The Marginal Standing Facility (MSF) is a facility provided by the Reserve Bank of India that allows scheduled commercial banks to borrow an additional amount of overnight money from the central bank over and above what is available to them through the Liquidity Adjustment Facility (LAF) window by dipping into their Statutory Liquidity Ratio (SLR) portfolio up to a limit
. The MSF rate is the rate at which banks can pledge government securities for gaining liquidity in situations when the liquidity is dried up, and it is typically set at a higher rate than the repo rate, currently at 4.25% in India
. It serves as a penal rate, creating a disincentive for banks to access this facility regularly
