RBI Temporarily Removes Interest Rate Caps On Select NRI Deposits Till September 30

The Reserve Bank of India (RBI) has temporarily removed interest rate ceilings on certain foreign currency and non-resident deposits, giving banks greater flexibility to attract overseas funds. In notifications issued on June 17, 2026, RBI said the interest rate ceiling on fresh Foreign Currency Non-Resident (Bank) or FCNR (B) deposits with maturities of 3-5 years has been withdrawn until September 30, 2026. The relaxation also applies to deposits that are renewed upon maturity during this period.

The RBI has also temporarily removed restrictions on interest rates for non-resident external (NRE) deposits with tenures of three years and above. This relaxation covers fresh deposits as well as renewed deposits and will remain in force until September 30, 2026.

What has Been Revised

FCNR (B) deposits are term deposits which allow non-resident Indians (NRIs) to maintain overseas earnings in foreign currencies with banks in India. Since these deposits are held in foreign currency, depositors are not exposed to fluctuations in the rupee’s value against the deposit currency.

With the withdrawal of the interest rate ceiling, banks can now decide the rates they wish to offer on eligible FCNR (B) deposits. The RBI has said that the relaxation takes effect from June 17, 2026.

The move gives banks additional flexibility to mobilise foreign currency deposits at a time when authorities are looking to strengthen foreign capital inflows.

Measures Aimed at Attracting Foreign Capital

The decision follows a series of measures announced by RBI earlier this month to encourage foreign capital inflows amid pressure on the rupee against the dollar.

One of those measures was the introduction of a concessional foreign exchange swap facility for authorised dealer (AD) banks raising fresh FCNR (B) deposits with maturities of 3-5 years. The facility, available until September 30, 2026, is intended to help banks meet the full cost of hedging such deposits.

The RBI has issued separate notifications on these measures for commercial banks, co-operative banks, regional rural banks (RRBs) and small finance banks (SFBs).

Conditions Remain for NRE and NRO Deposits

While easing restrictions on select NRI deposits, the RBI clarified that interest rates offered on NRE and non-resident ordinary (NRO) deposits should not be higher than the rates offered by the respective bank on comparable domestic rupee term deposits.

The temporary relaxation is expected to help banks attract additional overseas deposits over the coming months while supporting foreign currency inflows into the banking system.