The RBI had taken a temporary step to increase the liquidity in banks
The Reserve Bank of India (RBI) has extended the tenure of enhanced lending facility for banks to six months to meet the cash crunch. The move comes amid the Corona virus epidemic and the current economic crisis caused by ‘lockdown’.
The RBI had taken a temporary step to increase the liquidity in banks. Under this, the loan limit under Scheduled Marginal Standing Facility (MSF) for scheduled banks was increased from 2 percent to 3 percent under their net demand and time liability (NDTL) from 27 March 2020.
The facility was initially meant for 30 June 2020 but in view of the Kovid-19 crisis, it was later extended to 30 September 2020. The RBI said in a statement, providing banks with a satisfactory position in terms of liquidity and extending the exemption given under MSF to meet their cash coverage ratio (LCR) requirements for six months i.e. March 31, 2021 Has been decided The central bank said that with this, banks have 1.
There will be access to additional funds up to Rs 49 lakh crore. Under MSF, banks can avail loans from the Reserve Bank for one day on government securities held under statutory liquidity ratio. The rate of interest on marginal standing facility is currently 4.25 percent.
