A standing deposit facility is a permanent arrangement under which commercial banks may deposit surplus funds with the central bank, normally overnight, at an interest rate announced in advance. Banks use it at their own initiative, and the central bank gives no collateral in return. It is one of the two sides of a central bank standing facility system; the other is the standing lending facility, through which banks borrow.
Because no bank will lend in the market for less than it can earn risk-free at the central bank, the facility's rate acts as a floor for the overnight interbank rate. Together the two facilities form a corridor around the policy interest rate. The European Central Bank's deposit facility is a well-known example, and its rate has become the main guide to the euro area's monetary policy stance. India's central bank introduced a facility under this name in 2022 as the floor of its corridor.