New Monetary policy measures being discussed to suck out excess liquidity through Standing Deposit Facility (SDF) in the coming financial year.
It is suppose to be more effective than Market Stabilization Scheme (MSS) or open market operations (OMO) as RBI need not provide banks with collateral in exchange for the funds parked with it.
Impact on banks: Short term interest rates likely to come down which would result in steepening of the yield curve and is positive for banks especially PSU Banks
Impact on fixed income securities: We expect short-term funds and dynamic bond funds to perform better if the decision as speculated in media is implemented.
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