Which of the following is incorrect with respect to the Marginal Standing Facility MSF ........

Economic and Social Issues Monetary and Fiscal Policy

Which of the following is incorrect with respect to the Marginal Standing Facility (MSF)

It is 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.

Currently the limit of borrowing under this facility is two per cent of net demand and time liabilities deposits (NDTL) of commercial banks

Rate of interest for this facility is currently 25 basis points above the repo rate

This provides a safety valve against unanticipated liquidity shocks to the banking system

None of the options given above

छोटे Courses बड़े Results

Master Monetary and Fiscal Policy

Prepare through Micro-courses

Try Now

Explanation:

MSF is 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 (NDTL) at a penal rate of interest, currently 25 basis points above the repo rate. This provides a safety valve against unanticipated liquidity shocks to the banking system.