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Repo Rate Cut: Standing Liquidity Facilities Cheaper

Current · Source: Reserve Bank of India · RBI/2008-09/338 · issued 02 Jan 2009 · ~2 min read
Quick answerRBI slashed the fixed repo rate under LAF by 100 bps to 5.5% effective Jan 2, 2009. Standing liquidity facilities for banks (export credit refinance) and PDs (collateralised liquidity support) will now be available at this lower rate from Jan 3, 2009.
The rule, in the simplest words
How it plays out — a real example

Anita, a treasury officer at a scheduled bank in Mumbai, logs into the bank’s system on 3 January 2009, changes the repo rate to 5.5%, recalculates the interest on the bank’s export‑credit refinance line, informs the export‑credit team that the cost of funds has dropped, and notes the expected boost to the bank’s net interest margin.

What changed

The fixed repo rate under the Liquidity Adjustment Facility was reduced by 100 basis points from 6.5% to 5.5% with immediate effect. Consequently, the standing liquidity facilities provided to banks (export credit refinance) and Primary Dealers (collateralised liquidity support) will be available at the revised repo rate of 5.5% from January 3, 2009.

What it means for you

Banks and Primary Dealers will now get cheaper liquidity from RBI, reducing their cost of funds for export credit refinance and collateralised support. This rate cut is part of RBI's broader easing cycle to support economic activity during the global financial crisis. Lower borrowing costs should help banks pass on benefits to exporters and improve overall liquidity conditions.

What you must do

Who it affects

All Scheduled Banks (excluding RRBs), Primary Dealers, Export credit refinance borrowers, Treasury departments of banks and PDs

❓ 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 new repo rate under LAF?

The fixed repo rate has been reduced by 100 basis points from 6.5% to 5.5% with immediate effect from January 2, 2009.

From when will the standing liquidity facilities be available at the new rate?

The standing liquidity facilities for banks (export credit refinance) and Primary Dealers (collateralised liquidity support) will be available at the revised repo rate of 5.5% from January 3, 2009.

📜 Read the original circular — full text as issued by RBI
RBI/2008-09/338 REF.No.MPD.BC. 315 /07.01.279/2008-09 January 2, 2009 To All Scheduled Banks [excluding Regional Rural Banks (RRBs)] and Primary Dealers Dear Sir/Madam, Standing Liquidity Facilities for Banks and Primary Dealers Please refer to the Reserve Bank’s Press Release: 2008-2009/1023 dated January 2, 2009 , in terms of which the fixed repo rate under the Liquidity Adjustment Facility (LAF) has been reduced by 100 basis points from 6.5 per cent to 5.5 per cent with immediate effect. 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 revised repo rate, i.e., at 5.5 per cent with effect from January 3, 2009. Yours faithfully, (Janak Raj) Adviser-in-Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2008-09/338 · issued 02 Jan 2009. The plain-English explanation above is BankPulse’s own independent summary.
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Who does what — compliance checklist
💻 IT / Systems
  • Update your treasury systems to reflect the new repo rate of 5.5% for all standing liquidity facilities effective January 3, 2009.
📜 Compliance
  • Review your export credit refinance availed from RBI to ensure interest calculations align with the revised rate.
  • Communicate the rate change to your export credit and treasury teams for accurate pricing and reporting.
  • Assess the impact on your net interest margin and liquidity position given the cheaper funding source.
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 Banks (excluding RRBs), Primary Dealers, Export credit refinance borrowers, Treasury departments of banks and PDs), your first concrete step on “Repo Rate Cut: Standing Liquidity Facilities Cheaper” is: “Update your treasury systems to reflect the new repo rate of 5.5% for all standing liquidity facilities effective January 3, 2009.” (RBI issued this 02 Jan 2009).

  1. Circular: RBI/2008-09/338 -- Repo Rate Cut: Standing Liquidity Facilities Cheaper
  2. Issued: 02 Jan 2009
  3. Action required: Update your treasury systems to reflect the new repo rate of 5.5% for all standing liquidity facilities effective January 3, 2009.
  4. Action required: Review your export credit refinance availed from RBI to ensure interest calculations align with the revised rate.
  5. Action required: Communicate the rate change to your export credit and treasury teams for accurate pricing and reporting.
  6. Action required: Assess the impact on your net interest margin and liquidity position given the cheaper funding source.
  7. Owner: ____________ Target date: ____________
  8. Board/committee approval needed? Y / N
  9. 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=4740&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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