RBI tightens bulk deposit rate disclosure, allows LCR-linked pricing

The Reserve Bank of India (RBI) has tightened disclosure norms for deposit interest rates while simultaneously giving banks greater flexibility to price such deposits based on liquidity risks. The move comes in the wake of questions raised over the pricing of bulk deposits in the Maharashtra State Road Development Corporation (MSRDC) case involving HDFC Bank.

Under the revised guidelines, interest rates offered on deposits, including bulk deposits, must be uniform across all branches and for all customers. There should be no discrimination in the interest paid between one deposit and another of a similar amount accepted on the same date at any of its offices, the RBI said while amending the guidelines.

Banks will now be required to publish interest rates applicable to all deposits, including bulk deposits, on their websites in advance. The rates for bulk deposits must be displayed every business day by 10 am, with a maximum grace period until 10.10 am, the RBI stated.

However, a bank will have the freedom to offer differential interest rates on bulk deposits by considering the differential run-off rate applicable to deposits or unsecured wholesale funding under the Liquidity Coverage Ratio (LCR) framework, as specified in the Reserve Bank of India (Commercial Banks – Asset Liability Management) Directions, 2025. This will be applicable to rupee deposits of non-residents as well.

In the context of a liquidity crisis, the run-off rate is the proportion of funds or deposits likely to leave a bank. The bank must hold enough High Quality Liquid Assets (HQLA), such as cash, government bonds and central bank reserves, to cover such stressed outflows. The current run-off rate is 12.5 per cent, including 2.5 per cent of deposits raised through digital channels. Higher run-off rates increase a bank’s expected cash outflows, reduce its LCR ratio and require the bank to hold more liquid assets.

The LCR indicates whether a bank has enough high-quality liquid assets to meet its short-term obligations.

The central bank issued the Reserve Bank of India (Commercial Banks – Interest Rate on Deposits) Second Amendment Directions, 2026, which will come into effect from October 1, 2026.

The regulatory change follows an investigative report by The Indian Express on May 27 which said HDFC Bank had conducted an internal vigilance investigation into interest payments of Rs 45 crore, “camouflaged” as marketing expenditure, made to MSRDC for 2023-24 and 2024-25. The report said the internal investigation was ordered on March 12 by the Audit Committee of the board, just six days before Atanu Chakraborty abruptly resigned as the bank’s part-time chairman, saying “certain happenings and practices within the bank are not in congruence with my personal values and ethics”.

The internal audit of the bank’s marketing department had flagged these payments and rated the department’s performance as “unsatisfactory”, according to The Indian Express investigation. These payments were described as contributions to a road safety awareness campaign through local vendors.

The latest RBI move is likely to make it harder for banks to negotiate rates for select clients without publicly reflecting those rates in their published schedules. The requirement for daily disclosures creates a transparent benchmark against which deposit pricing can be scrutinised by regulators, auditors and depositors.

Banks can now distinguish between categories of wholesale deposits based on how stable they are from a liquidity management perspective. Deposits that attract higher regulatory run-off rates under the LCR framework may be priced differently from deposits viewed as more stable.

Banking sources said the RBI is seeking greater transparency and consistency in deposit pricing, as different negotiated rates could undermine fairness and create regulatory arbitrage.