Q. A facility under which scheduled commercial banks can borrow additional amount of overnight money from the Reserve Bank by dipping into their Statutory Liquidity Ratio (SLR) portfolio up to a limit at a penal rate of interest – is describes which of the following?
Answer: A
Notes:
Marginal Standing Facility (MSF), under which scheduled commercial banks can borrow additional amount of overnight money from the Reserve Bank by dipping into their Statutory Liquidity Ratio (SLR) portfolio up to a limit at a penal rate of interest.
This provides a safety valve against unanticipated liquidity shocks to the banking system.
Source: TMH Ramesh Singh
