In a significant update to banking regulations, the Reserve Bank of India (RBI) has revised the definition of bulk deposits for Scheduled Commercial Banks (SCBs), Small Finance Banks (SFBs), and Local Area Banks. This change, announced by RBI Governor Shaktikanta Das in the Monetary Policy Statement, aims to provide banks with greater flexibility in managing their asset-liability portfolios.
Banks currently have the discretion to offer differential interest rates on bulk deposits based on their requirements and Asset-Liability Management (ALM) projections. The bulk deposit limit, which was last enhanced in 2019 for SCBs (excluding Regional Rural Banks) and SFBs, is currently set at ‘Single Rupee term deposits of Rs 2 crore and above’.
Following a comprehensive review, the RBI has proposed to revise the definition of bulk deposits as follows:
· For SCBs (excluding Regional Rural Banks): Single Rupee term deposits of Rs 3 crore and above.
· For SFBs: Single Rupee term deposits of Rs 3 crore and above.
· For Local Area Banks: Single Rupee term deposits of Rs 1 crore and above, as applicable for RRBs.