MSS ceiling fixed at Rs. 50,000 cr for current fiscal

The Reserve Bank of India (RBI) has fixed the quantum of intervention through Market Stabilisation Scheme (MSS) at Rs. 50,000 crore to manage liquidity.

Under the MSS, RBI, on the behalf of government, absorbs liquidity by issuing Treasury Bills and/ or dated securities. “The ceiling for outstanding balance under the MSS for the fiscal year 2014-15 has been fixed at Rs. 50,000 crore,” the RBI said in a statement.

“This ceiling will be reviewed when the outstanding balance reaches the threshold limit of Rs. 35,000 crore,” it said.

The government launched MSS in consultation with RBI in 2004 with the objective to absorb excess liquidity, arising out of significant foreign exchange inflows, by issuing treasury bills or dated securities.

The Government issues treasury bills and/ or dated securities under the MSS. This is in addition to its normal borrowing requirements.

For the current fiscal, the government has pegged its borrowing requirements at Rs. 5.97 lakh crore. Of this, about 61.5 per cent or Rs. 3.68 lakh would be borrowed in the April-September period.