Monday, 23 September 2013

Banking Concept: Know About Marginal Standing Facility !

1) What is Marginal Standing Facility (MSF)?
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 2.5 per cent of their respective Net Demand and Time Liabilities (NDTL) outstanding at the end of second preceding fortnight. 

2) What is the current MSF rate?
In the mid-quarter review of the monetary policy , the Reserve Bank of India (RBI) reduced the Marginal Standing Facility (MSF) rate by 75 basis points to 9.50% and increased the Repo rate by 25 basis points to 7.50% with immediate effect. 

3) What is its borrowing limit?
i. With a view to enabling banks to meet the liquidity requirements of mutual funds under the RBI’s Special Repo Window announced on July 17, 2013, it has been decided to raise the borrowing limit below the stipulated SLR requirement under the MSF from 2% of NDTL to 2.5% of NDTL.

ii. The higher MSF limit of 0.5% of NDTL will be available only for the Special Repo Window. This additional limit will be available for a temporary period until further notice.

4) Why is it required?
It is required because Commercial 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.

Current Rates are as Follows:
1. Repo Rate – 7.50%
2. Reverse Repo Rate – 6.50%
3. CRR – 4%
4. MSF – 9.50%
5. Bank Rate - 9.50%
6. SLR – 23%


37 comments:

Anonymous said...

SIR please provide more and more banking awareness questions.rrb exam didn't had gk section instead it had banking awareness question.plzzzz help for futher exams

Anonymous said...

This is so helpful but I also request you sir that plz provide more and more banking and financial quizes...thank you vvery much.

Anonymous said...

nicely explained .
please explain the difference between repo rate & MSF rate in an article . tnxxx.. FROM - TMSJ

Anonymous said...

Ab sahi line par aaye ho .. Sir ji

papa said...

thanku Bankers adda ...plz update more banking awareness terms.and govt plans with foreign trade and investment..as exam patterns hs changed now...

Anonymous said...

thanx sir but sir thoda share market related awareness de dete to jyada acchaa hoga thaxs

SHAROOK Gi said...

thank s to bankers adda

venkatesh gadamsetty said...

can any one explain the below point. Additionally, they can also avail funds on overnight basis below the
stipulated SLR up to 2.5 per cent of their respective Net Demand and Time
Liabilities (NDTL) outstanding at the end of second preceding fortnight.

rohit said...

are bhaiyon kya SSC CGL mein whitner use kar sakte hein .
Northern region ki site par likha hei ki kar sakte hein .
lekin is bar maine aisa suna hei ki tier-1 jisne use kara usko ZERO de diya.

pls reply if anyone knows..

Anonymous said...

sir plz provide necessary banking awareness materials for us as the gk capsule..and best wishes for the service doing for the aspirants like us..keep going.

Unknown said...

Ghanta bhai 0 to de hi ni sakte ... Whitner use ker sakte hain maine khud kai exams main kiya tha kooch ni hooa...koi scene ni hai...

Anonymous said...

Sir rrb officer scale 1st me maine hindi attend ki thi nd last me submit kia tab english section me mere ek question visited show ho ra tha ..sir plz tell kya koi problm toh ni hogi na..plz sir plz tell me

Anonymous said...

I request 2 the team of bankersadda,,,, plzz provide us relevant computer awareness for ibps po which iz 2 b held in upcoming next month...we r in xtremly need of dat section...

RAHUL GUPTA said...

SLR 24.5% HAI

Anonymous said...

Hai nhi tha....21 ko sab change hua except CRR....so ab 23% hi hai.......

Lakshmi said...

Sir, Pls provide Banking Awareness power capsules for IBPS Po & Clerk. Kindly help us. U r giving valuable guidance to the Bank Job aspirants. we are great fans of u. pls do the need full sir. Kindly help us

Anonymous said...

*
If question attend kia nd answer pe click kara or phir uske baad mark for review kar ke save nd next nahi kia toh kya us qustion ka answer count hoga..plz tell me plz..Reply

B SRIRAM said...

what is meant by "BANK RATE"?

ajeet said...

sir, please upload the capsule for banking, just like you have uploaded the gk capsule. we will be very thankful to you. plzz

Shaurabh Srivastav said...

mgb ki vacancey aa gyi

Maverick said...

Kshetriya : Nice read... keep up the good work bankers adda !

Maverick said...

Kshetriya : Nice read... keep up the good work bankers adda !

sunita gupta said...
This comment has been removed by the author.
sunita gupta said...

This is so helpful but I also request you sir that plz provide more and more banking and financial quizes...thank you vvery much.

Read more: http://www.bankersadda.com/2013/09/banking-concept-know-about-marginal.html#ixzz2fo9YN2wq

sunita gupta said...

This is so helpful but I also request you sir that plz provide more and more banking and financial quizes...thank you vvery much.

Read more: http://www.bankersadda.com/2013/09/banking-concept-know-about-marginal.html#ixzz2fo9YN2wq

Anonymous said...

Thank you so much sir for this

India infrastructure funds said...

On reading this post I came to know about full details of marginal standing facility.

NIRAJ KUMAR SINGH said...

When any bank is taking loan from the RBI for long period of time in that case bank rate will be charged.
where as the repo and MSF is for short period of time.

NIRAJ KUMAR SINGH said...

Repo Rate is one among the tool of LAF, where at this rate bank can take loan from RBI for a short period of time, the minimum amount they can book is 5 cr, below of this they cant take where as,
MSF is also on among the technique which is used to borrow fund from the RBI for a day or for overnight. but to avail this facilities one should fulfill two basic condition that the minimum amount should me more than 1 Cr and they should have any one account in the RBI i.e (Current account & SGL account). and mainly commercial bank has this type of account with RBI.

All client of RBI is eligible to bid for Repo rate where as for the MSF only commercial bank can bid.

Anonymous said...

how many regional offices of RBI???

Anonymous said...

Sir, Pls provide Banking Awareness power capsules for IBPS Po & Clerk. Kindly help us. U r giving valuable guidance to the Bank Job aspirants. we are great fans of u. pls do the need full sir. Kindly help us

Anonymous said...

hai sir..we are in need of banking awarness...so pls provide that

Anonymous said...

what's the major different b/w Bank Rate and MSF.

Anonymous said...

hello sir,
I request you to provide us with a banking awareness capsule......for upcoming ibps po exam
and it will be great if you provide us with computer capsule as well

Anonymous said...

ya me also want the computer and banking awareness capsule

Guru Kant said...

sir , can u provide some cmp question which will near to come and also some new news related to cmp(computer)

Veeru Veeramreddy said...

MSF & Base rate is 8.75% plz correct it.....

Post a Comment