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Repo Rate Hiked to 9%: Standing Liquidity Facilities Priced Higher

Current · Source: Reserve Bank of India · RBI/2008-09/102 · issued 29 Jul 2008 · ~1 min read

Quick answerRBI raised the fixed repo rate by 50 bps to 9.0% effective July 29, 2008. Consequently, standing liquidity facilities for banks (export credit refinance) and Primary Dealers (collateralised liquidity support) will now be available at the new repo rate of 9.0%.

The rule, in the simplest words

The RBI (India's central bank) raised the repo rate (the rate at which banks borrow money from RBI) from 8.5% to 9.0% on July 29, 2008.
Banks and Primary Dealers (special companies that trade government bonds) now have to pay 9.0% interest when they borrow from RBI using special loan programs like export credit refinance (loans for exporters) and collateralised liquidity support (emergency loans backed by bonds).
This makes it more expensive for banks and Primary Dealers to get money from RBI, so they may charge higher interest on loans they give to people and businesses.

How it plays out — a real example

A forex & trade-finance officer in Indore, Priya, checks the new RBI rule and sees that her bank's export credit refinance loan now costs 9.0% instead of 8.5%. She updates her pricing sheet for exporters and tells her treasury team to plan for higher borrowing costs, so they can adjust the interest rates on new gold loans to keep the bank's profits stable.

What changed

The fixed repo rate under the Liquidity Adjustment Facility was increased by 50 basis points from 8.5% to 9.0%, effective immediately from July 29, 2008. As a result, the standing liquidity facilities provided to banks (export credit refinance) and Primary Dealers (collateralised liquidity support) are now priced at the revised repo rate of 9.0%.

What it means for you

Banks and Primary Dealers will face higher borrowing costs for these specific liquidity windows, directly impacting their cost of funds. This move signals tighter monetary policy aimed at controlling inflation, and lenders may need to reassess their liquidity management and lending rates accordingly.

What you must do

Update internal pricing models to reflect the new 9.0% rate for export credit refinance and collateralised liquidity support.
Review liquidity contingency plans to account for the increased cost of accessing these standing facilities.
Communicate the rate change to treasury and credit teams to align funding strategies.
Assess the impact on net interest margins and adjust lending or investment strategies if needed.

Who it affects

All Scheduled Banks (excluding Regional Rural Banks), Primary Dealers

❓ Common questions

Regulatory timeline

Stated effective date effective July 29, 2008
Decoded by BankPulse 2026-06-19 13:03 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 July 29, 2008?

The fixed repo rate under the Liquidity Adjustment Facility has been increased by 50 basis points to 9.0%.

Which standing liquidity facilities are impacted by this change?

The standing liquidity facilities for banks (export credit refinance) and for Primary Dealers (collateralised liquidity support) are now available at the revised repo rate of 9.0%.

Are Regional Rural Banks affected by this circular?

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

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

RBI/2008-09/102

 REF.No.MPD.BC. 304/07.01.279/2008-09 

 July 29, 2008

 To

 All Scheduled Banks [excluding Regional Rural Banks (RRBs)]

 and Primary Dealers

 Dear Sir/Madam,

 Standing Liquidity Facilities for Banks and Primary Dealers 

 As announced in the First Quarter Review of Annual Statement on Monetary Policy for the Year 2008-09 , the fixed repo rate under the Liquidity Adjustment Facility (LAF) was increased by 50 basis points from 8.5 per cent to 9.0 per cent with immediate effect (Paragraph 105). 

 2. 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 9.0 per cent with effect from July 29, 2008.

 Yours faithfully,

 (M.D. Patra)

 Adviser-in-Charge

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2008-09/102 · issued 29 Jul 2008. The plain-English explanation above is BankPulse’s own independent summary.

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Who does what — compliance checklist

💰 Credit

Update internal pricing models to reflect the new 9.0% rate for export credit refinance and collateralised liquidity support.

💻 IT / Systems

Communicate the rate change to treasury and credit teams to align funding strategies.

📜 Compliance

Review liquidity contingency plans to account for the increased cost of accessing these standing facilities.
Assess the impact on net interest margins and adjust lending or investment strategies if needed.

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 Credit Manager at a bank this circular applies to (All Scheduled Banks (excluding Regional Rural Banks), Primary Dealers), your first concrete step on “Repo Rate Hiked to 9%: Standing Liquidity Facilities Priced Higher” is: “Update internal pricing models to reflect the new 9.0% rate for export credit refinance and collateralised liquidity support.” (RBI issued this 29 Jul 2008).

Circular: RBI/2008-09/102 -- Repo Rate Hiked to 9%: Standing Liquidity Facilities Priced Higher
Issued: 29 Jul 2008
Action required: Update internal pricing models to reflect the new 9.0% rate for export credit refinance and collateralised liquidity support.
Action required: Review liquidity contingency plans to account for the increased cost of accessing these standing facilities.
Action required: Communicate the rate change to treasury and credit teams to align funding strategies.
Action required: Assess the impact on net interest margins and adjust lending or investment strategies if needed.
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=4382&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.