RBI bars small finance banks from offering different FD rates for identical deposits

The Reserve Bank of India (RBI) has tightened the rules governing fixed deposit (FD) interest rates offered by small finance banks (SFBs), requiring them to follow uniform pricing for identical retail deposits from October 1, 2026. The move is aimed at improving transparency, eliminating arbitrary pricing practices and ensuring equal treatment for depositors across branches.

The changes have been introduced under the *Reserve Bank of India (Small Finance Banks – Interest Rate on Deposits) Second Amendment Directions, 2026*. One of the biggest changes is that SFBs can no longer offer different interest rates on the same category of retail deposit accepted on the same day simply because the customer visited a different branch or had a different relationship with the bank.

Same deposit, same day, same interest rate

In practical terms, if two customers invest the same amount in a fixed deposit of the same tenure with the same small finance bank on a particular day, both must receive the same interest rate. Banks will not be permitted to offer preferential rates to select customers for identical deposits unless the differentiation falls within the RBI's permitted framework.

The central bank said deposit interest rates should be consistent across all branches and customers. The objective is to ensure fairness and prevent situations where depositors receive different returns despite investing under identical terms. The move is also expected to boost confidence among retail investors by making FD pricing more predictable and transparent.

Advance disclosure of FD rates

To reinforce transparency, SFBs will have to publish their deposit interest rate schedules in advance. The interest paid on both regular and bulk deposits must be in line with the rates displayed on the bank's official website. This will allow customers to compare FD rates across banks more easily and reduce ambiguity over the returns they can expect.

The revised directions also introduce stricter disclosure requirements for bulk deposits. Small finance banks must publish the applicable interest rates for bulk deposits on their websites every business day at 10:00 a.m., with a 10-minute grace period permitting updates until 10:10 a.m.

Bulk deposits remain exempt

For regulatory purposes, a bulk deposit refers to a single rupee term deposit of ₹3 crore or more in the case of scheduled commercial banks and small finance banks.

While the RBI has standardised pricing for retail deposits, it has retained flexibility for bulk deposits. Banks may continue to offer different interest rates on such deposits, provided the pricing policy is clearly defined and disclosed in advance. The variation may be based on factors such as deposit stability, liquidity management requirements and other prudential considerations under the RBI's regulatory framework. The same flexibility is available for eligible bulk deposits accepted from non-resident customers.

What it means for FD investors

The amended directions will come into effect on October 1, 2026. By mandating advance disclosure of interest rates, uniform pricing for retail deposits and transparent policies for bulk deposits, the RBI aims to strengthen consumer protection while allowing small finance banks adequate flexibility to manage their funding needs.

For fixed deposit investors, the changes mean they no longer need to worry about receiving a lower interest rate than another customer for an identical deposit at the same bank. The new framework also makes it easier to compare FD offerings across small finance banks, bringing greater transparency and consistency to the deposit market while ensuring that identical deposits earn identical returns regardless of the branch where they are opened.