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Repo and Reverse Repo Hiked by 25 bps in Jan 2011

Current · Source: Reserve Bank of India · RBI/2010-11/388 · issued 25 Jan 2011 · ~1 min read
Quick answerRBI raised repo rate to 6.50% and reverse repo rate to 5.50%, effective January 25, 2011, as part of the Third Quarter Review of Monetary Policy 2010-11. All other LAF terms remain unchanged.
The rule, in the simplest words
How it plays out — a real example

A branch operations officer in Indore, Priya, checks the new rates and realizes her bank's borrowing cost from RBI just went up. She tells her branch manager that they may need to raise lending rates on gold loans to keep profits steady, while also noting that any extra cash they park with RBI will now earn a bit more interest.

What changed

The repo rate under the Liquidity Adjustment Facility was increased by 25 basis points from 6.25% to 6.50%. The reverse repo rate was also raised by 25 basis points from 5.25% to 5.50%, effective immediately.

What it means for you

Banks will face higher cost for borrowing from RBI under LAF, while their surplus funds parked with RBI will earn slightly more. This tightening signals RBI's intent to control inflation, potentially leading to higher lending rates and reduced liquidity in the banking system.

What you must do

Who it affects

All Scheduled Commercial Banks (excluding RRBs), Primary Dealers, Treasury departments of banks, Borrowers and depositors indirectly

❓ Common questions

Regulatory timeline

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

When did this rate change take effect?

The repo and reverse repo rate hikes were effective from January 25, 2011, the date of the announcement.

Are any other terms of the LAF scheme changing?

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

Why did RBI increase these rates?

The increase was part of the Third Quarter Review of Monetary Policy 2010-11, aimed at managing inflation and liquidity conditions.

📜 Read the original circular — full text as issued by RBI
RBI/2010-11/388 FMD.MOAG. No.56/01.01.01/2010-11 January 25, 2011 All Scheduled Commercial Banks (excluding RRBs) and Primary Dealers Dear Sir, Liquidity Adjustment Facility – Repo and Reverse Repo Rates As announced today in the Third Quarter Review of Monetary Policy 2010-11 , it has been decided to increase the repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 6.25 per cent to 6.50 per cent and the reverse repo rate by 25 basis points from 5.25 per cent to 5.50 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. Krishnamurthy) Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2010-11/388 · issued 25 Jan 2011. 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 of banks, Borrowers and depositors indirectly), your first concrete step on “Repo and Reverse Repo Hiked by 25 bps in Jan 2011” is: “Review your bank's LAF borrowing and surplus deployment strategies to account for the new rates.” (RBI issued this 25 Jan 2011).

  1. Circular: RBI/2010-11/388 -- Repo and Reverse Repo Hiked by 25 bps in Jan 2011
  2. Issued: 25 Jan 2011
  3. Action required: Review your bank's LAF borrowing and surplus deployment strategies to account for the new rates.
  4. Action required: Assess the impact on your net interest margin and adjust lending and deposit rates accordingly.
  5. Action required: Communicate the rate changes to your treasury and ALCO teams for immediate action.
  6. Action required: Monitor RBI's future policy stance for further rate adjustments.
  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=6239&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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