The Reserve Bank of India (RBI) on 15 July 2013 announced measures to deal with rupee volatility which includes lifting of two interest rates by 200 basis points each and a planned sale of 120 billion rupees (2 billion dollars) of Government bonds in July 2013. RBI has also adjusted the Marginal Standing Facility (MSF) and the Bank Rate to 10.25% each which were 8.25% previously. What does Marginal Standing Facility mean?

• A. MSF is defined as the amount of total deposits that banks are required to keep with the central bank. If the central bank decides to increase the CRR, the available amount with the banks comes down.
• B. It is the rate at which the RBI borrows money from commercial banks.
• C. Marginal Standing Facility (MSF) is the rate at which banks can borrow from the central bank at an increased rate against government securities during times of tight cash
• D. MSF is the rate at which banks borrow from RBI. It is an instrument of monetary policy. Whenever banks have any shortage of funds they can borrow from the RBI.