Bulk depositors such as public sector undertakings, temple trusts and companies with huge cash surplus are making hay as some banks seem game for paying muh maangi keemat (desired price) for their deposits to bridge the gap between credit growth and deposit growth.

This is underscored by the fact that interest rates on one-year bulk deposits (₹3 crore and above) have gone up from an average 6.90-7.00 per cent level in January 2026 to about 7.50 per cent now.

Credit growth (year-on-year) of all scheduled banks at 14.88 per cent as on April 15 was 276 basis points, higher than the deposit growth of 14.88 per cent, per RBI’s latest data.

A senior executive with a public sector bank (PSB) noted that recently a renowned temple trust issued a tender for placing a single ₹500 crore deposit, which is currently earning an interest rate of about 6.80 per cent with another bank. The mountain-top temple is now believed to be seeking a return of at least 7.30 per cent.

Repo rate

Indian Bank’s MD & CEO Binod Kumar said bulk deposit rates will go up if loan growth continues to grow at a faster clip than deposit growth, assuming the repo rate remains static. Ultimately, banks may also have to increase retail term deposit rates.

Kumar expects his bank to maintain the bulk deposit proportion at about 20 per cent of overall deposits.

K Arvind, Head – Treasury, Tamilnad Mercantile Bank, said: “One year bulk deposit rates have gone up from 6.90 to 7.00 per cent level in January 2026 to the current level of about 7.50 per cent. Though the repo rate has come down, bulk deposit rates have not come down as banks have to mobilise resources to support credit growth.”

According to the RBI’s latest data, during the current easing cycle (February 2025 to February 2026), the repo rate has been cumulatively cut by 125 basis points (bps) from 6.50 per cent to 5.25 per cent, but the transmission has not happened to the full extent.

The weighted average domestic term deposit rate on fresh and outstanding deposits have come down by 97 bps and 47 bps, respectively. The PSB executive quoted above said institutional depositors are exploiting the need of banks to mobilise deposits to the hilt.

Published on May 7, 2026