RBI Temporarily Lifts Interest Rate Caps on NRE and FCNR(B) Deposits

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  • Last Updated on 22 June, 2026

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NRE and FCNR(B) Deposit Interest Rate Restrictions

Notification No. RBI/2026-27/138  DOR.SOG(SPE).REC.117/13.03.00/2026-27, Dated 17.06.2026

The Reserve Bank of India (RBI) has amended the Interest Rate on Deposits Directions applicable to various categories of banks, providing temporary regulatory relief on interest rate prescriptions for certain NRE and FCNR(B) deposits.

The relaxation is aimed at encouraging mobilisation of foreign currency and non-resident deposits.

1. Banks Covered by the Amendment

The revised directions apply to:

  • Commercial Banks;
  • Small Finance Banks (SFBs);
  • Regional Rural Banks (RRBs);
  • Local Area Banks (LABs);
  • Urban Co-operative Banks (UCBs); and
  • Rural Co-operative Banks (RCBs).

2. Relaxation for NRE Deposits

The RBI has temporarily withdrawn the existing restriction on interest rates applicable to:

Fresh Non-Resident External (NRE) deposits with a tenor of three years and above.

During the relaxation period, banks will have greater flexibility in determining the interest rates offered on eligible NRE deposits.

3. Relaxation for FCNR(B) Deposits

The amendment also withdraws the existing ceiling on interest rates applicable to:

Fresh Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits having tenors of three to five years.

This allows banks to offer interest rates without being constrained by the earlier regulatory ceiling for the specified deposit category.

4. Period of Applicability

The temporary relaxation shall remain in force from:

17 June 2026 to 30 September 2026

The benefit is available only for fresh eligible deposits mobilised during this period.

5. Objective of the Measure

The RBI’s decision is intended to:

  • Encourage mobilisation of NRE and FCNR(B) deposits;
  • Attract additional foreign currency inflows;
  • Enhance flexibility for banks in deposit pricing; and
  • Support the country’s external sector position.

The measure complements other recent initiatives undertaken by the RBI to facilitate foreign exchange inflows and strengthen foreign currency resources.

6. Expected Impact

The temporary withdrawal of interest rate restrictions is expected to enable banks to offer more competitive returns on eligible NRE and FCNR(B) deposits, thereby encouraging greater participation by non-resident depositors and supporting the mobilisation of foreign currency resources during the specified period.

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied