Marginal Standing Facility
Definition
Marginal Standing Facility — Meaning, Definition & Full Explanation
The Marginal Standing Facility (MSF) is an emergency overnight borrowing scheme for commercial banks in India, introduced by the Reserve Bank of India (RBI) in 2011. It allows banks to borrow funds from the RBI by pledging a limited amount of government securities, even if they have exhausted their eligible securities under the Liquidity Adjustment Facility (LAF), at a penal rate higher than the prevailing repo rate. This facility serves as a safety valve to prevent acute short-term liquidity mismatches and reduce volatility in the interbank overnight money market.
What is Marginal Standing Facility?
The Marginal Standing Facility (MSF) is a special window provided by the Reserve Bank of India (RBI) for commercial banks to borrow funds overnight