The Reserve Bank of India (RBI) has temporarily withdrawn interest rate restrictions on select NRI deposits mobilised by Urban Cooperative Banks (UCBs) and Rural Cooperative Banks until September 30, 2026, providing lenders greater flexibility to attract overseas funds.
Under the revised norms, cooperative banks can now offer interest rates on fresh Non-Resident External (NRE) deposits with maturities of three years and above, including deposits renewed upon maturity, without being subject to the earlier restriction that capped rates at levels offered on comparable domestic rupee term deposits.
The RBI has also temporarily removed the interest rate ceiling on fresh Foreign Currency Non-Resident [FCNR(B)] deposits with maturities of more than three years and up to five years, including renewed deposits.
Earlier, these deposits were subject to RBI-prescribed ceilings linked to international benchmark rates and swap rates.
The relaxation, effective from June 17 to September 30, 2026, is expected to help cooperative banks strengthen deposit mobilisation, improve access to overseas funds, and compete more effectively for NRI deposits. However, transfers from Non-Resident Ordinary (NRO) accounts to NRE accounts will not qualify for the exemption.