The Reserve Bank of India (RBI), intervening in the money market has offered a two-day window to banks to tide over the liquidity mismatch situation in the banking system. As per the RBI release the central bank will offer funds to the banks for two days through Marginal Standing Facility (MSF) on February 7, 2015 (Saturday). The MSF remained open between 4.00 PM and 4.30 PM. The reversal will take place on February 9, 2015 (Monday).
Usually, the central bank does not offer such facilities on Saturdays, but on Friday, rates in the collateralized borrowing and lending obligation (CBLO), a facility through which banks can adjust their liquidity position jumped to a record 76%, prompting the RBI to open a half hour window.
Recently in its sixth bi-monthly credit policy review, the RBI while maintaining status quo for repo rate, announced reduction in the Statutory Liquidity Ratio (SLR) by 0.50 percentage point to 21.5 per cent. The move was for supporting liquidity to an extent of about Rs 45 000 crore. The RBI had initiated an easing monetary policy by reducing the repo rate from 8 to 7.75 per cent on January 15.
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