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Q31 (IAS/2014) Economy › Money, Banking & Inflation › Monetary policy tools Official Key

The terms 'Marginal Standing Facility Rate' and 'Net Demand and Time Liabilities', sometimes appearing in news, are used in relation to

Result
Your answer: —  ·  Correct: A
Explanation

Both terms mentioned in the question are directly related to banking operations in India. Marginal Standing Facility (MSF) was introduced by RBI in 2011[1], and it is an interest rate at which the Reserve Bank of India lends money to scheduled commercial banks facing acute liquidity shortages[2]. All scheduled commercial banks having current account with RBI can avail MSF, and they can avail an overnight short-term loan up to 2 per cent of their Net Demand and Time Liabilities[1]. Net Demand and Time Liabilities (NDTL) = DTL - Assets of the bank with other banks[3]. These are technical banking terms used by the RBI as part of its monetary policy framework to manage liquidity in the banking system. Therefore, option A is correct.

Sources
  1. [1] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > LONG TERM REPO OPERATIONS (LTROs) > p. 166
  2. [3] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > LIABILITIES OF A BANK > p. 164
How others answered
Each bar shows the % of students who chose that option. Green bar = correct answer, blue outline = your choice.
Community Performance
Out of everyone who attempted this question.
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got it right
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Q. The terms 'Marginal Standing Facility Rate' and 'Net Demand and Time Liabilities', sometimes appearing in news, are used in relation to …
At a glance
Origin: Books + Current Affairs Fairness: Low / Borderline fairness Books / CA: 2.5/10 · 7.5/10
Statement 1
Are the terms "Marginal Standing Facility Rate" and "Net Demand and Time Liabilities" used in relation to banking operations?
Origin: Direct from books Fairness: Straightforward Book-answerable
From standard books
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > LONG TERM REPO OPERATIONS (LTROs) > p. 166
Presence: 5/5
“Marginal Standing Facility (MSF): This facility was introduced by RBI in 2011. Eligibility: All the SCBs having current account with RBI can avail MSF. They can avail an overnight short-term loan up to 2 per cent of their Net Demand and Time Liabilities.”
Why this source?
  • Defines Marginal Standing Facility (MSF) as an RBI facility for scheduled commercial banks to borrow overnight funds.
  • Explicitly links the MSF borrowing limit to a percentage of Net Demand and Time Liabilities (NDTL).
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > LIABILITIES OF A BANK > p. 164
Presence: 5/5
“Total Demand and Time Liabilities (DTL) includes items mentioned in 1, 2 and 3 above. Net Demand and Time Liabilities (NDTL) = DTL - Assets of the bank with other banks. Assets of the bank include assets of the banks with other banks, advances by bank, investments by bank and money at call and short notice.”
Why this source?
  • Gives the definition/formula for Net Demand and Time Liabilities (NDTL), showing it is a bank liability metric.
  • Shows NDTL is computed from bank demand and time liabilities and inter-bank assets—clearly a banking concept.
Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > The following are the major instruments/tools that RBI uses for conducting its monetary policy: > p. 61
Presence: 5/5
“Marginal Standing Facility (MSF): It is a facility introduced in 2011, under which scheduled commercial banks can borrow additional amount of overnight money (over and above what is available to them through repo rate) from the Reserve Bank by dipping into their SLR portfolio up to a limit (2%) at a penal rate of interest. This provides a safety valve against unanticipated liquidity shocks to the banking system. When banks take loan from RBI at Repo rate, banks need to keep Govt. Securities with RBI, but this security is in addition to the requirement under SLR. Banks cannot keep SLR securities to avail loan from RBI at Repo Rate.”
Why this source?
  • Describes MSF as a facility (introduced 2011) allowing scheduled commercial banks to borrow overnight by dipping into SLR—an operational banking mechanism.
  • Frames MSF as a safety valve for liquidity shocks to the banking system, tying the term to bank operations and RBI policy.
Statement 2
Are the terms "Marginal Standing Facility Rate" and "Net Demand and Time Liabilities" used in relation to communication networking?
Origin: Web / Current Affairs Fairness: CA heavy Web-answerable

