The terms ‘Marginal Standing Facility Rate’ and ‘Net Demand and Time L

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The terms ‘Marginal Standing Facility Rate’ and ‘Net Demand and Time Liabilities’, sometimes appearing in news, are used in relation to

banking operations
communication networking
military strategies
supply and demand of agricultural products
This question was previously asked in
UPSC IAS – 2014
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The correct option is A. The terms ‘Marginal Standing Facility Rate’ and ‘Net Demand and Time Liabilities’ are used in relation to banking operations.
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.
Both MSF Rate and NDTL are specific terms used in the context of banking regulations, monetary policy, and the operations conducted by commercial banks under the purview of the central bank (RBI) in India. They are not related to communication networking, military strategies, or supply and demand of agricultural products.

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