>[!summary]- Marginal Standing Facility (MSF), 2011 > - [2011](#2011) > - [About MSF](#About%20MSF) > - [Eligibility/Participants](#Eligibility/Participants) > - [Margin and Collateral](#Margin%20and%20Collateral) > - [Timings](#Timings) > - [Settlement](#Settlement) > - [Timeline of changes in MSF rate](#Timeline%20of%20changes%20in%20MSF%20rate) > - [2012](#2012) > - [Data Releases](#Data%20Releases) > - [Related Directions](#Related%20Directions) > - [References](#References) <br> >**Marginal standing facility** shall mean the facility under which the eligible banks can avail liquidity support from the Reserve Bank against excess SLR holdings. Additionally, they can also avail overnight liquidity by dipping into their stipulated/mandatory SLR, up to a certain percent of their respective NDTL outstanding at the last day of the second preceding fortnight. >[Fortnight](RBI_Notification_20251211_Reserve%20Bank%20of%20India%20(Commercial%20Banks%20–%20Cash%20Reserve%20Ratio%20and%20Statutory%20Liquidity%20Ratio)%20Amendment%20Directions,%202025.pdf) means the period from the first day to the fifteenth day of each calendar month or sixteenth day to the last day of each calendar month, both days inclusive. <br> ## 2011 1. [November 25, 2005](RBI_Press%20Release_20051125_RBI%20to%20introduce%20Second%20LAF%20from%20November%2028.pdf) - RBI introduced [Second LAF](Liquidity%20Adjustment%20Facility%20(LAF).md#November%202005) on November 25, 2005 1. Apart from this, RBI has also conducted additional LAFs and Special LAFs, whenever required, like on March 31, 2006 between 9.00 p.m. to 9.30 p.m. to facilitate funds management by banks on account of the year-end closing on March 31, 2006 falling on a reporting Friday. 2. [March 15, 2011](RBI_Group:Committee_20110315_Report%20of%20the%20Working%20Group%20on%20Operating%20Procedure%20of%20Monetary%20Policy_Chairman-Deepak%20Mohanty.pdf)- In the Report of the Working group on Operating Procedure of Monetary Policy (Chairman-Deepak Mohanty), it was suggested: 1. a collateralised Exceptional Standing Facility (ESF) at the Bank Rate up to one per cent of the NDTL of banks carved out of their required SLR portfolio be instituted. 3. [May 3, 2011](RBI_MPS_201105_FY11-12_1.pdf) - In the Monetary Policy Statement for 2011-12, based on the suggestions of the Working Group to Review the Operating Procedure of Monetary Policy, chaired by then Executive Director, Deepak Mohanty, [Dr. D. Subbarao](Duvvuri%20Subbarao%20(2008%20to%202013).md) announced the [new changes](RBI_MPS_201105_FY11-12_1.pdf#page=2&selection=65,0,65,49) in the operating procedure of monetary policy in the in the Annual Monetary Policy Statement 2011-12. 1. A new Marginal Standing Facility (MSF) was announced effective from the fortnight beginning on May 07, 2011. 4. [May 9, 2011](Liquidity%20Adjustment%20Facility%20(LAF).md#2010-2011) - MSF was [operationalized](RBI_Press%20Release_20110509_Marginal%20Standing%20Facility%20–%20Scheme.pdf) by RBI for all participants of [LAF](Liquidity%20Adjustment%20Facility%20(LAF).md) (except SPDs) ==on standing basis==. But as state above, RBI had already been providing additional liquidity up to 1 to 2 per cent of Net Demand and Time Liabilites through second LAF but on an ==_ad hoc_ basis== at the repo rate. 1. Here NDTL (for SLR) = Liabilities to Others $+$ Net Inter-bank Liabilities (Liabilities to the Banking System – Assets with the Banking System, *if positive or 0 if negative)*. 5. [May 19, 2011](RBI_Press%20Release_20110519_Second%20LAF%20on%20Reporting%20Fridays.pdf) - With this new scheme, as a part of the Modified Operating Procedures of Monetary Policy, the second LAF on reporting Fridays, which was operated on was discontinued. 6. [April 17, 2012](RBI_Notification_20120417_Maintenance%20of%20Statutory%20Liquidity%20Ratio%20(SLR)%20–%20Marginal%20Standing%20Facility%20(MSF).pdf) - In order to provide greater liquidity cushion, RBI decided to raise the borrowing limit of SCBs under the MSF from 1% to 2% of their NDTL outstanding at the end of the second preceding fortnight with immediate effect. 