Change in bulk deposits’ limit may lead to deposit accretion for banks, say bankers

The Reserve Bank of India (RBI) has raised the bulk deposit limit for scheduled commercial banks and small finance banks from Rs 2 crore to Rs 3 crore, potentially leading to deposit accretion, according to analysts. Bulk deposits, used by high-net-worth individuals, typically offer interest rates of 5-6% for 7 to 45 days. \r

The change, stemming from a review of banks' bulk deposits, aims to enhance banks' capacity for mobilizing retail deposits. RBI Governor Shaktikanta Das announced the new limits, excluding regional rural banks, which have a Rs 1 crore threshold.\r

This move is expected to lower banks' cost of funds slightly, amidst generally robust deposit growth outpacing credit growth in recent quarters.