RBI Raises Bulk Fixed Deposit Threshold to Rs 3 Crore For Enhanced Asset Liability Management

RBI MPC 2024: For Local Area Banks, the bulk deposit limit is set to be 'Single Rupee term deposits of Rs 1 crore and above', aligning with the existing limit for RRBs.

RBI MPC 2024: The Reserve Bank of India (RBI) announced on Friday an increase in the threshold for bulk fixed deposits from Rs 2 crore to Rs 3 crore. This adjustment aims to improve the asset liability management of banks. Bulk fixed deposits, which earn slightly higher interest rates than retail term deposits, are offered different rates as part of banks' liquidity management strategies.

Following this change, single rupee term deposits up to Rs 2 crore with Scheduled Commercial Banks (excluding Regional Rural Banks) and Small Finance Banks will now be classified as retail fixed deposits. "Upon reviewing the bulk deposit limit, it is proposed to redefine bulk deposits as 'Single Rupee term deposit of Rs 3 crore and above' for SCBs (excluding RRBs) and SFBs," said RBI Governor Shaktikanta Das while announcing the bi-monthly policy.

For Local Area Banks, the bulk deposit limit is set to be 'Single Rupee term deposits of Rs 1 crore and above', aligning with the existing limit for RRBs.

RBI Deputy Governor Swaminathan J clarified during a media interaction, "This is a routine review. A few years ago, the limit was Rs 1 crore, then increased to Rs 2 crore, and now Rs 3 crore, reflecting current times. This adjustment is expected to enhance asset liability management for banks, aiding their classification of bulk and retail deposits."

Addressing concerns about potential cost increases for deposits, Swaminathan said that the impact would be entity-specific. "There may not be any systemic impact, but individual entities might experience beneficial or detrimental effects depending on their liability management," he said.

In a move to facilitate ease of doing business, the RBI proposed rationalising guidelines for the export and import of goods and services under the Foreign Exchange Management Act (FEMA), 1999. "Given the evolving dynamics of international trade and progressive liberalization of foreign exchange regulations, we propose to streamline the current FEMA guidelines on export and import," Das explained. "Draft guidelines will be issued shortly for stakeholder feedback."

To further strengthen digital payments, Das announced the establishment of a Digital Payments Intelligence Platform for network-level intelligence and real-time data sharing across the digital payments ecosystem.

"The RBI has undertaken several measures over the years to enhance digital payments while ensuring safety and security, thereby boosting consumer confidence," he noted. "However, growing instances of digital payment frauds necessitate a system-wide approach to prevent and mitigate such frauds. Consequently, the RBI has formed a committee to examine various aspects of setting up the platform."