The Reserve Bank of India in its monetary policy for 2011-12, introduced the marginal standing facility (MSF), under which banks could borrow funds from RBI at 8.25%, which is 1% above the liquidity adjustment facility-repo rate against pledging government securities.
The MSF rate is pegged 100 basis points or a percentage point above the repo rate. Banks can borrow funds through MSF when there is a considerable shortfall of liquidity. This measure has been introduced by RBI to regulate short-term asset liability mismatches more effectively.
It came into effect from May 7, 2011. This will contain volatility in over-night inter-bank call money.
4 Comments on MSF – Marginal Standing Facility
pradeep
29/07/2011 at 1:38 am
differnce bw repo and msf
manoj sharma
27/03/2012 at 7:42 pm
CAN YOU TELL ME WHAT IS MSF(marginal standing facility).AND HOW IT WORKS , WHAT IS THE CAUSE OF THIS FACILITY.
Mohit Garg
12/08/2012 at 9:34 pm
Manoj, I found something regarding MSF, thought it might help you! Please follow the link.
http://wiki.answers.com/Q/What_is_marginal_standing_facility_rate
ravi
25/03/2013 at 9:11 pm
msf is fast term that is applied by the rbi.in this commercial bank can borrow money to the rbi in higher rate in less time.it is fast than so that rbi lend commercial bank on higher rate.in present repo is 7.5 but msf 8.5