The Reserve Bank of India said on Wednesday that it is temporarily removing prescribed interest-rate ceilings on a narrow set of non-resident deposit products, with the changes in place through September 30, 2026.
Under the Reserve Bank of India (Commercial Banks - Interest Rate on Deposits) Amendment Directions, 2026, the central bank has lifted the cap on interest rates for new Foreign Currency Non-Resident (FCNR) deposits with tenors of three to five years. The amendment also eliminates rate restrictions on Non-Resident External (NRE) deposits with maturities of three years and above, and it extends to NRE deposits that are renewed on maturity.
These instructions take effect from Wednesday and alter the guidance first issued on November 28, 2025. The RBI framed the amendment under Section 35A of the Banking Regulation Act, 1949, saying the step was "necessary and expedient in the public interest."
At the same time, certain constraints remain. For both NRE and Non-Resident Ordinary (NRO) deposits, the pre-existing requirement that interest rates must not exceed those offered on comparable domestic rupee term deposits remains applicable. The temporary exemption introduced by the amendment specifically applies only to fresh NRE deposits mobilized by banks with tenors of three years and above.
The amendment makes explicit that transfers from NRO accounts to NRE accounts do not qualify for the temporary relief from interest-rate restrictions. In other words, only newly mobilized NRE deposits meeting the tenor condition are eligible for the exemption; converted or transferred balances are excluded.
In sum, the RBI has narrowed the scope of its rate-cap relief to select long-tenor non-resident deposit instruments for a defined period, while preserving the ceiling tie to comparable domestic term deposit rates for other non-resident balances.