RBI lifts cap on FCNR(B), NRE deposit rates to boost foreign inflows
Mumbai, Jun 17, 2026
The central bank has temporarily withdrawn interest rate ceilings on select FCNR(B) and NRE deposits, giving banks greater flexibility to attract NRI funds
The Reserve Bank of India (RBI) on Tuesday temporarily withdrew the interest rate ceiling on fresh Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits with maturities of three years and above up to five years till September 30, 2026, in a move that will allow banks greater flexibility in mobilising foreign-currency deposits from non-resident Indians.
The central bank said the interest rate ceiling applicable to fresh FCNR(B) deposits mobilised by banks, including deposits renewed upon maturity, for tenors of three years and above up to and including five years, has been withdrawn with effect from June 17, 2026, until September 30, 2026.
Before the relaxation, FCNR(B) deposits in the three-to-five-year bucket were subject to a ceiling of the overnight alternative reference rate for the respective currency or swap rate plus 350 basis points. Deposits with maturities of one year to less than three years will continue to carry a ceiling of the overnight alternative reference rate or swap rate plus 250 basis points.
Separately, the RBI also temporarily withdrew restrictions on interest rates offered on fresh Non-Resident External (NRE) deposits of three years and above, including deposits renewed on maturity, till September 30, 2026. Under the relaxation, banks will not be bound by the existing requirement that rates on such deposits should not exceed those offered on comparable domestic rupee term deposits. Transfers from NRO accounts to NRE accounts, however, will not qualify for the exemption.
The amended directions came into effect immediately.
Most large banks are currently offering peak FCNR(B) deposit rates of around 6 per cent.
State Bank of India (SBI), HDFC Bank, ICICI Bank and Axis Bank are offering rates of up to 6 per cent on deposits with maturities ranging from three to five years.
Kotak Mahindra Bank is offering up to 6.15 per cent on deposits above $1 million with maturities of three to five years, while deposits below $1 million in the same maturity bucket earn 6 per cent.
Among private lenders, Yes Bank is offering a peak FCNR(B) deposit rate of 6.6 per cent for a five-year tenor, while deposits with maturities of three to four years earn between 6.5 per cent and 6.55 per cent. CSB Bank has also significantly increased its rates, raising the three-year to less-than-four-year maturity bucket by 290 basis points to 6.95 per cent.
[The Business Standard]
