Current · Source: Reserve Bank of India · RBI/2012-13/486 · issued 03 May 2013 · ~1 min read
Quick answerRBI reduced the repo rate by 25 basis points to 7.25% effective immediately. Reverse repo and MSF rates adjusted automatically to 6.25% and 8.25% respectively. All other LAF and MSF terms remain unchanged.
The rule, in the simplest words
RBI lowered the repo rate [the interest rate at which banks borrow money from RBI] by 25 basis points to 7.25%
The reverse repo rate [the interest rate at which RBI borrows money from banks] is now 6.25%, and the MSF rate [the interest rate at which banks can borrow emergency funds from RBI] is 8.25%
Banks can borrow money at a lower cost, which may lead to lower lending rates for customers
The change aims to support economic growth by easing monetary policy [the rules that control the money supply in the economy]
How it plays out — a real example
A treasury officer in Mumbai will update their bank's systems to reflect the new repo rate of 7.25% and review their lending strategies to see if they can offer lower interest rates to customers. This change may help the bank attract more borrowers and support the country's economic growth. The officer will also communicate the rate changes to their asset-liability management team to ensure they are prepared for any changes in liquidity.
What changed
The repo rate under the Liquidity Adjustment Facility was reduced by 25 basis points from 7.50% to 7.25%. Consequently, the reverse repo rate adjusted to 6.25% and the Marginal Standing Facility rate to 8.25%.
What it means for you
Banks can now borrow from RBI at a lower cost, which may reduce their lending rates over time. The automatic adjustments to reverse repo and MSF rates ensure the rate corridor remains consistent. This move signals RBI's intent to support economic growth by easing monetary policy.
What you must do
Update your treasury systems to reflect the new repo rate of 7.25%, reverse repo rate of 6.25%, and MSF rate of 8.25%.
Review your lending and deposit rate strategies to align with the reduced policy rates.
Communicate the rate changes to your asset-liability management (ALM) teams for liquidity planning.
Ensure acknowledgment of this circular is sent to RBI as required.
Who it affects
All scheduled commercial banks (excluding RRBs), Primary dealers, Treasury and ALM departments, Borrowers with floating-rate loans
❓ Common questions
When did this repo rate cut take effect?
The reduction was effective immediately from May 3, 2013, as announced in the Monetary Policy Statement for 2013-14.
Are there any changes to other LAF or MSF terms?
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/2012-13/486
FMD.MOAG. No. 78 /01.01.001/2012-13
May 03, 2013
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 Monetary Policy Statement for 2013-14 , it has been decided to reduce the Repo rate under the Liquidity Adjustment Facility (LAF) by 25 basis points from 7.50 per cent to 7.25 per cent with immediate effect.
2. Consequent to the change in the Repo rate, the Reverse Repo rate under the LAF and the Marginal Standing Facility (MSF) rate will stand automatically adjusted to 6.25 per cent and 8.25 per cent respectively 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/2012-13/486 · issued 03 May 2013. The plain-English explanation above is BankPulse’s own independent summary.
Update your treasury systems to reflect the new repo rate of 7.25%, reverse repo rate of 6.25%, and MSF rate of 8.25%.
📜 Compliance
Review your lending and deposit rate strategies to align with the reduced policy rates.
Communicate the rate changes to your asset-liability management (ALM) teams for liquidity planning.
Ensure acknowledgment of this circular is sent to RBI as required.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are an IT/Systems lead at a bank this circular applies to (All scheduled commercial banks (excluding RRBs), Primary dealers, Treasury and ALM departments, Borrowers with floating-rate loans), your first concrete step on “Repo Rate Cut by 25 bps to 7.25%” is: “Update your treasury systems to reflect the new repo rate of 7.25%, reverse repo rate of 6.25%, and MSF rate of 8.25%.” (RBI issued this 03 May 2013).
Circular: RBI/2012-13/486 -- Repo Rate Cut by 25 bps to 7.25%
Issued: 03 May 2013
Action required: Update your treasury systems to reflect the new repo rate of 7.25%, reverse repo rate of 6.25%, and MSF rate of 8.25%.
Action required: Review your lending and deposit rate strategies to align with the reduced policy rates.
Action required: Communicate the rate changes to your asset-liability management (ALM) teams for liquidity planning.
Action required: Ensure acknowledgment of this circular is sent to RBI as required.
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=7959&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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