Word of the Day Marginal Standing Facility It is a facility for banks to borrow money from the RBI in an emergency Normally, banks borrow money from the RBI at the repo rate. They then use this money to give loans to the public. If a bank has less money than required to run operations or give loans, it tries to borrow money from other banks through overnight and short-term loans, which are known as inter-bank loans. Let’s say a bank is unable to get an inter-bank loan to manage its cash crunch. It will now ask the RBI for an overnight loan using the Marginal Standing Facility (or MSF). Such loans have a higher interest rate than the repo rate. For example, if the repo rate is 6.25%, the MSF rate will be around 6.50%.