The Reserve Bank of India rolled back the marginal standing facility rate (MSF) by 75 basis points from 10. 25 per cent to 9.50 per cent. MSF rate is the rate at which banks borrow funds overnight from the RBI against approved Government securities.
On similar lines, the minimum daily maintenance of the cash reserve ratio (CRR) was rolled back from 99 per cent to 95 per cent.
This withdrawal “will provide a boost to growth, reduce the financing distortions that are emerging in the market, and reduce the strain on corporate and bank balance sheets,” said Governor Raghuram Rajan while addressing a press conference here to announce the mid-quarter review of the monetary policy.
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The RBI chief also assured that the difference between the MSF and repo rate will be brought down to 100 basis points. He raised the repo rate by 25 basis points to 7.50 per cent.
Dr. Rajan also said that the banks have started bringing in money through the FCNR (B) route.