The Reserve Bank of India (RBI) has extended the enhanced borrowing facility provided to banks by six months to meet liquidity shortage till March 31, 2021.
On March 27, the central bank had increased the borrowing limit for scheduled banks under the marginal standing facility (MSF) scheme from 2 per cent to 3 per cent of their net demand and time liabilities.
The facility which was initially available up to June 30 was later extended up to September 30 due to economic disruptions caused by the COVID-19 pandemic and subsequent lockdown.
"With a view to providing comfort to banks on their liquidity requirements as also to enable to continue to meet LCR requirements, it has been decided to continue with the MSF relaxation for a further period of six months, that is up to March 31, 2021," the RBI said in a statement late on Monday.
This dispensation, it added, provides increased access to funds to the extent of Rs 1.49 lakh crore and also qualifies as high-quality liquid assets for the liquidity coverage ratio.
Under the MSF, banks can borrow overnight at their discretion by dipping into the statutory liquidity ratio. The marginal standing facility rate currently stands at 4.25 per cent.
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