Bar on fixed deposits goes up

Mumbai: The Reserve Bank of India (RBI) on Friday hiked the threshold for bulk fixed deposits to Rs3 crore from existing Rs2 crore with a view to improve asset liability management of banks. Bulk fixed deposits earn slightly higher interest rate than retail term deposits as banks offer different rates as part of their liquidity management exercise.

Now, single rupee term deposits of up to Rs2 crore with Scheduled Commercial Banks (excluding Regional Rural Banks) and Small Finance Banks will be part of retail fixed deposits. On a review of the bulk deposit limit, it is proposed to revise the definition of bulk deposits as ‘Single Rupee term deposit of Rs3 crore and above’ for SCBs (excluding RRBs) and SFBs, RBI Governor Shaktikanta Das said, while announcing the bi-monthly policy.