Home › Circulars › RBI/2011-12/517

Bank Rate Cut to 9%: Penal Rates on Reserve Shortfalls Revised

No longer current — withdrawn, no replacement on file yet

Source: Reserve Bank of India · RBI/2011-12/517 · issued 20 Apr 2012 · ~2 min read

Quick answerRBI cut the Bank Rate by 50 bps to 9.00% effective April 17, 2012. Penal interest rates on reserve shortfalls linked to Bank Rate are reduced accordingly. RRBs and co-operative banks must apply the new rates.

What changed

The Bank Rate was reduced from 9.50% to 9.00%, a 50 basis point cut, effective April 17, 2012. Penal interest rates on reserve requirement shortfalls, which are tied to the Bank Rate, were revised downward: the rate of Bank Rate plus 3 percentage points fell from 12.50% to 12.00%, and Bank Rate plus 5 percentage points fell from 14.50% to 14.00%.

What it means for you

This reduces the cost for RRBs and co-operative banks that incur penal interest due to reserve shortfalls, lowering their penalty burden. The cut signals a slightly accommodative monetary stance, which may ease liquidity pressures for smaller lenders. Banks should update their systems to reflect the new penal rates immediately.

Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.

What banks were required to do at the time

Update internal systems to apply the revised Bank Rate of 9.00% for all linked penal interest calculations.
Communicate the new penal rates (12.00% and 14.00%) to relevant treasury and compliance teams.
Ensure acknowledgment of this circular is sent to RBI as instructed.
Review any loan or deposit products that reference the Bank Rate for potential repricing.

Who it affects

Regional Rural Banks (RRBs), State Co-operative Banks (StCBs), Central Co-operative Banks (DCCBs), Treasury and compliance departments of these banks

❓ Common questions

Regulatory timeline

Stated effective date effective April 17, 2012
Decoded by BankPulse 2026-06-18 20:44 IST
repealed_by — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
Status change: withdrawn 03 Aug 2026, 04:00 IST

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

What is the new Bank Rate effective from April 17, 2012?

The Bank Rate has been reduced from 9.50% to 9.00%, a cut of 50 basis points.

How are penal interest rates on reserve shortfalls affected?

Penal rates linked to the Bank Rate are reduced: the rate of Bank Rate plus 3 percentage points is now 12.00% (down from 12.50%), and Bank Rate plus 5 percentage points is now 14.00% (down from 14.50%).

Which banks are covered by this circular?

All Regional Rural Banks, State Co-operative Banks, and Central Co-operative Banks are required to comply.

📜 This document’s life story (1 recorded event, each backed by RBI’s own words)

Repealed by RBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)

RBI’s words: “Official withdrawal register entry #1353: RPCD.CO.RRB.RCB.BC.No.72/03.05.33/2011-12 — "Bank Rate" dated April 20, 2012”

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

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All penal interest rates on shortfall in reserve requirements, which are specifically linked to the Bank Rate, also stand revised as indicated in Annex . 3. Please acknowledge receipt. Yours faithfully, (C.D.Srinivasan) Chief General Manager Encl: as above Annex Penal Interest Rates which are linked to the Bank Rate Item Existing Rate Revised Rate (Effective from April17, 2012) Penal interest rates on shortfalls in reserve requirements (depending on duration of shortfalls). Bank Rate plus 3.0 percentage points (12.50 per cent) or Bank Rate plus 5.0 percentage points (14.50 per cent). Bank Rate plus 3.0 percentage points (12.00 per cent) or Bank Rate plus 5.0 percentage points (14.00 per cent). 2026 All Months January February March April May June July August September October November December 2025 All Months January February March April May June July August September October November December 2024 All Months January February March April May June July August September October November December 2023 All Months January February March April May June July August September October November December 2022 All Months January February March April May June July August September October November December 2021 All Months January February March April May June July August September October November December 2020 All Months January February March April May June July August September October November December 2019 All Months January February March April May June July August September October November December 2018 All Months January February March April May June July August September October November December 2017 All Months January February March April May June July August September October November December Archives 2016 All Months January February March April May June July August September October November December 2015 All Months January February March April May June July August September October November December 2014 All Months January February March April May June July August September October November December 2013 All Months January February March April May June July August September October November December 2012 All Months January February March April May June July August September October November December 2011 All Months January February March April May June July August September October November December 2010 All Months January February March April May June July August September October November December 2009 All Months January February March April May June July August September October November December 2008 All Months January February March April May June July August September October November December 2007 All Months January February March April May June July August September October November December 2006 All Months January February March April May June July August September October November December 2005 All Months January February March April May June July August September October November December 2004 All Months January February March April May June July August September October November December 2003 All Months January February March April May June July August September October November December 2002 All Months January February March April May June July August September October November December 2001 All Months January February March April May June July August September October November December 2000 All Months January February March April May June July August September October November December 1999 All Months January February March April May June July August September October November December 1998 All Months January February March April May June July August September October November December 1997 All Months January February March April May June July August September October November December 1996 All Months January February March April May June July August September October November December 1995 All Months January February March April May June July August September October November December 1994 All Months January February March April May June July August September October November December 1993 All Months January February March April May June July August September October November December 1992 All Months January February March April May June July August September October November December 1991 All Months January February March April May June July August September October November December Top Back to previous page More Links Bank Holidays Banking Glossary Citizen's Charter Complaints Contact Us COVID-19 Measures E-LMS Events FAQs Financial Education Forms IFSC/MICR Codes Important Websites Opportunities @ RBI RBI Clarifications RBI Kehta Hai RBI’s Vision and Values (1257 kb)--> Right to Information Act Tenders Follow RBI RSS Twitter YouTube Instagram Facebook LinkedIn &copy; Reserve Bank of India. 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Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2011-12/517 · issued 20 Apr 2012. The plain-English explanation above is BankPulse’s own independent summary.

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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=7151&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.