New Delhi/Mumbai — India’s central bank will submit a fresh proposal to the government for introducing a new liquidity management tool as it grapples with strong foreign inflows, people familiar with the matter said. The decision to reconsider the so-called Standing Deposit Facility, or SDF, was taken at a meeting between the new economic affairs secretary Subhash Chandra Garg and Reserve Bank of India deputy governor Viral Acharya on Monday, the people said, asking not to be identified as they were not authorised to speak publicly. After a change of guard at the finance ministry with Garg taking charge from Shaktikanta Das, the government has eased its opposition to the new liquidity tool, as absorbing flows with the existing set of instruments becomes challenging. The ministry had earlier opposed a proposal to introduce the tool on the grounds that it gave the central bank the discretion to set interest rates outside the purview of the monetary policy panel. The central bank will ...
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