speed range of 2.3-2.5 Mach. Unbound by the diameter of aerial weapons, a ground-launched SFDR would accelerate a missile over 250 km.

6 . Facts for Prelims

Standing Deposit Facility

  • In 2018, the amended Section 17 of the RBI Act empowered the Reserve Bank to introduce the SDF – an additional tool for absorbing liquidity without any collateral.
  • By removing the binding collateral constraint on the RBI, the SDF strengthens the operating framework of monetary policy. The SDF is also a financial stability tool in addition to its role in liquidity management.
  • The SDF will replace the fixed rate reverse repo (FRRR) as the floor of the liquidity adjustment facility corridor. Both the standing facilities — the MSF (marginal standing facility) and the SDF will be available on all days of the week, throughout the year.
  • The main purpose of SDF is to reduce the excess liquidity of Rs 8.5 lakh crore in the system, and control inflation.
  • The SDF rate will be 25 bps below the policy rate (Repo rate), and it will be applicable to overnight deposits at this stage. It would, however, retain the flexibility to absorb liquidity of longer tenors as and when the need arises, with appropriate pricing. The RBI’s plan is to restore the size of the liquidity surplus in the system to a level consistent with the prevailing stance of monetary policy

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