RBI’s new framework for commercial bank deposit interest rates and LCR alignment from 1 October 2026

The Reserve Bank of India has notified the Reserve Bank of India (Commercial Banks – Interest Rate on Deposits) Second Amendment Directions, 2026, through circular RBI/2026-27/214 DOR.SOG(SPE).REC.176/13.03.00/2026-27 dated July 30, 2026.

These Amendment Directions modify the existing Reserve Bank of India (Commercial Banks – Interest Rate on Deposits) Directions, 2025, with a clear focus on:

  • Standardising how interest rates on rupee deposits, especially bulk deposits, are disclosed and applied, and
  • Allowing commercial banks to align bulk deposit pricing with the Liquidity Coverage Ratio (LCR) framework as laid down in the Reserve Bank of India (Commercial Banks – Asset Liability Management) Directions, 2025.

The revised framework becomes operational from October 01, 2026 and is issued in exercise of powers under Section 35A of the Banking Regulation Act, 1949 and other enabling provisions.

1. Regulatory backdrop and scope of the amendment

1.1 Original 2025 Directions and review

The Reserve Bank of India (Commercial Banks – Interest Rate on Deposits) Directions, 2025 issued on November 28, 2025 set the overall regulatory framework for interest rates on deposits for commercial banks.

Following a review of implementation and market practices, RBI has now introduced a second round of amendments with targeted changes relating to:

  • Operational discipline and transparency in bulk deposit interest rate disclosure, and
  • Flexibility for banks to differentiate bulk deposit rates in line with LCR-related run-off characteristics.

These changes apply to:

  • Rupee domestic deposits (including bulk deposits), and
  • Rupee deposits of non-residents.

Assessees dealing with commercial banks, particularly those placing large, short‑term funds, will be directly impacted by these amendments.

The Amendment Directions clarify that they are issued:

  • Under Section 35A of the Banking Regulation Act, 1949, and
  • In furtherance of the public interest, enabling RBI to regulate how interest on deposits is determined and disclosed.

All commercial banks governed by the 2025 Directions must adapt their systems, websites, and internal processes to comply by October 01, 2026.

2. Core change 1 – Mandatory website-based disclosure of bulk deposit rates with strict time window

2.1 Substitution of paragraph 7(3) – disclosure discipline

In Chapter II – ‘General Guidelines (Interest Rate Framework)’, paragraph 7(3) of the 2025 Directions has been fully substituted. Under the revised regime:

  • All deposit interest rates, including those for bulk deposits, must strictly follow the pre-disclosed schedule of interest rates uploaded on the bank’s official website in advance.
  • For bulk deposits, there is now a time-bound disclosure requirement:
    • The interest rates applicable to bulk deposits must be published on the bank’s website at 10:00 a.m. on every business day.
    • A grace period of 10 minutes is permitted, meaning the latest permissible time for such disclosure is 10:10 a.m. on each business day.

This means a bank cannot apply any bulk deposit rate that is not part of the schedule duly displayed within this specified time frame.

Important: Any bulk deposit accepted on a given business day must bear interest strictly in line with the rate schedule published for that day within 10:00 a.m. to 10:10 a.m.. Informal, off‑schedule rates will not be compliant with the revised Directions.

2.2 Implications for commercial banks

To operationalise this change, banks must:

  • Put in place robust internal processes to:
    • Finalise bulk deposit rate decisions before 10:00 a.m.,
    • Upload the revised schedule on the bank’s website reliably and consistently, and
    • Ensure automated mapping of the correct daily rate to all bulk deposit contracts booked that day.
  • Avoid any ad‑hoc or negotiated rates that are not reflected in the published schedule.
  • Maintain a verifiable audit trail (logs of website updates, timestamps, and rate cards) to demonstrate compliance to regulators and auditors.

2.3 Practical impact for depositors

For assessees placing large deposits: