Current · Source: Reserve Bank of India · RBI/2013-2014/314 · issued 07 Oct 2013 · ~1 min read
Quick answerRBI reduced the Marginal Standing Facility rate by 50 basis points from 9.50% to 9.00%, effective immediately. All other MSF scheme terms remain unchanged. This lowers the cost of emergency overnight borrowing for banks.
The rule, in the simplest words
The RBI cut the emergency borrowing rate (MSF rate) by 50 basis points, from 9.50% to 9.00%.
This new rate applies immediately and is the only change; all other rules for borrowing from the RBI stay the same.
Banks can now borrow overnight against approved government securities at the lower 9.00% rate, which helps reduce their emergency funding costs.
The MSF rate is still higher than the regular repo rate, so it is meant for special, urgent situations only.
All scheduled commercial banks (except rural banks) and their treasury and ALM teams should update their systems and plans to reflect this new rate.
How it plays out — a real example
A treasury officer named Arjun in Mumbai is preparing the bank’s overnight borrowing plan. He checks the new 9.00% MSF rate, updates the system, and tells the ALM team that the lower cost will ease the bank’s short‑term liquidity. He smiles, knowing the change will help the bank serve its customers better.
What changed
The Marginal Standing Facility rate was cut by 50 basis points to 9.00% from 9.50%, effective October 7, 2013. No other terms or conditions of the MSF scheme were modified.
What it means for you
Banks can now borrow overnight from the RBI at a lower rate of 9.00% against approved government securities, reducing their emergency funding costs. This may ease short-term liquidity pressures and slightly lower the overall cost of funds for lenders. However, the MSF remains a penal rate above the repo rate, so its usage is still meant for exceptional circumstances.
What you must do
Update your treasury systems and internal lending rate benchmarks to reflect the new MSF rate of 9.00%.
Review your liquidity contingency plans to account for the lower cost of emergency borrowing.
Communicate the rate change to your asset-liability management (ALM) team for impact assessment on funding costs.
Ensure all branches and dealing rooms are aware of the immediate effective date of this circular.
Who it affects
All Scheduled Commercial Banks (excluding RRBs), Treasury departments, Asset-Liability Management (ALM) teams, Banks relying on MSF for overnight liquidity
❓ Common questions
Regulatory timeline
Stated effective dateeffective October 7, 2013
Decoded by BankPulse2026-06-18 12:19 IST
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
What is the new MSF rate and when does it take effect?
The MSF rate is reduced to 9.00% from 9.50%, effective immediately from October 7, 2013.
Are there any other changes to the MSF scheme?
No, all other terms and conditions of the MSF scheme remain unchanged as per the circular.
Who is covered by this circular?
All Scheduled Commercial Banks, excluding Regional Rural Banks (RRBs), are covered.
📜 Read the original circular — full text as issued by RBI
RBI/2013-2014/314
FMD.MOAG. No.88/01.18.001/2013-14
October 07, 2013
All Scheduled Commercial Banks (excluding RRBs)
Madam / Sir,
Marginal Standing Facility
As announced today, it has been decided to reduce the Marginal Standing Facility (MSF) rate by 50 basis points from 9.50 per cent to 9.00 per cent with immediate effect.
2. All other terms and conditions of the current MSF scheme will remain unchanged.
3. Please acknowledge receipt.
Yours sincerely
(G. Mahalingam)
Principal Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2013-2014/314 · issued 07 Oct 2013. The plain-English explanation above is BankPulse’s own independent summary.
Ensure all branches and dealing rooms are aware of the immediate effective date of this circular.
💻 IT / Systems
Update your treasury systems and internal lending rate benchmarks to reflect the new MSF rate of 9.00%.
📜 Compliance
Review your liquidity contingency plans to account for the lower cost of emergency borrowing.
Communicate the rate change to your asset-liability management (ALM) team for impact assessment on funding costs.
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, Asset-Liability Management (ALM) teams, Banks relying on MSF for overnight liquidity), your first concrete step on “MSF Rate Cut by 50 bps to 9.00%” is: “Update your treasury systems and internal lending rate benchmarks to reflect the new MSF rate of 9.00%.” (RBI issued this 07 Oct 2013).
Circular: RBI/2013-2014/314 -- MSF Rate Cut by 50 bps to 9.00%
Issued: 07 Oct 2013
Action required: Update your treasury systems and internal lending rate benchmarks to reflect the new MSF rate of 9.00%.
Action required: Review your liquidity contingency plans to account for the lower cost of emergency borrowing.
Action required: Communicate the rate change to your asset-liability management (ALM) team for impact assessment on funding costs.
Action required: Ensure all branches and dealing rooms are aware of the immediate effective date of this circular.
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=8497&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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