RBI Temporarily Removes Interest Rate Restrictions on Select NRE and FCNR(B) Deposits

The Reserve Bank of India (RBI) has temporarily relaxed interest rate rules for certain deposits held by non-resident Indians (NRIs), as per news reports.  

The revised directions allow banks to offer interest rates without the earlier regulatory limits on specified deposits. The changes came into effect immediately and will remain valid until September 30, 2026. 

The relaxation applies to fresh Non-Resident External (NRE) deposits with a maturity of 3 years or more and fresh Foreign Currency Non-Resident (Bank), or FCNR(B), deposits with maturities of more than 3 years and up to 5 years.  

Eligible deposits renewed after maturity are also included. 

Earlier Limits Removed 

Before the latest notification, interest rates on NRE deposits could not be higher than those offered on comparable domestic rupee term deposits.  

FCNR(B) deposits with tenors of 3 to 5 years were subject to an interest rate ceiling linked to benchmark overnight rates and swap rates, along with an additional spread of 350 basis points. 

These restrictions have now been withdrawn for eligible deposits during the temporary period. The RBI has clarified that transfers from Non-Resident Ordinary (NRO) accounts to NRE accounts will not qualify under the revised framework. 

Part of Recent Policy Measures 

The decision comes alongside other steps announced by the central bank to encourage overseas capital flows into India.  

Earlier this month, rules were eased to allow foreign individual investors to buy shares in listed Indian companies directly, while banks were also provided a special window to mobilise FCNR deposits. 

The latest changes provide banks with greater flexibility in raising foreign currency and rupee deposits from overseas Indians under the revised norms. 

Read More: Government to Disburse Nearly ₹2,400 Crore Under PM-VBRY Incentives Scheme on June 19, 2026! 

Conclusion 

The temporary relaxation of interest rate restrictions will remain in force until September 30, 2026. The revised framework changes the way eligible NRE and FCNR(B) deposits can be priced, while leaving existing conditions on NRO-to-NRE transfers unchanged. 

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