Revised NRE Deposit Interest Rate Ceiling for UCBs
No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2005-06/216 · issued 22 Nov 2005 · ~1 min read
Quick answerRBI revised NRE deposit interest rates for Urban Co-operative Banks effective close of business on Nov 17, 2005. Savings accounts now earn domestic savings rate. Term deposit rates capped at LIBOR/SWAP plus 75 bps (up from 50 bps). Renewals of term deposits after maturity also covered.
What changed
RBI increased the interest rate ceiling on fresh NRE term deposits (1-3 years) from LIBOR/SWAP plus 50 basis points to plus 75 basis points. For NRE savings accounts, the rate was changed from LIBOR/SWAP-based to the domestic savings deposit rate. These changes apply to renewals of term deposits after their present maturity period.
What it means for you
Urban Co-operative Banks can now offer slightly higher rates on NRE term deposits, making them more competitive for attracting NRE funds. The shift to domestic savings rate for NRE savings accounts simplifies pricing but may reduce returns for depositors. Banks must monitor LIBOR/SWAP rates monthly to set compliant ceilings.
Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.
What banks were required to do at the time
Update NRE deposit interest rate slabs for savings and term deposits effective close of business on Nov 17, 2005.
Ensure term deposit rates for 1-3 years do not exceed LIBOR/SWAP plus 75 bps as of last working day of previous month.
Apply the same ceiling (as for 3-year deposits) to NRE deposits with maturity over 3 years.
Communicate revised rates to branches and update system parameters for renewals of term deposits.
Review and align internal circulars with the amending directive UBD.No.Dir.1/13.01.000/05-06.
Who it affects
All Primary (Urban) Co-operative Banks, NRE depositors, Treasury and deposit operations teams
📜 Read the original circular — full text as issued by RBI
RBI/2005-06/216
UBD.PCB. No. Cir17 /13.01.000/2005-06
November 22, 2005
The Chief Executive Officers of All Primary (urban) Co-operative Banks
Dear Sir/Madam,
Interest Rate on Non-Resident (External) Rupee (NRE) Deposits
Please refer to our circular UBD.PCB.Cir 27/13.01.00/04-05 forwarding therewith directive UBD.No. Dir 1/13.01.00/04-05 dated 01.11.2004 on the above subject. We advise that on a review, it has been decided that until further notice and with effect from close of business in India on November 17, 2005, the interest rates on Non-Resident (External) Rupee (NRE) Savings and Term Deposits will be as under:
(i) NRE Savings Account
The interest rates on NRE Savings deposit accounts shall be at the rate applicable to domestic savings deposits (as against LIBOR/ SWAP rate for six months maturity on US dollar deposits).
(ii) Term Deposits
The interest rates on fresh repatriable Non-Resident (External) Rupee (NRE) Term deposits for one to three years should not exceed the LIBOR/SWAP rates, as on the last working day of the previous month, for US dollar of corresponding maturity plus 75 basis points (as against 50 basis points effective since November 1, 2004) . The interest rates as determined above for three year deposits should also be applicable in case the maturity period exceeds three years. The changes in interest rates will also apply to NRE deposits renewed after their present maturity period.
2. The other instructions issued in this regard shall remain unchanged. An amending directive UBD.No.Dir.1/13.01.000/05-06 dated 22.11.2005 is enclosed.
Yours faithfully
(N.S.Vishwanathan)
Chief General Manager-in-charge
UBD.No.Dir. 1 /13.01.000/2005-06
November 22, 2005
Interest Rate on Non-Resident (External) Rupee (NRE) Deposits
In exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949 (AACS) and in partial modification of directive UBD.No. Dir 1/13.01.00/ 04-05 dated 01.11.2004 on Interest Rates on Non Resident (External) Rupee (NRE) deposits, the Reserve Bank of India being satisfied that it is necessary and expedient in the public interest so to do, hereby effects the under noted changes in the interest rates on NRE deposits.
(i) NRE Savings Account
"The interest rates on NRE Savings deposit accounts shall be at the rate applicable to domestic savings deposit accounts (as against LIBOR/SWAP rate for six months maturity on US dollar deposits), effective close of business in India on November 17, 2005".
(ii) NRE Term Deposits
"The interest rates on Non-Resident (External) Rupee (NRE) deposits for one to three years maturity contracted with effect from close of business in India on November 17, 2005 shall not exceed the LIBOR/ SWAP rates of the last working day of the previous month for US dollar of corresponding maturities plus 75 basis points . The interest rate as determined above shall also be applicable in case the maturity period exceeds three years. The above changes in interest rates will also apply to NRE term deposits renewed after their present maturity period".
(V.S Das)
Executive Director
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2005-06/216 · issued 22 Nov 2005. The plain-English explanation above is BankPulse’s own independent summary.
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BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=2630&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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