RBI in action
The Reserve Bank of India (RBI) proposed revising the definition of bulk deposits, impacting both traditional banks and Small Finance Banks (SFBs). Under the proposed changes, bulk deposits will now include single rupee term deposits of Rs 3 crore and above.
Previously, in 2019, the bulk deposit limit for Scheduled Commercial Banks (SCBs) (excluding Regional Rural Banks) and SFBs was set at Rs 2 crore and above. This adjustment is part of ongoing efforts to align banking regulations with evolving market conditions.
RBI Governor Shaktikanta Das stated that this change aims to streamline the categorization of substantial deposits within the banking sector.
Additionally, it is proposed to define the bulk deposit limit for Local Area Banks as single rupee term deposits of Rs 1 crore and above, similar to the existing limit for Regional Rural Banks. The necessary guidelines will be issued shortly.
The RBI noted, “Banks have the discretion to offer differential rates of interest on bulk deposits as per their requirements and Asset-Liability Management (ALM) projections.”
Ashwani Kumar, MD & CEO of UCO Bank, told CNBC TV18, “The revision of the bulk deposit threshold is a correction. Deposits below Rs 3 crore will now be classified as retail term deposits, and those above Rs 3 crore as bulk deposits.” He added that this adjustment is unlikely to significantly impact deposit-raising or resource mobilization efforts, noting that UCO Bank’s bulk deposit percentage was lower in 2024 than in 2023.
Sanjay Agarwal, Founder, MD & CEO of AU Small Finance Bank, welcomed the revision, stating, “The upward revision in the bulk deposit threshold from Rs 2 crore to Rs 3 crore and above is a pragmatic step that will provide banks with more room for the mobilization of granular retail deposits.”
