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RBI Extends Enhanced Borrowing Limit For Banks Under MSF By 6 Months

By Staff
|

The Reserve Bank of India (RBI) has extended the enhanced borrowing facility provided to banks to meet liquidity shortage till 31 March 2021.

The central bank, as a temporary measure, had increased the borrowing limit for scheduled banks under the marginal standing facility (MSF) scheme from 2 percent to 3 percent of their Net Demand and Time Liabilities (NDTL) with effect from 27 March 2020.

RBI Extends Enhanced Borrowing Limit For Banks Under MSF By 6 Months
 

The facility, which was initially available up to 30 June 2020, was later extended up to 30 September 2020 in view of the economic damage caused by disruptions from the COVID-19 pandemic.

"With a view to providing comfort to banks on their liquidity requirements as also to enable to continue to meet LCR requirements, it has been decided to continue with the MSF relaxation for a further period of six months, i.e., up to March 31, 2021," RBI said in a statement.

This dispensation, it added, 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 (SLR).

The MSF rate currently stands at 4.25 percent.

Read more about: rbi
Story first published: Tuesday, September 29, 2020, 8:37 [IST]
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