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SRF Interest Rate Cut to 5.5%

Current · Source: Reserve Bank of India · RBI/2008-09/342 · issued 02 Jan 2009 · ~1 min read

Quick answerRBI cut the repo rate by 100 bps to 5.5%, effective Jan 2, 2009. Consequently, the Special Refinance Facility (SRF) for scheduled commercial banks (excluding RRBs) will be available at 5.5% from Jan 3, 2009.

The rule, in the simplest words

The RBI (India's central bank) cut the repo rate (the rate at which it lends to banks) from 6.5% to 5.5% on January 2, 2009.
The Special Refinance Facility (SRF) (a special cheap loan for banks) now costs only 5.5%, down from 6.5%, starting January 3, 2009.
Only scheduled commercial banks (big banks that follow RBI rules) can use this cheaper loan, but Regional Rural Banks (RRBs) (small banks in villages) cannot.
Banks should update their computer systems and tell their treasury (money management) and ALM (asset-liability management) teams about the new lower rate.

How it plays out — a real example

A branch operations officer in Indore checks the new SRF rate of 5.5% and tells her treasury team they can now borrow cheaper from the RBI to fund more gold loans, helping her offer lower interest rates to customers during the 2008-09 financial stress.

What changed

The fixed repo rate under LAF was reduced by 100 basis points from 6.5% to 5.5% with immediate effect. Accordingly, the interest rate on the Special Refinance Facility (SRF) for scheduled commercial banks (excluding RRBs) was aligned to the new repo rate, dropping to 5.5% from January 3, 2009.

What it means for you

Banks can now access the SRF at a lower cost of 5.5%, reducing their funding expenses. This rate cut is part of RBI's broader easing to support liquidity and credit flow during the 2008-09 financial stress. Banks should factor this cheaper refinance into their liquidity management and lending strategies.

What you must do

Update internal systems to reflect the new SRF rate of 5.5% effective January 3, 2009.
Review liquidity positions and consider availing SRF at the reduced rate to lower funding costs.
Communicate the rate change to treasury and ALM teams for accurate cost-of-funds calculations.
Monitor RBI's future repo rate moves for potential further adjustments to SRF pricing.

Who it affects

All scheduled commercial banks (excluding Regional Rural Banks), Treasury departments, ALM and liquidity management teams

❓ Common questions

Regulatory timeline

Stated effective date effective Jan 2, 2009
Decoded by BankPulse 2026-06-19 11:13 IST

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

What is the new SRF rate and from when is it effective?

The SRF rate is reduced to 5.5%, effective from January 3, 2009, following the repo rate cut.

Which banks are eligible for this SRF?

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

Why did RBI reduce the SRF rate?

The reduction aligns with the 100 bps cut in the repo rate under LAF, aimed at easing liquidity and supporting bank lending during the economic slowdown.

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

RBI/2008-09/342
REF.No.MPD.BC. 
316 / 02.01.009/2008-09
 January 
02, 2009
 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:2008-09/1023 of January 02, 2009 , 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 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 5.5 per cent with effect from January 03, 
2009.
 Yours faithfully,
 (Janak 
Raj) 
Adviser-in-Charge

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2008-09/342 · 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 internal systems to reflect the new SRF rate of 5.5% effective January 3, 2009.

📜 Compliance

Review liquidity positions and consider availing SRF at the reduced rate to lower funding costs.
Communicate the rate change to treasury and ALM teams for accurate cost-of-funds calculations.
Monitor RBI's future repo rate moves for potential further adjustments to SRF pricing.

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, ALM and liquidity management teams), your first concrete step on “SRF Interest Rate Cut to 5.5%” is: “Update internal systems to reflect the new SRF rate of 5.5% effective January 3, 2009.” (RBI issued this 02 Jan 2009).

Circular: RBI/2008-09/342 -- SRF Interest Rate Cut to 5.5%
Issued: 02 Jan 2009
Action required: Update internal systems to reflect the new SRF rate of 5.5% effective January 3, 2009.
Action required: Review liquidity positions and consider availing SRF at the reduced rate to lower funding costs.
Action required: Communicate the rate change to treasury and ALM teams for accurate cost-of-funds calculations.
Action required: Monitor RBI's future repo rate moves for potential further adjustments to SRF pricing.
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=4739&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.