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RBI Cuts Interest Rate on Agri Liquidity Support to 8%

Current · Source: Reserve Bank of India · RBI/2008-09/244 · issued 22 Oct 2008 · ~1 min read
Quick answerRBI reduced the interest rate on temporary liquidity support for agricultural operations to the prevailing repo rate of 8% per annum, effective October 20, 2008. This follows a prior circular on the same subject.
The rule, in the simplest words
How it plays out — a real example

An agri & priority-sector lending officer in Indore, Priya, sees the new circular and updates her bank's system to charge only 8% interest on the temporary liquidity support for agricultural loans. She then tells her team that farmers can now get cheaper funds, helping them buy seeds and fertilizers for the season.

What changed

The rate of interest on the temporary liquidity support facility for agricultural operations was reduced to the prevailing fixed repo rate under LAF, which is 8% per annum, effective October 20, 2008. All other terms and conditions from the earlier circular remain unchanged.

What it means for you

Banks can now access cheaper liquidity from RBI for financing agricultural operations, as the interest rate is aligned with the repo rate. This reduces the cost of funds for banks, potentially enabling them to offer more competitive rates to farmers. The move supports agricultural credit flow during the season.

What you must do

Who it affects

Scheduled banks, NABARD, Agricultural lending departments, Treasury departments

❓ Common questions

Regulatory timeline

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

What is the effective date of this revised interest rate?

The revised rate of 8% per annum is effective from October 20, 2008.

Does this circular change any other terms of the liquidity support?

No, only the interest rate has been revised. All other conditions from the earlier circular dated October 15, 2008 remain unchanged.

📜 Read the original circular — full text as issued by RBI
RBI/2008-09/244 RPCD.PLFS . No. BC. 55  /05.04.02/2008-09  October 22, 2008 The Chairmen/Chief Executives of all Scheduled  Banks / NABARD Dear Sirs, Temporary liquidity support for financing agricultural operations Please refer to our circular RPCD.PLFS. No. BC.45 /05.04.02/2008-09 dated October 15, 2008 , on the captioned subject. 2. The rate of interest on the temporary liquidity support for financing agricultural operations, as mentioned therein, has since been revised. Accordingly, the rate of interest on the above facility stands reduced to the prevailing fixed repo rate under LAF, i.e., 8 per cent per annum with effect from October 20, 2008 . 3. All other conditions of the above circular remain unchanged. Yours faithfully, (G.Srinivasan) Chief General Manager – in – Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2008-09/244 · issued 22 Oct 2008. The plain-English explanation above is BankPulse’s own independent summary.
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Who does what — compliance checklist
💻 IT / Systems
  • Update your internal systems to reflect the new interest rate of 8% per annum on this liquidity facility.
📜 Compliance
  • Communicate the revised rate to your treasury and agricultural lending teams.
  • Ensure compliance with all other unchanged conditions from the October 15, 2008 circular.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template

Example: if you are an IT/Systems lead at a bank this circular applies to (Scheduled banks, NABARD, Agricultural lending departments, Treasury departments), your first concrete step on “RBI Cuts Interest Rate on Agri Liquidity Support to 8%” is: “Update your internal systems to reflect the new interest rate of 8% per annum on this liquidity facility.” (RBI issued this 22 Oct 2008).

  1. Circular: RBI/2008-09/244 -- RBI Cuts Interest Rate on Agri Liquidity Support to 8%
  2. Issued: 22 Oct 2008
  3. Action required: Update your internal systems to reflect the new interest rate of 8% per annum on this liquidity facility.
  4. Action required: Communicate the revised rate to your treasury and agricultural lending teams.
  5. Action required: Ensure compliance with all other unchanged conditions from the October 15, 2008 circular.
  6. Owner: ____________ Target date: ____________
  7. Board/committee approval needed? Y / N
  8. 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=4572&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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