Repo Rate Hiked 25 bps to 8.50% in Oct 2011 Policy
Current · Source: Reserve Bank of India · RBI/2011-2012/231 · issued 25 Oct 2011 · ~1 min read
Quick answerRBI raised the repo rate by 25 bps to 8.50% effective immediately, as part of the Second Quarter Review of Monetary Policy 2011-12. The reverse repo rate automatically adjusted to 7.50% and the MSF rate to 9.50%.
The rule, in the simplest words
RBI (the central bank) raised the repo rate (the interest rate banks pay to borrow money from RBI) by 25 basis points (0.25%) to 8.50%.
The reverse repo rate (the interest rate RBI pays to banks when they deposit money with RBI) automatically went up to 7.50%.
The MSF (Marginal Standing Facility, an emergency borrowing rate for banks) automatically went up to 9.50%.
Banks will likely increase their lending rates (interest on loans) because their own borrowing costs went up.
This rule is effective immediately from October 25, 2011.
How it plays out — a real example
A branch operations officer in Indore, Priya, checks the new repo rate hike and knows her bank will soon raise interest on new gold loans. She calls her regular customer, Mr. Sharma, to explain that if he takes a loan next week, the rate will be higher than last month, so he should lock in his current loan quickly.
What changed
The repo rate under the Liquidity Adjustment Facility was increased by 25 basis points from 8.25% to 8.50%, effective October 25, 2011. Consequently, the reverse repo rate automatically adjusted to 7.50% and the Marginal Standing Facility rate to 9.50%. All other terms of the LAF and MSF schemes remained unchanged.
What it means for you
This rate hike signals RBI's continued tightening stance to contain inflation, increasing the cost of funds for banks borrowing from the central bank. Banks will likely pass on higher costs to customers through increased lending rates, potentially slowing credit demand and impacting loan growth.
What you must do
Review and adjust your bank's lending and deposit rates in line with the new policy rates.
Communicate the rate change to treasury and ALCO teams for liquidity management.
Assess the impact on your bank's net interest margin and loan portfolio.
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 asset-liability management teams, Retail and corporate borrowers
❓ Common questions
Regulatory timeline
Stated effective dateeffective October 25, 2011
Decoded by BankPulse2026-06-18 23:07 IST
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
Why did RBI hike the repo rate by 25 bps?
The hike was announced as part of the Second Quarter Review of Monetary Policy 2011-12 to curb inflationary pressures.
How does this affect my bank's borrowing costs?
Banks borrowing from RBI under LAF will now pay 8.50% instead of 8.25%, increasing short-term funding costs.
What happens to the reverse repo and MSF rates?
The reverse repo rate automatically adjusted to 7.50% and the MSF rate to 9.50%, effective immediately.
📜 Read the original circular — full text as issued by RBI
RBI/2011-2012/231
FMD.MOAG. No.64/01.01.01/2011-12
October 25, 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 by the Governor in the Second Quarter Review of the Monetary Policy 2011-12 , it has been decided to increase the repo rate under the Liquidity Adjustment Facility (LAF) by 25 basis points from 8.25 per cent to 8.50 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 7.50 per cent and the Marginal Standing Facility (MSF) rate to 9.50 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. Mahalingam)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2011-2012/231 · issued 25 Oct 2011. The plain-English explanation above is BankPulse’s own independent summary.
Update internal systems and reporting for the revised repo, reverse repo, and MSF rates.
📜 Compliance
Review and adjust your bank's lending and deposit rates in line with the new policy rates.
Communicate the rate change to treasury and ALCO teams for liquidity management.
Assess the impact on your bank's net interest margin and loan portfolio.
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 asset-liability management teams, Retail and corporate borrowers), your first concrete step on “Repo Rate Hiked 25 bps to 8.50% in Oct 2011 Policy” is: “Review and adjust your bank's lending and deposit rates in line with the new policy rates.” (RBI issued this 25 Oct 2011).
Circular: RBI/2011-2012/231 -- Repo Rate Hiked 25 bps to 8.50% in Oct 2011 Policy
Issued: 25 Oct 2011
Action required: Review and adjust your bank's lending and deposit rates in line with the new policy rates.
Action required: Communicate the rate change to treasury and ALCO teams for liquidity management.
Action required: Assess the impact on your bank's net interest margin and loan portfolio.
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.
💬 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=6777&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.
Help us keep this accurate
Found an inaccuracy or have an improvement? Tell us. Every report is reviewed by our team before any change is made — nothing goes live unverified.
Public beta — plain-English informational summaries. Always verify against the official RBI source (circular number cited on every page) before making compliance, credit, treasury, audit, or operational decisions. · Join our WhatsApp channel ↗
BANKPULSE · FREE DAILY BRIEF
Get RBI updates for your role
Every important RBI update, decoded in plain English — for your career, exams & financial awareness.
We collect only your email, name and role, used solely to send your brief — never sold or shared. Withdraw anytime via the unsubscribe link in any email. Independent platform, not affiliated with the RBI. Information, not legal advice.
REPORT AN ERROR · BETA
Spotted an error? Earn 500 BankPulse Credits
Help us stay accurate. If your correction is verified true and approved by our founder, you earn 500 BankPulse Credits — redeemable when the platform monetises.
Reviewed by a human before any credit is awarded. We never change the site from crowd input without verification.
WANT A NEW FEATURE · BETA
What would make BankPulse more useful for you?
Tell us what to build next — a tool, a data view, a role page, anything. We read every suggestion.
Thank you — your ideas directly shape what we build.