Home › Circulars › RBI/2013-14/468

Bank Rate Hiked to 9%: Penal Rates on Reserve Shortfalls Revised

No longer current — withdrawn, no replacement on file yet

Source: Reserve Bank of India · RBI/2013-14/468 · issued 28 Jan 2014 · ~2 min read

Quick answerRBI raised the Bank Rate by 25 bps to 9.0% effective January 28, 2014, following the repo rate hike. Penal interest rates on reserve shortfalls, linked to Bank Rate, also increased accordingly.

What changed

The Bank Rate was increased by 25 basis points from 8.75% to 9.0%, effective January 28, 2014. This change was triggered by the repo rate hike announced in the Third Quarter Review of Monetary Policy 2013-14. Consequently, penal interest rates on shortfalls in reserve requirements, which are tied to the Bank Rate, were revised upward as detailed in the annex.

What it means for you

Banks will face higher costs for reserve shortfalls, as penal rates now range from 12.00% to 14.00% depending on the duration of the shortfall. This aligns with the RBI's tightening stance to control inflation. Lenders must recalibrate their liquidity management to avoid these elevated penalties.

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 new Bank Rate of 9.0% for calculating penal interest on reserve shortfalls.
Review and adjust liquidity buffers to minimize shortfalls and avoid the revised higher penal rates.
Communicate the rate change to treasury and compliance teams for accurate reporting and penalty calculations.
Monitor RBI circulars for any further changes to policy rates or reserve requirements.

Who it affects

All Scheduled Commercial Banks, Local Area Banks, Treasury and compliance departments, Banks with frequent reserve shortfalls

❓ Common questions

Regulatory timeline

Stated effective date effective January 28, 2014
Decoded by BankPulse 2026-06-18 10:58 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Status change: withdrawn 03 Aug 2026, 04:00 IST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 January 28, 2014?

The Bank Rate has been increased by 25 basis points to 9.0% from the previous 8.75%.

How do the revised penal interest rates work?

Penal rates on reserve shortfalls are now Bank Rate plus 3 percentage points (12.00%) or Bank Rate plus 5 percentage points (14.00%), depending on the duration of the shortfall.

Why was the Bank Rate changed?

The change followed the repo rate hike announced in the Third Quarter Review of Monetary Policy 2013-14, as part of RBI's monetary tightening to manage inflation.

📜 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 #948: DBOD.No.Ret.BC.88/12.01.001/2013-14 — "Bank Rate" dated January 28, 2014”

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

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Consequent to the increase in the policy repo rate under the Liquidity Adjustment Facility (LAF) as announced in the Third Quarter Review of Monetary Policy 2013-14 dated January 28, 2014 , the Bank Rate stands adjusted by 25 basis points from 8.75 per cent to 9.0 per cent with effect from January 28, 2014. 3. All penal interest rates on shortfall in reserve requirements, which are specifically linked to the Bank Rate, also stand revised as indicated in Annex . 4. Please acknowledge receipt. Yours faithfully (Sudha Damodar) Chief General Manager Encl: as above Annex Penal Interest Rates which are linked to the Bank Rate Item Existing Rate Revised Rate (Effective from January 28, 2014) Penal interest rates on shortfalls in reserve requirements (depending on duration of shortfalls). Bank Rate plus 3.0 percentage points (11.75 per cent) or Bank Rate plus 5.0 percentage points (13.75 per cent). Bank Rate plus 3.0 percentage points (12.00 per cent) or Bank Rate plus 5.0 percentage points (14.00 per cent). 2026 All Months January February March April May June July August September October November December 2025 All Months January February March April May June July August September October November December 2024 All Months January February March April May June July August September October November December 2023 All Months January February March April May June July August September October November December 2022 All Months January February March April May June July August September October November December 2021 All Months January February March April May June July August September October November December 2020 All Months January February March April May June July August September October November December 2019 All Months January February March April May June July August September October November December 2018 All Months January February March April May June July August September October November December 2017 All Months January February March April May June July August September October November December Archives 2016 All Months January February March April May June July August September October November December 2015 All Months January February March April May June July August September October November December 2014 All Months January February March April May June July August September October November December 2013 All Months January February March April May June July August September October November December 2012 All Months January February March April May June July August September October November December 2011 All Months January February March April May June July August September October November December 2010 All Months January February March April May June July August September October November December 2009 All Months January February March April May June July August September October November December 2008 All Months January February March April May June July August September October November December 2007 All Months January February March April May June July August September October November December 2006 All Months January February March April May June July August September October November December 2005 All Months January February March April May June July August September October November December 2004 All Months January February March April May June July August September October November December 2003 All Months January February March April May June July August September October November December 2002 All Months January February March April May June July August September October November December 2001 All Months January February March April May June July August September October November December 2000 All Months January February March April May June July August September October November December 1999 All Months January February March April May June July August September October November December 1998 All Months January February March April May June July August September October November December 1997 All Months January February March April May June July August September October November December 1996 All Months January February March April May June July August September October November December 1995 All Months January February March April May June July August September October November December 1994 All Months January February March April May June July August September October November December 1993 All Months January February March April May June July August September October November December 1992 All Months January February March April May June July August September October November December 1991 All Months January February March April May June July August September October November December Top Back to previous page More Links : Bank Holidays Banking Glossary Citizen's Charter Complaints Contact Us COVID-19 Measures E-LMS Events FAQs Financial Education Forms IFSC/MICR Codes Important Websites Opportunities @ RBI RBI Clarifications RBI Kehta Hai RBI’s Vision and Values (1257 kb)--> Right to Information Act Tenders Follow RBI RSS Twitter YouTube Instagram Facebook LinkedIn &copy; Reserve Bank of India. 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Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2013-14/468 · issued 28 Jan 2014. 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=8716&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.