· Under the Liquidity Adjustment Facility, the liquidity in the economy is managed in the short term using repo and reverse repo transactions, which are done in government securities as collateral.

· In 2018, the government introduced the Standing Deposit Facility to sterilize excess liquidity in the economy. Accordingly, in times of excess liquidity, such as demonetization, the Reserve Bank of India (RBI) may ask the banks to deposit excess liquidity with RBI at reverse repo rate, without the need for collateral.