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BANKING AND MONETARY POLICY — Economics STD 12 Commerce — Question

Gujarat BoardEnglish MediumSTD 12 CommerceEconomicsBANKING AND MONETARY POLICY3 Marks
Question
What is Marginal Standing Facility? Explain.
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Answer

Stabilization under emergency situation:
  • At times there might occur some emergency of acute shortage of cash with the commercial banks.
  • Under such situations there is a special window for banks where RBI provides money to commercial banks against approved government securities.
  • This rate is higher than repo rate and is known as ‘Marginal standing facility’. This helps in stabilizing the inflation under emergency situation

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