Question

The MSF rate is pegged _____ basis points or a percentage point above the repo rate?

A 45 Correct Answer Incorrect Answer
B 50 Correct Answer Incorrect Answer
C 75 Correct Answer Incorrect Answer
D 90 Correct Answer Incorrect Answer
E 100 Correct Answer Incorrect Answer

Solution

Banks borrow from the central bank by pledging government securities at a rate higher than the repo rate under liquidity adjustment facility or LAF in short. The MSF rate is pegged 100 basis points or a percentage point above the repo rate.

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