RBI allows banks to link bulk deposit rates to liquidity profile
Mumbai, Jul 30, 2026
Banks can now price bulk deposits based on liquidity characteristics under the LCR framework, while continuing to follow uniform interest rate norms
The Reserve Bank of India (RBI) has given banks greater flexibility in pricing bulk deposits, allowing them to offer differential interest rates based on the liquidity characteristics of such deposits under the Liquidity Coverage Ratio (LCR) framework.
The central bank, however, has retained the broader principle of uniformity in deposit pricing.
Interest rates offered on deposits, including bulk deposits, must be uniform across all branches and customers, and banks cannot discriminate between deposits of a similar amount accepted on the same date at any of their offices, the central bank said.
“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,” it said.
The flexibility will be available for both domestic rupee bulk deposits and rupee deposits of non-residents.
The move marks a change in the pricing framework for bulk deposits, with banks now allowed to consider the applicable run-off rate under the LCR framework while deciding the interest rate offered on such deposits.
The LCR-linked provision allows banks to consider the applicable run-off rate while pricing bulk deposits, while continuing to follow the requirement of non-discriminatory pricing for comparable deposits.
The LCR framework requires banks to maintain sufficient high-quality liquid assets to withstand net cash outflows during a period of liquidity stress. Different categories of deposits and unsecured wholesale funding attract different run-off rates under the framework.
Alongside the pricing flexibility, the RBI has introduced disclosure requirements for bulk deposit rates. Banks will have to disclose the interest rates payable on bulk deposits on their websites at 10 am on every business day, with a grace period of 10 minutes.
Further, interest rates payable on deposits, including bulk deposits, will have to strictly conform to the schedule of interest rates disclosed in advance on the bank’s website.
The revised framework will come into effect from October 1, 2026.
In June, the RBI had released a draft framework proposing to allow banks to offer differential interest rates on bulk deposits based on their liquidity characteristics under the Liquidity Coverage Ratio (LCR) framework.
RBI however, said 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 in the matter of interest paid on the deposits, between one deposit and another deposit of similar amount, accepted on the same date, at any of its offices.
Experts had said the move could usher in risk-based deposit pricing by allowing banks to offer different rates within the same deposit category based on the liquidity costs associated with such deposits. It would also give lenders greater flexibility to align deposit rates with regulatory costs, manage their cost of funds and asset-liability mismatches more efficiently, and eliminate the need to create separate maturity buckets to differentiate pricing.
However, experts had said the move was unlikely to materially affect deposit mobilisation or trigger a pricing war in the near term.
Banks with stronger low-cost current account and savings account (CASA) franchises could have greater flexibility in pricing bulk deposits, while those with weaker CASA bases may need to offer higher rates.
The RBI direction comes at a time when HDFC Bank, India’s largest private sector lender, on Monday said its board had issued warning letters and imposed a monetary penalty of ₹1 lakh each on three senior executives after an internal review into the bank’s arrangements with the Maharashtra State Road Development Corporation (MSRDC) to garner deposits in 2017 and 2021.
HDFC Bank denied any wrongdoing, saying all matters are handled in accordance with established processes and internal controls.
[The Business Standard]
