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RBI shifts SCB accommodation pricing from Bank Rate to repo rate

Current · Source: Reserve Bank of India · RBI/2011-12/209 · issued 30 Sep 2011 · ~1 min read

Quick answerRBI has changed the interest rate on loans to State Co-operative Banks under Section 17(4)(a) from Bank Rate to repo rate, effective September 30, 2011. This aligns short-term liquidity support with the policy repo rate.

The rule, in the simplest words

The interest rate on loans to State Co-operative Banks is now based on the [repo rate (a rate at which banks borrow money from the central bank)] instead of the [Bank Rate (the rate at which the central bank lends money)].
This change makes borrowing costs for State Co-operative Banks [lower (less expensive) or higher (more expensive)] depending on whether the [repo rate (a rate at which banks borrow money from the central bank)] is lower or higher than the [Bank Rate (the rate at which the central bank lends money)].
State Co-operative Banks must update their internal pricing models to use the [repo rate (a rate at which banks borrow money from the central bank)] for loans from the central bank.
The change aims to make liquidity support more responsive to [monetary policy signals (decisions made by the central bank to control the money supply)].

How it plays out — a real example

A treasury officer in Mumbai will now calculate the interest on loans from the central bank using the repo rate, which could lead to lower borrowing costs for their State Co-operative Bank. This change will help them make more informed decisions about liquidity management and adjust their bank's strategies accordingly. As a result, the treasury officer will need to update their internal pricing models and inform their team about the revised interest calculation.

What changed

Previously, RBI provided accommodation to State Co-operative Banks for general banking business at the Bank Rate. The circular now mandates that such loans will be priced at the repo rate instead.

What it means for you

State Co-operative Banks will now pay interest on RBI borrowings linked to the repo rate, which is typically lower than the Bank Rate in a normal rate cycle. This change makes liquidity support more responsive to monetary policy signals and could reduce borrowing costs for SCBs when repo rate is below Bank Rate.

What you must do

Update internal pricing models for RBI borrowings to reference the repo rate instead of Bank Rate.
Inform treasury and ALM teams about the revised interest calculation for clearing and liquidity adjustments.
Review liquidity management strategies to align with repo-linked borrowing costs.
Ensure compliance with the new rate for all fresh and outstanding accommodation under Section 17(4)(a).

Who it affects

State Co-operative Banks, Treasury departments of SCBs, RBI's rural planning and credit department

❓ Common questions

Regulatory timeline

Stated effective date effective September 30, 2011
Decoded by BankPulse 2026-06-18 23:16 IST

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

Does this circular apply to all types of accommodation under Section 17(4)(a)?

Yes, the circular specifies that all loans and advances for general banking business, including clearing adjustments and liquidity, will now be charged at the repo rate.

When did this change take effect?

The circular was issued on September 30, 2011, and the change was effective from that date.

What was the previous rate for such accommodation?

Earlier, the interest was provided at the Bank Rate as per RBI circular dated April 20, 1999.

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

RBI/2011-12/209

RPCD.CO RCB. BC No.20/03.03.02/2011-12

 September 30, 2011

 All State Co-operative Banks 

 Dear Sir

 Advances to State Co-operative Banks under 

 Section I7 (4) (a) of the RBI Act, 1934 for general banking business 

 As you are aware, the interest on loans and advances granted by the Reserve Bank to State Co-operative Banks under Section 17 (4) (a) of the RBI Act, 1934 for the purpose of general banking business such as clearing adjustments, liquidity etc. is provided at Bank Rate in terms of our circular RPCD No. NB. BC.93/03.03.02/98-99 dated April 20, 1999. 

 2. It has now been decided that, henceforth, such accommodation will be provided to State Co-operative Banks at the repo rate.

 Yours faithfully

 (I. S. Negi)

 General Manager

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2011-12/209 · issued 30 Sep 2011. The plain-English explanation above is BankPulse’s own independent summary.

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Topics: Co-operative Banks

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Key dataSee the live numbers behind this topic: RBI Penalty Tracker, NPA / Asset-Quality Tracker — updated from official RBI data.

Key termsPlain-English definitions of terms in this circular — see the full Indian banking glossary. KYC / AML · Gross NPA (GNPA) · Deposit insurance (DICGC) · Scheduled Commercial Bank (SCB)

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Who does what — compliance checklist

⚙️ Operations

Inform treasury and ALM teams about the revised interest calculation for clearing and liquidity adjustments.

📜 Compliance

Update internal pricing models for RBI borrowings to reference the repo rate instead of Bank Rate.
Review liquidity management strategies to align with repo-linked borrowing costs.
Ensure compliance with the new rate for all fresh and outstanding accommodation under Section 17(4)(a).

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 (State Co-operative Banks, Treasury departments of SCBs, RBI's rural planning and credit department), your first concrete step on “RBI shifts SCB accommodation pricing from Bank Rate to repo rate” is: “Update internal pricing models for RBI borrowings to reference the repo rate instead of Bank Rate.” (RBI issued this 30 Sep 2011).

Circular: RBI/2011-12/209 -- RBI shifts SCB accommodation pricing from Bank Rate to repo rate
Issued: 30 Sep 2011
Action required: Update internal pricing models for RBI borrowings to reference the repo rate instead of Bank Rate.
Action required: Inform treasury and ALM teams about the revised interest calculation for clearing and liquidity adjustments.
Action required: Review liquidity management strategies to align with repo-linked borrowing costs.
Action required: Ensure compliance with the new rate for all fresh and outstanding accommodation under Section 17(4)(a).
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=6741&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.