Current · Source: Reserve Bank of India · RBI/2021-22/82 · issued 09 Aug 2021 · ~1 min read
Quick answerRBI extends the MSF relaxation allowing banks to borrow an additional 1% of NDTL under SLR, cumulatively up to 3%, until December 31, 2021, to support liquidity and LCR compliance.
The rule, in the simplest words
Banks can borrow extra money from the RBI by using their SLR (a required amount of safe assets like government bonds) as collateral, up to an extra 1% of their total deposits (NDTL), making the total allowed 3%.
This special borrowing option is now available until December 31, 2021, instead of ending on September 30, 2021.
Banks can use this borrowed money to meet their LCR (a rule that says they must have enough easy-to-sell assets to survive a 30-day crisis) and manage short-term cash needs.
How it plays out — a real example
A treasury officer in Indore, Priya, notices her bank's cash reserves are low due to a sudden surge in loan demand. She checks the latest RBI rule and sees the MSF relaxation is extended to December 31, 2021. She quickly arranges for her treasury team to borrow an extra 1% of the bank's deposits using government bonds, ensuring the bank stays compliant with LCR rules and can keep lending to customers without stress.
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
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
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.
📜 This document’s life story (1 recorded event, each backed by RBI’s own words)
RBI’s words: “was later extended up to December 31, 2021 vide circular DOR.RET.REC.36/12.01.001/2021-22 dated August 09, 2021”
📜 Read the original circular — full text as issued by RBI
RBI/2021-22/82
DOR.RET.REC.36/12.01.001/2021-22
August 09, 2021
All Scheduled Banks
Madam/Sir
Section 24 of the Banking Regulation Act, 1949 – Maintenance of Statutory Liquidity
Ratio (SLR) – Marginal Standing Facility (MSF) - Extension of Relaxation
Please refer to circular DOR.No.Ret.BC.36/12.01.001/2020-21 dated February 05, 2021 , 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 September 30, 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 on Developmental and Regulatory Policies of August 06, 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 three months, i.e., up to December 31, 2021.
Yours faithfully
(Thomas Mathew)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2021-22/82 · issued 09 Aug 2021. The plain-English explanation above is BankPulse’s own independent summary.
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 planners), your first concrete step on “MSF SLR Dip Relaxation Extended to Dec 31, 2021” is: “Update internal liquidity management plans to utilize the MSF window up to 3% of NDTL until December 31, 2021.” (RBI issued this 09 Aug 2021).
Circular: RBI/2021-22/82 -- MSF SLR Dip Relaxation Extended to Dec 31, 2021
Issued: 09 Aug 2021
Action required: Update internal liquidity management plans to utilize the MSF window up to 3% of NDTL until December 31, 2021.
Action required: Ensure LCR calculations reflect the continued relaxation for regulatory reporting.
Action required: Monitor liquidity positions to optimize use of this facility without over-reliance.
Action required: Communicate the extension to treasury and risk management teams for operational readiness.
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
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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=12142&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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