MSF Rate and NDTL — Banking terms UPSC Prelims PYQ 2014

The terms ‘Marginal Standing Facility Rate’ and ‘Net Demand and Time Liabilities’, sometimes appearing in news, are used in relation to

1. banking operations
2. communication networking
3. military strategies
4. supply and demand of agricultural products

Explanation

Option (a) is correct

• Both terms are integral to banking operations.
• Marginal Standing Facility (MSF) Rate: It is a window for banks to borrow from the Reserve Bank of India in an emergency situation when inter-bank liquidity dries up completely.
• Net Demand and Time Liabilities (NDTL): The amount of money available to the bank for providing loans is called its NDTL, which is basically the sum of all the deposits made to the bank by people like you, less the amount that the bank has invested in other banks.

Answer: (a) banking operations; Difficulty Level: Easy