The Marginal Standing Facility (MSF) rate is generally kept ___ the Repo Rate.
- Equal to
- Lower than
- Higher than
- Unrelated to
Answer: Higher than
The MSF is a penal rate at which banks can borrow overnight funds from the RBI against their SLR portfolio when inter-bank liquidity dries up completely. It is typically kept 25 basis points (0.25%) higher than the Repo Rate to discourage routine borrowing.