i. MSF rate is the rate at which banks borrow funds overnight from the Reserve Bank of India (RBI) against approved government securities.
ii. This came into effect in may 2011. Under the Marginal Standing Facility (MSF), currently banks avail funds from the RBI on overnight basis against their excess statutory liquidity ratio (SLR) holdings.
iii. Additionally, they can also avail funds on overnight basis below the stipulated SLR up to 1 per cent of their respective Net Demand and Time Liabilities (NDTL) outstanding at the end of second preceding fortnight.
Why (MSF) is it required: Banks borrow money from RBI at MSF rate when there is an acute cash shortage or acute asset-liability mismatch. This does not carry any stigma. Size of MSF: Minimum amount of Rs. One crore and in multiples of Rs. One crore thereafter.
ii. This came into effect in may 2011. Under the Marginal Standing Facility (MSF), currently banks avail funds from the RBI on overnight basis against their excess statutory liquidity ratio (SLR) holdings.
iii. Additionally, they can also avail funds on overnight basis below the stipulated SLR up to 1 per cent of their respective Net Demand and Time Liabilities (NDTL) outstanding at the end of second preceding fortnight.
Why (MSF) is it required: Banks borrow money from RBI at MSF rate when there is an acute cash shortage or acute asset-liability mismatch. This does not carry any stigma. Size of MSF: Minimum amount of Rs. One crore and in multiples of Rs. One crore thereafter.
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