Marginal Standing Facility (MSF) is a facility under which scheduled commercial banks can borrow additional funds overnight from the Reserve Bank of India (RBI) by dipping into their Statutory Liquidity Ratio (SLR) portfolio up to a certain limit. The MSF Rate is the interest rate charged by the RBI for this facility, and it is a key monetary policy tool. Net Demand and Time Liabilities (NDTL) represent the total liabilities of a bank (deposits, borrowings, etc.) minus its deposits with other banks and other approved assets. It is the base on which banks' reserve requirements like the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) are calculated by the RBI.
The terms 'Marginal Standing Facility Rate' and 'Net Demand and Time Liabilities', sometimes appearing in news, are used in relation to
Asked in UPSC IAS 2014 · Topic: Money & Banking (Monetary Policy: Objectives, Instruments (quantitative and qualitative), and Transmission Mechanism)
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