Question

    The rate at which scheduled commercial banks can borrow

    additional amounts of overnight money from the Reserve Bank is 
    A Hot Money rate Correct Answer Incorrect Answer
    B Bank rate Correct Answer Incorrect Answer
    C Marginal standing facility rate Correct Answer Incorrect Answer
    D Reverse repo rate Correct Answer Incorrect Answer

    Solution

    The Marginal Standing Facility (MSF) is a window for scheduled commercial banks to borrow overnight money from the RBI against government securities. The MSF rate is typically higher than the Repo rate and is used for emergency funding requirements. This facility allows banks to borrow additional funds when they face a liquidity crunch beyond the limits of the regular Repo operations.

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