Web source
Presence: 5/5
"A Marginal Standing Facility rate is an interest rate at which the Reserve Bank of India lends money to scheduled commercial banks facing acute liquidity shortages."
Why this source?
  • Defines Marginal Standing Facility (MSF) as an interest rate used by the Reserve Bank of India to lend to scheduled commercial banks.
  • Describes MSF in the context of bank liquidity and borrowing limits tied to NDTL, indicating a banking/monetary policy context rather than networking.
Web source
Presence: 5/5
"NTDL Net Demand and Time Liabilities refer to a bank’s total deposits and liabilities, excluding its capital."
Why this source?
  • Defines NDTL (Net Demand and Time Liabilities) as a bank’s total deposits and liabilities, used for calculating SLR and MSF eligibility.
  • Places both terms squarely in banking/reserve requirements, not in any communications or networking context.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > LONG TERM REPO OPERATIONS (LTROs) > p. 166
Strength: 5/5
“Marginal Standing Facility (MSF): This facility was introduced by RBI in 2011. Eligibility: All the SCBs having current account with RBI can avail MSF. They can avail an overnight short-term loan up to 2 per cent of their Net Demand and Time Liabilities.”
Why relevant

Defines Marginal Standing Facility (MSF) as a facility introduced by RBI and links MSF borrowing limits to banks' Net Demand and Time Liabilities (NDTL).

How to extend

A student can extend this by noting both terms appear together in a clear banking/RBI operational definition, so they likely belong to finance rather than networking.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > The following are the major instruments/tools that RBI uses for conducting its monetary policy: > p. 61
Strength: 5/5
“Marginal Standing Facility (MSF): It is a facility introduced in 2011, under which scheduled commercial banks can borrow additional amount of overnight money (over and above what is available to them through repo rate) from the Reserve Bank by dipping into their SLR portfolio up to a limit (2%) at a penal rate of interest. This provides a safety valve against unanticipated liquidity shocks to the banking system. When banks take loan from RBI at Repo rate, banks need to keep Govt. Securities with RBI, but this security is in addition to the requirement under SLR. Banks cannot keep SLR securities to avail loan from RBI at Repo Rate.”
Why relevant

Describes MSF as a monetary policy instrument for scheduled commercial banks, explaining its purpose and collateral rules.

How to extend

Use this rule (MSF as an RBI monetary tool) to rule out domains like communication networking which do not use central-bank instruments.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > The following are the major instruments/tools that RBI uses for conducting its monetary policy: > p. 63
Strength: 5/5
“Scheduled Commercial Banks are required to maintain SLR as per the Banking Regulation Act 1949. The ceiling on SLR is 40%. Deposits of public are the liability of banks. The public's demand deposits are demand liability of the bank and time deposits are time liability of the banks and the total demand and time deposits of the public is called 'Net Demand and Time Liabilities (NDTL)' of the banks. The CRR and SLR enable RBI to control the amount of money that banks can create and make public deposits safe and liquid. It ensures that banks have a safe cushion of assets to draw on when account holders want to be paid.”
Why relevant

Explicitly defines Net Demand and Time Liabilities (NDTL) as the total demand and time deposits of the public — a banking balance-sheet concept used for reserve calculations.

How to extend

A student can compare NDTL's definition to typical networking terminology and see there is no conceptual overlap.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > LONG TERM REPO OPERATIONS (LTROs) > p. 167
Strength: 4/5
“Money and Banking 7.11 (NDTL) outstanding at the end of second preceding fortnight, against government securities as collateral. This facility is in addition to loans on repo rate. The minimum amount which can be accessed through MSF is ₹1 crore and in multiples of ₹1 crore. The rate of interest under MSF is 25 basis points (i.e. 0.25%) above the repo rate. MSF rate of interest on 5 February 2021 stood at 4.25 per cent. The borrowing limit of 2 per cent of the Net Demand and Time Liabilities (NDTL) under MSF has been increased to 3 per cent by RBI in April 2020 as one of the measures to reduce the economic impact of COVID-19.”
Why relevant

Gives operational details tying MSF borrowing limits and interest rates to percentages of NDTL and RBI emergency measures, reinforcing their use in banking policy.

