{"id":93731,"date":"2025-06-01T11:56:22","date_gmt":"2025-06-01T11:56:22","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=93731"},"modified":"2025-06-01T11:56:22","modified_gmt":"2025-06-01T11:56:22","slug":"the-marginal-standing-facility-is-a-window-for-banks-to-borrow-funds","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/the-marginal-standing-facility-is-a-window-for-banks-to-borrow-funds\/","title":{"rendered":"The “Marginal Standing Facility” is a window for banks to borrow funds"},"content":{"rendered":"

The “Marginal Standing Facility” is a window for banks to borrow funds from the Reserve Bank of India at<\/p>\n

[amp_mcq option1=”the repo rate” option2=”a rate lower than the repo rate” option3=”a rate higher than the repo rate” option4=”zero interest rate” correct=”option3″]<\/p>\n

\n
\n
This question was previously asked in<\/div>\n
UPSC Combined Section Officer – 2021-22<\/div>\n<\/div>\n
Download PDF<\/a>Attempt Online<\/a><\/div>\n<\/div>\n
\nThe correct answer is C. The Marginal Standing Facility (MSF) rate is higher than the repo rate.
\n<\/section>\n
\nThe 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 limit. It was introduced as a safety valve against unanticipated liquidity shocks. The rate charged under MSF is a penal rate, typically higher than the prevailing repo rate.
\n<\/section>\n
\nThe MSF rate is usually pegged 25 or 50 basis points above the repo rate. For instance, if the repo rate is 6.50%, the MSF rate might be 6.75%. This higher rate discourages banks from using MSF frequently and encourages them to manage their liquidity prudently. The repo rate is the rate at which commercial banks borrow money from the RBI by selling their securities to the central bank under a repurchase agreement.
\n<\/section>\n","protected":false},"excerpt":{"rendered":"

The “Marginal Standing Facility” is a window for banks to borrow funds from the Reserve Bank of India at [amp_mcq option1=”the repo rate” option2=”a rate lower than the repo rate” option3=”a rate higher than the repo rate” option4=”zero interest rate” correct=”option3″] This question was previously asked in UPSC Combined Section Officer – 2021-22 Download PDFAttempt … <\/p>\n

Detailed SolutionThe “Marginal Standing Facility” is a window for banks to borrow funds<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1090],"tags":[1484,1120,1190],"class_list":["post-93731","post","type-post","status-publish","format-standard","hentry","category-upsc-combined-section-officer","tag-2021-22","tag-economic-development","tag-money-banking","no-featured-image-padding"],"yoast_head":"\nThe "Marginal Standing Facility" is a window for banks to borrow funds<\/title>\n<meta name=\"description\" content=\"The correct answer is C. The Marginal Standing Facility (MSF) rate is higher than the repo rate. The 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 limit. It was introduced as a safety valve against unanticipated liquidity shocks. The rate charged under MSF is a penal rate, typically higher than the prevailing repo rate.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/the-marginal-standing-facility-is-a-window-for-banks-to-borrow-funds\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The "Marginal Standing Facility" is a window for banks to borrow funds\" \/>\n<meta property=\"og:description\" content=\"The correct answer is C. The Marginal Standing Facility (MSF) rate is higher than the repo rate. The 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 limit. It was introduced as a safety valve against unanticipated liquidity shocks. 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The Marginal Standing Facility (MSF) rate is higher than the repo rate. The 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 limit. It was introduced as a safety valve against unanticipated liquidity shocks. 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The Marginal Standing Facility (MSF) rate is higher than the repo rate. The 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 limit. It was introduced as a safety valve against unanticipated liquidity shocks. 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