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Indian banks must lend surplus funds to their peers instead of parking the money at a central bank facility, the Reserve Bank of India governor said on Friday.

"It is desirable that banks having surplus funds explore lending opportunities in the interbank call market rather than passively parking funds in the SDF (standing deposit facility) at relatively less attractive rates," Shaktikanta Das said during his monetary policy address in Mumbai.

Greater volume of call money transactions would help deepen the interbank money market and also lower the need for some lenders to rely on the marginal standing facility, he added.

India's banking system liquidity - the quantum of money in the interbank market - has been in a deficit since the middle of September after tax payments.

Money market rates have risen after the central bank imposed an incremental cash reserve ratio in August.

The RBI lends funds to banks at the repo rate of 6.50%. Banks can also borrow from the MSF facility at 6.75% and park money with the central bank using the SDF at 6.25% rate.

The liquidity distribution in the banking system is skewed, the RBI chief said in his address.

Banks have been parking around 500 billion rupees to one trillion rupees with the RBI under SDF.

At the same time, borrowing through the marginal standing facility hit a record high of nearly two trillion rupees in September.

The RBI may have to consider open market sales of government bonds going forward as it seeks to manage liquidity, Governor Das said.

"While remaining nimble, we may have to consider OMO (open market operation)-sales to manage liquidity, consistent with the stance of monetary policy."

The timing and quantum of bond sales would depend on evolving liquidity conditions, he added.

The RBI has net sold bonds worth 71 billion rupees in four weeks to Sept. 22 through operations on the bond trading platform.