RBI allows lenders to offer differential interest rates on bulk deposits

The Reserve Bank of India has allowed banks to offer differentiated interest rates on bulk deposits.

This will improve flexibility for banks relating to pricing of large deposits.

In an annexure which discloses the feedback received on a draft amendment directions which were issued on June 5, the RBI said banks "will do the necessary categorisation as per their need, based on the differential run-off rates applicable to deposits/ unsecured wholesale funding from various retail and non-retail customers, basis which they compute and submit their liquidity coverage ratio (LCR) framework."

The banks will need to disclose the interest rates on bulk deposits at 10:00 am with a grace time of 10 minutes, latest by 10:10 am, on each business day, on the bank's website. This programme will be implemented from October 1, 2026 onwards.

The rule will be applicable to both domestic rupee deposits and those held by NRIs, the RBI added and will be without any discrimination between deposits of similar amount accepted on the same date.

the RBI did not accept a feedback on whether to use run-off rates for pricing may be extended to deposits of less than Rs 3 crores, to ensure that customers with higher run-off rates are not able to split bulk deposits into multiple deposits of less than Rs 3 crores to avail the higher interest rates.

The RBI said: “It was decided to not implement the same at this stage, as permitting banks to offer differential interest rates on deposits of less than ₹3 crore, based on differential run-off rates, would make the interest rates offered on such deposits more subjective and complex,” the RBI annexure said.

This comes at a time when in late May the HDFC Bank came under scrutiny from the regulator and the media for making a a payment of Rd 45 crore to the Maharashtra State Road and Development Corporation (MSRDC), camouflaging it as "marketing spends", in a bid to secure a bulk deposit.

The board of the HDFC Bank has this week penalised its CEO Sashidhar Jagdishan, CFO Srinivasan Vaidyanathan and the group head of retail assets Arvind Vohra for an amount of Rs 1 lakh each and a warning letter for a 'Business overreach". The RBI has now asked the board of the bank for details.