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RBI Reduces LAF Rates by 50 Basis Points

Current · Source: Reserve Bank of India · RBI/2025-26/42 · issued 06 Jun 2025 · ~1 min read
Quick answerRBI reduces LAF policy repo rate by 50 basis points to 5.50% with immediate effect.

What changed

What it means for you

What you must do

Who it affects

All Liquidity Adjustment Facility (LAF) participants

❓ Common questions

What is the new policy repo rate under LAF?

The new policy repo rate under LAF is 5.50%.

What is the impact of this rate change on banks and lenders?

Banks and lenders may see an increase in liquidity and a decrease in borrowing costs.

What are the other terms and conditions of the extant LAF Scheme?

All other terms and conditions of the extant LAF Scheme remain unchanged.

📜 Read the original circular — full text as issued by RBI
RBI/2025-26/42 FMOD.MAOG.No.152/01.01.001/2025-26 June 06, 2025 All Liquidity Adjustment Facility (LAF) participants Madam/Sir, Liquidity Adjustment Facility - Change in rates As announced in the Monetary Policy Statement dated June 06, 2025 , it has been decided by the Monetary Policy Committee (MPC) to reduce the policy repo rate under the Liquidity Adjustment Facility (LAF) by 50 basis points from 6.00 per cent to 5.50 per cent with immediate effect. 2. Consequently, the standing deposit facility (SDF) rate and marginal standing facility (MSF) rate stand adjusted to 5.25 per cent and 5.75 per cent respectively, with immediate effect. 3. All other terms and conditions of the extant LAF Scheme will remain unchanged. Yours sincerely, (G. Seshsayee) Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2025-26/42 · issued 06 Jun 2025. 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 Liquidity Adjustment Facility (LAF) participants), your first concrete step on “RBI Reduces LAF Rates by 50 Basis Points” is: “Review and update your lending and borrowing strategies accordingly.” (RBI issued this 06 Jun 2025).

  1. Circular: RBI/2025-26/42 -- RBI Reduces LAF Rates by 50 Basis Points
  2. Issued: 06 Jun 2025
  3. Action required: Review and update your lending and borrowing strategies accordingly.
  4. Action required: Monitor the impact of this rate change on your bank's liquidity and interest income.
  5. Action required: Consider adjusting your deposit and lending rates to remain competitive.
  6. Owner: ____________ Target date: ____________
  7. Board/committee approval needed? Y / N
  8. 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=12854&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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