Following the feedback received from banks and Fixed Income Money Market and Derivatives Association of India (FIMMDA) the RBI said that banks can disclose the bulk deposits rates on their websites by 10:00 am with a grace time of 10 minutes, latest by 10:10 am, on each business day. However, the interest rate on deposits below Rs 3 crore have been kept out of this stipulation as banks generally disclose the rates on such deposits in advance of the start of business day.
Banks can offer differential interest rate on bulk deposits, by considering the differential run-off rate applicable to deposits or unsecured wholesale funding from retail or non-retail customers, respectively under the LCR framework. Under the LCR framework, retail deposits generally attract lower run-off rates and are considered more stable sources of funding, requiring banks to hold lower levels of liquid assets against them. In contrast, wholesale or non-retail deposits carry higher run-off rates and impose a greater liquidity burden on banks.
The RBI did not accept bank feedback asking for the freedom to use run-off rates for pricing to be extended to deposits of less than Rs 3 crores “as permitting banks to offer differential interest rates on deposits of less than Rs 3 crore, based on differential run-off rates, would make the interest rates offered on such deposits more subjective and complex.”
The suggestion by banks to be provided a standard categorisation of the type of entities based on the run-off rates was also not accepted by RBI. “It would be appropriate for the banks to do the necessary categorisation as per their need, based on the differential run-off rates applicable to deposits/ unsecured wholesale funding from various retail and non-retail customers, basis which they compute and submit their LCR returns to RBI,” the central bank said.