More Stories

Informist, Tuesday, Aug. 25, 2026

 

--RBI re-imposes caps on 3-5 year FCNR(B) deposit rates from Aug 31

--CONTEXT: RBI had removed 3-5 year FCNR(B) deposit rate caps until Sept 30

 

NEW DELHI – The Reserve Bank of India Tuesday reinstated limits on interest rates offered on three- to five-year foreign currency non-resident (banks) deposits from Aug. 31, bringing forward the timeline from the earlier notified Sept. 30. Interest rate caps on non-resident (external) deposits of three years and above will also be reimposed a month earlier.

 

The guidelines state that banks' interest rate on deposits must be limited to the overnight Alternative Reference Rate for the respective currency or swap plus 350 basis points. In normal times, interest rates on NRE or Non-Resident Ordinary Account deposits could also not be higher than those offered by banks on comparable domestic rupee term deposits.

 

The move follows the central bank's decision to cut short the window to mobilise deposits under its concessional swap window to Aug. 31 from Sept. 30 after an "encouraging response" to the scheme. The RBI's zero-cost hedging facility to banks for three- to five-year FCNR(B) deposits has accrued over $65 billion between Jun. 8 and Friday. The swap window will run until Sept. 11 for deposits mobilised until August-end.

 

On Jun. 17, the RBI had temporarily withdrawn the mandated interest rate ceiling on these deposits in a bid to garner inflows. Banks had raised the interest rates they offered on dollar-denominated FCNR(B) deposits by up to 400 basis points after the scheme was announced, offering upwards of 7.10% under the special scheme.

 

The regulator had also given additional leeway on the incoming deposits as well, including exemptions from cash reserve ratio and statutory liquidity ratio requirements. In a release earlier Tuesday, it removed these exemptions a month early as well as it worked to operationalise the new deadline for its special scheme.  End

 

US$1 = INR 95.41

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Aaryan Khanna

Edited by Deepshikha Bhardwaj

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2026. All rights reserved.