Marginal Standing Facility

The RBI introduced the Marginal Standing Facility (MSF) window in the fiscal year 2011-12 to offer emergency liquidity to banks in times of inter-bank liquidity shortages. Banks have the option to borrow overnight funds from the RBI by pledging government securities as collateral. The MSF rate represents the interest rate applied by the RBI for this facility, and it is higher than the repo rate. Acting as an upper limit for the overnight interbank rate, the MSF rate plays a role in stabilising the money market.