How to extend

A student could use this concrete numeric/operational linkage to judge that these are finance metrics, not networking parameters.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > CASH RESERVE RATIO (CRR) vs STATUTORY LIQUIDITY RATIO (SLR) > p. 169
Strength: 4/5
“Both the reserve requirement tools are used by the Reserve Bank of India (RBI) to regulate the supply of money in the economy. However: CRR is maintained as a percentage of the Demand and Time Liabilities (DTL), whereas SLR is maintained as a percentage of the Net Demand and Time Liabilities (NDTL).”
Why relevant

Contrasts CRR and SLR as reserve tools maintained as percentages of DTL and NDTL, showing NDTL is a standard basis for banking regulation.

How to extend

Extend by noting NDTL's role in regulatory ratios — a banking-specific application unlikely to be used in communication networking.

Statement 3
Are the terms "Marginal Standing Facility Rate" and "Net Demand and Time Liabilities" used in relation to military strategies?
Origin: Web / Current Affairs Fairness: CA heavy Web-answerable

Web source
Presence: 5/5
"A Marginal Standing Facility rate is an interest rate at which the Reserve Bank of India lends money to scheduled commercial banks facing acute liquidity shortages."
Why this source?
  • Explicitly defines Marginal Standing Facility (MSF) rate as an interest rate for lending by the Reserve Bank of India to commercial banks.
  • Connects MSF borrowing limits to Net Demand and Time Liabilities (NDTL), showing a banking/monetary policy context, not military.
Web source
Presence: 5/5
"NTDL Net Demand and Time Liabilities refer to a bank’s total deposits and liabilities, excluding its capital."
Why this source?
  • Defines NTDL as a bank’s total deposits and liabilities, tying the term to banking operations.
  • States NTDL is the basis for calculating SLR and MSF eligibility, reinforcing financial (not military) usage.
Web source
Presence: 5/5
"Net Demand and Time Deposit Liabilities (NDTL) The Net Demand and Time Liabilities (NDTL) include all the types of deposits banks offer their customers."
Why this source?
  • Describes Net Demand and Time Deposit Liabilities (NDTL) as including types of deposits banks offer customers.
  • Places both terms in the context of banks, repo rates, and liquidity ratios, not in military strategy.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 8: Financial Market > egin{array}{c|c|c|c|c} \\hline extbf{2015} & extbf{0} & extbf{0} \\[1ex] \ \hline \ \end{array} > p. 251
Strength: 5/5
“What is/are the facility/facilities the beneficiaries can get from the services of Business Correspondent (Bank Saathi) in branchless areas? • 1. It enables the beneficiaries to draw their subsidies and social security benefits in their villages. • 2. It enables the beneficiaries in the rural areas to make deposits and withdrawals. Select the correct answer using the code given below: • (b) 2 only • (a) 1 only • (d) Neither 1 nor 2 • (c) Both 1 and 2 31. The terms 'Marginal Standing Facility Rate' and 'Net Demand and Time Liabilities' sometimes appearing in news are used in relation to • (a) banking operations• (b) communication networking”
Why relevant

Contains a multiple-choice question listing 'Marginal Standing Facility Rate' and 'Net Demand and Time Liabilities' with an answer option 'banking operations' (and separately 'military strategies'), implying the terms are associated with banking in that source.

How to extend

A student could take this pattern (the question contrasting banking vs military) and, using the fact these terms appear with 'banking operations' in the source, treat 'military strategies' as the unlikely category to verify against other references.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > LONG TERM REPO OPERATIONS (LTROs) > p. 166
Strength: 5/5
“Marginal Standing Facility (MSF): This facility was introduced by RBI in 2011. Eligibility: All the SCBs having current account with RBI can avail MSF. They can avail an overnight short-term loan up to 2 per cent of their Net Demand and Time Liabilities.”
Why relevant

Defines Marginal Standing Facility (MSF) as an RBI facility allowing scheduled commercial banks to borrow against their Net Demand and Time Liabilities.

