The Reserve Bank of India (RBI) on Thursday amended its deposit interest rate directions to explicitly allow banks to offer differential interest rates on bulk deposits based on liquidity considerations under the Liquidity Coverage Ratio (LCR) framework, a move that comes months after HDFC Bank faced regulatory scrutiny over its practices in offering varying rates a large depositor.
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.
Under the revised norms, banks can offer differential interest rates on bulk deposits by taking into account the applicable run-off rates for deposits and unsecured wholesale funding under the RBI's Asset Liability Management Directions, 2025. The amendment applies to both domestic rupee deposits and rupee deposits of non-residents.
The RBI has, however, tightened disclosure requirements. Banks will now be required to publish interest rates on all deposits, including bulk deposits, on their websites every business day by 10 a.m., with a grace period until 10:10 a.m.
The amended directions also reiterate that interest rates on deposits should remain uniform across branches and customers for deposits of similar amounts accepted on the same date. However, the carve-out for bulk deposits effectively provides regulatory clarity for differentiated pricing based on liquidity characteristics.
The move assumes significance as it follows heightened supervisory attention on HDFC Bank over its practice of offering varying rates on large-value deposits. The bank had allegedly paid about Rs 45 crore in extra interest disguised as marketing expenses to the Maharashtra State Road Development Corporation (MSRDC) to secure large bulk deposits. The bank allegedly provided an effective return of roughly 6.01% to MSRDC, while regular rates for similar deposits hovered near 3.5%.
HDFC Bank later fined its chief executive Sashidhar Jagdishan, outgoing chief financial officer Srinivasan Vaidyanathan and group head of retail assets Arvind Vohra Rs 1 lakh each for their role in the MSRDC case.
The decision was reached after an internal review of the arrangement with MSRDC for garnering deposits in 2017 and 2021 offering higher rate of interest.
During a meeting of the special disciplinary committee of independent directors, the board did not find anything conclusive that would constitute mala fide action, personal enrichment or improper motive but the conduct of the employees involved constituted business overreach, the bank told stock exchanges.