Marginal Standing Facility (MSF) Rate
Marginal Standing Facility (MSF) Rate

1 Yr ago | 5 Yr ago | 10 Yr ago |
4.25% | 6.50% | 9.00% |
Major Monetary Policy Rates And Reserve Requirements
Chart of Marginal Standing Facility (MSF) Rate
Current MSF Rate
The current Marginal Standing Facility (MSF) Rate is 4.25%
. The Marginal Standing Facility (MSF) Rate last witnessed a change in its level on May 22, 2020 when it declined by 0.40% from its previous level of 4.65%.As of today, i.e. on July 05, 2022, the Policy Rates which include Repo Rate stood at 4.00%, Reverse Repo Rate at 3.35%, Marginal Standing Facility (MSF) Rate at 4.25% and Bank Rate at 4.25%. The Reserve Ratios which include Cash Reserve Ratio (CRR) stood at 3.00% and the Statutory Liquidity Ratio (SLR) at 18.00%, according to data of Major Monetary Policy Rates and Reserve Requirements released by the Reserve Bank of India.
Marginal Standing Facility (MSF) Rate Comparision Chart
Marginal Standing Facility (MSF) Rate
Marginal Standing Facility (MSF) was announced by the RBI in the Monetary Policy for the year 2011-12. This facility is effective from May 9, 2011.
Under this facility, the eligible entities may borrow up to two per cent of their respective Net Demand and Time Liabilities (NDTL). In the event, the banks’ SLR holding falls below the statutory requirement up to two per cent of their NDTL, banks will not have the obligation to seek a specific waiver for default in SLR compliance arising out of use of this facility.
The MSF facility is for one day except on Fridays when the facility is for three days or more, maturing on the following working day.
Eligibility
All Scheduled Commercial Banks having Current Account and SGL Account with Reserve Bank, Mumbai are eligible to participate in the MSF Scheme.
Rate of Interest
During inception, i.e. in May 2011 it was decided by RBI that the rate of interest on amount availed under this facility will be 100 basis points above the LAF repo rate, or as decided by the Reserve Bank from time to time. In April 2016, RBI narrowed the policy rate corridor from +/-100 basis points (bps) to +/- 50 bps, thus MSF was fixed at 50 basis points above repo rate. In April 2017, RBI again narrowed the LAF corridor from +/-50 basis points (bps) to +/- 25 bps, since then marginal standing facility (MSF) rate is fixed 25 basis points above repo rate.
Eligible Securities
MSF is undertaken in all SLR-eligible transferable Government of India (GoI) dated Securities/Treasury Bills and State Development Loans (SDL). Oil Bonds issued by Government of India also qualify as eligible securities for Marginal Standing Facility (MSF).
Pricing of all securities including Treasury Bills is taken at face value for MSF operations by Reserve Bank. Accrued interest as on the date of transaction is ignored for the purpose of pricing of securities.
Margin Requirement
A margin of 5 per cent is applied in respect of GoI dated securities and Treasury Bills. In respect of SDLs, a margin of 10 per cent is applied by the RBI. Thus, the amount of securities offered on acceptance of a request for Rs.100 is Rs.105 (face value) of GoI dated securities and Treasury Bills or Rs.110 (face value) of SDLs.
Mechanics of operations
The MSF requests is submitted by the SCBs to RBI electronically in the Negotiated Dealing System (NDS). On acceptance of MSF requests, the applicant’s Repo Constituents’ Subsidiary General Ledger Account (RC SGL) is debited by the required quantum of securities and credited to Bank’s RC SGL Account. Accordingly, the applicant’s current account is credited with the MSF application amount. The transactions is reversed in the second leg. In case the second leg falls on a holiday, the reversal date is the next working day.
RBI introduced Straight Through Processing (STP) MSF operations with effect from August 3, 2015. This enables eligible participants to receive the credit or debit immediately on placement of the bids or offers, subject to the availability of the collateral or funds, within the prescribed time window.
Eligible participants can, as hitherto, place multiple bids/offers in the respective liquidity facilities. Settlement of the transaction is automatic and immediate after the placement of the bid/offer. The transactions undertaken by a participant is final and hence request for cancellation of bids or offers is not entertained.
Timing
Minimum request size
Settlement of Transactions
The Federal Reserve has a responsibility to ensure the safety and soundness of financial institutions and to contain systemic risks in financial markets.
~ Bernie Sanders