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The terms ‘Marginal Standing Facility Rate’ and ‘Net Demand and Time Liabilities’, sometimes appearing in news, are used in relation to
[2014]
- a)Banking operations
- b)Communication networking
- c)Military strategies
- d)Supply and demand of agricultural products
Correct answer is option 'A'. Can you explain this answer?
Verified Answer
The terms ‘Marginal Standing Facility Rate’ and ‘Net...
Marginal Standing Facility rate is the rate at which banks borrow funds overnight from the Reserve Bank of India (RBI) against approved government securities. Net Demand and time liability is the sum of demand and time liability of Banks with public and other banks wherein assets with other banks is subtracted to get net liability of other bank.
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The terms ‘Marginal Standing Facility Rate’ and ‘Net...
Banking Operations
Marginal Standing Facility Rate:
- The Marginal Standing Facility (MSF) Rate is the rate at which scheduled commercial banks can borrow funds overnight from the Reserve Bank of India (RBI) against approved government securities.
- It is a penal rate that is higher than the repo rate and is used by banks when they exhaust all other avenues for borrowing.
Net Demand and Time Liabilities:
- Net Demand and Time Liabilities (NDTL) is a measure used by the RBI to determine the reserve requirements of banks.
- It refers to the difference between a bank's demand and time liabilities (deposits) and its demand and time assets (loans).
- The NDTL is crucial in assessing a bank's liquidity and solvency position, as it helps in determining the amount of cash reserves that a bank needs to maintain with the RBI.
Relation to Banking Operations:
- The Marginal Standing Facility Rate and Net Demand and Time Liabilities are closely related to banking operations as they impact the liquidity and borrowing abilities of banks.
- The MSF Rate influences the cost of borrowing for banks, while NDTL determines the reserve requirements and liquidity positions of banks.
- Understanding these terms is essential for banks to manage their funds effectively and comply with regulatory requirements set by the RBI.
Marginal Standing Facility Rate:
- The Marginal Standing Facility (MSF) Rate is the rate at which scheduled commercial banks can borrow funds overnight from the Reserve Bank of India (RBI) against approved government securities.
- It is a penal rate that is higher than the repo rate and is used by banks when they exhaust all other avenues for borrowing.
Net Demand and Time Liabilities:
- Net Demand and Time Liabilities (NDTL) is a measure used by the RBI to determine the reserve requirements of banks.
- It refers to the difference between a bank's demand and time liabilities (deposits) and its demand and time assets (loans).
- The NDTL is crucial in assessing a bank's liquidity and solvency position, as it helps in determining the amount of cash reserves that a bank needs to maintain with the RBI.
Relation to Banking Operations:
- The Marginal Standing Facility Rate and Net Demand and Time Liabilities are closely related to banking operations as they impact the liquidity and borrowing abilities of banks.
- The MSF Rate influences the cost of borrowing for banks, while NDTL determines the reserve requirements and liquidity positions of banks.
- Understanding these terms is essential for banks to manage their funds effectively and comply with regulatory requirements set by the RBI.
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The terms ‘Marginal Standing Facility Rate’ and ‘Net Demand and Time Liabilities’, sometimes appearing in news, are used in relation to[2014]a)Banking operationsb)Communication networkingc)Military strategiesd)Supply and demand of agricultural productsCorrect answer is option 'A'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about The terms ‘Marginal Standing Facility Rate’ and ‘Net Demand and Time Liabilities’, sometimes appearing in news, are used in relation to[2014]a)Banking operationsb)Communication networkingc)Military strategiesd)Supply and demand of agricultural productsCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The terms ‘Marginal Standing Facility Rate’ and ‘Net Demand and Time Liabilities’, sometimes appearing in news, are used in relation to[2014]a)Banking operationsb)Communication networkingc)Military strategiesd)Supply and demand of agricultural productsCorrect answer is option 'A'. Can you explain this answer?.
The terms ‘Marginal Standing Facility Rate’ and ‘Net Demand and Time Liabilities’, sometimes appearing in news, are used in relation to[2014]a)Banking operationsb)Communication networkingc)Military strategiesd)Supply and demand of agricultural productsCorrect answer is option 'A'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about The terms ‘Marginal Standing Facility Rate’ and ‘Net Demand and Time Liabilities’, sometimes appearing in news, are used in relation to[2014]a)Banking operationsb)Communication networkingc)Military strategiesd)Supply and demand of agricultural productsCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The terms ‘Marginal Standing Facility Rate’ and ‘Net Demand and Time Liabilities’, sometimes appearing in news, are used in relation to[2014]a)Banking operationsb)Communication networkingc)Military strategiesd)Supply and demand of agricultural productsCorrect answer is option 'A'. Can you explain this answer?.
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