The Reserve Bank of India (RBI), on November 28, 2025, released the Reserve Bank of India (Small Finance Banks – Interest Rate on Deposits) Directions, 2025 for public comments. The Directions, issued under Sections 21 and 35A of the Banking Regulation Act, 1949, aim to establish a comprehensive and transparent framework governing interest rates on deposits maintained by Small Finance Banks (SFBs).
The mandates that SFBs adopt a Board-approved policy covering interest rate determination, penalties on premature withdrawal (including NRE and FCNR(B) deposits), and disclosure of uniform rates across branches. Interest rates must be reasonable, consistent, and transparent, with no negotiation permitted between depositors and banks. It further prescribes that deposits maturing on non-business days continue to earn interest at the contracted rate until the next working day.
Additionally, the Directions specify conditions for interest payment on domestic deposits, including savings and term deposits, with flexibility to offer differential rates on bulk deposits (₹3 crore and above). Special provisions cover additional interest for bank staff and senior citizens, treatment of overdue and deceased depositors’ accounts, and handling of foreign currency and non-resident deposits. These Directions will come into effect upon publication on RBI’s official website.
These Directions shall come into force with immediate effect.
[Notification No. RBI/DOR/2025-26/184 DOR.SOG(SPE).REC.103/13.03.00/ 2025-26]
