What changed
RBI consolidated and updated the interest rate framework for Urban Co-operative Banks (UCBs) under the Reserve Bank of India (Urban Co-operative Banks – Interest Rate on Deposits) Directions, 2025. The directions define bulk deposits as single rupee term deposits of ₹1 crore and above for Tier 3 and Tier 4 scheduled UCBs, referencing the prudential norms directions. They also incorporate Alternative Reference Rate (ARR) definitions for LIBOR transition.
What it means for you
UCBs now have a single, comprehensive directive for deposit interest rates, replacing earlier fragmented circulars. The clear bulk deposit threshold helps standardize pricing and reporting. Banks must update their deposit policies to comply with the new definitions and ensure ARR alignment for foreign currency deposits.
What you must do
- Review and align your bank's deposit interest rate policy with the new Directions, including bulk deposit definitions.
- Update systems to apply the ₹1 crore threshold for bulk deposits for Tier 3 and Tier 4 Scheduled Primary (Urban) Co-operative Banks as defined under the Prudential Norms on Capital Adequacy Directions, 2025.
- Be aware of the Alternative Reference Rate (ARR) definition for foreign currency deposits as per RBI's LIBOR transition circular.
- Train compliance and treasury teams on the consolidated framework and its effective date.
Who it affects
Urban Co-operative Banks (UCBs), Tier 3 and Tier 4 Scheduled Primary (Urban) Co-operative Banks, Deposit operations and treasury teams at UCBs, Compliance officers at UCBs
What is the effective date of these Directions?
The Directions come into effect on the day they are placed on the RBI official website, which is November 28, 2025.