The Reserve Bank of India (RBI) has rewritten the rules governing interest rates on bank deposits, giving lenders greater flexibility to price bulk deposits while simultaneously tightening disclosure norms to improve transparency. The changes, which come into effect from October 1, 2026, are expected to make the wholesale deposit market more market-driven and better aligned with banks’ liquidity risks.
While the amendments appear technical, they could significantly influence how banks compete for large deposits from corporates, institutions and wealthy customers.
What has changed?
The RBI’s amendments revolve around three key changes. First, banks must publish their interest rates on all deposits, including bulk deposits, on their websites every business day. Bulk deposit rates must be disclosed by 10:00 am, with a maximum grace period until 10:10 am, ensuring customers have access to the day’s official rates before negotiating deposits.
Second, the central bank has reiterated that interest rates for deposits of similar size accepted on the same day must remain uniform across all branches and customers. This is aimed at eliminating arbitrary pricing and ensuring greater fairness in deposit mobilisation.
Third and perhaps most significantly, the RBI has allowed banks to offer differential interest rates on bulk deposits based on the Liquidity Coverage Ratio (LCR) run-off rates applicable to those deposits. The same flexibility has also been extended to non-resident rupee bulk deposits.
Why is the LCR link important?
The most consequential aspect of the amendment is the linkage between deposit pricing and the Liquidity Coverage Ratio (LCR) framework.
Under LCR regulations, different categories of deposits carry different ‘run-off rates’, the proportion of deposits that regulators assume may leave a bank during a period of financial stress. Deposits considered more stable attract lower run-off assumptions, while volatile wholesale deposits require banks to hold higher liquidity buffers.
Until now, banks had limited flexibility in differentiating interest rates based on these regulatory liquidity costs. The revised directions now explicitly allow banks to factor these costs into pricing decisions.
What it means for depositors
For retail depositors, there may be little immediate change. Savings accounts and regular fixed deposits are unlikely to see any noticeable impact.
However, for corporates, trusts, institutions, NBFCs and high-net-worth customers placing large deposits, pricing could become more dynamic.
Banks may offer higher rates for deposits that attract favourable liquidity treatment while becoming more selective in pricing deposits that increase regulatory liquidity costs.
What it means for banks
The amendments provide banks with an important risk-based pricing tool.
Instead of competing solely on interest rates, lenders can now better align deposit pricing with the actual liquidity value of each deposit. This should improve balance sheet management and reduce the cost of maintaining regulatory liquidity buffers.
The mandatory daily disclosure of bulk deposit rates also reduces opacity in the market, making pricing more transparent and limiting discretionary negotiations outside publicly disclosed rates.
Competition likely to intensify
The revised framework is expected to intensify competition among banks for quality bulk deposits rather than merely large deposits.
Banks with stronger liquidity positions may be able to offer more attractive rates for desirable deposit categories, while others could focus on improving customer mix rather than simply chasing volumes.
For treasury departments of corporates, the changes could create more opportunities to compare rates across banks as daily disclosures become standardised.