Question

<!--td {border: 1px solid #ccc;}br {mso-data-placement:same-cell;}--> Consider the following statements:

1. Marginal Standing Facility (MSF) is an ultra short term borrowing scheme meant for lending overnight to banks to meet liquidity shortfalls.
2. MSF rate is pegged at a certain percentage point above the repo rate..

Which of the above statements is/are correct?

• A. 1 only
• B. 2 only
• C. Both 1 and 2
• D. Neither 1 Nor 2

Answer 1

The correct option is C Both 1 and 2

<!--td {border: 1px solid #ccc;}br {mso-data-placement:same-cell;}--> Marginal Standing Facility (MSF) is an ultra short term borrowing scheme meant for lending overnight to banks to meet liquidity shortfalls.
MSF rate is usually pegged at a certain percentage point above the repo rate..
MSF is meant only for scheduled commercial banks in which they can borrow from RBI for one day period to meet their liquidity shortfalls .