Sunita Somvanshi
The Reserve Bank of India (RBI) has introduced updated regulations governing bank deposits as part of its ongoing effort to strengthen financial system stability and protect depositor interests. The changes affect how banks classify and manage their deposit liabilities, with downstream implications for savings account holders, fixed deposit investors and the broader banking sector.
Liquidity Coverage Ratio Updates
The RBI has revised the Liquidity Coverage Ratio (LCR) framework, requiring banks to maintain a larger buffer of high-quality liquid assets (HQLA) against certain types of deposits. Under the revised norms, banks must hold additional liquidity buffers against retail deposits made by digitally active customers, which the RBI has identified as potentially more volatile — since online banking customers can transfer or withdraw funds more quickly than traditional branch-based depositors.
What This Means for Fixed Deposit Holders
The regulatory changes do not reduce the safety of your fixed deposits. Bank deposits in India are insured up to ₹5 lakh per depositor per bank by the Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of the RBI. This coverage applies to all savings accounts, fixed deposits, current accounts and recurring deposits combined across all branches of the same bank.
Interest Rates and Competition
The updated liquidity requirements may marginally affect the interest rates banks offer on deposits, as maintaining additional liquid assets has a cost. However, intense competition among banks for retail deposits means rates are unlikely to fall significantly. In fact, several small finance banks and cooperative banks have continued to offer 7–9% annual interest on fixed deposits to attract depositors.
Savings Account Rules
The RBI has also reaffirmed rules around inoperative accounts. Accounts that have had no customer-initiated transactions for two years are classified as “inoperative” and transferred to a separate ledger. Funds in inoperative accounts are eventually transferred to the RBI’s Depositor Education and Awareness (DEA) Fund after 10 years of inactivity, though depositors can claim these funds at any time by contacting their bank.
Nominee Registration — a Key Reminder
The RBI has strongly encouraged all depositors to ensure they have registered a nominee for their bank accounts and fixed deposits. Without a nominee, the process of claiming deceased depositors’ funds can be time-consuming and complicated for families. Banks are required to facilitate nominee registration and update existing records easily.
External Sources: Reserve Bank of India | Deposit Insurance and Credit Guarantee Corporation — DICGC
