What changed
RBI consolidated and updated the interest rate framework for Rural Co-operative Banks (State and Central Co-operative Banks) under the Banking Regulation Act, 1949. The directions define bulk deposits as single rupee term deposits of ₹15 lakh and above, and introduce Alternative Reference Rate (ARR) for LIBOR transition. They cover domestic, non-resident, and foreign currency deposits, with specific rules on premature withdrawal penalties and interest on deceased depositor accounts.
What it means for you
RCBs now have a single, clear regulatory reference for setting deposit interest rates, reducing ambiguity. The ₹15 lakh bulk deposit threshold standardizes reporting and compliance. Banks must update their deposit policies to match these directions, especially on penalties and ARR usage, to avoid regulatory action.
What you must do
- Review and align your bank's deposit interest rate policy with the new Directions, covering all deposit types.
- Update internal systems to reflect the ₹15 lakh bulk deposit definition and associated reporting.
- Ensure compliance with premature withdrawal penalty rules and interest payment norms for deceased depositors.
- Train staff on the new framework, especially for NRE and FCNR(B) deposit handling.
- Monitor RBI circulars for any subsequent amendments to these Directions.
Who it affects
State Co-operative Banks, Central Co-operative Banks, Rural Co-operative Banks' deposit operations teams, Compliance and risk management departments of RCBs
What is the effective date of these Directions?
The Directions came into effect on November 28, 2025, the date they were placed on RBI's official website.
Are these Directions applicable to all co-operative banks?
No, they apply only to Rural Co-operative Banks, defined as State Co-operative Banks and Central Co-operative Banks under the NABARD Act, 1981.
What is the definition of a bulk deposit under these rules?
A bulk deposit is a single rupee term deposit of ₹15 lakh and above.