7. **RBI Special Repo-Window for Mutual Funds** 1. [July 17, 2013](RBI_Notification_20130717_%20Special%20Repo%20Window%20for%20Liquidity%20Requirement%20of%20Mutual%20Funds.pdf) - RBI announced a special 3-day repo at an interest rate of 10.25 per cent for a notified amount of Rs. 25,000 crore with a view to enabling banks to meet the liquidity requirements of mutual funds. 1. RBI's aggressive measures to defend the falling rupee by tightening bank liquidity had caused yields to surge, which prompted institutional investors to pull funds from debt schemes causing liquidity shortage with AMCs. 2. [July 17, 2013](RBI_20130717_Maintenance%20of%20SLR%20–%20MSF.pdf) - With a view to enabling banks to meet the liquidity requirements of mutual funds under the RBI’s Special Repo Window announced on July 17, 2013, it has been decided to raise the borrowing limit below the stipulated SLR requirement under the MSF from 2% per cent of NDTL to 2.5% of NDTL. So banks could borrow additional 0.5% of their NDTL without collateral. In other words, shortfall in SLR of up to 0.5% of NDTL was allowed while providing liquidity to MFs. 3. [Oct 29, 2013](RBI_Press%20Release_20131031_RBI’s%20Special%20Repo%20Window%20for%20Liquidity%20Requirements%20of%20Mutual%20Funds.pdf) - RBI decided to close the window with immediate effect. 2. [October 15, 2008](RBI_Notification_20081015_Maintenance%20of%20Statutory%20Liquidity%20Ratio%20(SLR)%20-%20Additional%20Liquidity%20Support%20under%20Liquidity%20Adjustment%20Facility%20(LAF).pdf) - RBI allowed banks to borrow for the purpose of meeting the liquidity requirements of mutual funds, to the extent of up to 0.5% of their net demand and time liabilities (NDTL) under the LAF without collateral. so a shortfall in SLR of up to 0.5% of NDTL was allowed. 3. April 17, 2020 - RBI had announced ₹50,000 crore Special Liquidity Facility for Mutual Funds (SLF-MF), but against eligible collateral and no relaxation against the SLR requirement was provided. So no shortfall on SLR was allowed. ## About MSF 1. Banks are allowed to borrow under the repo window of the LAF against the collateral of securities which are more than the SLR and LCR requirement. *Note that securities held by RBI under repo is not considered as SLR as it is an encumbered investment but borrowed/received securities from RBI under reverse repo is considered as SLR.* 2. Banks can also avail funds from RBI on overnight basis, under Marginal Standing Facility (MSF), against their excess [[SLR - Statutory Liquidity Ratio|SLR]] holdings. 3. ==Additionally, MSF also allows banks to borrow overnight (T+1) up to a [certain portion](https://rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=13160#:~:text=C.%20Marginal%20Standing%20Facility%20(MSF)) of their net demand and time liabilities (NDTL) at the end of the second preceding fortnight, by dipping into the mandatory SLR, that is without depositing excess SLR eligible securities for collateral. 4. The borrowing rate, called the MSF rate, is marginally higher than the repo rate, and hence referred to as penal rate. 5. It became the upper floor of the corridor around the call money rate. RBI aims to keep the weighted average overnight call money rate which is the operating target of its monetary policy, aligned with the repo rate. 6. As on Nov-2024, the MSF rate is 25 basis points above the repo rate and the width of the corridor around the target rate of monetary policy, viz. call money rate, is 50 bps. 7. It is to be noted that the corridors are above and below the repo rate and not exactly equal to repo rate. This allows price discovery and trading in the inter-bank market. 8. As bank have a window other than LAF to access funds from RBI and also at a fixed rate for one-day, abrupt volatility in one-day lending rates in the interbank market, especially due to shortage of funds, has been reduced. 