The Reserve Bank of India has extended the implementation deadline for new differential interest rate rules to October 1, 2026, following representations from banks and the Fixed Income Money Market and Derivatives Association of India (FIMMDA). As reported by The Times of India, the central bank decided to provide banks with additional time to prepare for the new framework after considering industry feedback. The Reserve Bank of India (Commercial Banks - Interest Rate on Deposits) Second Amendment Directions, 2026 will come into effect from October 1, 2026, with banks given time to modify their systems and processes for applying run-off rates as a factor for determining interest rates on bulk deposits. The directions will apply to commercial banks, small finance banks, regional rural banks (RRBs), local area banks, payment banks and urban cooperative banks, ensuring comprehensive coverage across all banking segments.
The RBI has introduced differential interest rate provisions for bulk deposits, allowing banks to offer varying rates based on liquidity risk considerations under the Liquidity Coverage Ratio (LCR) framework. According to The Times of India, "A bank shall have the freedom to offer differential interest rate on bulk deposits, by considering the differential run-off rate applicable to deposits or unsecured wholesale funding under the LCR framework." The provision applies to both domestic rupee deposits and rupee deposits held by non-residents, with the move aligning deposit pricing with the revised LCR framework outlined in the Reserve Bank of India (Commercial Banks – Asset Liability Management) Directions, 2025. Retail deposits generally attract lower run-off rates and are considered more stable sources of funding, requiring banks to hold lower levels of liquid assets against them, while wholesale or non-retail deposits carry higher run-off rates and impose a greater liquidity burden on banks. As per Mint, the rule changes follow reports that private sector lender HDFC Bank paid the Maharashtra State Road Development Corporation (MSRDC) ₹45 crore for so-called "marketing expenses" - differential payments for higher interest rates compared to other customers, with the bank's board concluding that employees engaged in "business overreach" but were not acting for personal gain.
The RBI has introduced enhanced disclosure requirements for bulk deposit rates, mandating that banks disclose interest rates on their websites by 10:00 am on every business day with a 10-minute grace period. According to The Times of India, "Interest rates payable on deposits, including bulk deposits, shall be strictly as per the schedule of interest rates disclosed in advance on the bank's website." As reported by Mint, these interest rates must be uniform across all branches, and for all customers, with no discrimination among deposits of a similar amount accepted on the same date at any of the bank's offices. Banks will also be free to continue disclosing interest rates through other modes of communication, such as SMS and e-mail. The revised framework will come into effect on October 1, 2026, with banks required to disclose bulk deposit interest rates latest by 10:10 am on each business day to ensure uniformity and transparency in deposit pricing practices.
The RBI has introduced strict uniformity requirements for deposit pricing across branches, mandating that banks cannot offer different interest rates for similar deposits based on the branch where they are invested. According to The Times of India, "The interest rates offered on deposits, including bulk deposits, shall be uniform across all branches and for all customers and there shall be no discrimination... between one deposit and another deposit of similar amount, accepted on the same date, at any of its offices." This means that customers with similar deposits accepted on the same date should receive the same interest rate across a bank's branches, making it easier for customers to compare deposit rates and understand applicable returns before investing. The move could significantly impact how banks price their deposits and how customers approach deposit investments, with the changes expected to make it easier for customers to compare deposit rates before investing and reduce the possibility of branch-level variations for similar deposits. While giving banks greater flexibility in pricing bulk deposits, the RBI has retained the principle that similarly placed depositors must be treated equally, with banks unable to offer different rates to customers with similar deposits solely based on location or individual negotiations if the deposits are otherwise identical.
The RBI has clarified that "Bulk Deposit" means a single rupee term deposit of ₹3 crore and above, with this limit applicable to scheduled commercial banks (excluding RRBs) and small finance banks. According to The Times of India, in case of regional rural banks, the bulk deposit limit is ₹1 crore. The amendment directions apply specifically to small finance banks like Ujjivan SFB, Unity SFB, Jana SFB, Suryoday SFB, AU SFB, Utkarsh SFB, Fincare SFB and others, ensuring comprehensive coverage across all banking segments. The framework follows a draft proposal issued by the RBI in June 2026 that invited comments from banks and other stakeholders, after which the central bank issued the final directions and subsequently postponed their implementation to October 1 to allow banks more time to comply. While the changes are unlikely to alter returns on retail fixed deposits overnight, they are expected to make FD pricing more transparent for customers while giving banks greater flexibility in setting rates for bulk deposits.
