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MSF Rate Cut by 75 bps to 9.50%

Current · Source: Reserve Bank of India · RBI/2013-2014/277 · issued 20 Sep 2013 · ~1 min read
Quick answerRBI reduced the Marginal Standing Facility rate by 75 basis points to 9.50%, effective immediately. This recalibrates MSF to 200 bps above the repo rate, easing emergency borrowing costs for banks.
The rule, in the simplest words
How it plays out — a real example

A branch operations officer in Indore, Priya, checks the new MSF rate of 9.50% and updates her bank's liquidity plan. She tells her treasury team that borrowing overnight from RBI is now cheaper, so they can rely on MSF instead of costlier market loans to cover a sudden cash shortfall.

What changed

The MSF rate was cut from 10.25% to 9.50%, a reduction of 75 basis points. This change aligns the MSF rate at 200 basis points above the policy repo rate under the Liquidity Adjustment Facility.

What it means for you

Banks can now borrow overnight from RBI at a lower emergency rate, reducing their cost of funds during liquidity stress. This move signals RBI's intent to ease short-term funding pressures and support monetary transmission.

What you must do

Who it affects

All Scheduled Commercial Banks (excluding RRBs), Treasury departments, ALM and liquidity management teams

❓ Common questions

What is the new MSF rate and when does it take effect?

The MSF rate is reduced to 9.50% from 10.25%, effective immediately from September 20, 2013.

How does this change relate to the repo rate?

The MSF rate is now set at 200 basis points above the policy repo rate, recalibrating its spread under the LAF.

Are there any other changes to the MSF scheme?

No, all other terms and conditions of the MSF scheme remain unchanged.

📜 Read the original circular — full text as issued by RBI
RBI/2013-2014/277 FMD.MOAG. No. 87/01.18.001/2013-14 September 20, 2013 All Scheduled Commercial Banks (excluding RRBs) Madam / Sir, Marginal Standing Facility Rates As announced today in the Mid-Quarter Review of the Monetary Policy 2013-14 , it has been decided to reduce the Marginal Standing Facility (MSF) rate by 75 basis points from 10.25 percent to 9.50 per cent with immediate effect . 2. Consequent to this change, Marginal Standing Facility (MSF) rate is recalibrated to 200 basis points above the policy repo rate under the Liquidity Adjustment Facility (LAF). 3. All other terms and conditions of the current MSF Scheme will remain unchanged. 4. Please acknowledge receipt. Yours sincerely (G. Mahalingam) Principal Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2013-2014/277 · issued 20 Sep 2013. The plain-English explanation above is BankPulse’s own independent summary.
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Who does what — compliance checklist
💻 IT / Systems
  • Update internal systems and loan pricing models to reflect the new MSF rate of 9.50%.
📜 Compliance
  • Communicate the revised MSF rate to treasury and ALM teams for liquidity planning.
  • Review borrowing strategies to optimize use of MSF versus other LAF windows.
  • Acknowledge receipt of the circular to RBI as instructed.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template

Example: if you are an IT/Systems lead at a bank this circular applies to (All Scheduled Commercial Banks (excluding RRBs), Treasury departments, ALM and liquidity management teams), your first concrete step on “MSF Rate Cut by 75 bps to 9.50%” is: “Update internal systems and loan pricing models to reflect the new MSF rate of 9.50%.” (RBI issued this 20 Sep 2013).

  1. Circular: RBI/2013-2014/277 -- MSF Rate Cut by 75 bps to 9.50%
  2. Issued: 20 Sep 2013
  3. Action required: Update internal systems and loan pricing models to reflect the new MSF rate of 9.50%.
  4. Action required: Communicate the revised MSF rate to treasury and ALM teams for liquidity planning.
  5. Action required: Review borrowing strategies to optimize use of MSF versus other LAF windows.
  6. Action required: Acknowledge receipt of the circular to RBI as instructed.
  7. Owner: ____________ Target date: ____________
  8. Board/committee approval needed? Y / N
  9. 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.

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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=8441&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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