Meaning and terms of ‘Bulk Deposits’ in Banks

In terms of Master Direction – Reserve Bank of India (Interest Rate on Deposits) Directions, “Bulk Deposit” means, a Single Rupee term deposit of Rupees two crore and above for Scheduled Commercial Banks (excluding Regional Rural Banks) and Small Finance Banks. For Regional Rural Banks (RRBs), single Rupee term deposits of Rupees fifteen lakhs have been treated as bulk deposits.

However, on Thursday (October 26, 2023), the Central Bank (RBI) decided to enhance the bulk deposit limit for Regional Rural Banks. Accordingly, “Bulk Deposit” for Regional Rural Banks would now mean Single Rupee term deposits of Rupees one crore and above.

“The provisions of these Directions shall apply to every Scheduled Commercial Bank {including Regional Rural Banks (RRBs)}, Small Finance Banks, Payment Banks and Local Area Banks. These directions shall not be applicable to operations of foreign branches of Indian banks” said RBI.

Banks are permitted to offer differential interest rates only on bulk deposits. However, the Bank will have the discretion to disallow premature withdrawal of term deposits in respect of Bulk Deposits. Nevertheless, interest rates payable on bulk deposits shall not be subject to negotiation between the depositors and the bank. Interest rates for bulk deposits shall be strictly as per the schedule of interest rates disclosed in advance. The interest rates offered shall be reasonable, consistent, transparent, and available for supervisory review/scrutiny as and when required. The banks shall maintain the bulk deposit interest rate card in their Core banking system to facilitate supervisory review.

The differential interest shall not be applicable on deposit schemes framed on the basis of the Bank Term Deposit Scheme, 2006, or the deposits received under the Capital Gains Accounts Scheme, 1988.