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RBI Hikes Repo Rate by 50 bps to 8.50%

Current · Source: Reserve Bank of India · RBI/2007-2008/379 · issued 24 Jun 2008 · ~1 min read

Quick answerRBI raised the repo rate from 8.00% to 8.50% effective June 25, 2008, while keeping the reverse repo rate unchanged at 6.00%. This tightening aims to anchor inflation expectations amid global and domestic macroeconomic pressures.

The rule, in the simplest words

The RBI raised the repo rate from 8.00% to 8.50% to control inflation.
Banks will face a higher cost of borrowing from RBI, which may lead to higher lending rates for customers.
Banks need to reassess their asset-liability management and pricing strategies.

How it plays out — a real example

A branch operations officer in Indore, Mr. Kumar, needs to adjust the interest rates on gold loans to reflect the higher repo rate. He will review the current rates and communicate the changes to customers, ensuring that the updated rates are reflected in the loan pricing models. This will help him manage the bank's liquidity and asset-liability balance effectively.

What changed

The fixed repo rate under the Liquidity Adjustment Facility was increased by 50 basis points to 8.50%, effective June 25, 2008. The reverse repo rate remains unchanged at 6.00%. All other terms and conditions of the LAF scheme stay the same.

What it means for you

Banks will face higher cost of borrowing from RBI, which will likely transmit to higher lending rates for customers. This move signals RBI's commitment to controlling inflation, potentially slowing credit growth and impacting loan demand. Lenders need to reassess their asset-liability management and pricing strategies.

What you must do

Review and adjust lending and deposit rates to reflect the higher repo rate.
Reassess liquidity management and borrowing costs under LAF.
Communicate rate changes to customers and update loan pricing models.
Monitor inflation trends and RBI's future policy signals for further adjustments.

Who it affects

All scheduled commercial banks (excluding RRBs), Primary dealers, Borrowers with floating rate loans, Treasury and ALM teams

❓ Common questions

Regulatory timeline

Stated effective date effective June 25, 2008
Decoded by BankPulse 2026-06-19 13:43 IST

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

Why did RBI increase the repo rate?

RBI raised the repo rate by 50 bps to 8.50% to align with the monetary policy stance for 2008-09, based on domestic and global macroeconomic and financial developments, primarily to curb inflationary pressures.

What is the impact on reverse repo rate?

The reverse repo rate remains unchanged at 6.00%, so the corridor between repo and reverse repo widens, making it more expensive for banks to borrow from RBI while keeping the floor for overnight rates steady.

When does this change take effect?

The new repo rate of 8.50% is effective from June 25, 2008, as specified in the RBI notification.

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

RBI/2007-2008/379
FMD.MOAG. 
No.19/01.01.01/2007-08
 June 24, 2008
 All Scheduled Commercial 
Banks (excluding RRBs)
 and Primary Dealers
 Dear Sir,
 Liquidity 
Adjustment Facility – Repo and Reverse Repo Rates
 Consistent 
with the stance of monetary policy in 2008-09 and on the basis of incoming information 
on domestic and global macroeconomic and financial developments, the Reserve Bank 
of India has decided to increase the fixed repo rate under the Liquidity Adjustment 
Facility (LAF) by 50 basis points to 8.50 per cent from 8.00 per cent with effect 
from June 25, 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 remain unchanged. 
 4. Please acknowledge receipt by e-mail .
 Yours 
faithfully
 (Chandan Sinha)
Chief General Manager

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2007-2008/379 · issued 24 Jun 2008. The plain-English explanation above is BankPulse’s own independent summary.

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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, Borrowers with floating rate loans, Treasury and ALM teams), your first concrete step on “RBI Hikes Repo Rate by 50 bps to 8.50%” is: “Review and adjust lending and deposit rates to reflect the higher repo rate.” (RBI issued this 24 Jun 2008).

Circular: RBI/2007-2008/379 -- RBI Hikes Repo Rate by 50 bps to 8.50%
Issued: 24 Jun 2008
Action required: Review and adjust lending and deposit rates to reflect the higher repo rate.
Action required: Reassess liquidity management and borrowing costs under LAF.
Action required: Communicate rate changes to customers and update loan pricing models.
Action required: Monitor inflation trends and RBI's future policy signals for further adjustments.
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=4254&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.