The country’s banking regulator Reserve Bank of India on Wednesday temporarily lifted the interest rate limit on new foreign currency non-resident (bank) i.e. FCNR (B) deposits with maturity of 3-5 years till September 30, in order to attract foreign capital. It has also temporarily lifted the restriction on interest rates on Non-Resident External (NRE) deposits of 3 years and above till September 30, 2026. This also includes deposits renewed after maturity.
RBI made this announcement
The interest rate cap applicable on fresh FCNR(B) deposits raised by banks (including deposits renewed on maturity) — for tenures of three years and above up to five years — raised by banks has been temporarily lifted for the period from June 17, 2026, to September 30, 2026, the central bank said in a circular. This relaxation came into effect from Wednesday. FCNR (B) deposit is a term deposit account for non-resident Indians (NRIs) to park their foreign earnings in foreign currency in India. The notification also states that the interest rates on NRE/NRO deposits should not be higher than the rates offered by the bank on similar domestic rupee term deposits.
Many decisions were taken in the beginning of the month
Earlier this month, the Reserve Bank of India (RBI) made several announcements to attract foreign capital in view of the falling value of the rupee against the US dollar. One of these announcements was that AD banks will be given concessional forex swap facility till September 30, 2026, on bearing the full hedging cost for raising new FCNR(B) deposits of 3-5 years. In this regard, separate notifications have also been issued for commercial banks, co-operative banks, regional rural banks and small finance banks.
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