How to extend

A student can combine this explicit RBI/banking definition with general knowledge that RBI and NDTL are monetary terms, not military, to judge the statement implausible.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > The following are the major instruments/tools that RBI uses for conducting its monetary policy: > p. 63
Strength: 5/5
“Scheduled Commercial Banks are required to maintain SLR as per the Banking Regulation Act 1949. The ceiling on SLR is 40%. Deposits of public are the liability of banks. The public's demand deposits are demand liability of the bank and time deposits are time liability of the banks and the total demand and time deposits of the public is called 'Net Demand and Time Liabilities (NDTL)' of the banks. The CRR and SLR enable RBI to control the amount of money that banks can create and make public deposits safe and liquid. It ensures that banks have a safe cushion of assets to draw on when account holders want to be paid.”
Why relevant

Gives a definition of Net Demand and Time Liabilities (NDTL) as total demand and time deposits of the public, tying the term to bank liabilities and reserve requirements.

How to extend

Knowing NDTL is a banking accounting aggregate, a student could reasonably exclude military strategy usage without external military sources showing overlap.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > The following are the major instruments/tools that RBI uses for conducting its monetary policy: > p. 62
Strength: 4/5
“With the introduction of Standing Deposit Facility (SDF), the policy/LAF corridor has changed and now it is SDF and MSF where SDF is the floor and MSF is the upper end with the policy repo rate in the middle of the corridor. • 8. Reserve Requirements (Fractional Reserve Banking): • Cash Reserve Ratio (CRR) The amount of cash that the scheduled commercial banks are required to maintain with RBI with respect to their NDTL (on a fortnightly basis)”
Why relevant

States that cash reserve requirements (CRR) are maintained with respect to NDTL, linking NDTL to central bank monetary policy mechanisms.

How to extend

A student can extend this pattern (NDTL used in monetary policy rules) to infer the term belongs to financial regulation rather than military doctrine.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > LONG TERM REPO OPERATIONS (LTROs) > p. 167
Strength: 4/5
“Money and Banking 7.11 (NDTL) outstanding at the end of second preceding fortnight, against government securities as collateral. This facility is in addition to loans on repo rate. The minimum amount which can be accessed through MSF is ₹1 crore and in multiples of ₹1 crore. The rate of interest under MSF is 25 basis points (i.e. 0.25%) above the repo rate. MSF rate of interest on 5 February 2021 stood at 4.25 per cent. The borrowing limit of 2 per cent of the Net Demand and Time Liabilities (NDTL) under MSF has been increased to 3 per cent by RBI in April 2020 as one of the measures to reduce the economic impact of COVID-19.”
Why relevant

Provides operational details: MSF borrowing limits as a percentage of NDTL and MSF interest rate—practical banking parameters, not military terminology.

How to extend

A student could use these numerical rules (percentages of NDTL, interest rates) to recognize the technical financial nature of the terms and dismiss a military interpretation absent contrary evidence.

Statement 4
Are the terms "Marginal Standing Facility Rate" and "Net Demand and Time Liabilities" used in relation to the supply and demand of agricultural products?
Origin: Web / Current Affairs Fairness: CA heavy Web-answerable

Web source
Presence: 5/5
"A Marginal Standing Facility rate is an interest rate at which the Reserve Bank of India lends money to scheduled commercial banks facing acute liquidity shortages."
Why this source?
  • Defines Marginal Standing Facility (MSF) rate as an interest rate at which the Reserve Bank of India lends to scheduled commercial banks.
  • Shows MSF is about bank liquidity/borrowing, not agricultural supply or demand.
Web source
Presence: 5/5
"Net Demand and Time Deposit Liabilities (NDTL) include all the types of deposits banks offer their customers."
Why this source?
  • Explains Net Demand and Time Liabilities (NDTL) as types of bank deposits (demand and time liabilities).
  • Links NDTL to banking deposit structure rather than to agricultural products.
Web source
Presence: 5/5
"Net Demand and Time Liabilities - This is the total of all bank deposits that decide how much a bank can borrow under MSF."
Why this source?
  • States NDTL is the total of all bank deposits that determine how much a bank can borrow under MSF.
  • Connects both terms directly to banking operations (MSF borrowing cap), not to agricultural supply/demand.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > LONG TERM REPO OPERATIONS (LTROs) > p. 166
Strength: 5/5
“Marginal Standing Facility (MSF): This facility was introduced by RBI in 2011. Eligibility: All the SCBs having current account with RBI can avail MSF. They can avail an overnight short-term loan up to 2 per cent of their Net Demand and Time Liabilities.”
Why relevant

Defines Marginal Standing Facility (MSF) and directly links MSF usage to banks' borrowing against their Net Demand and Time Liabilities (ND&TL).

