Starting October 1, banks will have to follow a new framework for disclosing interest rates on bulk fixed deposits, bringing greater transparency to the rates offered to large depositors.
Under the new rules, banks will be required to publish the applicable interest rates for bulk deposits on their websites by 10 AM on every working day. They will also have a 10-minute window to incorporate any updates or changes.
The rate applicable to a deposit will be the same as the rate disclosed by the bank in advance. This means customers will be able to check the rate before placing their money and know what interest rate applies to their deposit.
For scheduled commercial banks, the RBI currently defines bulk deposits as term deposits of Rs 3 crore and above.
Who will be affected by the change?
The framework is mainly relevant to customers planning to invest large sums in fixed deposits.
A depositor looking to place Rs 3 crore or more in a term deposit will need to check the bank’s disclosed rate before making the investment. The same rate is expected to apply to similar deposits accepted by the bank on the same day.
This also means the applicable rate should not vary simply because a customer chooses a different branch or banking channel, subject to the RBI framework.
The existing rules allow banks to offer differential interest rates based on the size of deposits, while rates are also governed by factors such as the tenor and certain deposit features.
What about smaller FD investors?
Customers putting smaller amounts into fixed deposits will generally not be covered by the bulk-deposit disclosure requirement.
So, if someone is investing Rs 1 lakh, Rs 2 lakh or Rs 5 lakh in an FD, they will not need to track the bulk deposit rate published by the bank every morning.
For large depositors, however, checking the bank’s website before placing the deposit will become important. Keeping a record of the rate displayed on the day of investment may also help customers retain details of the rate applicable when the deposit was booked.