The Reverse Repo Rate is an important tool used by the Reserve Bank of India (RBI) to control liquidity and manage inflation in the economy. It is the rate at which the RBI borrows money from commercial banks, thereby influencing overall interest rates in the market. Over the past five years, from 2019 to 2025, India’s reverse repo rate has changed several times in response to major economic events — including the COVID-19 pandemic, global inflation, and policy adjustments aimed at stabilizing growth. In this article, we take a detailed look at the history of the Reverse Repo Rate in India from 2019 till now, highlighting how RBI’s monetary policy decisions have shaped the country’s financial landscape.
Reverse Repo Rate in India History
| Date | Reverse repo rate (%) |
| 2021 to present | 3.35 (unchanged) |
| Dec 04, 2020 | 3.35 |
| Oct 09, 2020 | 3.35 |
| Aug 06, 2020 | 3.35 |
| May 22, 2020 | 3.35 |
| Apr 17, 2020 | 3.75 |
| Mar 27, 2020 | 4.15 |
| Feb 06, 2020 | 4.90 |
| Dec 05, 2019 | 4.90 |
| Oct 04, 2019 | 4.90 |
| Aug 07, 2019 | 5.15 |
| Jun 06, 2019 | 5.50 |
| Apr 04, 2019 | 5.75 |
| Feb 07, 2019 | 6.00 |
| Jan 31, 2019 | 6.25 |
What is the Repo Rate?
The Repo Rate (Repurchase Rate) is the rate at which the Reserve Bank of India (RBI) lends money to commercial banks for short-term needs. When banks face a shortage of funds, they can borrow money from the RBI by selling government securities (like bonds) to the RBI with an agreement to repurchase them later at a higher price. That extra price represents interest, and the rate at which this borrowing happens is the Repo Rate.
Purpose:
- To control inflation and liquidity in the economy.
- When inflation is high, the RBI increases the Repo Rate → borrowing becomes costlier → less money in circulation.
- When growth slows, the RBI reduces the Repo Rate → borrowing becomes cheaper → more money flows into the economy.
Example:
If the Repo Rate is 6.5%, banks borrow from RBI at 6.5% interest.
What is the Reverse Repo Rate?
The Reverse Repo Rate is the rate at which the RBI borrows money from commercial banks. It is the opposite of the Repo Rate. When banks have extra funds, they can deposit that money with the RBI and earn interest at the Reverse Repo Rate.
Purpose:
- To absorb excess liquidity from the banking system.
- When there is too much money in circulation, the RBI increases the Reverse Repo Rate → banks prefer parking money with the RBI → reduces money supply in the market.
Example:
If the Reverse Repo Rate is 3.35%, banks earn 3.35% interest by keeping their surplus funds with the RBI.
Simple Difference Between Repo Rate and Reverse Repo Rate
| Feature | Repo Rate | Reverse Repo Rate |
|---|---|---|
| Definition | Rate at which RBI lends money to banks | Rate at which RBI borrows money from banks |
| Flow of Money | RBI → Banks | Banks → RBI |
| Purpose | Controls inflation and boosts liquidity | Absorbs excess liquidity |
| Impact of Increase | Loans become costlier | Banks prefer depositing funds with RBI |
| Typical Value | Always higher than Reverse Repo Rate | Always lower than Repo Rate |
