🔔 TEMPORARY RELIEF — VALID JUNE 17, 2026 TO SEPTEMBER 30, 2026
RBI has issued 6 simultaneous Amendment Directions (RBI/2026-27/138 to 143) on June 17, 2026, covering every category of regulated bank in India. With immediate effect, the interest rate restriction on fresh NRE deposits of 3 years and above and the FCNR(B) interest rate ceiling for 3–5 year tenors stand temporarily withdrawn until September 30, 2026. The ceiling for FCNR(B) deposits of 1 year to under 3 years (ARR + 250 bps) continues unchanged. Critically, NRO-to-NRE account transfers do not qualify for this exemption.
📋 Key Facts at a Glance
Circular Numbers
RBI/2026-27/138 to 143
Date of Issue
June 17, 2026
Effective Date
June 17, 2026 (Date of Issue)
Relief Expires
September 30, 2026
Signatory
Dr. Sudarsana Sahoo, Chief General Manager, RBI
Legal Authority
Section 35A, Banking Regulation Act, 1949
(+ Section 56 for Urban & Rural Co-op Banks)
NRE Deposit Relief
3-year & above tenors — Rate ceiling LIFTED till Sep 30, 2026
FCNR(B) Relief
3–5 year tenors — ARR + 350 bps ceiling SUSPENDED till Sep 30, 2026
FCNR(B) — Unchanged
1-year to <3-year tenors — ARR + 250 bps ceiling CONTINUES
Critical Exclusion
NRO-to-NRE transfers — NOT eligible for rate exemption
Bank Types Covered
Commercial Banks, SFBs, RRBs, LABs, UCBs, Rural Co-op Banks
Amends
Interest Rate on Deposits Directions, 2025 dated Nov 28, 2025
The Reserve Bank of India, through its Department of Regulation (DOR), issued six simultaneous Amendment Directions on June 17, 2026 — bearing Circular Numbers RBI/2026-27/138 to 143 — covering all six categories of banks regulated by it: Commercial Banks, Small Finance Banks, Regional Rural Banks, Local Area Banks, Urban Co-operative Banks, and Rural Co-operative Banks. The instruments are signed by Dr. Sudarsana Sahoo, Chief General Manager, and are issued under Section 35A of the Banking Regulation Act, 1949 (with Section 56 additionally invoked for the co-operative bank categories). They take effect from the date of issue and temporarily modify the respective Interest Rate on Deposits Directions, 2025 issued on November 28, 2025.
The core measure is a temporary withdrawal of two deposit interest rate restrictions: (i) the ceiling on interest rates offered on fresh NRE deposits of 3 years and above tenors (including deposits renewed upon maturity), and (ii) the ceiling on FCNR(B) deposits of 3 years and above up to and including 5 years. Both relaxations are operative from June 17, 2026 and expire on September 30, 2026, after which the original ceilings prescribed in the November 2025 Directions resume. This measure is designed to attract long-tenor foreign currency and non-resident rupee deposits at competitive rates, strengthening the capital inflow position during the applicable window.
⚖️ Regulatory Foundation
Circular Numbers
RBI/2026-27/138, 139, 140, 141, 142, 143
Ref Numbers
DOR.SOG(SPE).REC.117, 119, 120, 118, 121, 122/13.03.00/2026-27
Date & Effective
June 17, 2026 (from date of issue)
Signatory
Dr. Sudarsana Sahoo, Chief General Manager
Statutory Power
Section 35A, Banking Regulation Act, 1949
Section 56 additionally for UCBs & Rural Co-op Banks
Amends / Parent
Interest Rate on Deposits Directions, 2025 dated November 28, 2025 (all 6 bank categories)
Relief Window
June 17, 2026 → September 30, 2026
Addressees
All Commercial Banks, SFBs, RRBs, LABs, Urban Co-op Banks, Rural Co-op Banks
📖 Section 1 — Background: Why These Directions Were Needed
India's foreign currency deposit framework for non-residents has historically been governed by interest rate ceilings set by the RBI to balance two competing objectives: attracting foreign currency inflows from the diaspora (NRIs and PIOs) while preventing a destabilising carry-trade dynamic where banks offer rates significantly in excess of market rates, creating artificial demand. The two key instruments in this framework are NRE (Non-Resident External) Rupee deposits and FCNR(B) (Foreign Currency Non-Resident (Banks)) deposits.
Under the Interest Rate on Deposits Directions, 2025 dated November 28, 2025 — the parent directions for all 6 Amendment Directions now being issued — interest rates on NRE deposits were capped at the level of comparable domestic rupee term deposits, and FCNR(B) deposits had a ceiling structured as a spread over the Overnight Alternative Reference Rate (ARR) for the respective currency (or swap rate), with 250 bps for 1-year to sub-3-year tenors and 350 bps for 3-year to 5-year tenors.
