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Repo and Reverse Repo Hiked by 25 bps

Current · Source: Reserve Bank of India · RBI/2009-10/405 · issued 20 Apr 2010 · ~1 min read
Quick answerRBI raised repo rate to 5.25% and reverse repo to 3.75%, effective immediately, as part of the 2010-11 Annual Policy. This tightens liquidity and signals a gradual withdrawal of accommodation.
The rule, in the simplest words
How it plays out — a real example

Rohit, a treasury manager at a scheduled commercial bank in Mumbai, checks the new RBI rates each morning. Seeing the repo rate now at 5.25%, he updates the bank's funding cost models and informs the loan‑pricing team so they can adjust home‑loan rates before the next day’s customer meetings.

What changed

The repo rate under the Liquidity Adjustment Facility was increased by 25 basis points from 5.00% to 5.25%, and the reverse repo rate was similarly raised from 3.50% to 3.75%. All other terms and conditions of the LAF scheme remain unchanged.

What it means for you

Banks will face higher cost of borrowing from RBI, which may lead to increased lending rates for customers. The 25 bps hike signals RBI's intent to manage inflation and anchor expectations, potentially compressing net interest margins if banks cannot pass on costs quickly.

What you must do

Who it affects

All scheduled commercial banks (excluding RRBs), Primary dealers, Treasury departments, Retail and corporate borrowers

❓ Common questions

When did this rate change take effect?

The new repo and reverse repo rates became effective immediately from April 20, 2010, as announced in the Annual Policy Statement for 2010-11.

What is the new repo rate and reverse repo rate?

The repo rate was increased to 5.25% and the reverse repo rate to 3.75%, both up by 25 basis points from their previous levels.

Are there any other changes to the LAF scheme?

No, all other terms and conditions of the current Liquidity Adjustment Facility scheme remain unchanged.

📜 Read the original circular — full text as issued by RBI
RBI/2009-10/405 FMD.MOAG. No.43/01.01.01/2009-10 April 20, 2010 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 2010-11 , the Reserve Bank has decided to increase the repo rate under the Liquidity Adjustment Facility (LAF) by 25 basis points from 5.00 per cent to 5.25 per cent and the reverse repo rate by 25 basis points from 3.50 per cent to 3.75 percent with immediate effect. 2. All other terms and conditions of the current LAF scheme will remain unchanged. 3. Please acknowledge receipt. Yours sincerely (P. Krishnamurthy) Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2009-10/405 · issued 20 Apr 2010. 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, Retail and corporate borrowers), your first concrete step on “Repo and Reverse Repo Hiked by 25 bps” is: “Review your asset-liability management to assess impact on funding costs and liquidity.” (RBI issued this 20 Apr 2010).

  1. Circular: RBI/2009-10/405 -- Repo and Reverse Repo Hiked by 25 bps
  2. Issued: 20 Apr 2010
  3. Action required: Review your asset-liability management to assess impact on funding costs and liquidity.
  4. Action required: Communicate with treasury to adjust investment portfolios for the new rate environment.
  5. Action required: Evaluate loan pricing strategies to maintain net interest margins.
  6. Action required: Prepare for potential further rate actions by stress-testing balance sheets.
  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 03 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=5603&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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