Home › Circulars › RBI/2012-13/491

Bank Rate Cut to 8.25%: Impact on Urban Co-op Banks

No longer current — withdrawn, no replacement on file yet

Source: Reserve Bank of India · RBI/2012-13/491 · issued 03 May 2013 · ~1 min read

Quick answerRBI reduced the Bank Rate by 25 bps to 8.25% effective May 3, 2013. This directly lowers penal interest rates on reserve shortfalls and the SSI refinance rate for urban co-operative banks.

What changed

The Bank Rate was reduced from 8.50% to 8.25%, a 25 basis point cut, effective May 3, 2013. Consequently, penal interest rates on reserve requirement shortfalls—previously Bank Rate plus 3% (11.50%) or plus 5% (13.50%)—are now 11.25% and 13.25% respectively. The interest rate on refinance for SSI under Section 17(2)(bb) read with Section 17(4)(c) of the RBI Act also dropped to 8.25%.

What it means for you

Urban co-operative banks will face lower penalty costs for reserve shortfalls, easing liquidity management pressures. The reduced SSI refinance rate may encourage more lending to small-scale industries. However, the overall impact is modest as the Bank Rate is a signaling rate, not a direct policy rate for most lending.

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 reflect the revised penal interest rates of 11.25% and 13.25% for reserve shortfalls.
Adjust the SSI refinance rate to 8.25% for any new or outstanding refinance under Section 17(2)(bb).
Communicate the changes to treasury and compliance teams to ensure accurate penalty calculations.
Acknowledge receipt of this circular to your regional RBI office.

Who it affects

All Primary (Urban) Co-operative Banks, Banks availing SSI refinance under Section 17(2)(bb), Banks with reserve requirement shortfalls

❓ Common questions

Regulatory timeline

Stated effective date effective May 3, 2013
Decoded by BankPulse 2026-06-18 15:39 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Status change: withdrawn 03 Aug 2026, 04:00 IST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 May 3, 2013?

The Bank Rate has been reduced by 25 basis points from 8.50% to 8.25%.

How do the revised penal interest rates work?

Penal rates on reserve shortfalls are now Bank Rate plus 3% (11.25%) or plus 5% (13.25%), depending on the duration of the shortfall.

Does this affect SSI refinance rates?

Yes, the interest rate on refinance for SSI under Section 17(2)(bb) read with Section 17(4)(c) of the RBI Act is also revised to 8.25%.

📜 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 #1155: UBD.BPD.(PCB).Cir.No.48/16.11.00/2012-13 — "Bank Rate" dated May 3, 2013”

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

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No. 48 /16.11.00/2012-13 May 3, 2013 The Chief Executive Officer All Primary (Urban) Co-operative Banks Madam/Dear Sir, Bank Rate Please refer to our circular UBD.BPD.(PCB).Cir.No.44/16.11.00/2012-13 dated March 19, 2013 on the captioned subject. As announced in the Monetary Policy Statement for 2013-14 , the Bank Rate stands adjusted by 25 basis points from 8.50 per cent to 8.25 per cent with effect from May 3, 2013. 2. All penal interest rates on shortfall in reserve requirements, which are specifically linked to the Bank Rate, also stand revised as indicated in the Annex . The interest rate on refinance for SSI under Section 17(2)(bb) read with Section 17(4)(c) of the Reserve Bank of India Act, 1934 also stands revised to 8.25 per cent with effect from May 3, 2013. 3. Please acknowledge receipt to the Regional Office concerned. Yours faithfully, (A. K. Bera) Principal Chief General Manager Encl: As above. Annex Penal Interest Rates which are linked to the Bank Rate Item Existing Rate Revised Rate (Effective from May 3, 2013) Penal interest rates on shortfalls in reserve requirements (depending on duration of shortfalls). Bank Rate plus 3.0 percentage points (11.50 per cent) or Bank Rate plus 5.0 percentage points (13.50 per cent). 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Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2012-13/491 · issued 03 May 2013. 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=7964&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.