How to extend

A student can infer these terms are technical banking measures and thus likely pertain to monetary/banking operations rather than to agricultural market supply/demand.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 8: Financial Market > egin{array}{c|c|c|c|c} \\hline extbf{2015} & extbf{0} & extbf{0} \\[1ex] \ \hline \ \end{array} > p. 251
Strength: 5/5
“What is/are the facility/facilities the beneficiaries can get from the services of Business Correspondent (Bank Saathi) in branchless areas? • 1. It enables the beneficiaries to draw their subsidies and social security benefits in their villages. • 2. It enables the beneficiaries in the rural areas to make deposits and withdrawals. Select the correct answer using the code given below: • (b) 2 only • (a) 1 only • (d) Neither 1 nor 2 • (c) Both 1 and 2 31. The terms 'Marginal Standing Facility Rate' and 'Net Demand and Time Liabilities' sometimes appearing in news are used in relation to • (a) banking operations• (b) communication networking”
Why relevant

Contains a multiple-choice prompt that explicitly asks whether the terms sometimes appearing in news are used in relation to 'banking operations'.

How to extend

Use this as a corroborating clue that mainstream sources treat these terms as banking jargon, not agricultural market terminology.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 10: Agriculture - Part I > 10.3 Minimum Support Price (MSP) > p. 305
Strength: 4/5
“CACP takes into account the following factors to recommend MSP to the dept. of Agriculture • Cost of production and margin (profit) to farmers• Demand and supply• Price trends in the market both domestic and international• Inter crop price parity• Terms of trade between agriculture and non-agriculture products• Likely implication of MSP on consumers of that product Among several criteria for recommending the MSP, the most important one is the cost of production of farmers and margin/profit on it. The cost of production (All-India weighted average Cost of Production) of agricultural produce is calculated in three ways: A2, A2+FL and C2.”
Why relevant

Shows the kinds of terms and criteria (e.g., MSP, cost of production, demand and supply) actually used in agriculture policy and price support discussions.

How to extend

Contrast the agricultural vocabulary (MSP, cost, demand/supply) with the banking vocabulary (MSF, ND&TL) to assess whether the latter fit agricultural supply-demand usage.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 9: Agriculture > Objectives of MSP include: > p. 329
Strength: 4/5
“• While recommending MSP, CACP considers determinants such as demand and supply, cost of production, price trends in market, inter-crop price parity, a minimum of 50 per cent margin over cost of production, etc. • Thus, MSP announced is 1. 5 times the cost of production of the crop. • At present, government announces MSP for 22 mandated crops and FRP for sugarcane. • In addition to it, MSP for Toria and De-Husked Coconut is fixed on the basis of MSPs of ö rapeseed/mustard and copra, respectively.”
Why relevant

Notes determinants considered when recommending Minimum Support Price (MSP), reinforcing that agricultural price policy uses MSP-related concepts.

How to extend

A student can compare MSP-focused terms with the MSF/ND&TL banking terms to judge that MSF/ND&TL are unlikely to be agricultural supply/demand terms.

Microeconomics (NCERT class XII 2025 ed.) > Chapter 5: Market Equilibrium > 5.2.2 Price Floor > p. 85
Strength: 3/5
“In the case of agricultural support, to prevent price from falling because of excess supply, government needs to buy the surplus at the predetermined price. • • In a perfectly competitive market, equilibrium occurs where market demand equals market supply.• • The equilibrium price and quantity are determined at the intersection of the market demand and market supply curves when there is fixed number of firms.• • Each firm employs labour upto the point where the marginal revenue product of labour equals the wage rate.• • With supply curve remaining unchanged when demand curve shifts rightward (leftward), the equilibrium quantity increases (decreases) and equilibrium price increases (decreases) with fixed number of firms.”
Why relevant

Explains agricultural policy actions (government buying surplus) and market equilibrium language used in agricultural contexts.

How to extend

Use this example of agricultural market terminology/policy actions to see that agricultural discourse centers on supply, demand, MSP and surplus management rather than bank liquidity facilities.

