RBI temporarily lifts FCNR (B) deposit interest
The Reserve Bank on Wednesday temporarily withdrew interest rate ceiling on fresh Foreign Currency Non-Resident (Bank) deposits of 3-5 years’ maturity till September 30, a move aimed at attracting foreign capital.
It has also temporarily withdrawn restriction on interest rates on Non-Resident External (NRE) deposits of 3 years and above tenors, including deposits that are renewed upon maturity, till September 30, 2026.
“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that are renewed upon maturity, for three years and above -- up to and including five-year tenors, is temporarily withdrawn with effect from June 17, 2026, for the period until September 30, 2026,” the central bank said in a circular. The relaxation came into effect from Wednesday. An FCNR (B) deposit is a term deposit account meant for Non-Resident Indians (NRIs) to park overseas earnings in foreign currencies in India.
The notification also said interest rates on NRE/NRO deposits should not be higher than those offered by the bank on comparable domestic rupee term deposits.
Earlier this month, the Reserve Bank of India (RBI) had announced a host of measures to attract foreign capital in the backdrop of rupee depreciating against the US dollar.
One of the measures was a facility of concessional forex swap for bearing the full hedging cost shall be provided till September 30, 2026, to AD banks for raising fresh 3-5-year FCNRB) deposits. Separate notifications in this regard have also been issued for commercial banks, co-operative banks, regional rural banks, and small finance banks.
