No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2022-23/174 · issued 08 Feb 2023 · ~1 min read
Quick answerRBI raised the Bank Rate by 25 basis points to 6.75% effective February 8, 2023. This directly increases penal interest rates on reserve shortfalls, impacting all banks' liquidity costs.
What changed
The Bank Rate was revised upward from 6.50% to 6.75%, a 25 bps increase, effective immediately from February 8, 2023. Consequently, penal interest rates on reserve requirement shortfalls, which are linked to the Bank Rate, also rose: the lower penal rate moved from 9.50% to 9.75%, and the higher rate from 11.50% to 11.75%.
What it means for you
Banks will face higher costs for failing to maintain required reserves, as penal rates are now pegged to the higher Bank Rate. This could tighten liquidity management and increase pressure on banks to avoid shortfalls. The move aligns with the broader monetary tightening stance signaled in the February 2023 policy.
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 6.75% for calculating penal interest on reserve shortfalls.
Communicate the revised penal rates (9.75% and 11.75%) to treasury and compliance teams immediately.
Review reserve maintenance processes to minimize shortfalls and avoid higher penal charges.
Assess impact on liquidity costs and adjust short-term funding strategies accordingly.
Who it affects
All scheduled commercial banks, Treasury and ALM desks, Compliance and risk management teams
repealed_by — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
Status change: withdrawn03 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 February 8, 2023?
The Bank Rate has been increased by 25 basis points from 6.50% to 6.75% with immediate effect.
How do the revised penal interest rates work?
Penal rates on reserve shortfalls are now Bank Rate plus 3 percentage points (9.75%) or Bank Rate plus 5 percentage points (11.75%), depending on the duration of the shortfall.
Which banks are impacted by this change?
This circular applies to all banks, meaning every scheduled commercial bank must comply with the revised Bank Rate and linked penal rates.
📜 This document’s life story (2 recorded events, each backed by RBI’s own words)
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2022-23/174 · issued 08 Feb 2023. 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=12450&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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