Indian History

Marginal Standing Facility

Marginal Standing Facility (MSF):
A facility under which scheduled commercial banks can borrow additional amount of overnight money from the Reserve Bank by dipping into their Statutory Liquidity Ratio (SLR) portfolio up to a limit (currently two per cent of their net demand and time liabilities deposits) at a penal rate of interest, currently 50 basis points above the repo rate.
This provides a safety valve against unanticipated liquidity shocks to the banking system.
MSF rate and reverse repo rate determine the corridor for the daily movement in the weighted average call money rate.
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