Repo Rate Cut to 6.25%: SLF for Primary Dealers Revised
Current · Source: Reserve Bank of India · RBI/2024-25/110 · issued 07 Feb 2025 · ~1 min read
Quick answerRBI cut the repo rate by 25 bps to 6.25% effective immediately. The Standing Liquidity Facility for Primary Dealers is now available at this revised rate, lowering their cost of collateralised borrowing from the central bank.
The rule, in the simplest words
RBI (India's central bank) cut the repo rate (the interest banks pay to borrow from RBI) from 6.50% to 6.25%.
This new rate applies right away to the Standing Liquidity Facility (a special loan program) for Primary Dealers (companies that buy and sell government bonds).
Primary Dealers will now pay less interest when they borrow from RBI using collateral (something valuable they promise to give if they can't repay).
This change may make it cheaper for banks and Primary Dealers to get short-term funds (money for a few days), possibly lowering loan costs for customers.
How it plays out — a real example
A treasury officer in Indore sees the repo rate drop to 6.25%. She tells her treasury team that the bank's borrowing cost from RBI just fell, so they can now offer slightly cheaper short-term loans to jewelers, helping them buy more gold for the wedding season.
What changed
The Monetary Policy Committee reduced the policy repo rate under the Liquidity Adjustment Facility by 25 basis points from 6.50% to 6.25% with immediate effect. Consequently, the Standing Liquidity Facility provided to Primary Dealers is now priced at the new repo rate of 6.25%.
What it means for you
Primary Dealers will now pay lower interest on collateralised liquidity support from RBI, reducing their funding costs. This aligns with the broader monetary easing stance and may improve liquidity conditions in the government securities market. Banks and PDs can expect slightly cheaper access to short-term funds, potentially easing pressure on lending rates.
What you must do
Update internal systems to reflect the new 6.25% repo rate for SLF transactions with immediate effect.
Review liquidity management strategies to take advantage of lower borrowing costs from RBI.
Communicate the rate change to treasury and dealing teams handling PD operations.
Monitor market reactions and adjust short-term funding plans accordingly.
Who it affects
Primary Dealers, Treasury departments of banks, Market makers in government securities, RBI's liquidity operations team
❓ Common questions
What is the new repo rate effective from February 7, 2025?
The repo rate has been reduced by 25 basis points from 6.50% to 6.25% with immediate effect.
Does this change affect only Primary Dealers?
The notification specifically applies the revised rate to the Standing Liquidity Facility for Primary Dealers, but the repo rate cut impacts all LAF operations.
When did this change take effect?
The change is effective immediately from February 7, 2025, as announced in the bi-monthly Monetary Policy Statement.
📜 Read the original circular — full text as issued by RBI
RBI/2024-25/110
REF.No.MPD.BC.398/07.01.279/2024-25
February 07, 2025
All Primary Dealers,
Standing Liquidity Facility for Primary Dealers
As announced in the bi-monthly Monetary Policy Statement, 2024-25 , today, it has been decided by the Monetary Policy Committee (MPC) to reduce the policy repo rate under the Liquidity Adjustment Facility (LAF) by 25 basis points from 6.50 per cent to 6.25 per cent with immediate effect.
2. Accordingly, the Standing Liquidity Facility provided to Primary Dealers (PDs) (collateralised liquidity support) from the Reserve Bank would be available at the revised repo rate of 6.25 per cent with immediate effect.
Yours faithfully,
(Praggya Das)
Adviser-in-Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2024-25/110 · issued 07 Feb 2025. The plain-English explanation above is BankPulse’s own independent summary.
Communicate the rate change to treasury and dealing teams handling PD operations.
💻 IT / Systems
Update internal systems to reflect the new 6.25% repo rate for SLF transactions with immediate effect.
📜 Compliance
Review liquidity management strategies to take advantage of lower borrowing costs from RBI.
Monitor market reactions and adjust short-term funding plans accordingly.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are an IT/Systems lead at a bank this circular applies to (Primary Dealers, Treasury departments of banks, Market makers in government securities, RBI's liquidity operations team), your first concrete step on “Repo Rate Cut to 6.25%: SLF for Primary Dealers Revised” is: “Update internal systems to reflect the new 6.25% repo rate for SLF transactions with immediate effect.” (RBI issued this 07 Feb 2025).
Circular: RBI/2024-25/110 -- Repo Rate Cut to 6.25%: SLF for Primary Dealers Revised
Issued: 07 Feb 2025
Action required: Update internal systems to reflect the new 6.25% repo rate for SLF transactions with immediate effect.
Action required: Review liquidity management strategies to take advantage of lower borrowing costs from RBI.
Action required: Communicate the rate change to treasury and dealing teams handling PD operations.
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.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
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=12775&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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