Liquidity Adjustment Facility

Repo Rate

March 1, 2015

Repo rate, or repurchase rate, is the rate at which RBI lends to banks for short periods. This is done by RBI buying government bonds from banks with an agreement to sell them back at a fixed rate. Objective of Repo The objective of Repo is to...

Marginal Standing Facility

March 1, 2015

Marginal Standing Facility is a new Liquidity Adjustment Facility (LAF) window created by Reserve Bank of India in its credit policy of May 2011.  MSF is the rate at which the banks are able to borrow overnight funds from RBI against the approved government securities. The question...

What is Liquidity?

February 28, 2015

By Liquidity, we simply mean to refer to the money floating in the system that is available to all stakeholders of the markets viz.  Individuals, corporate entities and the government. We know that liquidity is influenced by the demand and supply of money in the system.  RBI...

Liquidity Adjustment Facility (LAF)

April 28, 2011

Liquidity Adjustment Facility (LAF) is the primary instrument of Reserve Bank of India for modulating liquidity and transmitting interest rate signals to the market. It refers to the difference between the two key rates viz. repo rate and reverse repo rate. Informally, Liquidity Adjustment Facility is also known...

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