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Repo Rate Cut to 6.5%: Standing Liquidity Facilities Aligned

Current · Source: Reserve Bank of India · RBI/2008-09/309 · issued 06 Dec 2008 · ~1 min read
Quick answerRBI cut the fixed repo rate under LAF by 100 bps to 6.5% from Dec 8, 2008. Standing liquidity facilities for banks (export credit refinance) and PDs (collateralised liquidity support) will now be available at this new repo rate.
The rule, in the simplest words
How it plays out — a real example

A forex & trade-finance officer in Indore, Priya, checks the new repo rate of 6.5% on December 8, 2008. She updates her bank's internal system so that any export credit refinance requests from her branch are now priced at this lower rate, reducing the cost for her bank's export lending.

What changed

The fixed repo rate under the Liquidity Adjustment Facility was reduced by 100 basis points from 7.5% to 6.5%, effective December 8, 2008. Consequently, standing liquidity facilities—export credit refinance for banks and collateralised liquidity support for Primary Dealers—will be priced at the new repo rate of 6.5%.

What it means for you

Banks and Primary Dealers will now access these standing facilities at a lower cost, reducing their funding expenses. This aligns with RBI's broader monetary easing to support liquidity and economic activity during the 2008 financial crisis.

What you must do

Who it affects

All Scheduled Banks (excluding RRBs), Primary Dealers

❓ Common questions

Regulatory timeline

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

Which standing liquidity facilities are impacted by this repo rate cut?

Export credit refinance for banks and collateralised liquidity support for Primary Dealers will now be available at the reduced repo rate of 6.5%.

When does the new rate take effect?

The revised rate of 6.5% is effective from December 8, 2008.

Are Regional Rural Banks covered by this circular?

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

📜 Read the original circular — full text as issued by RBI
RBI/2008-09/309 REF.No. MPD.BC.313/07.01.279/2008-09 December 6, 2008 To All Scheduled Banks [excluding Regional Rural Banks (RRBs)] and Primay Dealers Dear Sir/Madam, Standing Liquidity Facilities for Banks and Primary Dealers Please refer to the Reserve Bank’s Press Release dated December 6, 2008, in terms of which the fixed repo rate under the Liquidity Adjustment Facility (LAF) has been reduced by 100 basis points from 7.5 per cent to 6.5 per cent with effect from December 8, 2008. 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 6.5 per cent with effect from December 8, 2008. Yours faithfully, (M.D. Patra) Adviser-in-Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2008-09/309 · issued 06 Dec 2008. The plain-English explanation above is BankPulse’s own independent summary.
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Who does what — compliance checklist
⚙️ Operations
  • Monitor LAF operations to ensure seamless transition to the new repo rate for standing facilities.
💻 IT / Systems
  • Communicate the revised rate to treasury and credit teams for accurate cost-of-funds calculations.
📜 Compliance
  • Update internal pricing models for export credit refinance and PD liquidity support to reflect the 6.5% rate from Dec 8, 2008.
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), Primary Dealers), your first concrete step on “Repo Rate Cut to 6.5%: Standing Liquidity Facilities Aligned” is: “Update internal pricing models for export credit refinance and PD liquidity support to reflect the 6.5% rate from Dec 8, 2008.” (RBI issued this 06 Dec 2008).

  1. Circular: RBI/2008-09/309 -- Repo Rate Cut to 6.5%: Standing Liquidity Facilities Aligned
  2. Issued: 06 Dec 2008
  3. Action required: Update internal pricing models for export credit refinance and PD liquidity support to reflect the 6.5% rate from Dec 8, 2008.
  4. Action required: Communicate the revised rate to treasury and credit teams for accurate cost-of-funds calculations.
  5. Action required: Monitor LAF operations to ensure seamless transition to the new repo rate for standing facilities.
  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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Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=4685&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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