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Repo Rate Hiked 25 bps to 8%; Reverse Repo Unchanged

Current · Source: Reserve Bank of India · RBI/2007-2008/362 · issued 11 Jun 2008 · ~1 min read
Quick answerRBI raised the repo rate by 25 bps to 8.00% effective June 12, 2008, to curb inflation. The reverse repo rate stays at 6.00%. All other LAF terms remain unchanged.
The rule, in the simplest words
How it plays out — a real example

A branch operations officer in Indore, Priya, sees the repo rate hike and knows her bank's cost of funds just went up. She updates her loan pricing sheet to add 0.25% to new gold loan interest rates, explaining to customers that RBI's move to fight inflation means slightly higher EMIs starting next month.

What changed

The fixed repo rate under the Liquidity Adjustment Facility was increased by 25 basis points from 7.75% to 8.00%, effective June 12, 2008. The reverse repo rate remains unchanged at 6.00%.

What it means for you

Borrowing from RBI via repo will cost banks 25 bps more, tightening liquidity and signaling a hawkish stance to contain inflation. Lending rates may rise as banks pass on higher costs, potentially slowing credit growth. The unchanged reverse repo rate keeps the corridor floor steady, limiting immediate impact on excess liquidity absorption.

What you must do

Who it affects

All Scheduled Commercial Banks (excluding RRBs), Primary Dealers, Treasury departments, Credit and lending teams

❓ Common questions

Regulatory timeline

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

Why did RBI hike the repo rate in June 2008?

To contain inflation expectations amid current macroeconomic and monetary conditions.

What is the new repo rate and when does it take effect?

The repo rate is increased to 8.00% from 7.75%, effective June 12, 2008.

Did the reverse repo rate change?

No, the reverse repo rate remains unchanged at 6.00%.

📜 Read the original circular — full text as issued by RBI
RBI/2007-2008/362 FMD.MOAG. No.18/01.01.01/2007-08 June 11, 2008 All Scheduled Commercial Banks (excluding RRBs) and Primary Dealers Dear Sir, LIQUIDITY ADJUSTMENT FACILITY – REPO AND REVERSE REPO RATES In the light of the current macroeconomic and overall monetary conditions and with a view to containing inflation expectations, the Reserve Bank of India has decided to increase the fixed repo rate under the Liquidity Adjustment Facility (LAF) by 25 basis points to 8.00 per cent from 7.75 per cent, with effect from June 12, 2008. 2. The reverse repo rate under LAF remains unchanged at 6.00 per cent. 3. All other terms and conditions of the current LAF Scheme will remain unchanged. 4. Please acknowledge receipt by e-mail . Yours faithfully (Somnath Chatterjee) Director
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2007-2008/362 · issued 11 Jun 2008. The plain-English explanation above is BankPulse’s own independent summary.
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Who does what — compliance checklist
💻 IT / Systems
  • Communicate the rate change impact to treasury and credit teams for updated pricing models.
📜 Compliance
  • Review and adjust your bank's lending and deposit rates to reflect the higher cost of funds.
  • Reassess liquidity management strategies given the wider repo-reverse repo spread.
  • Monitor inflation trends and RBI guidance for further rate actions.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template

Example: if you are a Compliance officer at a bank this circular applies to (All Scheduled Commercial Banks (excluding RRBs), Primary Dealers, Treasury departments, Credit and lending teams), your first concrete step on “Repo Rate Hiked 25 bps to 8%; Reverse Repo Unchanged” is: “Review and adjust your bank's lending and deposit rates to reflect the higher cost of funds.” (RBI issued this 11 Jun 2008).

  1. Circular: RBI/2007-2008/362 -- Repo Rate Hiked 25 bps to 8%; Reverse Repo Unchanged
  2. Issued: 11 Jun 2008
  3. Action required: Review and adjust your bank's lending and deposit rates to reflect the higher cost of funds.
  4. Action required: Reassess liquidity management strategies given the wider repo-reverse repo spread.
  5. Action required: Communicate the rate change impact to treasury and credit teams for updated pricing models.
  6. Action required: Monitor inflation trends and RBI guidance for further rate actions.
  7. Owner: ____________ Target date: ____________
  8. Board/committee approval needed? Y / N
  9. Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.

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BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=4231&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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