UPSC | Prelims GS | 2026

With reference to the reported RBI monetary policy measures, consider: 1. The MPC raised the policy repo rate under the LAF. 2. The SDF rate was below the repo rate. 3. The MSF rate was above the repo rate. Which are correct?

  1. 1 and 2 only
  2. 2 and 3 only
  3. 1 and 3 only
  4. 1, 2 and 3

Answer

Correct Answer

1, 2 and 3

Explanation

All three are correct: repo was 5.5%, SDF 5.25% and MSF/bank rate 5.75%. SDF is the floor because banks park funds with RBI without collateral. MSF is the ceiling because banks borrow overnight against eligible securities. The reported corridor is therefore repo-centred.

Topics: indian economy, liquidity adjustment facility, monetary policy, repo sdf msf corridor