9. When it reduces the MSF rate, RBI uses one of its "available option" to push more funds into the banking system. ### Eligibility/Participants 1. Participants: All [[Liquidity Adjustment Facility (LAF)#^d27841|LAF eligible participants]] except SDPs can avail the MSF scheme. 1. All scheduled commercial banks having current account and subsidiary general ledger (SGL) account with the Reserve Bank, Mumbai are eligible to participate in the MSF Scheme. 2. [MSF for Scheduled UCBs](https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11361&Mode=0) - Circular dated August 16, 2018 specified the eligibility criteria for granting Scheduled UCBs access to MSF for managing their liquidity. It may be mentioned that access to LAF was already provided to them in 2014 3. Standalone [Primary Dealers](Primary%20Dealers%20(PDs).md#Central%20Bank%20Liquidity%20for%20Standalone%20Primary%20Dealers) (SPDs) are not allowed to avail MSF. ### Margin and Collateral 1. **Collateral:** It is carved out of the required [[SLR - Statutory Liquidity Ratio|SLR]]. So as the banks’ SLR holdings fall below the statutory requirement, banks will not have the obligation to seek a specific waiver for default in SLR compliance arising out of use of this facility in terms of notification issued under sub section (2A) of Section 24 of the Banking Regulation Act, 1949. 1. Now sub-section (8) of Section 24 of the Banking Regulation Act, 1949, the RBI is allowed to waive payment of the penal interest on account of default in the maintenance of the SLR by a banking company. 2. Clause (8) of Section 24 of the BR Act, 1949 reads as under: Notwithstanding anything contained in this section, if the Reserve Bank is satisfied, on an application in writing by the defaulting banking company, that the banking company had sufficient cause for its failure to comply with the provisions of clause (a) of sub-section (2-A), the Reserve Bank may not demand the payment of the penal interest. 2. **Margin** It is same for MSF/[[Liquidity Adjustment Facility (LAF)#^986f9f|LAF]] ^c81403 1. [March 19, 2013](RBI_Notification_20130319_Liquidity%20Adjustment%20Facility%20and%20Marginal%20Standing%20Facility.pdf) 1. Margin under the Liquidity Adjustment Facility and Marginal Standing Facility was revised 2. [November 25, 2016](RBI_Notification_20161125_Liquidity%20Adjustment%20Facility%20–%20Oil%20Marketing%20Companies’%20Government%20of%20India%20Special%20Bonds%20(Oil%20Bonds)%20as%20eligible%20collateral%20under%20LAF%20MSF%20and%20Removal%20of%20Margin%20Requirement%20for%20Reverse%20Repos.pdf) 1. Oil Marketing Companies’ Government of India Special Bonds (Oil Bonds) became eligible as collateral under LAF/MSF and 2. Margin requirement for the securities provided by RBI as collateral to the successful participants in Reverse Repo operations (including Term Reverse Repos 3. [June 6, 2018](RBI_Notification_20180606_Review%20of%20margin%20requirements%20under%20the%20Liquidity%20Adjustment%20Facility%20and%20Marginal%20Standing%20Facility.pdf) - Effective from August 1, 2018, RBI announced a ==Review of margin requirements under the LAF and MSF.== 1. the initial margin on collateral was fixed on the basis of its residual maturity. 2. Central Government Dated Securities (including Oil Bonds and Treasury Bills) - 0.5% to 4% per cent in five different buckets of residual maturity. 3. SDLs (unrated) - 2.5 per cent to 6.0 per cent for the same maturity buckets. 4. SDLs (rated) - 1.0 per cent lower than that of other SDLs for the same maturity buckets, i.e., in the range of 1.5 per cent to 5.0 per cent. This was done to incentivise the state governments to get SDLs a public rating. 5. [Before this]( Harmonising Liquidity Adjustment Facility (LAF) Haircuts with International Standards), an initial margin of 4 per cent and 6 per cent was applied on Central Government Securities (including T-bills) and State Development Loans (SDLs) respectively, submitted as collaterals by participants in Repo/MSF. Since the margin requirement is similar for all eligible securities irrespective of residual maturity, this system did not differentiate the market risk across securities. ### Timings 1. MSF facility is available from after the closure of call money market hours, to not let banks borrow from RBI as the first choice but rather utilise inter-bank market for funds. It is thus resort of last choice for funds for banks. 