Home › Circulars › RBI/2009-2010/351

Repo and Reverse Repo Rates Hiked by 25 bps

Current · Source: Reserve Bank of India · RBI/2009-2010/351 · issued 19 Mar 2010 · ~1 min read

Quick answerRBI raised repo rate from 4.75% to 5.00% and reverse repo rate from 3.25% to 3.50%, effective March 19, 2010, as part of calibrated exit from accommodative policy. All other LAF terms unchanged.

The rule, in the simplest words

The RBI raised the repo rate by 25 basis points to 5.00% to help control inflation.
The reverse repo rate was also raised by 25 basis points to 3.50% to help manage liquidity.
Banks will face higher costs when borrowing from the RBI, which may lead to higher lending rates for customers.

How it plays out — a real example

Rahul, a branch operations officer in Indore, noticed that the RBI had raised the repo rate. He knew this would increase the cost of borrowing for his bank, so he decided to review their asset-liability management to ensure they could still offer competitive gold-loan rates to their customers. This would help them maintain their market share in the region.

What changed

The repo rate under the Liquidity Adjustment Facility was increased by 25 basis points to 5.00%, and the reverse repo rate was similarly raised to 3.50%. This move was part of the calibrated exit strategy announced in earlier policy reviews.

What it means for you

Banks will face higher cost of borrowing from RBI, which may lead to tighter liquidity and upward pressure on lending rates. The spread between repo and reverse repo remains at 150 bps, signaling a gradual normalization of monetary policy.

What you must do

Review your asset-liability management to account for higher funding costs.
Communicate potential rate changes to your treasury and credit teams.
Monitor liquidity conditions and adjust your LAF bidding strategy accordingly.
Prepare for possible transmission of rate hikes to customer loan and deposit rates.

Who it affects

All scheduled commercial banks (excluding RRBs), Primary dealers, Treasury departments, Corporate and retail borrowers

❓ Common questions

Regulatory timeline

Stated effective date effective March 19, 2010
Decoded by BankPulse 2026-06-19 07:12 IST

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

Why did RBI raise repo and reverse repo rates?

The hike was part of a calibrated exit strategy from the accommodative stance, initiated in October 2009 and continued in January 2010, to manage inflationary pressures.

What is the impact on bank lending rates?

Higher repo rate increases banks' cost of funds, which may lead to higher lending rates for borrowers over time, depending on each bank's transmission mechanism.

Are any other LAF terms changing?

No, all other terms and conditions of the LAF scheme remain unchanged as per the notification.

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

Notifications - Reserve Bank of India Skip to main content Selected Selected Change Language हिंदी Search the Website Search Home About Us ▼ About Us Organisation & Functions ▶ Organisation Structure Departments Offices Training Establishment ▶ College of Agricultural Banking Reserve Bank Staff College College of Supervisors RBI's Functions and Working Governors Deputy Governors Executive Directors Communication Policy of RBI Sources of Information ▶ Annual Publications Half-yearly Publications Quarterly Publications Monthly Publications Weekly Publications Occasional Publications SDDS NSDP Data Releases Publications available on Subscription General Information RBI History Museum ▶ The RBI Museum RBI Monetary Museum Notification ▼ Notifications Master Directions Master Circulars Amendment Directions Draft Notifications/Guidelines ▶ Draft Notifications/Guidelines Draft Directions (RE-wise) Index To RBI Circulars Standalone Circulars Circulars Withdrawn Press Releases Speeches & Media Interactions ▼ Speeches Media Interactions Memorial Lectures Podcasts Publications ▼ Biennial Annual Half-Yearly Quarterly Bi-monthly Monthly Weekly Occasional Reports Working Papers Legal Framework ▼ Act Rules Regulations Schemes Research ▼ External Research Schemes RBI Occasional Papers Working Papers RBI Bulletin History DRG Studies KLEMS State Statistics and Finances Statistics ▼ Data Releases Database on Indian Economy Public Debt Statistics Regulatory Reporting ▼ List of Returns Data Definition Validation rules/ Taxonomy List of RBI Reporting Portals FAQs of RBI Reporting Portals Home Notifications Notifications ( 41 kb ) Liquidity Adjustment Facility – Repo And Reverse Repo Rates RBI/2009-2010/351 FMD.MOAG. No.42/01.01.01/2009-10 March 19, 2010 All Scheduled Commercial Banks (excluding RRBs) and Primary Dealers Dear Sir, Liquidity Adjustment Facility – Repo And Reverse Repo Rates As a part of the calibrated exit strategy initiated in the Second Quarter Review in October 2009 and carried forward in the Third Quarter Review in January 2010, the Reserve Bank of India has decided to raise the repo rate under the Liquidity Adjustment Facility (LAF) by 25 basis points from 4.75 per cent to 5.00 per cent and the reverse repo rate under the LAF by 25 basis points from 3.25 per cent to 3.50 per cent with immediate effect. 2. All other terms and conditions of the current LAF Scheme will remain unchanged. 3. Please acknowledge receipt. Yours sincerely (P. 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Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2009-2010/351 · issued 19 Mar 2010. The plain-English explanation above is BankPulse’s own independent summary.

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Who does what — compliance checklist

💻 IT / Systems

Communicate potential rate changes to your treasury and credit teams.

📜 Compliance

Review your asset-liability management to account for higher funding costs.
Monitor liquidity conditions and adjust your LAF bidding strategy accordingly.
Prepare for possible transmission of rate hikes to customer loan and deposit rates.

Grouped from the action items above — a single circular may involve more than one team.

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, Corporate and retail borrowers), your first concrete step on “Repo and Reverse Repo Rates Hiked by 25 bps” is: “Review your asset-liability management to account for higher funding costs.” (RBI issued this 19 Mar 2010).

Circular: RBI/2009-2010/351 -- Repo and Reverse Repo Rates Hiked by 25 bps
Issued: 19 Mar 2010
Action required: Review your asset-liability management to account for higher funding costs.
Action required: Communicate potential rate changes to your treasury and credit teams.
Action required: Monitor liquidity conditions and adjust your LAF bidding strategy accordingly.
Action required: Prepare for possible transmission of rate hikes to customer loan and deposit rates.
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 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=5537&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.