What changed
The RBI extended the MSF relaxation, which permits banks to dip into SLR up to an additional 1% of NDTL (cumulatively 3%), for another three months. This facility was previously set to expire on September 30, 2021, and is now available until December 31, 2021.
What it means for you
Banks get continued flexibility to manage short-term liquidity by borrowing more from the MSF against SLR securities without breaching statutory requirements. This helps maintain LCR compliance and eases pressure during tight liquidity conditions, supporting lending and stability.
What you must do
- Update internal liquidity management plans to utilize the MSF window up to 3% of NDTL until December 31, 2021.
- Ensure LCR calculations reflect the continued relaxation for regulatory reporting.
- Monitor liquidity positions to optimize use of this facility without over-reliance.
- Communicate the extension to treasury and risk management teams for operational readiness.
Who it affects
All scheduled banks in India, Treasury departments, Risk management teams, Liquidity planners
What is the MSF relaxation extension about?
RBI allows banks to borrow under MSF by dipping into SLR up to an additional 1% of NDTL (total 3%) until December 31, 2021, to ease liquidity and meet LCR needs.
How does this affect my bank's SLR compliance?
The relaxation means you can temporarily use SLR securities for MSF borrowing up to 3% of NDTL without penalty, but you must maintain the overall SLR requirement after the facility ends.
Is this facility automatic or do we need to apply?
The facility is available to all scheduled banks as per RBI guidelines; no separate application is needed, but banks should ensure they meet operational conditions for MSF access.