RBI’s new bulk FD rules from October 1: What changes for investors? Experts explain
The Reserve Bank of India (RBI) is changing the rules governing interest rates on bulk fixed deposits (FDs) from October 1, bringing greater transparency to how banks disclose rates for large deposits.
The changes are unlikely to affect most individual retail investors because they apply to bulk deposits, which for scheduled commercial banks generally start at ₹3 crore.
The revised framework is aimed at making bulk-FD pricing more transparent and giving large depositors clearer information about the interest rate applicable to their deposits.
Under the revised RBI framework, banks will have to publish the interest rates applicable to bulk fixed deposits on their websites on every working day.
The rates must be disclosed by 10 AM, with a 10-minute window available for updating the information.
Banks will also be required to pay interest on an eligible bulk deposit based on the rate disclosed in advance.
This gives large depositors a publicly available reference point to check the applicable rate before placing their money with a bank.
For scheduled commercial banks, a bulk deposit generally refers to a single rupee term deposit of ₹3 crore or more. The threshold, however, is different for certain categories of banks.
Therefore, investors with conventional retail FDs below the applicable bulk-deposit threshold will generally not be affected by these specific changes.
The new requirements are primarily relevant to individuals, companies, trusts and other depositors placing large sums in bank term deposits.
What experts say
The key change for investors is greater visibility into bulk-deposit pricing.
Experts said the revised rules should make it easier for large depositors to check and compare the rates being offered by different banks. This could reduce information gaps between banks and customers when negotiating or placing large deposits.
Tanu Gupta, Engagement Manager at Scripbox, said: “Under the new RBI rules on bulk fixed deposits, effective October 1, banks will be required to publish their applicable bulk-deposit interest rates on their websites by 10 AM on every working day. This should bring greater transparency and consistency to deposit pricing. For customers placing large sums, banks will be required to disclose applicable bulk-deposit rates on their websites, making it easier to know the prevailing rate before booking an FD.”
“The move towards consistent pricing for similar bulk deposits across branches should also reduce discrepancies and give customers a clearer basis for comparison,” added Gupta.
However, greater disclosure does not mean that all banks will offer identical rates.
Banks will continue to determine their deposit rates based on factors such as their funding requirements, liquidity position and broader business needs.
Stuti Bubna, Financial Coach, Partner, Finstrong Wealth Pvt Ltd, said: “It’s a meaningful step for large depositors. Until now, bulk deposit rates were often negotiated. Your bargaining power determined the rates that you would walk away with. Two people could possibly be quoted different rates at the same time. Now, since a rate card that is published daily that the bank must stick to, with no branch-level variation, removes much of that guesswork and makes comparing banks far easier.”
“Banks have some wriggle room, though. They can still differentiate rates based on the LCR (Liquidity Coverage Ratio) treatment of a deposit,” Bubna added.
Experts advise large depositors to consider more than the headline interest rate before booking a bulk FD.
The tenure of the deposit, the rules governing premature withdrawal, and the bank’s financial strength should also be examined.