2. [May 9, 2011](https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=6394&Mode=0) - 3.30 PM to 4.30 PM working days in Mumbai, excluding Saturdays 3. [[RBI_Press Release_20110809_Reverse Repo Window under Liquidity Adjustment Facility and Marginal Standing Facility – Change of Timing.pdf|August 9, 2011]] - 4.30 PM to 5.00 PM on all working days in Mumbai (excluding Saturdays) 4. [[RBI_Press Release_20120711_Reverse Repo Window under Liquidity Adjustment Facility and Marginal Standing Facility – Change of Timing.pdf|July 11, 2012]] - 4.45 pm to 5.15 pm on all working days in Mumbai (excluding Saturdays) 5. ==[[RBI_Review_20131029_Second Quarter Review of Monetary Policy 2013-14 - Statement_Dr. Raghuram G. Rajan.pdf|Oct 29, 2013]] - Between 7.00 pm and 7.30 pm [instead](https://rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=8545) of the existing timings of 4.45 pm to 5.15 pm== 1. Given the difficulty of settling  electronic funds transfers when the markets have closed, Dr. Raghuram G. Rajan, Governor, Reserve Bank of India, announced in the Second Quarter Review of Monetary Policy 2013-14 revision of the timing of MSF operations. 2. With effect from November 5, 2013, they are conducted between 7.00 pm and 7.30 pm instead of between 4.45 pm and 5.15 pm. 6. [Nov 24, 2015](RBI_Press%20Release_20151124_RBI%20extends%20Window%20Timings%20of%20Fixed%20Rate%20LAF%20and%20MSF%20Operations.pdf) - Between 5:30 PM and 7:30 PM (LAF fixed rate repo/reverse repo and MSF). 7. [Dec 13, 2019](https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=48884) - Additional window between 23:00 hrs to 23:59 hrs, along with 5:30 PM to 7:30 PM. 8. [March 30, 2020](https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=49599) - Between 09:00 AM and 11:59 PM, changed from between 5:30 PM and 11:59 PM after NEFT system was made available on 24x7 basis from December 16, 2019. 9. [Feb 10, 2022](https://rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=53250) - Between 5:30 PM to 11:59 PM (including SDF), changed from between 09:00 AM and 11:59 PM. 10. [June 30, 2025](RBI_Press%20Release_20250630_Standing%20Deposit%20Facility%20and%20Marginal%20Standing%20Facility%20–%20Change%20in%20Timings.pdf) - ==7 PM to 11:59 PM on all days including holidays (MSF/SDF)==, to enable the frictionless functioning of the payment and settlement system, effective July 1, 2025 1. [June 25, 2025](RBI_Press%20Release_20250625_Recommendations%20of%20the%20Working%20Group%20on%20Comprehensive%20Review%20of%20Trading%20and%20Settlement%20Timings%20of%20Various%20Markets%20Regulated%20by%20the%20Reserve%20Bank.pdf) - This was done after the market timings for call money was extended to 7:00 PM from 5:30 pm on June 25, 2025 and accordingly, the revised market hours for call money was changed to between 9:00 AM to 7:00 PM. ### Settlement 1. On August 3, 2015, RBI introduced Straight Through Processing (STP) of fixed rate Liquidity Adjustment Facility (LAF) and Marginal Standing Facility (MSF) Operations with effect from August 3, 2015. 2. Access to SDF/MSF (1st leg) is available on all days, including Sundays and holidays. But, in case of intervening holidays, repayment is made on the next working day (T+2), except on Fridays when the facility will be for three days (T+3) or more, maturing on the following working day. 1. On [[RBI_Press Release_20231227_Reversal of Standing Deposit Facility (SDF) and Marginal Standing Facility (MSF) during weekends: holidays.pdf|December 27, 2023]], it was announced that effective December 30, 2023, even the reversal (second leg) of liquidity facilities under both MSF/SDF would be allowed on weekends and holidays. 