Explain the following instruments used by Reserve Bank of India for implementing monetary policy: Marginal Standing Facility.
CS Executive · Economic, Business and Commercial Laws · PYQS · June 2023
Explain the following instruments used by Reserve Bank of India for implementing monetary policy: Marginal Standing Facility.
Answer & Explanation:
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 at a penal rate of interest. This provides a safety valve against unanticipated liquidity shocks to the banking system.
Topics: Reserve Bank of India
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