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Repo Rate Hiked 25 bps to 7.50%: MSF & Reverse Repo Adjusted

Current · Source: Reserve Bank of India · RBI/2010-11/569 · issued 16 Jun 2011 · ~2 min read

Quick answerRBI raised the repo rate by 25 bps to 7.50% effective June 16, 2011. Reverse repo automatically moved to 6.50% and MSF to 8.50%. All other LAF and MSF terms remain unchanged.

The rule, in the simplest words

The RBI (India's central bank) raised the repo rate (the rate at which banks borrow money from RBI) by 0.25% to 7.50%, starting June 16, 2011.
Because the repo rate went up, the reverse repo rate (the rate RBI pays banks for their deposits) automatically became 6.50%, and the MSF rate (an emergency borrowing rate for banks) became 8.50%.
All other rules for the LAF (a tool RBI uses to manage bank liquidity) and MSF schemes stayed exactly the same.

How it plays out — a real example

A branch operations officer in Indore, Priya, checks the new repo rate of 7.50% and knows her bank's lending rates will soon rise. She calls her top borrower, Mr. Sharma, to explain that his next gold-loan renewal might have a slightly higher interest rate because the RBI made borrowing costlier for banks.

What changed

The repo rate under the Liquidity Adjustment Facility was increased by 25 basis points from 7.25% to 7.50%, effective immediately. Consequently, the reverse repo rate automatically adjusted to 6.50% and the Marginal Standing Facility rate to 8.50%. No other terms or conditions of the LAF or MSF schemes were modified.

What it means for you

This rate hike signals RBI's tightening stance to curb inflation, directly increasing your cost of borrowing from the central bank. Banks will likely pass on higher costs to customers through increased lending rates, potentially slowing credit demand. The automatic adjustments to reverse repo and MSF rates ensure the LAF corridor remains intact, maintaining policy transmission.

What you must do

Review your asset-liability management to account for higher funding costs from the repo window.
Assess the impact on your marginal cost of funds-based lending rate (MCLR) and consider revising lending rates.
Communicate with treasury teams to adjust investment strategies given the new rate corridor.
Update internal systems and reporting for the revised repo, reverse repo, and MSF rates.

Who it affects

All Scheduled Commercial Banks (excluding RRBs), Primary Dealers, Treasury and ALM desks, Retail and corporate borrowers (via lending rate changes)

❓ Common questions

Regulatory timeline

Stated effective date effective June 16, 2011
Decoded by BankPulse 2026-06-19 01:08 IST

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

Why did RBI increase the repo rate by 25 bps?

The hike was announced as part of the Mid-Quarter Monetary Policy Review: June 2011, aimed at controlling inflationary pressures. The exact rationale is not detailed in the circular, but repo rate increases are typically used to tighten liquidity and curb inflation.

How does this affect my bank's lending rates?

Higher repo rate increases your cost of funds from RBI. Banks usually pass this on by raising lending rates (like MCLR or base rate), making loans more expensive for customers. You should review your lending rate structure accordingly.

Are there any changes to MSF or reverse repo terms beyond rates?

No. The circular explicitly states that all other terms and conditions of the LAF and MSF schemes remain unchanged. Only the rates were adjusted as a consequence of the repo rate hike.

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

RBI/2010-11/569

 FMD.MOAG. No.60/01.01.01/2010-11 

 June 16, 2011

 All Scheduled Commercial Banks (excluding RRBs) and Primary Dealers 

 Dear Sir,

 Liquidity Adjustment Facility – Repo and Reverse Repo 

 and Marginal Standing Facility Rates 

 As announced in the Mid-Quarter Monetary Policy Review: June 2011 , it has been decided to increase the repo rate under the Liquidity Adjustment Facility (LAF) by 25 basis points from 7.25 per cent to 7.50 per cent with immediate effect.

 2. Consequent to the above increase in the repo rate, the reverse repo rate under the LAF will stand automatically adjusted to 6.50 per cent and the Marginal Standing Facility (MSF) rate to 8.50 per cent with immediate effect.

 3. All other terms and conditions of the current LAF and MSF Schemes will remain unchanged. 

 4. Please acknowledge receipt. 

 Yours sincerely 

 (G. Seshsayee) 

 Deputy General Manager

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2010-11/569 · issued 16 Jun 2011. The plain-English explanation above is BankPulse’s own independent summary.

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Who does what — compliance checklist

💻 IT / Systems

Update internal systems and reporting for the revised repo, reverse repo, and MSF rates.

📜 Compliance

Review your asset-liability management to account for higher funding costs from the repo window.
Assess the impact on your marginal cost of funds-based lending rate (MCLR) and consider revising lending rates.
Communicate with treasury teams to adjust investment strategies given the new rate corridor.

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 and ALM desks, Retail and corporate borrowers (via lending rate changes)), your first concrete step on “Repo Rate Hiked 25 bps to 7.50%: MSF & Reverse Repo Adjusted” is: “Review your asset-liability management to account for higher funding costs from the repo window.” (RBI issued this 16 Jun 2011).

Circular: RBI/2010-11/569 -- Repo Rate Hiked 25 bps to 7.50%: MSF & Reverse Repo Adjusted
Issued: 16 Jun 2011
Action required: Review your asset-liability management to account for higher funding costs from the repo window.
Action required: Assess the impact on your marginal cost of funds-based lending rate (MCLR) and consider revising lending rates.
Action required: Communicate with treasury teams to adjust investment strategies given the new rate corridor.
Action required: Update internal systems and reporting for the revised repo, reverse repo, and MSF 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=6463&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.