About MSF

• Marginal Standing Facility (MSF) is the rate at which the banks are able to borrow overnight funds from RBI against the approved government securities.
• The scheme was introduced by RBI with the main aim of reducing volatility in the overnight lending rates in the inter-bank market and to enable smooth monetary transmission in the financial system.

• In March 2020, the RBI increased the cap for liquidity available under the marginal standing facility, from 2 per cent to 3 per cent of their Net Demand and Time Liabilities (NDTL) — or deposits. 

Why in News?

• The RBI has decided to extend the enhanced borrowing facility provided to the banks to meet their liquidity shortages under the marginal standing facility scheme.
• This relaxation, which was granted till June 30, 2020, has now been extended till September 30.

https://indianexpress.com/article/business/banking-and-finance/rbi-extends-higher-overnight-borrowing-facility-of-banks-to-sept-6479571/