What changed
The MSF rate was cut from 9.00% to 8.75%, a reduction of 25 basis points, effective from October 29, 2013. Consequently, the MSF rate is now set at 100 basis points above the policy repo rate under the LAF.
What it means for you
Banks can now borrow overnight from RBI at a lower cost, improving liquidity management. This reduction signals a slight easing in monetary policy, potentially lowering short-term lending rates for banks and their customers.
What you must do
- Update your internal systems to reflect the new MSF rate of 8.75%.
- Review your liquidity contingency plans to leverage the lower MSF rate.
- Communicate the rate change to your treasury and ALM teams for immediate action.
Who it affects
Scheduled Commercial Banks (excluding RRBs), Treasury departments, Asset-Liability Management teams
What is the new MSF rate and when does it take effect?
The MSF rate is reduced to 8.75% from 9.00%, effective immediately from October 29, 2013.
How does this change relate to the repo rate?
The MSF rate is now recalibrated to 100 basis points above the policy repo rate under the LAF.
Are there any other changes to the MSF scheme?
No, all other terms and conditions of the MSF scheme remain unchanged.