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RBI Hikes Repo Rate by 25 bps to 7.50%

Current · Source: Reserve Bank of India · RBI/2013-2014/278 · issued 20 Sep 2013 · ~1 min read
Quick answerRBI raised the repo rate by 25 basis points to 7.50% effective immediately, with the reverse repo rate automatically adjusting to 6.50%. This move aims to tighten liquidity and curb inflation.
The rule, in the simplest words
How it plays out — a real example

A gold‑loan officer in Indore sees the RBI’s repo rate jump to 7.50%. She quickly updates her loan pricing model, raising the interest on new gold‑backed loans by a few basis points, and informs her customers that the change is part of the RBI’s effort to keep inflation in check. She feels confident that her adjustments keep the bank competitive while staying compliant with the new policy.

What changed

The repo rate under the Liquidity Adjustment Facility (LAF) was increased by 25 basis points from 7.25% to 7.50%, effective immediately. Consequently, the reverse repo rate automatically adjusted to 6.50%. All other LAF terms remain unchanged.

What it means for you

Banks will face higher borrowing costs from the RBI, potentially leading to increased lending rates for customers. This tightening is intended to control inflation but may slow credit growth. Lenders should reassess their asset-liability management and loan pricing strategies.

What you must do

Who it affects

All scheduled commercial banks (excluding RRBs), Standalone primary dealers, Borrowers with floating-rate loans, Depositors seeking higher returns

❓ Common questions

Why did RBI increase the repo rate?

The hike was announced in the Mid-Quarter Review of the Monetary Policy 2013-14 to curb inflationary pressures.

How does this affect my bank's lending rates?

Banks may increase their lending rates as their cost of funds rises, impacting floating-rate loans and new borrowings.

Will the reverse repo rate change automatically?

Yes, the reverse repo rate adjusts automatically to 6.50% following the repo rate hike, as per LAF rules.

📜 Read the original circular — full text as issued by RBI
RBI/2013-2014/278 FMD.MOAG. No. 86/01.01.001/2013-14 September 20, 2013 All Scheduled Commercial Banks (excluding RRBs) and Standalone Primary Dealers Madam / Sir, Liquidity Adjustment Facility – Repo and Reverse Repo Rates As announced today in the Mid-Quarter Review of the Monetary Policy 2013-14 , it has been decided to increase the Repo rate under the Liquidity Adjustment Facility (LAF) by 25 basis points from 7.25 per cent to 7.50 per cent with immediate effect. 2. Consequent to the change in the Repo rate, the Reverse Repo rate under the LAF will stand automatically adjusted to 6.50 per cent with immediate effect. 3. All other terms and conditions of the current LAF scheme will remain unchanged. 4. Please acknowledge receipt. Yours sincerely (G. Mahalingam) Principal Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2013-2014/278 · issued 20 Sep 2013. The plain-English explanation above is BankPulse’s own independent summary.
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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), Standalone primary dealers, Borrowers with floating-rate loans, Depositors seeking higher returns), your first concrete step on “RBI Hikes Repo Rate by 25 bps to 7.50%” is: “Review and adjust lending and deposit rates to reflect the higher repo rate.” (RBI issued this 20 Sep 2013).

  1. Circular: RBI/2013-2014/278 -- RBI Hikes Repo Rate by 25 bps to 7.50%
  2. Issued: 20 Sep 2013
  3. Action required: Review and adjust lending and deposit rates to reflect the higher repo rate.
  4. Action required: Reassess liquidity management and borrowing strategies under the LAF.
  5. Action required: Communicate rate changes to customers and update loan pricing models.
  6. Action required: Monitor inflation trends and RBI's future policy signals for further adjustments.
  7. Owner: ____________ Target date: ____________
  8. Board/committee approval needed? Y / N
  9. 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.

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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=8440&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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