The Reserve Bank of India (RBI) on 7 October 2013 reduced the Marginal Standing Facility (MSF) rate to 9 per cent from 9.5 per cent to improve liquidity in the system. In a release issued from Mumbai the RBI stated that the decision was taken after a review of evolving liquidity conditions. MSF allows banks to borrow money from RBI at a higher rate when there is a significant liquidity crunch.
The RBI further stated that it conducted open market purchase operations of 9974 crore rupees with the aim of injecting liquidity into the system.
This is the second reduction in the rate since the September 20 mid-quarter monetary policy review, when it was lowered to 9.5 per cent from 10.25 per cent.
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