Pattern takeaway: UPSC frequently uses a 'Term -> Domain' matching pattern for technical jargon. They pick terms from RBI circulars (Banking), ISRO missions (Tech), or Summits (IR) and simply ask 'Which field?'. You don't need the formula, just the context.
How you should have studied
  1. [THE VERDICT]: Sitter. Direct hit from standard sources like Vivek Singh (Ch. 2) or Nitin Singhania (Ch. 7) under 'Quantitative Tools of Monetary Policy'.
  2. [THE CONCEPTUAL TRIGGER]: The RBI's Monetary Policy Framework (specifically Liquidity Adjustment Facility and Reserve Ratios).
  3. [THE HORIZONTAL EXPANSION]: Memorize the 'Liquidity Corridor': SDF (Floor) < Repo < MSF (Ceiling). Related terms: CRR, SLR, OMO (Open Market Operations), MSS (Market Stabilization Scheme), LTRO, and the difference between 'Gross' and 'Net' DTL.
  4. [THE STRATEGIC METACOGNITION]: Don't just memorize the acronym. Ask: 'Is this a tool to inject liquidity or absorb it?' and 'What is the base for calculation?' (Answer: NDTL). If a term defines a limit or a rate, it usually belongs to Banking.
Concept hooks from this question
📌 Adjacent topic to master
S1
👉 Marginal Standing Facility (MSF)
💡 The insight

MSF is one of the exact terms in the statement and is defined in the references as an RBI overnight lending facility for scheduled commercial banks.

High-yield for UPSC: MSF appears in questions on RBI liquidity management and monetary policy tools. Understanding MSF explains overnight liquidity support, penal rates, and limits tied to bank metrics. Prepare by memorising the purpose, eligibility, and linkage to NDTL/SLR from standard RBI instruments.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > LONG TERM REPO OPERATIONS (LTROs) > p. 166
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > The following are the major instruments/tools that RBI uses for conducting its monetary policy: > p. 61
🔗 Anchor: "Are the terms "Marginal Standing Facility Rate" and "Net Demand and Time Liabili..."
📌 Adjacent topic to master
S1
👉 Net Demand and Time Liabilities (NDTL)
💡 The insight

NDTL is the other exact term in the statement; references give its definition and formula as a banking liability measure.

Essential for UPSC banking/monetary policy questions: NDTL is used to compute CRR/SLR requirements and to set limits (e.g., MSF borrowing). Master the composition and formula of NDTL and its use in reserve-requirement calculations to answer data- and concept-based questions.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > LIABILITIES OF A BANK > p. 164
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > The following are the major instruments/tools that RBI uses for conducting its monetary policy: > p. 63
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > The following are the major instruments/tools that RBI uses for conducting its monetary policy: > p. 62
🔗 Anchor: "Are the terms "Marginal Standing Facility Rate" and "Net Demand and Time Liabili..."
📌 Adjacent topic to master
S1
👉 Reserve requirements & the monetary policy corridor (CRR, SLR, SDF/MSF)
💡 The insight

References tie NDTL to CRR/SLR and place MSF as the upper end of the RBI policy corridor (with SDF as the floor).

Frequently tested intersection of banking operations and monetary policy: knowing how CRR/SLR relate to NDTL and how SDF/MSF form the corridor helps answer questions on liquidity management, transmission, and RBI tools. Study by mapping each instrument to its objective, calculation base (NDTL), and role in the policy corridor.

📚 Reading List :
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > The following are the major instruments/tools that RBI uses for conducting its monetary policy: > p. 62
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > The following are the major instruments/tools that RBI uses for conducting its monetary policy: > p. 61
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > The following are the major instruments/tools that RBI uses for conducting its monetary policy: > p. 63
🔗 Anchor: "Are the terms "Marginal Standing Facility Rate" and "Net Demand and Time Liabili..."
📌 Adjacent topic to master
S2
👉 Marginal Standing Facility (MSF)
💡 The insight

MSF is repeatedly described in the references as an RBI facility allowing banks to borrow overnight funds, so understanding MSF clarifies the domain where the term is used.

