RBI revises banks' bulk deposit limit to Rs 3 crore from Rs 2 crore

The Reserve Bank of India (RBI) on Friday proposed to revise the definition of bulk deposits, which would impact both traditional banks and Small Finance Banks (SFBs). Under the proposed change, bulk deposits will now encompass single rupee term deposits of Rs 3 crore and above. 

The bulk deposit limit was enhanced in the year 2019 for Scheduled Commercial Banks (SCBs) (excluding Regional Rural Banks) and Small Finance Banks (SFBs) as Single Rupee term deposits of Rs 2 crore and above. 

This move comes as a part of ongoing efforts to adapt banking regulations to evolving market conditions.

RBI Governor Shaktikanta Das said this adjustment aims to streamline the categorisation of substantial deposits within the banking sector.

On a review, it is also proposed to define the bulk deposit limit for Local Area Banks as Single Rupee term deposits of Rs 1 crore and above as applicable in case of RRBs. Necessary guidelines will be issued shortly, the central bank noted.

The RBI stated: "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: "As far as bulk deposits are concerned, it is a correction. Only any deposit below Rs 3 crore now will be classified as a retail term deposit, and above Rs 3 crore will be classified as a bulk deposit."

He added that this adjustment is unlikely to significantly impact deposit-raising or resource mobilisation efforts. 

He said: "As I have to talk about, say, UCO Bank, we have been maintaining our bulk deposit in a range and in 2024, our bulk deposit as a percentage of our total deposit was lower than in 2023."

"Upward revision in Bulk Deposit threshold from INR 2 crore to INR 3 crore & above is a welcome and pragmatic step and will provide more room to banks for mobilisation of granular retail deposits,” said Sanjay Agarwal, Founder, MD & CEO, AU Small Finance Bank.