Deposit booster
RBI withdraws interest rate limit on fresh FCNR(B) deposits of tenor 3-5 years
This story was originally published at 19:19 IST on 17 June 2026
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--RBI withdraws limits on interest rates on NRE deposits of 3 yr, above tenor
--RBI withdraws interest rate cap on fresh FCNR(B) deposits of 3-5 yr tenors
NEW DELHI – The Reserve Bank of India Wednesday decided to temporarily withdraw the interest rate ceiling on fresh foreign currency non-resident bank deposits of three- to five-year tenors and restriction on interest rates on Non-Resident External Account deposits of three-year and above tenors, including deposits that are renewed upon maturity. The measure is effective immediately and will be in place till Sept. 30.
The move comes after the central bank earlier this month announced a swap facility to cover the full hedging costs for banks raising fresh three- to five-year FCNR(B) deposits till Sept. 30. The swap facility, which came into effect on Jun. 8, will remain open till Oct. 16 for deposits mobilised between Jun. 8 and Sept. 30.
Earlier, banks' interest rate on FCNR(B) deposits for three- to five-year tenors was limited to the overnight Alternative Reference Rate for the respective currency or swap plus 350 basis points. As per the temporary amendement, interest rates on NRE or Non-Resident Ordinary Account deposits can now be higher than those offered by banks on comparable domestic rupee term deposits, the RBI said. However, any transfer from NRO accounts to NRE accounts will not qualify for such exemption, it added.
Most domestic banks have increased rates on FCNR(B) deposit after the RBI's announcement of a concessional swap window. An Informist Poll estimated that the swap window will bring in about $43 billion. The RBI's temporary relaxation on interest rate ceiling may help draw more foreign currency inflows. End
US$1 = INR 94.52
Reported by Pratiksha
Edited by Rajeev Pai
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