FD New Rules: RBI's new rule regarding FD interest rates to come into effect on October 1; investors will be pleased to know..

A major change regarding interest rates on Fixed Deposits (FDs) is on the horizon. The Reserve Bank of India (RBI) is preparing to revise the rules for determining interest rates on deposits. The objective is to enhance transparency regarding bulk deposits and ensure a uniform process for all customers.

These regulations will apply not only to commercial banks but also to small finance banks, regional rural banks (RRBs), payment banks, local area banks, and urban cooperative banks. The new rules will come into effect on October 1, 2026. This means the method of offering interest on large deposits across the entire banking system will become more streamlined and standardized.

What is a bulk deposit?
A bulk deposit refers to a fixed deposit where a sum of ₹3 crore or more is deposited in a single transaction. Such investments are typically made by companies, large business entities, trusts, and high-net-worth individuals. Previously, banks would determine interest rates through individual negotiations with these clients; consequently, two customers depositing the same amount might receive different interest rates. This practice will no longer continue.

What changes from October 1?

Under the new rules, every bank must publish its bulk deposit interest rates on its website by 10:00 AM on every working day. In the event of a delay, the information must be made available no later than 10:10 AM.

Subsequently, the bank will offer the same interest rate to all customers for bulk deposits of the same amount on that day. Whether a customer is existing or new, or visits any branch, the interest rate will remain uniform. Banks will not be permitted to offer rates different from those displayed on their websites. This measure aims to curb private negotiations and hidden deals.

Banks can now determine interest rates based on risk.
The RBI has introduced another change: banks will now be able to offer higher interest rates on large deposits that carry a higher probability of early withdrawal. In banking terms, this is assessed based on the Liquidity Coverage Ratio (LCR). For instance, while the fixed deposits (FDs) of ordinary individuals usually remain locked for a set tenure, large corporations can quickly withdraw crores of rupees when the need arises. Banks may decide to offer better interest rates on such high-risk bulk deposits. This facility will apply to large deposits made by both domestic customers and NRIs.

Who stands to benefit the most?
The biggest beneficiaries of this change will be companies, institutions, and high-net-worth clients who place FDs of ₹3 crore or more. They will now be able to clearly view the day's interest rate on the bank's website each morning. No customer will receive a higher interest rate based merely on personal relationships or negotiation.

This rule will not directly apply to ordinary customers placing FDs of less than ₹3 crore. However, the RBI mandates that the interest rates displayed on the website must be the ones offered to customers. This will enhance transparency within the banking system.

What should large investors keep in mind?
If you or your company places an FD of ₹3 crore or more, ensure you check the day's interest rate on the bank's website before depositing on or after October 1, 2026. You will be entitled to the exact rate published on the website for that specific amount on that day. If a bank attempts to offer a different rate, it will be considered a violation of RBI regulations, and a complaint can be lodged with the RBI's Banking Ombudsman.

The RBI believes that these changes will bring greater transparency to the bulk deposit market, ensure a uniform process for all customers, and enable banks to manage their liquidity more effectively.

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