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      Question

      In India, the Marginal Standing Facility (MSF) is a tool

      used by the Reserve Bank of India (RBI) to lend to commercial banks at an overnight rate. What is the standard rate at which MSF is provided?
      A 0.25% above the repo rate Correct Answer Incorrect Answer
      B 0.50% below the repo rate Correct Answer Incorrect Answer
      C 1% above the repo rate Correct Answer Incorrect Answer
      D 1.50% above the repo rate Correct Answer Incorrect Answer
      E At par with the repo rate Correct Answer Incorrect Answer

      Solution

      MSF allows scheduled commercial banks to borrow overnight funds from RBI against government securities. The MSF rate is typically 0.25% higher than the repo rate.

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