Question 31
AOptions
BSolution
Both 'Marginal Standing Facility (MSF) Rate' and 'Net Demand and Time Liabilities (NDTL)' are fundamental terms used within the financial and banking sector, particularly in the context of central banking and commercial banking operations in India.
- Marginal Standing Facility (MSF) Rate: This is a penal rate at which scheduled commercial banks can borrow money from the Reserve Bank of India (RBI) overnight, against government securities, when there is an acute shortage of inter-bank liquidity. It serves as a last resort for banks.
- Net Demand and Time Liabilities (NDTL): This refers to the total of demand and time deposits (liabilities) of a bank with the public and other banks, minus deposits of other banks with it. NDTL is a crucial figure used by the RBI to calculate key statutory requirements for banks, such as the Cash Reserve Ratio (CRR) and the Statutory Liquidity Ratio (SLR), which directly impact a bank's lending capacity.
Given their direct relevance to how banks operate, borrow, and are regulated, these terms are exclusively associated with banking operations.
CStrategy
When encountering technical terms, especially those appearing in financial news, try to associate them with their primary domain. Economic and financial terms often relate to banking, monetary policy, or markets. Understanding their basic function or what they measure can help in categorization.
DSyllabus Analysis
This question relates to Indian Economy, specifically Banking and Monetary Policy.
EQuestion Analysis
Easy. These are common terms frequently discussed in the context of the Indian financial system and RBI policy.