<ul><li>RBI may widen the policy rate corridor to push banks to lend and deter them from parking funds with RBI.</li><li>Banks have been passively parking funds with the RBI under the Standing Deposit Facility (SDF) instead of on-lending in the uncollateralized call money market.</li><li>Widening the policy rate corridor could mean the SDF rate becomes 50 bps lower than the policy repo rate, encouraging banks to explore other deployment options, including lending and non-SLR securities.</li><li>The move aims to address the issue raised by RBI Governor Sanjay Malhotra regarding banks deploying surplus funds with RBI, leading to potential widening of the Liquidity Adjustment Facility corridor.</li></ul>

To push banks to lend, RBI may widen policy rate corridor to 75 bps

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