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SRF Rate Cut to 6.5% Following Repo Reduction

Current · Source: Reserve Bank of India · RBI/2008-09/310 · issued 06 Dec 2008 · ~1 min read

Quick answerRBI cut the repo rate by 100 bps to 6.5% from Dec 8, 2008. Consequently, the Special Refinance Facility (SRF) for scheduled commercial banks (excluding RRBs) is now available at the same repo rate of 6.5%.

The rule, in the simplest words

The repo rate [a rate at which banks borrow money from the Reserve Bank of India] has been cut to 6.5%.
The Special Refinance Facility (SRF) [a special loan for banks] is now available at the same 6.5% rate.
This change helps banks by reducing their funding expenses [the cost of borrowing money].
Banks can use the cheaper SRF to manage their liquidity [the money they have available] and encourage lending [giving loans to customers].

How it plays out — a real example

A treasury manager at a scheduled commercial bank in Mumbai can now access the SRF at a lower cost of 6.5%, which helps reduce the bank's funding expenses and encourages lending to customers, thereby supporting the bank's overall liquidity management. This change can be applied in their daily work when calculating the cost of loans and managing the bank's liquidity position. The treasury manager can communicate the revised rate to the lending teams to ensure accurate cost calculations.

What changed

The fixed repo rate under LAF was reduced by 100 basis points from 7.5% to 6.5%, effective December 8, 2008. Consequently, the interest rate on the Special Refinance Facility (SRF) for scheduled commercial banks (excluding RRBs) was aligned to the new repo rate of 6.5%.

What it means for you

Banks can now access the SRF at a lower cost of 6.5%, reducing their funding expenses. This supports liquidity management and encourages lending, as the cheaper refinance facility eases pressure on bank margins.

What you must do

Update internal systems to reflect the new SRF rate of 6.5% from December 8, 2008.
Communicate the revised rate to treasury and lending teams for accurate cost calculations.
Review liquidity positions to optimize usage of the cheaper SRF facility.
Ensure compliance with SRF eligibility criteria as per Section 17(3B) of the RBI Act.

Who it affects

All scheduled commercial banks (excluding Regional Rural Banks), Treasury departments managing liquidity and refinance operations, Lending teams relying on SRF for funding

❓ Common questions

Regulatory timeline

Stated effective date effective December 8, 2008
Decoded by BankPulse 2026-06-19 11:28 IST

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

What is the new interest rate on the Special Refinance Facility?

The SRF rate is now 6.5% per annum, effective December 8, 2008, matching the reduced repo rate.

Which banks are eligible for this SRF?

All scheduled commercial banks are eligible, except Regional Rural Banks (RRBs).

Why was the SRF rate reduced?

The reduction follows RBI's decision to cut the repo rate by 100 bps to 6.5%, as announced in a press release on December 6, 2008.

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

RBI/2008-09/310
REF.No.MPD.BC. 
314 / 02.01.009/2008-09
 December 6, 2008
 To

 All Scheduled Commercial Banks
(excluding Regional Rural Banks)
 Dear 
Sir/Madam,
 Interest Rate on Special Refinance Facility (SRF) under 
Section 17(3B) of the Reserve Bank of India Act, 
1934 
 As announced in the Reserve Bank’s Press 
Release dated December 6, 2008 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 special refinance facility (SRF) provided to scheduled commercial banks (excluding 
Regional Rural Banks) by the Reserve Bank under Section 17(3B) of the Reserve 
Bank of India Act, 1934 introduced vide the circular Ref.No.MPD.BC.309 
/02.01.009/2008-09 dated November 3, 2008 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/2008-09/310 · issued 06 Dec 2008. The plain-English explanation above is BankPulse’s own independent summary.

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Who does what — compliance checklist

💻 IT / Systems

Update internal systems to reflect the new SRF rate of 6.5% from December 8, 2008.

📜 Compliance

Communicate the revised rate to treasury and lending teams for accurate cost calculations.
Review liquidity positions to optimize usage of the cheaper SRF facility.
Ensure compliance with SRF eligibility criteria as per Section 17(3B) of the RBI Act.

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 (All scheduled commercial banks (excluding Regional Rural Banks), Treasury departments managing liquidity and refinance operations, Lending teams relying on SRF for funding), your first concrete step on “SRF Rate Cut to 6.5% Following Repo Reduction” is: “Update internal systems to reflect the new SRF rate of 6.5% from December 8, 2008.” (RBI issued this 06 Dec 2008).

Circular: RBI/2008-09/310 -- SRF Rate Cut to 6.5% Following Repo Reduction
Issued: 06 Dec 2008
Action required: Update internal systems to reflect the new SRF rate of 6.5% from December 8, 2008.
Action required: Communicate the revised rate to treasury and lending teams for accurate cost calculations.
Action required: Review liquidity positions to optimize usage of the cheaper SRF facility.
Action required: Ensure compliance with SRF eligibility criteria as per Section 17(3B) of the RBI Act.
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=4684&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.