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      Question

      What is the maximum amount that can be borrowed by

      banks under the Marginal Standing Facility (MSF) route?
      A 1% of the Net Demand and Time Liabilities (NDTL) Correct Answer Incorrect Answer
      B 2% of NDTL Correct Answer Incorrect Answer
      C 5% of NDTL Correct Answer Incorrect Answer
      D 10% of NDTL Correct Answer Incorrect Answer
      E None of the above Correct Answer Incorrect Answer

      Solution

      The MSF was introduced by the Reserve Bank of India in 2011 in order to help banks manage the cash flow mismatch on overnight basis. The banks can approach RBI for loan under MSF facility in an interest rate that will be higher than the repo rate. Banks can borrow upto 2% of the total NDTL under this route whereas the minimum amount is Rs 1 crore.

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