RBI Temporarily Lifts Interest Rate Restrictions on NRE and FCNR(B) Deposits
En resumen
- The Reserve Bank of India has temporarily removed interest rate restrictions on NRE and FCNR(B) deposits until September 30, 2026, to attract foreign currency inflows.
- This allows banks to offer higher rates on these deposits for Non-Resident Indians.
Resumen generado por IA
Por qué importa
The Reserve Bank of India has temporarily lifted interest rate restrictions on certain NRE and FCNR(B) deposits until September 30, 2026. This move aims to attract foreign currency inflows by allowing banks to offer higher rates on these deposits.
The Reserve Bank of India (RBI) has temporarily relaxed interest rate restrictions on certain Non-Resident External (NRE) and Foreign Currency Non-Resident [FCNR(B)] deposits to attract more foreign currency inflows. The relaxation of interest rates on certain FCNR(B) deposits and NREs will be applicable till September 30, 2026, as per a statement from the Central Bank.
The removal of restrictions means banks may now increase their NRE and FCNR(B) deposit interest rates based on their funding requirements and market conditions during this period. NRIs planning to open or renew such FCNR(B) or NRE deposits may therefore see higher interest rate offerings from banks in the coming weeks.
Also read: FCNR deposit rates up to 6.5%: Bank of Baroda, Indian Overseas Bank and others launch schemes for NRIs, OCIs
What is RBI’s new direction about FCNR(B) and NRE deposits?
As per the Reserve Bank of India (Commercial Banks – Interest Rate on Deposits) Amendment Directions, 2026 issued on June 17, 2026, the RBI has decided to temporarily withdraw interest rate ceiling on fresh FCNR(B) deposits of 3-5 year tenors and restriction on interest rates on NRE deposits of 3 year and above tenors, including the deposits that are renewed upon maturity, from June 17, 2026, to September 30, 2026.
Interest rate cap on NRE deposits of 3 years and above temporarily withdrawn
Earlier, banks were not allowed to provide NRE deposit rates that were greater than their equivalent domestic term deposit rates.
Banks are now permitted to offer higher rates on new NRE deposits of of three years or longer
The relaxation applies to fresh deposits mobilised by banks as well as deposits that are renewed upon maturity during the specified period.
The notification stated, “The said restriction with respect to interest rates offered on fresh NRE deposits mobilised by banks, including the deposits that are renewed upon maturity, for three years and above tenors, is temporarily withdrawn with effect from June 17, 2026, for the period until September 30, 2026. Any transfer from NRO accounts to NRE accounts shall not qualify for such exemption.”
Removed the interest rate ceiling on FCNR(B) deposits of 3-5 years
For FCNR(B) deposits, banks were previously required to adhere to a ceiling rate set by the RBI. Banks are now able to offer rates higher than the prior cap for new FCNR(B) deposits with tenors ranging from three to five years. This also holds true for deposits that are renewed when they mature.
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Preguntas abiertas
- Will the RBI extend the relaxation beyond September 30, 2026?
- What specific rate increases can NRIs expect?
