Bulk depositors cash in on banks’ need to raise resources to meet credit demand

Bulk depositors, including public sector undertakings, temple trusts and companies with large cash reserves, are benefiting as some banks are willing to pay the muh maangi keemat (desired price) for their deposits to narrow the gap between credit growth and deposit growth.

This trend is reflected in the rise of interest rates on one‑year bulk deposits (₹3 crore and above), which have increased from an average of 6.90‑7.00 % in January 2026 to roughly 7.50 % today.

According to the RBI’s latest figures, year‑on‑year credit growth for all scheduled banks stood at 14.88 % as of 15 April, exceeding deposit growth by 276 basis points.

A senior executive at a public sector bank said that a prominent temple trust recently issued a tender for a single ₹500 crore deposit, which currently earns about 6.80 % with another bank. The hill‑top temple is now thought to be aiming for a return of no less than 7.30 %.

Repo rate

Indian Bank’s Managing Director and CEO, Binod Kumar, stated that bulk deposit rates will rise if loan growth continues to outpace deposit growth while the repo rate stays unchanged. In the end, banks may also need to lift retail term‑deposit rates.

Kumar anticipates that his bank will keep the share of bulk deposits at roughly 20 % of total deposits.

K. Arvind, Head of Treasury at Tamilnad Mercantile Bank, noted: “One‑year bulk deposit rates have risen from the 6.90‑7.00 % range in January 2026 to about 7.50 % today. Although the repo rate has declined, bulk deposit rates have remained steady because banks need to gather funds to sustain credit growth.”

Based on the RBI’s latest data, during the ongoing easing cycle (February 2025 to February 2026) the repo rate has been reduced cumulatively by 125 basis points, falling from 6.50 % to 5.25 %, yet the full transmission of this cut has not been realized.

The weighted average domestic term‑deposit rate on new deposits has fallen by 97 basis points, while the rate on outstanding deposits has dropped by 47 basis points. The PSB executive mentioned earlier added that institutional depositors are taking advantage of banks’ urgency to gather deposits.

Published on May 7, 2026