diff --git a/rhodecode/model/repos_group.py b/rhodecode/model/repos_group.py
--- a/rhodecode/model/repos_group.py
+++ b/rhodecode/model/repos_group.py
@@ -175,6 +175,10 @@ class ReposGroupModel(BaseModel):
                     repos_group=obj, user=user, perm=perm
                 )
             elif isinstance(obj, Repository):
+                #we do this ONLY IF repository is non-private
+                if obj.private:
+                    return
+
                 # we set group permission but we have to switch to repo
                 # permission
                 perm = perm.replace('group.', 'repository.')
@@ -199,6 +203,7 @@ class ReposGroupModel(BaseModel):
                   % (repos_group, recursive))
 
         for obj in repos_group.recursive_groups_and_repos():
+            #obj is an instance of a group or repositories in that group
             if not recursive:
                 obj = repos_group
 
diff --git a/rhodecode/templates/admin/repos_groups/repos_group_edit_perms.html b/rhodecode/templates/admin/repos_groups/repos_group_edit_perms.html
--- a/rhodecode/templates/admin/repos_groups/repos_group_edit_perms.html
+++ b/rhodecode/templates/admin/repos_groups/repos_group_edit_perms.html
@@ -71,7 +71,7 @@
     <tr>
         <td colspan="6">
            ${h.checkbox('recursive',value="True", label=_('apply to children'))}
-           <span class="help-block">${_('Set or revoke permission to all children of that group, including repositories and other groups')}</span>
+           <span class="help-block">${_('Set or revoke permission to all children of that group, including non-private repositories and other groups')}</span>
         </td>
     </tr>
 </table>
diff --git a/rhodecode/tests/models/common.py b/rhodecode/tests/models/common.py
--- a/rhodecode/tests/models/common.py
+++ b/rhodecode/tests/models/common.py
@@ -25,10 +25,11 @@ def _make_group(path, desc='desc', paren
     return gr
 
 
-def _make_repo(name, repos_group=None, repo_type='hg'):
+def _make_repo(name, repos_group=None, repo_type='hg', private=False):
     return RepoModel().create_repo(name, repo_type, 'desc',
                                    TEST_USER_ADMIN_LOGIN,
-                                   repos_group=repos_group)
+                                   repos_group=repos_group,
+                                   private=private)
 
 
 def _destroy_project_tree(test_u1_id):
@@ -67,6 +68,7 @@ def _create_project_tree():
      |__[g0_3] 1 repo
         |
         |_<g0/g0_3/g0_3_r1>
+        |_<g0/g0_3/g0_3_r2_private>
 
     """
     test_u1 = UserModel().create_or_update(
@@ -84,6 +86,8 @@ def _create_project_tree():
     g0_2_r2 = _make_repo('g0/g0_2/g0_2_r2', repos_group=g0_2)
     g0_3 = _make_group('g0_3', parent_id=g0)
     g0_3_r1 = _make_repo('g0/g0_3/g0_3_r1', repos_group=g0_3)
+    g0_3_r2_private = _make_repo('g0/g0_3/g0_3_r1_private', repos_group=g0_3,
+                                 private=True)
     return test_u1
 
 
diff --git a/rhodecode/tests/models/test_user_permissions_on_groups.py b/rhodecode/tests/models/test_user_permissions_on_groups.py
--- a/rhodecode/tests/models/test_user_permissions_on_groups.py
+++ b/rhodecode/tests/models/test_user_permissions_on_groups.py
@@ -101,7 +101,10 @@ def test_user_permissions_on_group_with_
     _check_expected_count(items, repo_items, expected_count(group, True))
 
     for name, perm in repo_items:
-        yield check_tree_perms, name, perm, group, 'repository.write'
+        if name == 'g0/g0_3/g0_3_r1_private':
+            yield check_tree_perms, name, perm, group, 'repository.none'
+        else:
+            yield check_tree_perms, name, perm, group, 'repository.write'
 
     for name, perm in items:
         yield check_tree_perms, name, perm, group, 'group.write'