UPSCpedia: Economedia - Economic Indicators:

• Marginal Standing Facility Rate :  Under this scheme, Banks will be able to borrow upto 1% of their respective Net Demand and Time Liabilities". The rate of interest on the amount accessed   from this facility will be 100 basis points (i.e. 1%)  above the repo rate. This scheme is likely to reduce volatility in the overnight rates and improve monetary transmission.

  
  

  In the policy statement RBI has also declared "The stance of monetary policy is, among other things, to manage liquidity to ensure that it remains broadly in balance, with neither a large surplus diluting monetary transmission nor a large deficit choking off fund flows."
  
• Difference between liquidity adjustment facility and marginal standing facility rate of RBI?
  Under LAF - Repo rate, Banks can borrow from RBI at the Repo rate by pledging government securities over and above the statutory liquidity requirements. However, in case of borrowing from the marginal standing facility, banks can borrow funds up to one percentage of their net demand and time liabilities, at 8.25%. and this can be within the statutory liquidity ratio of 24%
• Bank Rate: Bank Rate in India is decided by RBI. This is the   rate at which central bank (RBI)  lends money to other banks or financial institutions. If the bank rate goes up, long-term interest rates also tend to move up, and vice-versa. Thus, it can said   that if bank rate  is hiked, in all likelihood, banks will soon hikes their own lending rates to ensure that they continue to make   profit.
• Cash Reserve Ratio:  Banks in India are required to hold a certain proportion of their deposits in the form of  cash. However, actually Banks  don’t hold these as cash with themselves, but deposit such case with Reserve Bank of India (RBI) / currency chests, which is considered as  equivlanet to holding cash with RBI. This minimum ratio (that is the part of the total deposits  to be held as cash) is stipulated by the RBI and is known as the CRR or Cash Reserve Ratio. Thus, When a bank’s deposits increase by Rs100, and if the cash reserve ratio is 6%, the banks will have to hold additional Rs 6 with RBI and Bank will be able to use only Rs 94 for investments and lending / credit purpose. Therefore, higher the ratio (i.e. CRR), the lower is the amount that banks will be able to use for lending and investment. This power of RBI to reduce the lendable amount by increasing the CRR, makes it an instrument in the hands of a central bank through which it can control the amount that banks lend. Thus, it is a tool used by RBI to control liquidity in the banking system. Some non bankers also wrongly use CRR Ratio or CRR Rate instead of Cash Reserve Ratio ).
• Statutory Liquidity Ratio: This term is used by bankers and indicates the minimum percentage of deposits that the bank has to maintain in form of gold, cash or other approved securities. Thus, we can say that it is ratio of cash and some other approved securities to liabilities (deposits) It regulates the credit growth in India. Some non bankers also wrongly use SLR ratio or SLR Rate instead of Statutory Liquidity Ratio.
• Repo (Repurchase) Rate is the rate at which the RBI lends shot-term money to the banks against securities. When the repo rate increases borrowing from RBI becomes more expensive. Therefore, we can say that in case, RBI wants to make it more expensive for the banks to borrow money, it increases the repo rate; similarly, if it wants to make it cheaper for banks   to borrow money, it reduces the repo rate
• Reverse Repo Rate is the rate at which banks park their short-term excess liquidity with the RBI. The banks use this tool when they feel that they are stuck with excess funds and are not able to   invest anywhere for reasonable returns. An increase in the reverse repo rate  means that the RBI is ready to borrow money from the banks at a higher rate of interest. As a result, banks would prefer to keep more and more surplus funds with RBI.