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Standing Liquidity Facilities Rate Hiked to 8%

Current · Source: Reserve Bank of India · RBI/2007-2008/363 · issued 11 Jun 2008 · ~2 min read

Quick answerRBI raised the fixed repo rate under LAF to 8.00% effective June 11, 2008. Consequently, standing liquidity facilities for banks (export credit refinance) and primary dealers (collateralised liquidity support) will be available at this new repo rate from June 12, 2008.

The rule, in the simplest words

The RBI (India's central bank) raised the repo rate (the interest rate banks pay to borrow from RBI) to 8% starting June 11, 2008.
From June 12, 2008, banks and primary dealers (special financial companies that trade government bonds) must pay 8% interest when they borrow through special emergency loans called standing liquidity facilities.
This makes it more expensive for banks to get export credit refinance (special loans for banks that lend to exporters), so banks may charge exporters higher interest too.
Primary dealers also have to pay more for their collateralised liquidity support (emergency loans backed by securities), which can make borrowing costlier for them.

How it plays out — a real example

A forex & trade-finance officer in Indore, Priya, reviews her bank's daily funding report and sees that the cost of export credit refinance has just jumped from 7.75% to 8%. She immediately calls the treasury team to update the pricing on new export loans, knowing that her bank's lending margins will shrink if they don't pass on this higher cost to exporters.

What changed

The fixed repo rate under the Liquidity Adjustment Facility was revised upward to 8.00% with immediate effect. This change directly impacts the cost of standing liquidity facilities—export credit refinance for banks and collateralised liquidity support for primary dealers—which will now be charged at the new repo rate starting June 12, 2008.

What it means for you

Banks and primary dealers will face higher borrowing costs for these specific liquidity windows, as the rate aligns with the revised repo rate. This could tighten liquidity conditions and increase funding costs for banks relying on export credit refinance, potentially impacting lending margins and credit flow to the export sector.

What you must do

Review your bank's reliance on export credit refinance and assess the impact of the 25 bps rate hike on funding costs.
Update internal pricing models for export-related loans to reflect the higher refinance rate.
Communicate the rate change to treasury and credit teams to adjust liquidity management strategies.
Monitor RBI's future LAF announcements for further rate signals.

Who it affects

All scheduled banks (excluding RRBs) availing export credit refinance, Primary dealers using collateralised liquidity support, Treasury departments managing liquidity and funding costs, Export finance teams and credit officers

❓ Common questions

Regulatory timeline

Stated effective date effective June 11, 2008
Decoded by BankPulse 2026-06-19 13:45 IST

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

What is the new repo rate effective from June 11, 2008?

The fixed repo rate under the Liquidity Adjustment Facility has been revised to 8.00% with immediate effect.

When will the standing liquidity facilities be charged at the new rate?

The standing liquidity facilities for banks (export credit refinance) and primary dealers (collateralised liquidity support) will be available at the new repo rate of 8.00% from June 12, 2008.

Does this circular apply to Regional Rural Banks?

No, the circular explicitly excludes Regional Rural Banks (RRBs) from its scope.

📜 Read the original circular — full text as issued by RBI

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MOAG No. 18 / 01.01.01/ 2007-08 dated June 11, 2008 on Liquidity Adjustment Facility – Repo and Reverse Repo Rates. 2. The fixed repo rate under the LAF has been revised to 8.00 per cent with immediate effect. Accordingly, the Standing Liquidity Facilities provided to Banks (export credit refinance) and Primary Dealers (PDs) (collateralised liquidity support) from the Reserve Bank would be available at the repo rate i.e. at 8.00 per cent with effect from June 12, 2008. Yours faithfully, (A. B. 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Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2007-2008/363 · 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 to treasury and credit teams to adjust liquidity management strategies.

📜 Compliance

Review your bank's reliance on export credit refinance and assess the impact of the 25 bps rate hike on funding costs.
Update internal pricing models for export-related loans to reflect the higher refinance rate.
Monitor RBI's future LAF announcements for further rate signals.

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 banks (excluding RRBs) availing export credit refinance, Primary dealers using collateralised liquidity support, Treasury departments managing liquidity and funding costs, Export finance teams and credit officers), your first concrete step on “Standing Liquidity Facilities Rate Hiked to 8%” is: “Review your bank's reliance on export credit refinance and assess the impact of the 25 bps rate hike on funding costs.” (RBI issued this 11 Jun 2008).

Circular: RBI/2007-2008/363 -- Standing Liquidity Facilities Rate Hiked to 8%
Issued: 11 Jun 2008
Action required: Review your bank's reliance on export credit refinance and assess the impact of the 25 bps rate hike on funding costs.
Action required: Update internal pricing models for export-related loans to reflect the higher refinance rate.
Action required: Communicate the rate change to treasury and credit teams to adjust liquidity management strategies.
Action required: Monitor RBI's future LAF announcements for further rate signals.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
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=4232&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.