RBI’s Draft “Interest Rate on Deposits” Amendment Directions, 2026: What Banks Need to Know

The Reserve Bank of India has circulated draft “Reserve Bank of India (Interest Rate on Deposits) Amendment Directions, 2026” covering a wide spectrum of regulated banking entities. These proposed changes are designed to:

  • Give banks more room to decide pricing for Rupee bulk deposits; and
  • Standardise and tighten the way deposit interest rates are disclosed to the public.

The draft amendments span multiple categories of institutions, including:

  • Commercial banks
  • Small finance banks
  • Regional rural banks
  • Payments banks
  • Local area banks
  • Urban co‑operative banks

RBI has invited comments from regulated entities and other stakeholders on these proposals up to June 20, 2026.

1. Overall Regulatory Intent Behind the Draft Directions

1.1 Flexibility in Rupee bulk deposit pricing

The key policy objective is to liberalise the pricing framework for Rupee bulk deposits, especially by allowing more nuanced rate-setting based on liquidity risk. In particular:

  • Banks, especially Small Finance Banks, are proposed to be allowed to offer differentiated interest rates on bulk deposits.
  • This differentiation can be based on the applicable run-off rates under the Liquidity Coverage Ratio (LCR) framework for:
    • Retail customers; and
    • Non-retail customers, including unsecured wholesale funding.

This linkage effectively ties deposit pricing to how deposits are treated for liquidity risk management purposes, as laid down in the relevant Asset Liability Management directions.

1.2 Uniform and transparent disclosure of interest rates

Alongside greater pricing flexibility, RBI has emphasised rigorous disclosure discipline. Across almost all covered entities, the following core requirement is proposed:

Interest rates payable on deposits must strictly match the schedule of interest rates that is made available on the bank’s website before the start of each Business Day.

This means:

  • No intra-day ad hoc changes for fresh deposits that are not pre-disclosed; and
  • The published schedule on the website becomes the binding reference for interest rates applicable during that Business Day.

2. Entities Covered by the Draft Directions

RBI has placed separate draft amendment documents for specific entity classes:

  1. Reserve Bank of India (Commercial Banks – Interest Rate on Deposits) Amendment Directions, 2026
  2. Reserve Bank of India (Small Finance Banks – Interest Rate on Deposits) Amendment Directions, 2026
  3. Reserve Bank of India (Regional Rural Banks – Interest Rate on Deposits) Amendment Directions, 2026
  4. Reserve Bank of India (Payment Banks – Interest Rate on Deposits) Amendment Directions, 2026
  5. Reserve Bank of India (Local Area Banks – Interest Rate on Deposits) Amendment Directions, 2026
  6. Reserve Bank of India (Urban Co-operative Banks – Interest Rate on Deposits) Amendment Directions, 2026

Each set of draft directions amends the original 2025 Directions applicable to that particular category of bank.

3. Comment and Feedback Mechanism

3.1 Timeline for responses

RBI has opened these drafts to public and industry scrutiny. Comments can be sent up to June 20, 2026 by:

  1. Using the “Connect 2 Regulate” section on RBI’s website, via the specific hyperlink attached to each draft document; or
  2. Sending feedback by email, clearly mentioning in the subject line:

    ‘Feedback on (full name of the draft Amendment Directions (including the type of Regulated Entity))’

This window gives banks, industry bodies, and other stakeholders limited time to examine operational impact and respond.

4. Draft Directions for Small Finance Banks

4.1 Background reference directions

The draft “Reserve Bank of India (Small Finance Banks – Interest Rate on Deposits) Amendment Directions, 2026” refer back to the base framework:

  • Reserve Bank of India (Small Finance Banks – Interest Rate on Deposits) Directions, 2025, dated November 28, 2025, which they describe as the ‘Directions’.

RBI has re-examined these 2025 Directions and decided to recalibrate two broad areas:

  • Interest rate rules for Rupee bulk deposits; and
  • Disclosure standards for all deposit interest rates.

The amendment directions are issued under: