RBI extends enhanced borrowing limit for banks under MSF till March 31
The Reserve Bank of India (RBI) has extended the enhanced borrowing facility provided to banks by six months to meet liquidity shortage till March 31, 2021. The RBI vide circular dated 28 September 2020 announced that it has decided to continue with the Marginal Standing Facility (MSF) for a further period of six months i.e., till March 31, 2021.According to the Press Release, "On March 27,...
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The Reserve Bank of India (RBI) has extended the enhanced borrowing facility provided to banks by six months to meet liquidity shortage till March 31, 2021. The RBI vide circular dated 28 September 2020 announced that it has decided to continue with the Marginal Standing Facility (MSF) for a further period of six months i.e., till March 31, 2021.
According to the Press Release, "On March 27, 2020 banks were allowed to avail of funds under the marginal standing facility (MSF) by dipping into the Statutory Liquidity Ratio (SLR) by up to an additional one per cent of net demand and time liabilities (NDTL), i.e., cumulatively up to 3 per cent of NDTL. This facility, which was initially available up to June 30, 2020 was extended on June 26, 2020 up to September 30, 2020, in view of disruptions imposed by COVID-19."
It further added that this dispensation provides increased access to funds to the extent of Rs. 1.49 lakh crore, and also qualifies as high-quality liquid assets (HQLA) for the Liquidity Coverage ratio (LCR).
Under the MSF, banks can borrow overnight at their discretion by dipping into the statutory liquidity ratio. The marginal standing facility rate currently stands at 4.25%.
