Reserve Bank of India hikes threshold for bulk fixed deposit to Rs 3 crore from Rs 2 crore for better asset liability management

Mumbai, June 7

The Reserve Bank of India (RBI) on Friday hiked the threshold for bulk fixed deposits to Rs 3 crore from existing Rs 2 crore with a view to improve asset liability management of banks.

Bulk fixed deposits earn slightly higher interest rate than retail term deposits as banks offer different rates as part of their liquidity management exercise.

Now single rupee term deposits of up to Rs 2 crore with Scheduled Commercial Banks (SCBs), excluding Regional Rural Banks (RRBs), and Small Finance Banks (SFBs) will be part of retail fixed deposits.

On a review of the bulk deposit limit, it is proposed to revise the definition of bulk deposits as ‘single Rupee term deposit of Rs 3 crore and above’ for SCBs (excluding RRBs) and SFBs, RBI Governor Shaktikanta Das said while announcing the bi-monthly policy.

Further, 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.

“It is a routine review. Few years ago, it was only one crore and later it was enhanced to two and now it is Rs 3 crore just keeping in tune with the times. It is likely to have better asset liability management for the banks to help them in terms of classification of bulk and retail,” RBI Deputy Governor Swaminathan J said during an interaction with the media.

On concerns that it may increase the cost of deposit, the deputy governor said, it is something which is totally entity dependent.

“So there may not be any systemic impact in our view, but certain entities may have either a beneficial or detrimental impact depending upon how their liability side is managed. So we don’t expect any systemic impact on account of this change,” Swaminathan said.

To promote ease of doing business, RBI has proposed to rationalise guidelines for export and import of goods and services under Foreign Exchange Management Act (FEMA), 1999.

In view of the changing dynamics of international trade and in line with the progressive liberalisation of foreign exchange regulations, it is proposed to rationalise the extant FEMA guidelines on export and import of goods and services, Das said.

“This will further promote ease of doing business and provide greater operational flexibility to authorized dealer banks. Draft guidelines will be issued shortly for stakeholder feedback,” he said.

With regard to deepening of digital payment, Das said it is proposed to establish a digital payments intelligence platform for network level intelligence and real-time data sharing across the digital payments’ ecosystem.

The RBI has taken a number of measures over the years to deepen digital payments while ensuring their safety and security, and these measures have boosted consumer confidence, he said.

However, growing instances of digital payment frauds highlight the need for a system-wide approach to prevent and mitigate such frauds, he said.

“It is, therefore, proposed to establish a digital payments intelligence platform for network level intelligence and real-time data sharing across the digital payments’ ecosystem. To take this initiative forward, the RBI has constituted a committee to examine various aspects of setting up the platform,” he said.

The RBI has taken several pioneering initiatives in recent years to encourage innovation in the fintech sector, he said, adding, one such key initiative is the global hackathon: ‘HaRBInger – Innovation for Transformation’.

The first two editions of the hackathon were completed in the year 2022 and 2023, respectively, he said.

The third edition of the global hackathon, ‘HaRBInger 2024’, with two themes, namely ‘Zero Financial Frauds’ and ‘Being Divyang Friendly’, will be launched shortly, he added.