| Consider the following Statements about Marginal Standing Facility (MSF): |
| 1. It is basically a borrowing window for banks maintained By RBI. |
| 2. It is part of RBI monetary policy tool. |
| 3. Cost of borrowing under this window is always higher than Liquidity Adjustment Facility. |
| Which of the statements given above is/are incorrect? |
A) 1 only
B) 2 and 3 only
C) 1 and 3 only
D) None of the above
Correct Answer: D
Solution :
Marginal Standing Facility is a new Liquidity Adjustment Facility (LAF) window created by Reserve Bank of India in its credit policy of May 2011. MSF is the rate at which the banks are able to borrow overnight funds from RBI against the approved government securities.
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