The Reserve Bank of India (RBI) announced key changes to policy rates and penal interest rates as part of its Monetary Policy Statement 2025-26 on December 5, 2025. The Bank Rate has been reduced by 25 basis points, from 5.75% to 5.50%, prompting a corresponding reduction in penal interest rates on shortfalls in Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) to 8.50% and 10.50%, respectively. The policy repo rate under the Liquidity Adjustment Facility (LAF) has also been cut by 25 basis points to 5.25%, impacting collateralized liquidity support under the Standing Liquidity Facility for Primary Dealers. Additionally, related rates under LAF, including the Standing Deposit Facility (SDF) and Marginal Standing Facility (MSF), have been revised to 5.00% and 5.50%, respectively. These adjustments reflect RBI’s proactive approach to managing liquidity, supporting financial stability, and promoting credit flow in line with evolving economic conditions. All other terms of the LAF and penal interest frameworks remain unchanged.
RESERVE BANK OF INDIA
RBI/2025-26/134
DoR.RET.REC.341/12.01.001/2025-26 | Dated: December 05, 2025
All banks,
Madam / Sir,
Penal Interest on shortfall in CRR and SLR requirements – Change in Bank Rate
Please refer to our circular DoR.RET.REC.22/12.01.001/2025-26 dated June 06, 2025 on the captioned subject.
2. As announced in the Monetary Policy Statement 2025-26 dated December 05, 2025, the Bank Rate is revised downwards by 25 basis points from 5.75 per cent to 5.50 per cent with immediate effect. Accordingly, all penal interest rates on shortfall in CRR and SLR requirements, which are specifically linked to the Bank Rate, also stand revised as under:
Penal Interest Rates which are linked to the Bank Rate
| Item | Existing Rate | Revised Rate (With immediate effect) |
| Penal interest rates on shortfalls in reserve requirements (depending on duration of shortfall) | Bank Rate plus 3.0 percentage points (8.75 per cent) or Bank Rate plus 5.0 percentage points (10.75 per cent) | Bank Rate plus 3.0 percentage points (8.50 per cent) or Bank Rate plus 5.0 percentage points (10.50 per cent) |
Yours faithfully,
(Manoranjan Padhy)
Chief General Manager
RBI/2025-26/133
REF.No.MPD.BC.401/07.01.279/2025-26 | Dated: December 5, 2025
All Primary Dealers,
Standing Liquidity Facility for Primary Dealers
As announced in the bi-monthly Monetary Policy Statement, 2025-26 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 5.50 per cent to 5.25 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 5.25 per cent with immediate effect.
Yours faithfully,
(Dr. Anupam Prakash)
Adviser-in-Charge
RBI/2025-26/132
FMOD.MAOG.No.153/01.01.001/2025-26 | Dated: December 05, 2025
All Liquidity Adjustment Facility (LAF) participants
Madam/Sir,
Liquidity Adjustment Facility – Change in rates
As announced in the Monetary Policy Statement dated December 05, 2025, 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 5.50 per cent to 5.25 per cent with immediate effect.
2. Consequently, the standing deposit facility (SDF) rate and marginal standing facility (MSF) rate stand adjusted to 5.00 per cent and 5.50 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
