Fixed reverse repo rate
Reverse repo = Reverse Repurchase Agreement Rate- How often
- At policy meetingsChanged only by the RBI
- Last released
- 22 May 202022 May 2020
Cut by 40 bp, effective 22 May 2020.
Events on this chart
Source: RBI, released 22 May 2020 · Chart: Clarity UPSC
- Previous
- 3.75%17 Apr 2020
- Highest
- 7.50%25 Oct 2011
- Lowest
- 3.25%21 Apr 2009
39 readings since 21 Apr 2009.
Story
The rate the Reserve Bank of India pays banks when it takes their surplus money and gives government securities as collateral.
What is happening now As of 22 May 2020
The fixed reverse repo rate has been 3.35% since 22 May 2020. That day the Monetary Policy Committee cut the repo rate by 0.40 percentage point to 4.00% to ease financial conditions during the pandemic, and the reverse repo rate fell from 3.75% with it.
On 8 April 2022 the Reserve Bank of India (RBI) made the Standing Deposit Facility (SDF) the floor of the corridor and kept the fixed reverse repo at 3.35% for use at its discretion. The RBI's website still lists it at 3.35% on 12 November 2026, while the SDF rate is 5.25%. To absorb surplus money, the RBI now uses the SDF and variable rate reverse repo auctions, where the rate varies with each auction; it held 55 such auctions between its August and October 2026 policy meetings.
Why it matters
For many years the reverse repo rate was the floor of India's overnight interest rates. A bank with spare money could always lend it to the Reserve Bank of India (RBI) at this rate, so it would not lend to another bank for less. Changes in the rate therefore moved short-term market rates.
Since April 2022 the Standing Deposit Facility (SDF) has done that job, and the fixed reverse repo rate no longer moves with the repo rate. It remains a tool the RBI can use at its discretion. The switch explains why older books and news reports name the reverse repo, not the SDF, as the floor.
What it is
A bank with spare money at the end of the day can lend it to the Reserve Bank of India (RBI). In a reverse repo the RBI borrows the money and hands the bank government securities as collateral. The rate the RBI pays is the reverse repo rate.
Until April 2022 this rate was the floor of the policy corridor: banks would not lend in the market below it. On 8 April 2022 the RBI made the Standing Deposit Facility (SDF) the floor. The SDF takes surplus money without collateral at 0.25 percentage point below the repo rate.
When the SDF arrived, the RBI kept the fixed-rate reverse repo at 3.35%, the level set on 22 May 2020. It remains in the RBI's toolkit for use at its discretion, so it no longer moves with the repo rate.
Read this number
- The publisher
- The Reserve Bank of India is India's central bank. It manages money supply, bank regulation, the rupee and the country's foreign exchange reserves.
- Rate since
- 22 May 2020 (3.35%)
- Corridor floor
- The SDF since 8 April 2022
- Use now
- At the RBI's discretion
- Release rule
- Changed only by the RBI; unchanged at 3.35% since 22 May 2020
Terms on this page (3)
- MSF
- Marginal Standing Facility
- RBI
- Reserve Bank of India
- SDF
- Standing Deposit Facility
History
- 27 Mar 2020Cut to 4.00% as the pandemic began, a wider cut than the repo rate.
- 17 Apr 2020Cut to 3.75% outside a Monetary Policy Committee meeting, to push banks to lend rather than park money with the Reserve Bank of India.
- 22 May 2020Cut to 3.35%, where it has stayed.
- 8 Apr 2022The Standing Deposit Facility replaced it as the floor of the corridor; the fixed-rate reverse repo was kept for use at the Reserve Bank of India's discretion.
Readings
| Period | Value | Status | Released |
|---|---|---|---|
| 22 May 2020 | 3.35% | Final | 22 May 2020 |
| 17 Apr 2020 | 3.75% | Final | 17 Apr 2020 |
| 27 Mar 2020 | 4.00% | Final | 27 Mar 2020 |
| 4 Oct 2019 | 4.90% | Final | 4 Oct 2019 |
| 7 Aug 2019 | 5.15% | Final | 7 Aug 2019 |
| 6 Jun 2019 | 5.50% | Final | 6 Jun 2019 |
| 4 Apr 2019 | 5.75% | Final | 4 Apr 2019 |
| 7 Feb 2019 | 6.00% | Final | 7 Feb 2019 |
| 1 Aug 2018 | 6.25% | Final | 1 Aug 2018 |
| 6 Jun 2018 | 6.00% | Final | 6 Jun 2018 |
| 2 Aug 2017 | 5.75% | Final | 2 Aug 2017 |
| 6 Apr 2017 | 6.00% | Final | 6 Apr 2017 |
For UPSC
Know the corridor: the Standing Deposit Facility (SDF) is the floor (repo rate − 0.25 percentage point), the repo rate is the policy rate, and the Marginal Standing Facility (MSF) is the ceiling (repo rate + 0.25 percentage point); the Bank Rate equals the MSF rate. The fixed-rate reverse repo, unchanged since May 2020, has sat outside this corridor since April 2022.