{"id":85480,"date":"2025-06-01T03:18:32","date_gmt":"2025-06-01T03:18:32","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=85480"},"modified":"2025-06-01T03:18:32","modified_gmt":"2025-06-01T03:18:32","slug":"consider-the-following-statements-regarding-instruments-of-monetary-po","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-statements-regarding-instruments-of-monetary-po\/","title":{"rendered":"Consider the following statements regarding instruments of monetary po"},"content":{"rendered":"<p>Consider the following statements regarding instruments of monetary policy:<\/p>\n<ul>\n<li>1. Standing deposit facility (SDF) rate was introduced in April 2022.<\/li>\n<li>2. SDF rate replaced fixed reverse repo rate as the floor of the LAF corridor.<\/li>\n<\/ul>\n<p>Which of the statements given above is\/are correct?<\/p>\n<p>[amp_mcq option1=&#8221;1 only&#8221; option2=&#8221;2 only&#8221; option3=&#8221;Both 1 and 2&#8243; option4=&#8221;Neither 1 nor 2&#8243; correct=&#8221;option3&#8243;]<\/p>\n<div class=\"psc-box-pyq-exam-year-detail\">\n<div class=\"pyq-exam\">\n<div class=\"psc-heading\">This question was previously asked in<\/div>\n<div class=\"psc-title line-ellipsis\">UPSC CDS-1 &#8211; 2024<\/div>\n<\/div>\n<div class=\"pyq-exam-psc-buttons\"><a href=\"\/pyq\/pyq-upsc-cds-1-2024.pdf\" target=\"_blank\" class=\"psc-pdf-button\" rel=\"noopener\">Download PDF<\/a><a href=\"\/pyq-upsc-cds-1-2024\" target=\"_blank\" class=\"psc-attempt-button\" rel=\"noopener\">Attempt Online<\/a><\/div>\n<\/div>\n<section id=\"pyq-correct-answer\">\nStatement 1 is correct: The Standing Deposit Facility (SDF) was introduced by the Reserve Bank of India in April 2022 as an additional tool for absorbing liquidity without providing collateral.<br \/>\nStatement 2 is correct: The SDF rate was set below the repo rate and replaced the fixed reverse repo rate as the effective floor of the Liquidity Adjustment Facility (LAF) corridor. The LAF corridor is now defined by the Marginal Standing Facility (MSF) rate (ceiling) and the SDF rate (floor).<br \/>\n<\/section>\n<section id=\"pyq-key-points\">\nSDF was introduced in April 2022 and functions as the floor of the LAF corridor, replacing the fixed reverse repo rate.<br \/>\n<\/section>\n<section id=\"pyq-additional-information\">\nThe SDF aims to provide the RBI with a more flexible tool to manage liquidity compared to the reverse repo window which requires collateral. It also helps in better anchoring the overnight money market rates within the LAF corridor.<br \/>\n<\/section>\n","protected":false},"excerpt":{"rendered":"<p>Consider the following statements regarding instruments of monetary policy: 1. Standing deposit facility (SDF) rate was introduced in April 2022. 2. SDF rate replaced fixed reverse repo rate as the floor of the LAF corridor. Which of the statements given above is\/are correct? [amp_mcq option1=&#8221;1 only&#8221; option2=&#8221;2 only&#8221; option3=&#8221;Both 1 and 2&#8243; option4=&#8221;Neither 1 nor &#8230; <\/p>\n<p class=\"read-more-container\"><a title=\"Consider the following statements regarding instruments of monetary po\" class=\"read-more button\" href=\"https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-statements-regarding-instruments-of-monetary-po\/#more-85480\">Detailed Solution<span class=\"screen-reader-text\">Consider the following statements regarding instruments of monetary po<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1087],"tags":[1103,1120,1190],"class_list":["post-85480","post","type-post","status-publish","format-standard","hentry","category-upsc-cds-1","tag-1103","tag-economic-development","tag-money-banking","no-featured-image-padding"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Consider the following statements regarding instruments of monetary po<\/title>\n<meta name=\"description\" content=\"Statement 1 is correct: The Standing Deposit Facility (SDF) was introduced by the Reserve Bank of India in April 2022 as an additional tool for absorbing liquidity without providing collateral. Statement 2 is correct: The SDF rate was set below the repo rate and replaced the fixed reverse repo rate as the effective floor of the Liquidity Adjustment Facility (LAF) corridor. The LAF corridor is now defined by the Marginal Standing Facility (MSF) rate (ceiling) and the SDF rate (floor). SDF was introduced in April 2022 and functions as the floor of the LAF corridor, replacing the fixed reverse repo rate.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-statements-regarding-instruments-of-monetary-po\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Consider the following statements regarding instruments of monetary po\" \/>\n<meta property=\"og:description\" content=\"Statement 1 is correct: The Standing Deposit Facility (SDF) was introduced by the Reserve Bank of India in April 2022 as an additional tool for absorbing liquidity without providing collateral. Statement 2 is correct: The SDF rate was set below the repo rate and replaced the fixed reverse repo rate as the effective floor of the Liquidity Adjustment Facility (LAF) corridor. The LAF corridor is now defined by the Marginal Standing Facility (MSF) rate (ceiling) and the SDF rate (floor). 