Home › Circulars › RBI/2013-14/346

Bank Rate Cut to 8.75%: Impact on UCBs

No longer current — withdrawn, no replacement on file yet

Source: Reserve Bank of India · RBI/2013-14/346 · issued 29 Oct 2013 · ~2 min read

Quick answerRBI reduced the Bank Rate by 25 bps to 8.75% effective October 29, 2013. This lowers penal interest rates on reserve shortfalls and SSI refinance rate for Primary Urban Co-operative Banks.

What changed

The Bank Rate was reduced from 9.0% to 8.75%, a 25 basis point cut, effective October 29, 2013. Consequently, penal interest rates on reserve requirement shortfalls, which are linked to the Bank Rate, were revised downward: the rate of Bank Rate plus 3 percentage points fell from 12.00% to 11.75%, and Bank Rate plus 5 percentage points fell from 14.00% to 13.75%. The interest rate on refinance for SSI under Section 17(2)(bb) read with Section 17(4)(c) of the RBI Act was also reduced to 8.75%.

What it means for you

For Primary Urban Co-operative Banks, this reduction in the Bank Rate directly lowers the cost of penalties for failing to maintain required reserves. It also makes SSI refinance cheaper, potentially encouraging lending to small-scale industries. Banks should update their systems to reflect the new penal rates and refinance rate 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 penal interest rates of 11.75% and 13.75% for reserve shortfalls effective October 29, 2013.
Adjust the interest rate on SSI refinance to 8.75% per annum for all new and outstanding refinance under Section 17(2)(bb) read with Section 17(4)(c).
Communicate the changes to relevant departments and ensure compliance in reporting and customer dealings.

Who it affects

Primary Urban Co-operative Banks, Borrowers availing SSI refinance under Section 17(2)(bb) of RBI Act, Banks facing penal charges for reserve shortfalls

❓ Common questions

Regulatory timeline

Stated effective date effective October 29, 2013
Decoded by BankPulse 2026-06-18 12:02 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Status change: withdrawn 03 Aug 2026, 04:00 IST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 October 29, 2013?

The Bank Rate has been reduced by 25 basis points from 9.0% to 8.75%.

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 11.75% (down from 12.00%), and Bank Rate plus 5 percentage points is now 13.75% (down from 14.00%).

Does this circular 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 has been revised to 8.75% with effect from October 29, 2013.

📜 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 #1000: UBD.BPD.(PCB).Cir.No.33/16.11.00/2013-14 — "Revision in Bank Rate" dated October 29, 2013”

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

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No. 33 /16.11.00/2013-14 October 29, 2013 The Chief Executive Officer All Primary (Urban) Co-operative Banks Madam / Dear Sir, Revision in Bank Rate Please refer to our circular UBD.BPD.(PCB).Cir.No.28/16.11.00/2013-14 dated October 7, 2013 on the captioned subject. 2. As announced in the Second Quarter Review of Monetary Policy Statement for 2013-14 dated October 29, 2013, the Bank Rate stands adjusted by 25 basis points from 9.0 per cent to 8.75 per cent with effect from October 29, 2013. 3. 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 8.75 per cent with effect from October 29, 2013 Yours faithfully, (A.K.Bera) Principal Chief General Manager Encl: Annex Annex Penal Interest Rates which are linked to the Bank Rate Item Existing Rate Revised Rate (Effective from October 29, 2013) Penal interest rates on shortfalls in reserve requirements (depending on duration of shortfalls). Bank Rate plus 3.0 percentage points (12.00 per cent) or Bank Rate plus 5.0 percentage points (14.00 per cent). 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Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2013-14/346 · issued 29 Oct 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=8540&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.