RBI Boosts FD Transparency for Small Finance Banks

The Reserve Bank of India (RBI) has unveiled new guidelines for Small Finance Banks (SFBs) concerning Fixed Deposit (FD) interest rates, which will take effect on October 1, 2026. These changes, formally known as the Reserve Bank of India (Small Finance Banks-Interest Rate on Deposits) Second Amendment Directions, 2026, are designed to bring greater clarity, consistency, and fairness to depositors across India.

Enhancing Transparency in Rate Disclosure

Under this revised framework, SFBs must now disclose their FD rates in advance. They are also mandated to publish their comprehensive deposit interest rate schedules on their official websites, ensuring that interest paid on all deposits aligns with the online displayed rates.

For bulk deposits, SFBs face an additional requirement. They must release all applicable interest rates on their websites every business day by 10 am, with a brief 10-minute grace period allowed for any necessary updates.

Ensuring Uniformity for Regular Deposits

A significant component of these new regulations is the directive for SFBs to maintain consistent deposit interest rates across all their branches and for every customer. This means banks can no longer offer varied rates for regular deposits of the same amount made on the same date at different locations.

While uniformity is strictly enforced for regular deposits, SFBs retain some flexibility regarding bulk deposits. They can still offer differing interest rates for bulk deposits, with variations permissible based on factors such as deposit stability and liquidity requirements, as outlined by the RBI’s broader regulatory framework.

This new regulatory structure aims to protect the interests of depositors while simultaneously enabling banks to manage their funds effectively within the specified guidelines.