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Published on 29/06/2020 10:34:20 AM | Source: LKP Securities Ltd

RBI Decides To Extend Enhanced Borrowing Limit Of banks Under MSF Till September 30

Posted in Economy News| #RBI #Economy #Banking Sector

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The Reserve Bank of India (RBI) has decided to extend the enhanced borrowing facility provided to the banks under the marginal standing facility (MSF) to meet their liquidity shortages till September 30, 2020, amid the ongoing economic woes created by the coronavirus pandemic.

The RBI, as a temporary measure, had increased the borrowing limit of scheduled banks under the MSF scheme to 3% from 2% of their Net Demand and Time Liabilities (NDTL) with effect from March 27, 2020. Under the MSF, banks can borrow overnight funds at their discretion by dipping into the Statutory Liquidity Ratio (SLR). This relaxation, which was granted till June 30, 2020, has now been extended till September 30.

It said banks may continue to access overnight funds under the MSF against their excess SLR holding. The marginal standing facility rate currently stands at 4.25%. The RBI has also extended the relaxation on the minimum daily maintenance of the Cash Reserve Ratio (CRR) at 80% for a further period of three months till September 25, 2020. This was done in view of the continuing of hardships faced by banks in terms of social distancing of staff and consequent strains on reporting requirements.

 

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