http://www.arthapedia.in/index.php?title=Market_Stabilization_Scheme_(MSS)&feed=atom&action=historyMarket Stabilization Scheme (MSS) - Revision history2024-03-29T08:36:55ZRevision history for this page on the arthapediaMediaWiki 1.17.0http://www.arthapedia.in/index.php?title=Market_Stabilization_Scheme_(MSS)&diff=3349&oldid=prevRosemary.a at 17:34, 17 April 20162016-04-17T17:34:13Z<p></p>
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<tr><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"><div>crore, with a review due when the outstanding reaches the threshold of Rs.  </div></td><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"><div>crore, with a review due when the outstanding reaches the threshold of Rs.  </div></td></tr>
<tr><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"><div>35,000 crore.</p></div></td><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"><div>35,000 crore.</p></div></td></tr>
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<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;">== Also See==</ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;">*[http://www.arthapedia.in/index.php?title=Statutory_Liquidity_Ratio  Statutory Liquidity Ratio (SLR)]</ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;">*[http://www.arthapedia.in/index.php?title=Cash_Reserve_Ratio_(CRR) cash reserve ratio (CRR)]</ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;">*[http://www.arthapedia.in/index.php?title=Liquidity_Adjustment_Facility_(LAF) Liquidity Adjustment Facility (LAF)]</ins></div></td></tr>
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<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;">*[http://www.arthapedia.in/index.php?title=Marginal_Standing_Facility Marginal Standing Facility (MSF)]</ins></div></td></tr>
<tr><td colspan="2"> </td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div><ins style="color: red; font-weight: bold; text-decoration: none;">*Policy Rate </ins></div></td></tr>
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</table>Rosemary.ahttp://www.arthapedia.in/index.php?title=Market_Stabilization_Scheme_(MSS)&diff=872&oldid=prevArthapedia at 12:08, 3 October 20112011-10-03T12:08:31Z<p></p>
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<tr><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"><div>*Email- [mailto:rangeetg.ies@gmail.com rangeetg.ies@gmail.com]</div></td><td class='diff-marker'> </td><td style="background: #eee; color:black; font-size: smaller;"><div>*Email- [mailto:rangeetg.ies@gmail.com rangeetg.ies@gmail.com]</div></td></tr>
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<tr><td class='diff-marker'>−</td><td style="background: #ffa; color:black; font-size: smaller;"><div>[[Category:concepts]]</div></td><td class='diff-marker'>+</td><td style="background: #cfc; color:black; font-size: smaller;"><div>[[Category:concepts<ins class="diffchange diffchange-inline">|MarketStabilizationScheme(MSS)</ins>]]</div></td></tr>
</table>Arthapediahttp://www.arthapedia.in/index.php?title=Market_Stabilization_Scheme_(MSS)&diff=335&oldid=prevRangeetghosh1980: Created page with "<p>This scheme came into existence following a MoU between the Reserve Bank of India (RBI) and the Government of India (GoI) with the primary aim of aiding the sterilization op..."2011-08-23T03:50:30Z<p>Created page with "<p>This scheme came into existence following a MoU between the Reserve Bank of India (RBI) and the Government of India (GoI) with the primary aim of aiding the sterilization op..."</p>
<p><b>New concept</b></p><div><p>This scheme came into existence following a MoU between the Reserve Bank of <br />
India (RBI) and the Government of India (GoI) with the primary aim of aiding the <br />
sterilization operations of the RBI.</p><br />
<p>Historically, the RBI had been sterilizing the effects of significant capital <br />
inflows on domestic liquidity by offloading parts of the stock of Government <br />
Securities held by it. It is pertinent to recall, in this context, that the <br />
assets side of the RBI’s Balance Sheet (July 1 to June 30) includes Foreign <br />
Exchange Reserves and Government Securities while liabilities are primarily in <br />
the form of High Powered Money (consisting of Currency with the public and <br />
Reserves held in the RBI by the Banking System). Thus, any rise in Foreign <br />
Exchange Reserves resulting from the intervention of the RBI in the Foreign <br />
Exchange Markets (with the intention, say, to maintain the exchange rate on the <br />
face of huge capital inflows) entails a corresponding rise in High Powered <br />
Money. The Money Supply in the economy is linked to High Powered Money via the <br />
money multiplier. Therefore, on the face of large capital inflows, to keep the <br />
liabilities side constant so as to not raise the Supply of Money, corresponding <br />
reduction in the stock of Government Securities by the RBI is necessary.</p><br />
<p>The MSS was devised since continuous resort to sterilization by the RBI <br />
depleted its limited stock of Government Securities and impaired the scope for <br />
similar interventions in the future. Under this scheme, the GoI borrows from the <br />
RBI (such borrowing being additional to its normal borrowing requirements) and <br />
issues Treasury-Bills/Dated Securities that are utilized for absorbing excess <br />
liquidity from the market. Therefore, the MSS constitutes an arrangement aiding <br />
in liquidity absorption, in keeping with the overall monetary policy stance of <br />
the RBI, alongside tools like the Liquidity Adjustment Facility (LAF) and Open <br />
Market Operations (OMO).</p><br />
<p>The securities issued under MSS, termed as Market Stabilization Scheme (MSS) <br />
Securities/Bonds, are issued by way of auctions conducted by the RBI and are <br />
done according to a specified ceiling mutually agreed upon by the GoI and the <br />
RBI. They possess all the attributes of existing Treasury-Bills/Dated Securities <br />
and are included as a part of the country’s ‘internal Central Government debt’.</p><br />
<p>The amount raised under the MSS does not get credited to the Government <br />
Account but is maintained in a separate cash account with the RBI and are used <br />
only for the purpose of redemption/buy back of Treasury-Bills/Dated Securities <br />
issued under the scheme.</p><br />
<p>However, following the global financial crisis of 2008, that necessitated <br />
fiscal stimulus measures, an amendment to the original MoU between the RBI and <br />
the GoI in February 2009 allowed the Government to convert a portion of the MSS <br />
funds into normal government borrowing for financing its stimulus expenditure <br />
requirements.</p><br />
<p>Treasury-Bills/Securities issued under MSS are matched by equivalent cash <br />
balances that are held by the Government with the RBI. Such payments are not <br />
made from the MSS account just as receipts due to premium or accrued interest on <br />
these Securities are not credited to it.</p><br />
<p>As and when MSS securities are issued by the RBI as well as the annual <br />
ceiling, when decided, is notified through a press release. For the fiscal year <br />
2010-11 the annual ceiling for such securities outstanding stand at Rs. 50,000 <br />
crore, with a review due when the outstanding reaches the threshold of Rs. <br />
35,000 crore.</p><br />
<br />
<br />
==References==<br />
#http://www.rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=9886<br />
#http://www.rbi.org.in/scripts/PublicationReportDetails.aspx?TYPE=PERIOD&amp;PARAM1=11/12/2003&amp;PARAM2=13/12/2003<br />
<br />
<br />
==Contributed by==<br />
*[http://www.ies.gov.in/myaccount-profile-view.php?memid=359 Rangeet Ghosh, IES(2008)]<br />
*Email- [mailto:rangeetg.ies@gmail.com rangeetg.ies@gmail.com]<br />
<br />
[[Category:concepts]]</div>Rangeetghosh1980