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Statement 2 is correct: The SDF rate was set below the repo rate and replaced the fixed reverse repo rate as the effective floor of the Liquidity Adjustment Facility (LAF) corridor. The LAF corridor is now defined by the Marginal Standing Facility (MSF) rate (ceiling) and the SDF rate (floor). SDF was introduced in April 2022 and functions as the floor of the LAF corridor, replacing the fixed reverse repo rate.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-statements-regarding-instruments-of-monetary-po\/","og_locale":"en_US","og_type":"article","og_title":"Consider the following statements regarding instruments of monetary po","og_description":"Statement 1 is correct: The Standing Deposit Facility (SDF) was introduced by the Reserve Bank of India in April 2022 as an additional tool for absorbing liquidity without providing collateral. Statement 2 is correct: The SDF rate was set below the repo rate and replaced the fixed reverse repo rate as the effective floor of the Liquidity Adjustment Facility (LAF) corridor. The LAF corridor is now defined by the Marginal Standing Facility (MSF) rate (ceiling) and the SDF rate (floor). SDF was introduced in April 2022 and functions as the floor of the LAF corridor, replacing the fixed reverse repo rate.","og_url":"https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-statements-regarding-instruments-of-monetary-po\/","og_site_name":"MCQ and Quiz for Exams","article_published_time":"2025-06-01T03:18:32+00:00","author":"rawan239","twitter_card":"summary_large_image","twitter_misc":{"Written by":"rawan239","Est. reading time":"1 minute"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-statements-regarding-instruments-of-monetary-po\/","url":"https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-statements-regarding-instruments-of-monetary-po\/","name":"Consider the following statements regarding instruments of monetary po","isPartOf":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/#website"},"datePublished":"2025-06-01T03:18:32+00:00","dateModified":"2025-06-01T03:18:32+00:00","author":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/#\/schema\/person\/5807dafeb27d2ec82344d6cbd6c3d209"},"description":"Statement 1 is correct: The Standing Deposit Facility (SDF) was introduced by the Reserve Bank of India in April 2022 as an additional tool for absorbing liquidity without providing collateral. Statement 2 is correct: The SDF rate was set below the repo rate and replaced the fixed reverse repo rate as the effective floor of the Liquidity Adjustment Facility (LAF) corridor. The LAF corridor is now defined by the Marginal Standing Facility (MSF) rate (ceiling) and the SDF rate (floor). SDF was introduced in April 2022 and functions as the floor of the LAF corridor, replacing the fixed reverse repo rate.","breadcrumb":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-statements-regarding-instruments-of-monetary-po\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-statements-regarding-instruments-of-monetary-po\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-statements-regarding-instruments-of-monetary-po\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/exam.pscnotes.com\/mcq\/"},{"@type":"ListItem","position":2,"name":"UPSC CDS-1","item":"https:\/\/exam.pscnotes.com\/mcq\/category\/upsc-cds-1\/"},{"@type":"ListItem","position":3,"name":"Consider the following statements regarding instruments of monetary po"}]},{"@type":"WebSite","@id":"https:\/\/exam.pscnotes.com\/mcq\/#website","url":"https:\/\/exam.pscnotes.com\/mcq\/","name":"MCQ and Quiz for Exams","description":"","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/exam.pscnotes.com\/mcq\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/exam.pscnotes.com\/mcq\/#\/schema\/person\/5807dafeb27d2ec82344d6cbd6c3d209","name":"rawan239","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/exam.pscnotes.com\/mcq\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/761a7274f9cce048fa5b921221e7934820d74514df93ef195a9d22af0c1c9001?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/761a7274f9cce048fa5b921221e7934820d74514df93ef195a9d22af0c1c9001?s=96&d=mm&r=g","caption":"rawan239"},"sameAs":["https:\/\/exam.pscnotes.com"],"url":"https:\/\/exam.pscnotes.com\/mcq\/author\/rawan239\/"}]}},"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/posts\/85480","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/comments?post=85480"}],"version-history":[{"count":0,"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/posts\/85480\/revisions"}],"wp:attachment":[{"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/media?parent=85480"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/categories?post=85480"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/tags?post=85480"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}