High-yield for banking/monetary policy questions: MSF connects to liquidity management, RBI lending windows, repo operations and policy rate corridor. UPSC often asks about RBI instruments and emergency liquidity measures; master definitions, eligibility and limits. Learn by linking textbook definitions to recent RBI policy changes and practice MCQs.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > LONG TERM REPO OPERATIONS (LTROs) > p. 166
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > The following are the major instruments/tools that RBI uses for conducting its monetary policy: > p. 61
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > LONG TERM REPO OPERATIONS (LTROs) > p. 167
🔗 Anchor: "Are the terms "Marginal Standing Facility Rate" and "Net Demand and Time Liabili..."
📌 Adjacent topic to master
S2
👉 Net Demand and Time Liabilities (NDTL)
💡 The insight

NDTL is the base against which MSF borrowing limits and reserve ratios are computed, so it's central to interpreting both terms together.

Core concept for banking regulation and reserve requirements: NDTL appears in questions on CRR/SLR calculations, liquidity ratios and RBI controls. UPSC questions test ability to connect definitions to policy tools; practice by computing CRR/SLR percentages and tracing how NDTL affects monetary transmission.

📚 Reading List :
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > The following are the major instruments/tools that RBI uses for conducting its monetary policy: > p. 63
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > LIABILITIES OF A BANK > p. 164
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > CASH RESERVE RATIO (CRR) vs STATUTORY LIQUIDITY RATIO (SLR) > p. 169
🔗 Anchor: "Are the terms "Marginal Standing Facility Rate" and "Net Demand and Time Liabili..."
📌 Adjacent topic to master
S2
👉 Reserve requirements & policy corridor (CRR, SLR, SDF vs MSF)
💡 The insight

References link CRR/SLR maintenance to NDTL and position MSF as the upper end of the RBI's policy corridor, showing how these concepts interact.

Important for understanding RBI's toolkit and monetary stance questions: knowing which ratios are maintained on DTL vs NDTL and the role of SDF/MSF in the corridor helps answer applied policy questions. Study by mapping each instrument to its target base and role in liquidity management; use past policy change examples.

📚 Reading List :
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > The following are the major instruments/tools that RBI uses for conducting its monetary policy: > p. 62
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > CASH RESERVE RATIO (CRR) vs STATUTORY LIQUIDITY RATIO (SLR) > p. 169
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > The following are the major instruments/tools that RBI uses for conducting its monetary policy: > p. 63
🔗 Anchor: "Are the terms "Marginal Standing Facility Rate" and "Net Demand and Time Liabili..."
📌 Adjacent topic to master
S3
👉 Marginal Standing Facility (MSF)
💡 The insight

MSF appears repeatedly in the references as an RBI facility allowing banks to borrow overnight funds at a penal rate.

High-yield for UPSC: MSF is a specific liquidity window of the RBI and commonly tested under banking and monetary policy. It links directly to repo operations, SLR usage and emergency liquidity management. Learn its purpose, eligibility, limits (e.g., % of NDTL), and how it differs from repo/SDF—use concise notes and compare instruments in tabular form for quick revision.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > LONG TERM REPO OPERATIONS (LTROs) > p. 166
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > The following are the major instruments/tools that RBI uses for conducting its monetary policy: > p. 61
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > LONG TERM REPO OPERATIONS (LTROs) > p. 167
🔗 Anchor: "Are the terms "Marginal Standing Facility Rate" and "Net Demand and Time Liabili..."
🌑 The Hidden Trap

The 'Inter-bank' Trap. NDTL = Demand + Time Liabilities MINUS 'Assets with other banks'. The shadow fact is that inter-bank deposits are deducted to avoid double-counting reserve requirements. Also, watch out for 'Standing Deposit Facility (SDF)', which replaced Reverse Repo as the corridor floor.

⚡ Elimination Cheat Code

Linguistic DNA. 'Liabilities' is a core accounting term (Assets vs. Liabilities). 'Rate' implies a cost of capital. While Option D (Agriculture) mentions 'Supply and Demand', the phrase 'Time Liabilities' is specific to Balance Sheets (Banking). Military and Communication are contextually alien to 'Liabilities'.

🔗 Mains Connection

Mains GS-3 (Indian Economy - Mobilization of Resources): MSF isn't just a rate; it's a 'Safety Valve' for Financial Stability. It allows banks to borrow emergency funds even by dipping into SLR quotas to prevent payment system gridlocks.

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SIMILAR QUESTIONS

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Which of the following with regard to the term T^ank run’ is correct?