RBI's Big Decision: Banks Can Now Offer Different Interest Rates on Bulk Deposits; New Rules Explained

The Reserve Bank of India (RBI) has introduced a major change to the banking system by allowing commercial banks to offer differential interest rates on bulk deposits based on their Liquidity Coverage Ratio (LCR) run-off rates. The new framework, which comes into effect on October 1, 2026, is aimed at improving transparency and giving banks greater flexibility in managing large deposits.

RBI Allows Differential Interest Rates on Bulk Deposits

Under the revised RBI guidelines, banks will be permitted to offer different interest rates on bulk fixed deposits depending on their withdrawal risk profile. The move is expected to help banks better manage liquidity while complying with the Liquidity Coverage Ratio (LCR) framework.

However, the new rules will not affect ordinary retail customers, as they apply only to bulk deposits of ₹3 crore or more, typically made by corporates, institutions, trusts, and high-net-worth individuals (HNIs).

Three Major Changes Effective from October 1, 2026

The Reserve Bank issued the Reserve Bank of India (Commercial Banks – Interest Rate on Deposits) Second Amendment Directions, 2026 on July 30, introducing three important changes.

1. Daily Publication of Bulk Deposit Rates

Banks will be required to publish the interest rates applicable to bulk deposits on their official websites by 10:00 AM on every working day, with a maximum grace period of 10 minutes.

2. Uniform Interest Rates for Similar Deposits

Banks must offer exactly the same interest rate that is publicly displayed on their website. Customers depositing the same amount on the same day cannot be offered different rates across branches or individual negotiations.

3. Greater Flexibility Under the LCR Framework

The biggest policy change allows banks to offer higher interest rates on deposits carrying a higher run-off risk under the Liquidity Coverage Ratio norms. Earlier, banks generally maintained uniform rates for bulk deposits irrespective of withdrawal risk.

What Is a Bulk Deposit?

A bulk deposit refers to a single fixed deposit of ₹3 crore or more.

Such deposits are generally made by:

Large corporations

Business groups

Trusts and institutions

High-net-worth individuals (HNIs)

Retail banking customers are unlikely to be directly impacted by the revised framework.

Why Did RBI Introduce the New Rules?

The RBI's decision follows reports that HDFC Bank paid nearly ₹450 million to the Maharashtra State Road Development Corporation (MSRDC) during FY2024 and FY2025. The payments were reportedly linked to differential interest arrangements.

According to reports, MSRDC received an interest rate of 6.01%, substantially higher than the standard savings account rate of around 3.5%, creating an interest differential of nearly 2.5 percentage points.

The revised framework is designed to improve transparency, standardize disclosure practices, and ensure banks publicly display the rates being offered for bulk deposits.

Impact on the Banking Sector

The RBI's latest move is expected to strengthen transparency in deposit pricing while giving banks greater operational flexibility in managing liquidity and large institutional deposits.

Although the changes primarily affect bulk depositors, the new framework is likely to improve governance, enhance disclosure standards, and create a more transparent interest rate mechanism across India's banking sector.