1. First, the SDF and MSF are only available after the end of money market hours. Though there have been days where few banks have deposited funds with the RBI under SDF when there are others borrowing under MSF. This simultaneous high utilisation of both MSF and SDF by the banks was somewhat addressed *by allowing reversal of SDF and MSF even on weekends and holidays.* 2. Bids under Automated Sweep-In and Sweep-Out (ASISO) facility, which was [introduced](https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=50177) on Aug 06, 2020, are reversed on the next calendar day. 3. Manual bids - In the case of a manual bid placed through the e-Kuber portal, the choice with regard to tenor is exercisable with effect December 29, 2023 by the eligible entities at the time of placing of bid. 4. So the tenor can be 1 day to the next working day, like 1-3 days (Friday to Monday). 3. The settlement of all applications received under the MSF scheme will take place on the same day after the closure of the window for acceptance of applications. ### Timeline of changes in MSF rate 1. Initially, under the MSF, scheduled commercial banks could borrow overnight up to 1% of their NDTL against SLR. 1. After a period of 9 years, on [13-Feb-2012](https://rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=25954), the Bank Rate was aligned with the MSF rate. 2. On 2011, the MSF rate was 100 bps above the repo rate. 3. On [April 17, 2012](https://rbi.org.in/scripts/PublicationsView.aspx?Id=22517#:~:text=The%20Marginal%20Standing%20Facility%20(MSF)%20was%20introduced%20from%20the%20fortnight%20beginning%20May%207%2C%202011), the borrowing limit was raised to up to 2% 4. On July 15, 2013, the MSF rate was increased to 300 bps above the repo rate 5. On September 20, 2013, the rate was reduced to 200 basis points on September 20, 2013 and further to 150 bps on October 7, 2013. 6. On October 29, 2013, the spread was lowered again to 100 basis points 7. On April 5, 2016, the spread was reduced further to 50 basis points. 8. From April 6, 2017, the MSF rare is 25 basis points above the repo rate. 9. On [March 27, 2020](https://rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=11838), for a period up to June 30, 2020, it was temporarily increased to 3% and then again up to September 30, 2020 on [June 26, 2020](https://rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=11921). 10. On Sept 28, 2020, it was extended to March 31, 2021. 11. On [February 05, 2021](https://rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=12021), it was further extended till September 30, 2021 and then 12. On August 06, 2021, it was again extended to December 31, 2021. 13. On [December 8, 2021](https://www.rbi.org.in/commonman/Upload/English/PressRelease/PDFs/PR1321DDD61085A1D64D0DB682E6ADA64E9D1A.pdf), effective from January 1, 2022, it was reduced to up to 2% of NDTL instead from 3%. 14. As of Dec-2025, banks can borrow overnight up to 2% of their net demand and time liabilities. ## 2012 1. [13-Feb-2012](https://rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=25954) - After a period of 9 years, the RBI [aligned](Bank%20Rate.md#2012%20-%20Bank%20Rate%20aligned%20to%20MSF%20Rate) the bank rate with Marginal Standing Facility (MSF) rate, which in turn is linked to the policy repo rate under the LAF. ## Data Releases 1. Daily Money Market Operations 1. Daily Operations & Outstanding(both)- Marginal Standing Facility (MSF) & Standing Deposit Facility (SDF) 2. Monthly RBI Bulletin - RBI's Standing Facilities ## Related Directions 1. [Master Directions](Cash%20Reserve%20Ratio%20(CRR).md#Master%20Directions) for CRR and SLR # References 1. [May 9, 2011](https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=6394&Mode=0) - Marginal Standing Facility – Scheme 2. [Nov 28, 2025](https://www.rbi.org.in/scripts/BS_ViewMasDirections.aspx?id=13160) - Reserve Bank of India (Commercial Banks – Cash Reserve Ratio and Statutory Liquidity Ratio) Directions, 2025