RBI Ends Deposit Rate Discrimination Between Branches

The Reserve Bank of India has issued amended directions that will force banks to offer the same interest rate to every customer who places a deposit of the same amount on the same day. The directions, released on July 30, 2026, take effect from October 1, 2026, and apply to commercial banks, small finance banks, regional rural banks, local area banks, and both urban and rural co-operative banks.

The new framework tightens deposit rate governance while carving out a narrow exception for bulk deposits tied to liquidity risk metrics.

Uniform Rates Across All Branches

Under the amended directions, interest rates on all deposits, including bulk deposits, must be uniform across every branch and for every customer. The RBI stated that there shall be no discrimination in the interest paid on deposits of similar amounts accepted on the same date at any office of the bank.

A customer at a rural branch cannot be offered a lower rate than one at a metropolitan branch for an equivalent deposit made on the same day, closing a practice where banks adjusted rates based on location or customer relationship.

Bulk Deposit Flexibility Through LCR

While uniformity is the rule, the RBI has granted banks one avenue for differentiation. A bank may offer a differential interest rate on bulk deposits by considering the differential run-off rate applicable under the Liquidity Coverage Ratio framework, as specified in the RBI's asset liability management directions.

The run-off rate represents the estimated percentage of deposits that depositors could withdraw during financial stress. Deposits with lower expected run-off may justify a different rate. The LCR framework requires banks to hold sufficient high-quality liquid assets to cover potential outflows during stress scenarios.

Mandatory Website Disclosure

The amended directions require that interest rates on all deposits, including bulk deposits, strictly follow a schedule disclosed in advance on the bank's website. For bulk deposits, the RBI set a precise daily deadline: rates must be published by 10:10 am on each business day, with publication starting at 10:00 am and a 10-minute grace period.

Timeline and Earlier Amendments

The July 30 directions follow draft amendments circulated in June 2026. Separately, on June 17, 2026, the RBI issued another set of amendment directions temporarily relaxing interest rate restrictions on certain non-resident deposits until September 30, 2026.

Those earlier amendments permitted banks to offer interest rates on fresh NRE deposits with tenors of three years and above without being subject to the existing cap linked to comparable domestic term deposits. The interest rate ceiling on fresh FCNR(B) deposits with tenors of three to five years was also temporarily withdrawn. Transfers from NRO accounts to NRE accounts were explicitly excluded.

The October 1 effective date gives banks roughly two months to align systems and branch practices with the new requirements.