RBI will issue final guidelines regarding this by end of February.
Reserve Bank of India has chosen to alter the definition of bulk deposits in the recent monetary policy review. The threshold for bulk deposit has been revised as single deposits of Rs 2 crore and above.
The banks are also asked to maintain their bulk deposit card rates in the core banking system for supervisory review. RBI will issue final guidelines regarding this by end of February 2019.
Banks offer different interest rates for their fixed deposits depending on the money invested. A look at the table gives you a fair idea of what is on offer.
The banking sector appears to be coming out of woods. As capital expenditure is seen picking up, more companies are expected to borrow from banks and bank credit is expected to pick up. CRISIL estimates bank credit to grow at 13% to 14% over fiscal years 2019 and 2020 as compared to 8% in fiscal year 2018. This will force bank to mobilise more deposits. According to CRISIL banks will need to raise at least Rs 19-20 lakh crore of fresh deposits until March 2020 to keep the credit-deposit ratio near 80%, which in itself would be highest in a decade. Krishnan Sitaraman, senior director – CRISIL Ratings said: "Deposit growth is lagging credit growth. To continue lending the banks need to mobilise money which will ensure that banks continue to offer attractive interest rates on fixed deposits."
As of now, many private sector banks are offering higher interest rates on bulk fixed deposits. Banks can now offer differential interest rates only on fixed deposits where the amount invested is more than Rs 2 crore. If you are looking for pocketing the higher interest rates on offer on bulk fixed deposits, you have to now invest minimum Rs 2 crore. As the new threshold comes into picture banks can offer negotiated rates for fixed deposits in excess of Rs 2 crore. "As per RBI rules, bank can offer negotiated rates for bulk fixed deposit. But no two customers can be offered different rates for fixed deposit involving same amount, same tenure being invested on the same day," explained Surinder Chawla, head-geography, branch and business banking, RBL Bank.
If you are looking to invest in one single fixed deposit with public sector bank where retail card rates are higher than bulk FD rates, then you need not stop at Rs 1 crore. Below Rs 2 crore investment amount you will enjoy retail rates.
"RBI's rate cut announcement indicates that the interest rates are expected to go down. Fixed deposits may follow the interest rate in the economy over a period of time," added Chawla.Investors should take into account the changed rules, their risk taking capacity and the rates on offer before taking investment decisions.You can now invest in mutual funds with moneycontrol. Download moneycontrol transact app. A dedicated app to explore, research and buy mutual funds.