MARGINAL STANDING FACILITY

• Introduced in 2011, under LAF, banks borrow from the central bank in an emergency situation.
• So, it is a penal rate because MSF rate is generally pegged above the repo rate.

Repo rate: The rate of interest RBI charges from banks on their short term borrowing.

• Under MSF, banks can borrow funds up to 1% of their NDTL.