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RBI Cuts Repo and Reverse Repo Rates by 50 bps

Current · Source: Reserve Bank of India · RBI/2008-2009/399 · issued 04 Mar 2009 · ~1 min read
Quick answerRBI reduced the repo rate from 5.5% to 5.0% and reverse repo rate from 4.0% to 3.5%, effective March 5, 2009, to address global and domestic macroeconomic conditions.
The rule, in the simplest words
How it plays out — a real example

A branch operations officer in Indore, Mr. Kumar, was happy to hear about the rate cut. He could now borrow from the RBI at a lower cost, which meant he could offer better interest rates to his customers, increasing the chances of them taking gold loans. This would help him meet his targets and grow his business. ['Borrow from the RBI at a lower cost', 'Offer better interest rates to customers', 'Meet targets and grow business']

What changed

The fixed repo rate under the Liquidity Adjustment Facility was cut by 50 basis points to 5.0%, and the reverse repo rate was similarly reduced to 3.5%. These changes took effect from March 5, 2009, for all daily reverse repo and repo auctions, including special term repo auctions.

What it means for you

Banks can now borrow from RBI at a lower cost, reducing their funding expenses. The reverse repo rate cut makes parking funds with RBI less attractive, potentially encouraging banks to lend more. This dovish move aims to stimulate economic activity amid challenging global and domestic conditions.

What you must do

Who it affects

All scheduled commercial banks (excluding RRBs), Primary dealers, Treasury departments, ALCO teams

❓ Common questions

Regulatory timeline

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

When do the new repo and reverse repo rates become effective?

The revised rates are effective from March 5, 2009, for all daily LAF auctions, including special term repo auctions.

What is the new repo rate after this cut?

The repo rate has been reduced by 50 basis points from 5.5% to 5.0%.

Does this change affect any other terms of the LAF scheme?

No, all other terms and conditions of the current LAF Scheme remain unchanged.

📜 Read the original circular — full text as issued by RBI
On a review of current global and domestic macroeconomic situation, the Reserve Bank has decided to reduce the fixed repo rate under the Liquidity Adjustment Facility (LAF) by 50 basis points from 5.5 per cent to 5.0 per cent and the reverse repo rate by 50 basis points from 4.0 per cent to 3.5 percent with immediate effect. 2. Accordingly, the daily reverse repo and repo auctions, including special term repo auctions, under LAF would be conducted at the revised rates with effect from March 05, 2009. 3. All other terms and conditions of the current LAF Scheme remain unchanged.
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2008-2009/399 · issued 04 Mar 2009. The plain-English explanation above is BankPulse’s own independent summary.
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Worked example & action-note template

Example: if you are a Compliance officer at a bank this circular applies to (All scheduled commercial banks (excluding RRBs), Primary dealers, Treasury departments, ALCO teams), your first concrete step on “RBI Cuts Repo and Reverse Repo Rates by 50 bps” is: “Adjust your lending and deposit rates to reflect the lower policy rates.” (RBI issued this 04 Mar 2009).

  1. Circular: RBI/2008-2009/399 -- RBI Cuts Repo and Reverse Repo Rates by 50 bps
  2. Issued: 04 Mar 2009
  3. Action required: Adjust your lending and deposit rates to reflect the lower policy rates.
  4. Action required: Review your liquidity management strategies to optimize borrowing and surplus deployment.
  5. Action required: Communicate the rate changes to your treasury and ALCO teams for immediate action.
  6. Action required: Monitor market reactions and adjust your asset-liability positions accordingly.
  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=4869&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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