RBI moots use of run-off factor in bulk deposit differential interest rates
This story was originally published at 20:30 IST on 5 June 2026
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--RBI issues draft guidelines on banks' interest rates on deposits
MUMBAI – The Reserve Bank of India Friday proposed the use of run-off rates under the liquidity coverage ratio framework to determine differential interest rates on commercial and small finance banks' bulk deposits. The RBI sought feedback on draft directions on Interest rate on deposits by Jun. 20, the central bank said.
The draft norms are proposed "to provide greater flexibility to banks for pricing their rupee bulk deposits, while ensuring uniformity in disclosure of interest rates on deposits," the RBI said in a release.
The draft amendment proposes allowing banks the freedom to offer differential interest rates on bulk deposits by assessing the run-off rate applicable to deposits or unsecured wholesale funding from retail or non-retail customers, the central bank said. This is applicable to domestic and non-resident rupee deposits, the draft directions said. The run-off rate is to be considered as per the the RBI's 2025 asset liability management directions, it said.
The draft also proposed enhancing disclosure of these interest rates by mandating advance publication of these rates on the bank's website before the start of the business day. This draft amendment on disclosure applies to commercial banks, small finance banks, regional rural banks, payment banks, local area banks and urban co-operative banks.
At the post-policy press conference earlier Friday, RBI Governor Sanjay Malhotra said banks could offer differential rates on deposits, but should be done transparently. The central bank has a "very persistent" and "very clear" policy on the matter, Malhotra said. End
Reported by Meera Nair
Edited by Saji George Titus
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