The Reserve Bank of India (RBI) on Wednesday, June 17, 2026 temporarily removed the interest rate ceiling on fresh FCNR(B) and NRE deposits till September 30, 2026.
The central bank issued “Reserve Bank of India (Commercial Banks – Interest Rate on Deposits) Amendment Directions, 2026” to allow banks to offer higher rates to non-residents opting for FCNR(B) and NRE deposits over the next three months.
The following are some key details of changes announced by RBI:
1)The interest rate ceiling has been removed with effect from June 17 till September 30, 2026.
2)In case of FCNR(B) deposits, the Interest rate ceiling has removed been only for deposits of 3-5 years.
“The interest rate ceiling applicable to fresh FCNR(B) deposits mobilised by banks, including the deposits that are renewed upon maturity, for three years and above-upto and including five years tenors, is temporarily withdrawn with effect from June 17, 2026, for the period until September 30, 2026,” RBI said.
3)For NRE deposits, the interest rate ceiling has been removed for deposits of 3 years or above tenors. The new rule will also apply to deposits that are renewed upon maturity. However, any transfer from NRO accounts to NRE accounts shall not qualify for such exemption.
4)The interest rate ceiling has been removed for both commercial and small finance banks.
5)The amendments paves the way for banks to offer higher interest rates on FCNR(B) and NRE deposits during the ceiling-free window. In the last few days, several banks have already started offering higher rates on FCNR(B) deposits.
What are the ceilings?
As per the amendment directions, the following ceilings apply to NRE and FCNR(B) deposits. However, they have been removed till September 30, 2026.
- The interest rates on NRE/NRO deposits cannot be higher than what the banks offer on domestic term deposits.
- For FCNR(B) deposits, banks can offer rates as per the following ceiling rate:
| Period of deposit | Ceiling rate |
|---|---|
| 1-<3 years | Overnight alternative reference rate (OARR)/swap + 250 bps |
| 3-5 years | Overnight alternative reference rate (OARR)/swap + 350 bps |
“On a review, it has been 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 the date of this Amendment Directions till September 30, 2026,” RBI said in a notification.