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MSF SLR Relaxation Extended to Sept 30, 2021

Current · Source: Reserve Bank of India · RBI/2020-21/91 · issued 05 Feb 2021 · ~1 min read

Quick answerRBI extends MSF relaxation allowing banks to borrow under MSF by dipping into SLR up to 3% of NDTL until September 30, 2021, providing continued liquidity comfort and LCR support.

The rule, in the simplest words

Banks can borrow emergency money (MSF) by using up to 3% of their total deposits (NDTL) from their government bond holdings (SLR) until September 30, 2021.
This is an extra 1% on top of the normal 2% they could already use, so total is 3% of deposits.
Banks don't have to sell their bonds (SLR securities) to get cash; they can just borrow against them.
This helps banks meet their short-term cash needs (LCR) without trouble.

How it plays out — a real example

A treasury officer in Indore, Priya, sees that her bank needs extra cash to cover a sudden surge in withdrawals. She uses the MSF relaxation to borrow funds by dipping into the bank's SLR bonds up to 3% of NDTL, avoiding a fire sale of securities and keeping the bank's liquidity ratio healthy until September 30, 2021.

What changed

The RBI extended the relaxation under Marginal Standing Facility (MSF) that permits banks to borrow funds by using up to an additional 1% of their Net Demand and Time Liabilities (NDTL) from Statutory Liquidity Ratio (SLR) holdings, cumulatively up to 3% of NDTL. This facility, initially valid until June 30, 2020 and later extended to March 31, 2021, is now further extended for six months until September 30, 2021.

What it means for you

Banks can continue to access MSF funds by dipping into SLR securities up to 3% of NDTL, easing liquidity pressures and helping meet Liquidity Coverage Ratio (LCR) requirements. This extension provides banks with additional flexibility in managing short-term liquidity without needing to sell SLR securities in the market.

What you must do

Update internal liquidity management policies to reflect MSF relaxation validity until September 30, 2021.
Ensure compliance with SLR maintenance while utilizing the additional 1% MSF window cumulatively up to 3% of NDTL.
Monitor LCR requirements and leverage the MSF facility to meet liquidity needs as necessary.
Communicate the extended timeline to treasury and risk management teams for planning.

Who it affects

All scheduled banks in India, Treasury departments, Risk management teams, Liquidity planning units

❓ Common questions

Regulatory timeline

Decoded by BankPulse 2026-06-18 08:42 IST
extended_by — MSF SLR Dip Relaxation Extended to Dec 31, 2021

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

What is the total MSF borrowing limit under this relaxation?

Banks can borrow under MSF by dipping into SLR up to an additional 1% of NDTL, making the cumulative limit 3% of NDTL.

Until when is this MSF relaxation valid?

The relaxation is extended for six months from March 31, 2021, and is valid until September 30, 2021.

Does this relaxation help with LCR compliance?

Yes, the circular explicitly states that the facility enables banks to meet their Liquidity Coverage Ratio (LCR) requirements.

📜 This document’s life story (1 recorded event, each backed by RBI’s own words)

Extended by MSF SLR Dip Relaxation Extended to Dec 31, 2021

RBI’s words: “banks are allowed to continue with the MSF relaxation for a further period of three months”

📜 Read the original circular — full text as issued by RBI

RBI/2020-21/91
 DOR.No.Ret.BC.36/12.01.001/2020-21
 February 05, 2021
 All Scheduled Banks
 Dear Sir / Madam
 Section 24 of the Banking Regulation Act, 1949 – Maintenance of Statutory Liquidity Ratio (SLR) – 
 Marginal Standing Facility (MSF) - Extension of Relaxation
 Please refer to our circulars DOR.No.Ret.BC.52/12.01.001/2019-20 dated March 27, 2020 , DOR.RRB.No.28/31.01.001/2020-21 dated December 4, 2020 and Press Release No.2020-2021/401 dated September 28, 2020 on Marginal Standing Facility (MSF), wherein the banks were allowed to avail of funds under the MSF by dipping into the Statutory Liquidity Ratio (SLR) up to an additional one per cent of their net demand and time liabilities (NDTL), i.e., cumulatively up to three per cent of NDTL. This facility, which was initially available up to June 30, 2020 was later extended in phases up to March 31, 2021 providing comfort to banks on their liquidity requirements and also to enable them to meet their Liquidity Coverage Ratio (LCR) requirements.
 2. As announced in the Statement of Developmental and Regulatory Policies of February 05, 2021 , with a view to providing comfort to banks on their liquidity requirements, banks are allowed to continue with the MSF relaxation for a further period of six months, i.e., up to September 30, 2021.
 Yours faithfully
 (Thomas Mathew)
 Chief General Manager

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2020-21/91 · issued 05 Feb 2021. The plain-English explanation above is BankPulse’s own independent summary.

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Worked example & action-note template

Example: if you are a Compliance officer at a bank this circular applies to (All scheduled banks in India, Treasury departments, Risk management teams, Liquidity planning units), your first concrete step on “MSF SLR Relaxation Extended to Sept 30, 2021” is: “Update internal liquidity management policies to reflect MSF relaxation validity until September 30, 2021.” (RBI issued this 05 Feb 2021).

Circular: RBI/2020-21/91 -- MSF SLR Relaxation Extended to Sept 30, 2021
Issued: 05 Feb 2021
Action required: Update internal liquidity management policies to reflect MSF relaxation validity until September 30, 2021.
Action required: Ensure compliance with SLR maintenance while utilizing the additional 1% MSF window cumulatively up to 3% of NDTL.
Action required: Monitor LCR requirements and leverage the MSF facility to meet liquidity needs as necessary.
Action required: Communicate the extended timeline to treasury and risk management teams for planning.
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.

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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=12021&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.