The Reserve Bank of India (RBI) has conducted a review of bulk deposit limits for financial institutions, specifically focusing on Regional Rural Banks (RRBs). As a result, the bulk deposit limit for RRBs has been significantly increased from Rs 15 lakh to Rs 1 crore. This adjustment carries significant implications for the operational framework of RRBs and aims to create a more equitable banking landscape.
Boosting RRB Bulk Deposit Limit: The RBI has raised the bulk deposit limit for Regional Rural Banks from Rs 15 lakh to Rs 1 crore, a substantial change aimed at promoting equity among banks, especially those serving rural and semi-urban areas.
Depositor Protection: Deposits in RRBs are secured by the Deposit Insurance and Credit Guarantee Corporation (DICGC), ensuring protection of up to five lakh rupees for each depositor, thereby instilling confidence in depositors.
RBI’s Directive on Premature Withdrawals: On the same day, the RBI issued a separate directive, mandating that banks must allow premature withdrawals on all term deposits up to Rs 1 crore. This marks a significant increase from the previous limit of Rs 15 lakh for ‘non-callable’ fixed deposits.
Applicability to Non-Resident Deposits: Notably, the RBI’s instructions regarding premature withdrawals apply not only to domestic term deposits but also to Non-Resident (External) Rupee (NRE) Deposits and Ordinary Non-Resident (NRO) Deposits.
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