RBI temporarily removes interest rate caps on NRE and FCNR(B) deposits
The relaxation came into effect on June 17, 2026, and will remain in place until September 30, 2026.
Under the revised rules, banks can offer higher interest rates on fresh NRE deposits of 3 years and above, including deposits renewed upon maturity. However, transfers from Non-Resident Ordinary (NRO) accounts to NRE accounts will not be eligible for this exemption.
An NRE account allows non-residents to deposit foreign currency, which is maintained in Indian rupees. Both the principal amount and interest earned can be freely repatriated abroad. Bank officials expect the latest relaxation to attract higher inflows into NRE accounts.
According to RBI data, outstanding deposits under the NRE scheme stood at $7.94 billion in FY26, while outstanding FCNR(B) deposits were $946 million.
Earlier, on June 5, the RBI announced a concessional foreign exchange swap facility for FCNR(B) deposits until September 30, 2026, to encourage external commercial borrowings (ECBs) by public sector companies. The measure is expected to reduce hedging and funding costs for banks raising funds overseas.
The RBI also removed the interest rate ceiling on fresh FCNR(B) deposits, including renewed deposits, with tenors of 3 years and above up to and including 5 years, from June 17, 2026, to September 30, 2026.
The central bank clarified that the relaxation applies to eligible NRE and FCNR(B) deposits renewed during the exemption period ending September 30, 2026.
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