The terms 'Marginal Standing Facility Rate' and 'Net Demand and Time Liabilities', sometimes appearing in news, are used in relation to
Answer & explanation
Answer: (a) banking operations
Both terms belong to the Reserve Bank of India's regulation of banks. The Marginal Standing Facility (MSF) is an emergency overnight borrowing window for banks. Net Demand and Time Liabilities (NDTL) is the base on which a bank's reserve requirements and MSF borrowing limit are calculated.
- ✓ (a) MSF is the RBI facility through which eligible banks get overnight liquidity support against their government securities (SLR holdings). Because it is a penal rate, the MSF rate is fixed above the repo rate. A bank can borrow under MSF up to a set percentage of its NDTL. NDTL is its demand and time liabilities (mainly deposits) net of certain inter-bank items.
- ✗ (b) Neither term concerns telecom or data networks. They are balance-sheet and monetary-policy terms of the banking system.
- ✗ (c) Neither term is a military concept. MSF and NDTL appear in RBI's reserve-requirement and liquidity directions.
- ✗ (d) The rates and liabilities refer to bank funds, not to the supply or demand of farm produce.
Remember · MSF is the RBI's last-resort overnight window for banks, priced above the repo rate. Its limit and the CRR/SLR are calculated on a bank's NDTL.
Sources
- RBI Master Direction on Cash Reserve Ratio and Statutory Liquidity Ratio (rbidocs.rbi.org.in) ↗ “the facility under which the eligible banks can avail liquidity support from the Reserve Bank against excess SLR holdings.”
- Marginal Standing Facility, Arthapedia (Indian Economic Service, ies.gov.in) ↗ “MSF, being a penal rate, is always fixed above the repo rate.”
Question: UPSC Civil Services (Preliminary) 2014, General Studies Paper I. Explanation: Minimalist IAS, checked 25 Oct 2026 (how we verify). ·
