Q. Consider the following statements in the context of Banking in India:

1. Under the Repo rate, banks can borrow above their SLR requirements from the RBI, while under the Marginal Standing Facility (MSF), banks can borrow within their SLR requirements.
2. Under the Repo rate, banks can borrow up to 5% of their net demand and time liabilities (NDTL), while under the MSF, they can borrow with no limit.

Which of the above statements is / are correct?
Answer: Only 1 is correct
Notes: Statement 1 is correct: Under repo, banks borrow funds above their SLR stipulation, whereas under MSF, banks can borrow within the SLR requirement. Statement 2 is incorrect: Under repo, borrowing is limited to a certain percent of NDTL, and under MSF, the limit is capped at 2% of NDTL, not unlimited.