RBI says bulk deposit norms aim to improve transparency, standardisation

Governor Sanjay Malhotra says the RBI's revised bulk deposit framework seeks to improve transparency and standardise deposit rate disclosures without making major changes to existing norms.

The Reserve Bank of India (RBI) on Wednesday said its recent circular on bulk deposits and uniform deposit rates is aimed at improving transparency and standardisation in the way banks offer deposit rates, rather than introducing any significant change to the existing framework.

 

Speaking at the post-monetary policy press conference, RBI Governor Sanjay Malhotra said the central bank's July circular primarily seeks to standardise the manner in which banks communicate deposit rates to customers.

 

"Primarily, we have standardised and clarified how deposit rates should be offered in a transparent manner. There is no major change, to the best of my knowledge. It is all about transparency," Malhotra said.

 

 

He said banks have been asked to disclose deposit rates in advance on their websites. "Similarly, for bulk deposits, there was no standardisation of the timing. We have given them a leeway up to 10 a.m. for publishing bulk deposit rates," he added.

 

The revised norms allow banks to offer differential interest rates on bulk deposits based on their liquidity risk profile, taking into account the rates applicable to deposits or unsecured wholesale funding under the Liquidity Coverage Ratio (LCR) framework.

 

At the same time, the RBI has reiterated that deposit rates must remain uniform across all branches of a bank and for all customers. There should be no discrimination in the interest paid on deposits of the same amount accepted on the same day at any of the bank's offices.

 

Under the revised framework, banks are required to publish interest rates applicable to all deposits, including bulk deposits, on their websites in advance. Interest rates on bulk deposits must be displayed on every business day by 10 a.m., with a maximum grace period until 10:10 a.m.

 

Deputy Governor S C Murmu said the objective of the revised framework was to ensure greater transparency and create a level playing field for depositors.

 

"The intention was to bring transparency and a level playing field. That was the reason behind standardising the timing as well," Murmu said.

 

Responding to a question on window dressing by banks ahead of quarterly financial reporting, Malhotra said the practice was not a major concern and that the RBI's supervisory teams continuously monitor lenders and direct them to rectify any such instances.

 

"I don't think it is happening on a very large scale or that we should be concerned about it. Our guidance in this regard is very clear. Our supervisors visit banks from time to time, examine their books and issue directions wherever corrective action is required," he said.

 

Deputy Governor Swaminathan J said the banking system and the non-banking financial company (NBFC) sector remain resilient despite economic volatility, adding that supervisory concerns, if any, are addressed at the entity level rather than through system-wide measures.

 

"If there is any outlier behaviour displayed by any entity, we deal with it bilaterally. But rest assured, as covered in the MPC statement, the banking system as well as the NBFC sector is quite resilient despite volatility in economic conditions. We will continue to monitor data from every regulated entity through both on-site and off-site supervision and take action wherever there are instances of non-compliance. At the system level, however, things are adequately well managed," Swaminathan said.