Definition
Bulk Deposits
Bulk deposits are large single-ticket term deposits, above an RBI-defined threshold, on which banks may offer differential, often higher, interest rates.
The RBI defines bulk deposits (currently single rupee deposits above a set crore-level threshold) and lets banks set separate rate cards for them. Banks lean on bulk deposits to raise funds quickly, but the money is rate-sensitive and flighty.
A high reliance on bulk deposits raises a bank's cost of funds and weakens its liquidity profile under the LCR, since such deposits are assumed to run off faster than granular retail money. Analysts prefer banks funded by sticky retail CASA over those dependent on bulk deposits.
Related terms
- Cost of FundsCost of Funds is the weighted-average interest rate a bank or NBFC pays to raise the money it lends, covering deposits, borrowings and bonds.
- CASA (Current and Savings Account)CASA refers to the combined balances in current and savings accounts, which are a bank's cheapest source of funds.
- Deposits (Banking)Deposits are the funds customers place with a bank in current, savings and term accounts, forming the bank's primary and cheapest source of funding.
- Net Stable Retail DepositsStable retail deposits are sticky, granular deposits from individual customers that regulators treat as a reliable funding source under liquidity rules.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.