RBI lifts interest-rate ceilings on fresh NRE and FCNR(B) deposits until 30 September 2026
Banks may price fresh NRE (3yr+) and FCNR(B) 3–5yr deposits above the usual ceilings only until 30 September 2026, when caps reinstate
Change
On 17 June 2026 the Reserve Bank of India (RBI) issued Amendment Directions under section 35A of the Banking Regulation Act temporarily withdrawing, from the date of issue until 30 September 2026, the interest-rate ceiling on fresh FCNR(B) deposits of three to five years and the rate restriction on fresh NRE deposits of three years and above (including renewals), with transfers from NRO to NRE excluded from the exemption and the ceilings reinstating thereafter.
Why it matters
The withdrawal removes the RBI-prescribed caps for the named FCNR(B) (3–5yr) and NRE (3yr+) tenors only for 17 June to 30 September 2026, including deposits renewed upon maturity, allowing banks to price above the previous ceilings during the window. Transfers from NRO to NRE accounts are excluded from the exemption. The same temporary withdrawal applies across commercial banks, small finance banks, regional rural banks, local area banks and urban and rural co-operative banks. After 30 September 2026 the ceilings reinstate, so any rates set during the window must be managed against that reversion.
Implications
- — Deposit-pricing teams at commercial banks, small finance banks, regional rural banks, local area banks and co-operative banks that choose to price above the previous ceilings on fresh NRE (3yr+) or FCNR(B) (3–5yr) deposits must do so only within the 17 June–30 September 2026 window, and plan for the ceilings reinstating after 30 September 2026 — including for deposits renewed upon maturity.
- — Branch operations and deposit-servicing teams must ensure transfers from NRO accounts to NRE accounts are not treated as eligible for the temporary exemption, since the Directions exclude such transfers.
- — Treasury and ALM teams should account for the reversion date in funding plans, as any elevated rates offered during the window apply against deposits whose ceilings return after 30 September 2026.
Who is affected
- — Deposit-pricing teams at commercial, small finance, regional rural, local area and co-operative banks
- — Branch operations and deposit-servicing teams handling NRE/NRO and FCNR(B) accounts
- — Treasury and ALM teams managing deposit funding costs
What to watch
- — 30 September 2026: the temporary withdrawal expires and the interest-rate ceilings on fresh FCNR(B) (3–5yr) and NRE (3yr+) deposits reinstate.