economics medium MCQ

The Marginal Standing Facility (MSF) rate is generally kept ___ the Repo Rate.

  1. Equal to
  2. Lower than
  3. Higher than
  4. Unrelated to

Answer: Higher than

The MSF is a penal rate at which banks can borrow overnight funds from the RBI against their SLR portfolio when inter-bank liquidity dries up completely. It is typically kept 25 basis points (0.25%) higher than the Repo Rate to discourage routine borrowing.

Topic Banking - Monetary Policy
Exam Relevance Banking, SSC, UPSC
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