Current · Source: Reserve Bank of India · RBI/2011-2012/182 · issued 16 Sep 2011 · ~1 min read
Quick answerRBI raised the repo rate by 25 bps to 8.25% effective immediately, with reverse repo at 7.25% and MSF at 9.25%. This tightens liquidity and raises borrowing costs for banks.
The rule, in the simplest words
The RBI (India's central bank) raised the repo rate (the interest banks pay when borrowing from RBI) by 0.25% to 8.25% right away.
Because of that, the reverse repo rate (the interest banks earn when they lend money to RBI) automatically changed to 7.25%.
The Marginal Standing Facility (MSF) rate, a penalty borrowing rate for banks in emergencies, is now 9.25%.
Banks will now pay more to get money, so they are likely to increase loan and deposit rates for their customers.
How it plays out — a real example
Rohit, a gold‑loan officer in Mumbai, looks at the new repo, reverse repo and MSF rates and quickly updates his branch’s loan pricing sheet, then calls his customers to explain why the interest on new gold loans will be a little higher, assuring them the change is just following the RBI’s latest announcement.
What changed
The repo rate under the Liquidity Adjustment Facility was increased by 25 basis points from 8.00% to 8.25%. Consequently, the reverse repo rate automatically adjusted to 7.25% and the Marginal Standing Facility rate to 9.25%.
What it means for you
Banks will face higher cost of funds from RBI, likely leading to increased lending rates for customers. The MSF rate at 9.25% provides a penal borrowing window, reinforcing tighter monetary conditions.
What you must do
Review and adjust lending and deposit rates to reflect the new repo rate of 8.25%.
Update internal systems and treasury operations for the revised LAF and MSF rates.
Communicate rate changes to customers and align loan pricing strategies accordingly.
Monitor liquidity position and borrowing costs under the new rate structure.
Who it affects
All Scheduled Commercial Banks (excluding RRBs), Primary Dealers, Treasury and ALM teams, Retail and corporate borrowers
❓ Common questions
When did this rate change take effect?
The repo rate hike and consequent adjustments to reverse repo and MSF rates took effect immediately from September 16, 2011.
What are the new rates for reverse repo and MSF?
The reverse repo rate is now 7.25% and the MSF rate is 9.25%, both effective immediately.
Are there any other changes to LAF or MSF schemes?
No, all other terms and conditions of the current LAF and MSF schemes remain unchanged.
📜 Read the original circular — full text as issued by RBI
RBI/2011-2012/182
FMD.MOAG. No.63/01.01.01/2011-12
September 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 today in the Mid-Quarter Monetary Policy Review, September 2011 , it has been decided to increase the repo rate under the Liquidity Adjustment Facility (LAF) by 25 basis points from 8.00 per cent to 8.25 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 7.25 per cent and the Marginal Standing Facility (MSF) rate to 9.25 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. Mahalingam)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2011-2012/182 · issued 16 Sep 2011. The plain-English explanation above is BankPulse’s own independent summary.
Update internal systems and treasury operations for the revised LAF and MSF rates.
📜 Compliance
Review and adjust lending and deposit rates to reflect the new repo rate of 8.25%.
Communicate rate changes to customers and align loan pricing strategies accordingly.
Monitor liquidity position and borrowing costs under the new rate structure.
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 teams, Retail and corporate borrowers), your first concrete step on “RBI Hikes Repo Rate by 25 bps to 8.25%” is: “Review and adjust lending and deposit rates to reflect the new repo rate of 8.25%.” (RBI issued this 16 Sep 2011).
Circular: RBI/2011-2012/182 -- RBI Hikes Repo Rate by 25 bps to 8.25%
Issued: 16 Sep 2011
Action required: Review and adjust lending and deposit rates to reflect the new repo rate of 8.25%.
Action required: Update internal systems and treasury operations for the revised LAF and MSF rates.
Action required: Communicate rate changes to customers and align loan pricing strategies accordingly.
Action required: Monitor liquidity position and borrowing costs under the new rate structure.
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.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
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=6714&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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