MSF Expanded: Borrow Against SLR Below Statutory Minimum
Current · Source: Reserve Bank of India · RBI/2011-12/308 · issued 21 Dec 2011 · ~1 min read
Quick answerRBI now lets banks borrow overnight under MSF against excess SLR holdings and also dip up to 1% of NDTL below the statutory SLR floor without needing a waiver for the shortfall.
The rule, in the simplest words
Banks can borrow money overnight from RBI using any extra SLR (the part of deposits kept as safe government bonds).
Even if borrowing makes the SLR go a little below the legal minimum, banks may still borrow up to 1% of their NDTL (total amount of money people owe the bank) for one night.
When they use this 1% option, they do NOT have to ask RBI for a special waiver for the SLR shortfall.
Banks should check their NDTL every two weeks to see how much of the 1% headroom they have.
Treasury and liquidity teams need to add this new borrowing choice to their daily plans.
How it plays out — a real example
Rohit, a treasury manager at a scheduled commercial bank in Mumbai, notices the bank’s cash balance is low late in the day. He looks at the bank’s NDTL, sees that 1% of it is still free, and uses the MSF to borrow overnight from RBI, even though this pushes the SLR a bit below the required level. Because the rule now says no waiver is needed, Rohit can do this quickly and safely, keeping the bank’s operations running smoothly.
What changed
Previously, banks could only access MSF against excess SLR holdings. Now, they can also borrow overnight up to 1% of their NDTL even if it pushes their SLR below the statutory minimum, and no separate waiver is required for that SLR default.
What it means for you
This gives banks more flexibility to manage sudden liquidity crunches without breaching SLR compliance formally. Lenders can now use a small portion of their statutory SLR buffer as a funding source, reducing the need for costly market borrowing or penal actions.
What you must do
Update your MSF borrowing procedures to include the new 1% SLR dip option.
Monitor NDTL fortnightly to calculate the exact headroom available under this facility.
Ensure your treasury team is aware that no separate SLR waiver application is needed for this usage.
Review liquidity contingency plans to incorporate this additional funding avenue.
Who it affects
All scheduled commercial banks, Treasury departments, ALM and liquidity risk teams
❓ Common questions
Can we borrow under MSF for more than one day?
No, the facility is strictly overnight as per the circular.
Do we need to report the SLR shortfall separately to RBI?
No, the circular explicitly states that no specific waiver is required for the SLR default arising from this facility.
📜 Read the original circular — full text as issued by RBI
RBI/2011-12/308
FMD. No.65 /01.18.001/2011-12
December 21, 2011
All Scheduled Commercial Banks
Dear Sir,
Marginal Standing Facility - Scheme
Please refer to our Circular RBI/2010-11/515 dated May 9, 2011 on the captioned subject.
2. It has been decided to permit banks to avail themselves of funds from RBI on overnight basis, under Marginal Standing Facility (MSF), against their excess SLR holdings. Additionally, they can also avail themselves of funds, on overnight basis below the stipulated SLR, up to one per cent of their respective Net Demand and Time Liabilities outstanding at the end of second preceding fortnight. In the event the banks’ SLR holdings fall below the statutory requirement, banks will not have the obligation to seek a specific waiver for default in SLR compliance arising out of use of this facility in terms of notification issued under sub section (2A) of Section 24 of the Banking Regulation Act, 1949.
3. All other terms and conditions of the current MSF Scheme will remain unchanged.
4. Please acknowledge receipt.
Yours sincerely
(G Mahalingam)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2011-12/308 · issued 21 Dec 2011. The plain-English explanation above is BankPulse’s own independent summary.
Ensure your treasury team is aware that no separate SLR waiver application is needed for this usage.
📜 Compliance
Update your MSF borrowing procedures to include the new 1% SLR dip option.
Monitor NDTL fortnightly to calculate the exact headroom available under this facility.
Review liquidity contingency plans to incorporate this additional funding avenue.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are a Compliance officer at a bank this circular applies to (All scheduled commercial banks, Treasury departments, ALM and liquidity risk teams), your first concrete step on “MSF Expanded: Borrow Against SLR Below Statutory Minimum” is: “Update your MSF borrowing procedures to include the new 1% SLR dip option.” (RBI issued this 21 Dec 2011).
Action required: Update your MSF borrowing procedures to include the new 1% SLR dip option.
Action required: Monitor NDTL fortnightly to calculate the exact headroom available under this facility.
Action required: Ensure your treasury team is aware that no separate SLR waiver application is needed for this usage.
Action required: Review liquidity contingency plans to incorporate this additional funding avenue.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=6884&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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