Q: The terms ‘Marginal Standing Facility Rate’ and ‘Net Demand and Time Liabilities’, sometimes appearing in news, are used in relation to
a) banking operations
b) communication networking
c) military strategies
d) supply and demand of agricultural products
The Correct Answer is Option 1.
Marginal Standing Facility (MSF)
- It is the rate at which banks borrow funds overnight from the RBI against approved government securities.
- Under MSF, banks can borrow funds up to one percentage of their net demand and time liabilities (NDTL).
- It used by banks to borrow from the Reserve Bank of India in an emergency situation when inter-bank liquidity dries up completely. Hence, Option 1 is correct.
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