Liquidity Management in the System
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Central Banking (Elective) — CAIIB.
One-liners from this chapter
Free sample — 8 of 66 rapid-fire Q&A cards.
MSF — Marginal Standing Facility — Role in Corridor / Tenor / Rate / Mechanism?
Role in Corridor: Ceiling of the corridor; Tenor: Overnight; Rate / Mechanism: Repo + 25 bps = 5.50% (RBI MPC, June 2026). Bank's option after market hours; uses SLR-excess G-Secs as collateral.
What does LAF stand for in RBI's liquidity management framework?
Liquidity Adjustment Facility used by RBI to manage reserves.
Bank Rate — Role in Corridor / Tenor / Rate / Mechanism?
Role in Corridor: Penal/discount rate; numerically equal to MSF; Rate / Mechanism: 5.50% (RBI MPC, June 2026). Linked to MSF since 2012.
What is the current CRR rate effective from December 6, 2025?
CRR is currently 3.00% of Net Demand and Time Liabilities.
Repo Rate (Policy Rate) — Role in Corridor / Tenor / Rate / Mechanism?
Role in Corridor: Centre of corridor; Tenor: Overnight; auction-tenor; Rate / Mechanism: 5.25% (RBI MPC, June 5 2026). Fixed-rate overnight repo on tap; variable-rate auctions for term operations.
What is the operating target of RBI's liquidity management framework?
Weighted Average Call Rate (WACR) anchored close to policy repo rate.
SDF — Standing Deposit Facility — Role in Corridor / Tenor / Rate / Mechanism?
Role in Corridor: Floor of the corridor (replaced fixed-rate reverse repo from 08 April 2022); Tenor: Overnight; Rate / Mechanism: Repo − 25 bps = 5.00% (RBI MPC, June 2026). No collateral required. Bank's option after market hours.
When was the Interim Liquidity Adjustment Facility (ILAF) launched?
ILAF was launched in April 1999 under Phase 1.
PDF study notes
More chapters in Module C - Monetary Policy and Credit Policy
Master the full CB syllabus
Every chapter of Central Banking (Elective) — videos, tests, notes and one-liner decks in one place.