RBI cuts repo and reverse repo rates by 25 bps in April 2009
Current · Source: Reserve Bank of India · RBI/2008-2009/442 · issued 21 Apr 2009 · ~1 min read
Quick answerRBI reduced the repo rate from 5.00% to 4.75% and reverse repo rate from 3.50% to 3.25%, effective April 21, 2009, as part of the Annual Policy Statement for 2009-10.
The changes took immediate effect from April 21, 2009.
Banks can now borrow from RBI at a lower cost, which may encourage them to reduce lending rates for customers.
How it plays out — a real example
A branch operations officer in Indore, Mr. Kumar, was happy to hear about the RBI's rate cut. He could now borrow from RBI at a lower cost, which meant he could offer lower interest rates to his customers who wanted to take a gold loan. This would attract more customers and increase business for his bank.
What changed
The repo rate under the Liquidity Adjustment Facility was cut by 25 basis points to 4.75%, and the reverse repo rate was similarly reduced to 3.25%. These changes took immediate effect from April 21, 2009, starting with the special term repo auction and second LAF that day.
What it means for you
Banks can now borrow from RBI at a lower cost, which may encourage them to reduce lending rates for customers. The reverse repo rate cut makes parking funds with RBI less attractive, potentially pushing banks to deploy more funds into credit markets.
What you must do
Update your treasury systems to reflect the new repo rate of 4.75% and reverse repo rate of 3.25% for LAF operations.
Review your lending and deposit rate strategies to align with the reduced policy rates.
Monitor the special term repo facility modalities expected to be notified separately.
Communicate the rate changes to your asset-liability management team for liquidity planning.
Who it affects
All scheduled commercial banks (excluding RRBs), Primary dealers, Treasury departments, Asset-liability management teams
❓ Common questions
Regulatory timeline
Stated effective dateeffective April 21, 2009
Decoded by BankPulse2026-06-19 10:23 IST
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
When did these rate changes take effect?
The revised rates became effective from April 21, 2009, starting with the special term repo auction and the second LAF conducted that day.
What were the old and new repo and reverse repo rates?
The repo rate was reduced from 5.00% to 4.75%, and the reverse repo rate from 3.50% to 3.25%, both by 25 basis points.
Will there be any changes to the special term repo facility?
Yes, the RBI mentioned that revised modalities for the special term repo facility would be notified separately, as announced in the Annual Policy Statement.
📜 Read the original circular — full text as issued by RBI
RBI/2008-2009/442
FMD.MOAG. No.34/01.01.01/2008-09
April 21, 2009
All Scheduled Commercial Banks (excluding RRBs) and Primary Dealers
Dear Sir,
Liquidity Adjustment Facility – Repo and Reverse Repo Rates
As announced in the Annual Policy Statement for the year 2009-10 , the Reserve Bank has decided to reduce the repo rate under the Liquidity Adjustment Facility (LAF) by 25 basis points from 5.00 per cent to 4.75 per cent and the reverse repo rate by 25 basis points from 3.50 per cent to 3.25 percent with immediate effect.
2. Accordingly, the revised LAF repo and reverse repo rates would be applicable beginning with the special term repo auction and second LAF to be conducted today, i.e., April 21, 2009.
3. The revision in the modalities of the special term repo facility as announced in the Annual Policy Statement for the Year 2009-10, would be notified separately.
Yours faithfully
(Chandan Sinha)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2008-2009/442 · issued 21 Apr 2009. The plain-English explanation above is BankPulse’s own independent summary.
Update your treasury systems to reflect the new repo rate of 4.75% and reverse repo rate of 3.25% for LAF operations.
📜 Compliance
Review your lending and deposit rate strategies to align with the reduced policy rates.
Monitor the special term repo facility modalities expected to be notified separately.
Communicate the rate changes to your asset-liability management team for liquidity planning.
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 Operations officer at a bank this circular applies to (All scheduled commercial banks (excluding RRBs), Primary dealers, Treasury departments, Asset-liability management teams), your first concrete step on “RBI cuts repo and reverse repo rates by 25 bps in April 2009” is: “Update your treasury systems to reflect the new repo rate of 4.75% and reverse repo rate of 3.25% for LAF operations.” (RBI issued this 21 Apr 2009).
Circular: RBI/2008-2009/442 -- RBI cuts repo and reverse repo rates by 25 bps in April 2009
Issued: 21 Apr 2009
Action required: Update your treasury systems to reflect the new repo rate of 4.75% and reverse repo rate of 3.25% for LAF operations.
Action required: Review your lending and deposit rate strategies to align with the reduced policy rates.
Action required: Monitor the special term repo facility modalities expected to be notified separately.
Action required: Communicate the rate changes to your asset-liability management team for liquidity planning.
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.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
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=4972&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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