THE Reserve Bank of India (RBI) has changed the regulations related to interest rates on bulk fixed deposits (FDs) with effect from October 1, bringing clarity on how banks reveal rates for substantial deposits. The changes are not likely to impact most individual retail investors since these pertain to bulk deposits, which for scheduled commercial banks typically begin at Rs 3 crore.The revised framework seeks to enhance transparency in bulk-FD pricing and provide significant depositors with better insights regarding the interest rates relevant to their deposits. According to the RBI guidelines, banks must display the interest rates for bulk fixed deposits on their websites each business day.Regular announcementThe rates need to be made public by 10 am, allowing a 10-minute period for information updates. Banks must also pay interest on qualified bulk deposits according to the rate revealed beforehand.This provides significant depositors with a publicly accessible benchmark to verify the relevant rate prior to depositing their funds with a bank. For scheduled commercial banks, a bulk deposit typically means a single term deposit of Rs 3 crore or above. The threshold, nevertheless, varies for specific categories of banks.Consequently, investors holding standard retail FDs beneath the relevant bulk-deposit limit will typically remain unaffected. The revised regulations mainly pertain to individuals, businesses, trusts, and other depositors investing substantial amounts in bank term deposits.Who will be impactedThe changes mainly concern a single fixed or term deposit of Rs 3 crore or higher with a scheduled commercial bank. Consequently, these hold greater significance for high-net-worth individuals, corporations, trusts, institutions, and other major depositors. For regular retail customers with FDs under Rs 3 crore, the regulations do not significantly change interest rates. The interest on a standard FD will still rely on the bank’s current deposit-rate schedule, duration, customer type, and other relevant conditions.Current FDs will not reset themselvesCustomers who already have a fixed deposit should not expect their interest rate to vary starting October 1. Deposits that have already been made will proceed according to the conditions that were in effect when these were established.The revised regulations also do not automatically adjust the interest rate on an active FD. Customers looking to renew a deposit of Rs 3 crore or greater should verify the bank’s website for the listed rate.Banks may provide varied rates on large deposits within the Liquidity Coverage Ratio (LCR) framework. The RBI has added a new clause concerning domestic rupee deposits that pertain to the applicable run-off rates within the LCR framework.It indicates that a bank is allowed to provide a varied interest rate on large deposits by taking into account the different run-off rate relevant to deposits or unsecured wholesale funding within the LCR framework outlined in the RBI’s guidelines on asset-liability management.What industry experts sayExperts indicated that the revised regulations ought to simplify the process for substantial depositors to review and contrast the rates provided by various banks. This may reduce information disparities between banks and clients during negotiations or when making substantial deposits.The display of applicable bulk-deposit interest rates on websites by 10 am is expected to enhance clarity and uniformity in deposit pricing.