Home › Circulars › RBI/2010-2011/204

RBI Hikes Repo and Reverse Repo Rates

Current · Source: Reserve Bank of India · RBI/2010-2011/204 · issued 16 Sep 2010 · ~1 min read
Quick answerRBI raised the repo rate by 25 bps to 6.00% and the reverse repo rate by 50 bps to 5.00%, effective immediately, as part of the Mid-Quarter Policy Review. This tightens liquidity and signals a hawkish stance.
The rule, in the simplest words
How it plays out — a real example

Ravi, the treasurer at a mid-sized bank, sees the RBI notification and immediately updates the bank's MCLR (the benchmark for lending rates) to reflect the higher repo rate. He also instructs the dealing room to reduce surplus funds parked in reverse repo, as the higher rate makes it more attractive, but he knows borrowing costs will rise, so he plans to pass on the increase to new loans.

What changed

The repo rate under the Liquidity Adjustment Facility (LAF) was increased by 25 basis points from 5.75% to 6.00%. The reverse repo rate was increased by 50 basis points from 4.50% to 5.00%, effective immediately. All other terms of the LAF scheme remain unchanged.

What it means for you

Banks will face higher cost for borrowing from RBI under repo, and will earn more on excess funds parked under reverse repo. This is a tightening move to control inflation, likely leading to higher lending rates and reduced liquidity in the system. Banks should reassess their asset-liability management and pricing strategies.

What you must do

Who it affects

All Scheduled Commercial Banks (excluding RRBs), Primary Dealers

❓ Common questions

What is the new repo rate?

The repo rate has been increased by 25 basis points to 6.00% per annum, effective immediately.

What is the new reverse repo rate?

The reverse repo rate has been increased by 50 basis points to 5.00% per annum, effective immediately.

Are there any other changes to the LAF scheme?

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

📜 Read the original circular — full text as issued by RBI
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No. 50/01.01.01/2010-11 September 16, 2010 All Scheduled Commercial Banks (excluding RRBs) and Primary Dealers Dear Sir, Liquidity Adjustment Facility – Repo and Reverse Repo Rates As announced today in the Mid-Quarter Policy Review, it has been decided to increase the repo rate under the Liquidity Adjustment Facility (LAF) by 25 basis points from 5.75 per cent to 6.00 per cent and the reverse repo rate by 50 basis points from 4.50 per cent to 5.00 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/2010-2011/204 · issued 16 Sep 2010. The plain-English explanation above is BankPulse’s own independent summary.
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Who does what — compliance checklist
⚙️ Operations
  • Reassess liquidity positions and adjust treasury operations for the new corridor.
📜 Compliance
  • Update internal lending and deposit rate benchmarks to reflect the new repo and reverse repo rates.
  • Communicate the rate changes to customers and stakeholders promptly.
  • Review ALM (asset-liability management) to manage interest rate risk.
  • Monitor RBI's future policy signals for further rate actions.
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), your first concrete step on “RBI Hikes Repo and Reverse Repo Rates” is: “Update internal lending and deposit rate benchmarks to reflect the new repo and reverse repo rates.” (RBI issued this 16 Sep 2010).

  1. Circular: RBI/2010-2011/204 -- RBI Hikes Repo and Reverse Repo Rates
  2. Issued: 16 Sep 2010
  3. Action required: Update internal lending and deposit rate benchmarks to reflect the new repo and reverse repo rates.
  4. Action required: Reassess liquidity positions and adjust treasury operations for the new corridor.
  5. Action required: Communicate the rate changes to customers and stakeholders promptly.
  6. Action required: Review ALM (asset-liability management) to manage interest rate risk.
  7. Action required: Monitor RBI's future policy signals for further rate actions.
  8. Owner: ____________ Target date: ____________
  9. Board/committee approval needed? Y / N
  10. 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=5995&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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