🔴 The Problem: Capital Flows Under Pressure
Existing NRE and FCNR(B) rate caps were limiting India's ability to attract long-tenor diaspora deposits at competitive rates, particularly as global interest rates remained elevated and NRIs found comparable or better yields in other jurisdictions.
⚡ The Response: Temporary Ceiling Withdrawal
RBI decided to temporarily lift the rate ceilings on longer-tenor NRE and FCNR(B) deposits — specifically 3 years and above — allowing banks to competitively price these products and attract NRI inflows during the June–September 2026 window.
✅ The Safeguard: NRO Transfer Exclusion
To prevent regulatory arbitrage, the exemption explicitly excludes transfers from NRO accounts to NRE accounts. Only genuinely fresh NRE deposits mobilised directly by banks — including renewals — qualify for the rate freedom.
📂 Section 2 — The 6 Amendment Directions: Bank-Type Reference Table
RBI has issued one separate Amendment Direction for each of the six regulated bank categories it supervises. While the substantive changes are identical across all six, the paragraph numbers amended differ because each bank type has its own dedicated Directions document with its own internal structure. The table below maps each notification to its bank type, reference number, and exact paragraphs amended.
🏦 Section 3 — NRE / NRO Deposit Rate: What Changed
Under Chapter IV (Rupee Deposits of Non-Residents) of the respective Directions, the base rule on NRE/NRO deposit interest rates remains unchanged in its text: "Interest rates on NRE / NRO deposits shall not be higher than those offered by the bank on comparable domestic rupee term deposits." However, each Amendment Direction introduces a Footnote 1 that temporarily carves out an exception to this rule:
"The said restriction with respect to interest rates offered on fresh NRE deposits mobilised by banks, including the deposits that are renewed upon maturity, for three years and above tenors, is temporarily withdrawn with effect from June 17, 2026, for the period until September 30, 2026. Any transfer from NRO accounts to NRE accounts shall not qualify for such exemption."
— Footnote 1 to amended NRE/NRO paragraph (identical in all 6 directions)
🚫 NRO → NRE Transfer: Expressly Excluded
The exemption applies only to fresh NRE deposits directly mobilised by banks (including those renewed at maturity). A transfer of funds from an NRO account into an NRE account does not constitute "fresh NRE deposit mobilisation" for the purpose of this exemption, and such deposits remain subject to the standard domestic rate cap. This anti-abuse safeguard prevents re-labelling of existing NRO balances to benefit from the higher NRE rate.
Importantly, the relaxation applies only to eligible NRE deposits and the specified FCNR(B) tenor band. NRO deposits are not covered by the exemption and continue to remain subject to the normal domestic-rate restriction throughout the relief window.
ℹ️ NRO Deposits Remain Unchanged
The temporary relief applies only to eligible NRE deposits and FCNR(B) deposits covered by the amendment directions. NRO deposits continue to remain subject to the normal domestic-rate restriction without any exemption.
💱 Section 4 — FCNR(B) Deposit Rate: What Changed
Under Chapter V (Foreign Currency Deposits) of the respective Directions, the interest rate ceiling table for FCNR(B) deposits is amended as follows. The table structure remains, but Footnote 2 temporarily suspends the ceiling for the 3-year to 5-year tenor band:
"The interest rate ceiling applicable to fresh FCNR(B) deposits mobilised by banks, including the deposits that are renewed upon maturity, for three years and above-upto and including five years tenors, is temporarily withdrawn with effect from June 17, 2026, for the period until September 30, 2026."
— Footnote 2 to amended FCNR(B) paragraph (identical in all 6 directions)
🔄 Section 5 — Before vs After: Complete Comparison
🔒 Section 6 — What Remains Unchanged
FCNR(B) — Sub-3-Year Ceiling
The ceiling of Overnight ARR / Swap + 250 bps for 1-year to under-3-year FCNR(B) deposits is not withdrawn. It remains fully operative. Banks cannot exceed this ceiling even during the relief window.
NRO Deposits — All Tenors
NRO deposit rates continue to be restricted to the level of comparable domestic rupee term deposits. No exemption has been extended to NRO deposits at any tenor.
NRE Deposits — Sub-3-Year Tenors
The interest rate restriction on NRE deposits of less than 3 years continues to apply without change. Only the 3-year-and-above tenor band is covered by the temporary exemption.
Post-September 30, 2026
All exemptions automatically expire on September 30, 2026. Unless extended or made permanent by a fresh RBI direction, the rate ceilings prescribed in the November 28, 2025 Directions resume in full from October 1, 2026.
Automatic Reversion
From 1 October 2026, the original ceilings under the November 28, 2025 directions resume automatically unless RBI issues a fresh extension or replacement direction.
👥 Section 7 — Impact Analysis: Who Is Affected and How
✅ Section 8 — Compliance Action Points: Role-Specific Checklist
🏦 Treasury / ALCO
☐ Update NRE deposit rate cards for 3-year+ tenors effective June 17, 2026
☐ Update FCNR(B) rate cards — remove 350 bps ceiling for 3–5 year tenors (confirm ARR + 250 bps cap retained for 1yr–<3yr)
☐ Set system-level rate reversion trigger for October 1, 2026
☐ Obtain ALCO/Board approval for revised rate schedule under the relief window
☐ Ensure new deposits maturing post-September 30 honour locked-in contracted rates
📋 Compliance / Legal Team
☐ Record the applicable para number for your bank type (Comm: 27(4)/32(7); SFB/RRB/LAB: 26(4)/31(7); UCB/Rural Co-op: 24(4)/29(7))
☐ Update internal compliance register to reflect temporary nature of exemption (sunset: Sep 30, 2026)
☐ Brief branch network on the NRO-to-NRE transfer exclusion — systems must block elevated rates on such transfers
☐ Update MITC (Most Important Terms and Conditions) for NRE FD and FCNR(B) product literature
💻 IT / Operations
☐ Update deposit booking systems to allow eligible NRE 3-year-plus rates from June 17, 2026
☐ Block elevated rates for NRO-to-NRE transfers
☐ Build automatic rate reversion for October 1, 2026
☐ Update online NRI booking interfaces and branch rate sheets
📊 Internal Audit
☐ Verify all NRE deposits of 3-year+ tenors booked during June 17 – Sep 30, 2026 comply with the relaxed but correctly documented rate framework
☐ Audit that no NRO-to-NRE transfer has been incorrectly given the higher NRE rate
☐ Verify FCNR(B) sub-3-year deposits continue to be booked within the ARR + 250 bps ceiling (not affected by relief)
☐ Check for rates reverting correctly for deposits booked after Sep 30, 2026
🌍 NRI Banking / Relationship Managers
☐ Proactively reach out to existing NRI customers about the limited-window rate opportunity (3+ year NRE FDs)
☐ Clearly communicate to NRI customers that this is a temporary measure expiring Sep 30, 2026
☐ Do not offer relaxed NRE rates to customers seeking to transfer funds from NRO accounts — that route is excluded
☐ Present FCNR(B) 3–5 year deposit product at competitive market rates under the relaxed ceiling
📅 Section 9 — Key Dates at a Glance
Nov 28, 2025
Parent Directions issued
(Interest Rate on Deposits Directions, 2025)
Jun 17, 2026
Relief starts
6 Amendment Directions issued
Sep 30, 2026
Relief expires
Original ceilings resume from Oct 1
Key Takeaway
This is a temporary RBI relief window that only changes pricing flexibility for specific long-tenor NRE and FCNR(B) deposits. The core domestic-rate framework remains in place for all other cases.
📎 Sources & Legal References
• RBI/2026-27/138 | DOR.SOG(SPE).REC.117/13.03.00/2026-27 | June 17, 2026 — Commercial Banks – Interest Rate on Deposits Amendment Directions, 2026
• RBI/2026-27/139 | DOR.SOG(SPE).REC.119/13.03.00/2026-27 | June 17, 2026 — Small Finance Banks – Interest Rate on Deposits Amendment Directions, 2026
• RBI/2026-27/140 | DOR.SOG(SPE).REC.120/13.03.00/2026-27 | June 17, 2026 — Regional Rural Banks – Interest Rate on Deposits Amendment Directions, 2026
• RBI/2026-27/141 | DOR.SOG(SPE).REC.118/13.03.00/2026-27 | June 17, 2026 — Local Area Banks – Interest Rate on Deposits Amendment Directions, 2026
• RBI/2026-27/142 | DOR.SOG(SPE).REC.121/13.03.00/2026-27 | June 17, 2026 — Urban Co-operative Banks – Interest Rate on Deposits Amendment Directions, 2026
• RBI/2026-27/143 | DOR.SOG(SPE).REC.122/13.03.00/2026-27 | June 17, 2026 — Rural Co-operative Banks – Interest Rate on Deposits Amendment Directions, 2026
• Parent Directions: RBI (Commercial Banks — Interest Rate on Deposits) Directions, 2025 dated November 28, 2025 (and equivalent for each bank type)
• Statutory Authority: Section 35A, Banking Regulation Act, 1949 | Section 56, Banking Regulation Act, 1949 (for co-operative banks)
This article is for informational and compliance reference purposes only. It does not constitute legal or financial advice. Banks should refer to the original RBI directions available at rbi.org.in for implementation purposes.
