FCNR(B) Deposit Rate Ceiling Revised to LIBOR/SWAP Minus 25 bps
No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2008-09/172 · issued 17 Sep 2008 · ~1 min read
Quick answerRBI has raised the interest rate ceiling on FCNR(B) deposits from LIBOR/SWAP minus 75 bps to minus 25 bps, effective September 16, 2008. This allows banks to offer higher rates on these foreign currency deposits.
What changed
The ceiling rate for FCNR(B) deposits of all maturities was increased from LIBOR/SWAP rates minus 75 basis points to minus 25 basis points. For floating rate deposits, the ceiling is now SWAP rates minus 25 bps, with a six-month reset period.
What it means for you
Banks can now offer more competitive rates on FCNR(B) deposits, potentially attracting more foreign currency inflows. This change gives lenders greater flexibility to price deposits closer to market rates, which may improve their ability to raise foreign currency funds.
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 your FCNR(B) deposit interest rate slabs to reflect the new ceiling of LIBOR/SWAP minus 25 bps.
Communicate the revised rates to your treasury and branch operations teams immediately.
Ensure floating rate deposit contracts specify a six-month interest reset period as mandated.
Review your current FCNR(B) portfolio to assess the impact on funding costs and margins.
📜 Read the original circular — full text as issued by RBI
RBI/2008-09/172
RPCD.CO.RF.BC.No.31/ 07.38.01/2008-09
September 17, 2008
The Managing Director
Maharashtra State Co-operative Bank Ltd.
9, Nagindas Master Road Extension, Fort
Mumbai-1
Dear Sir,
Interest Rate on FCNR(B) Deposits
Please refer to our circular RPCD.CO.RF.BC.No.81/07.38.01/2006-07 dated April 26, 2007 on Interest Rate on FCNR(B) Deposits. On a review, it has been decided that until further notice and with effect from the close of business in India as on September 16, 2008, the interest rates on FCNR(B) Deposits will be as under:
In respect of FCNR(B) deposits of all maturities contracted effective from the close of business in India as on September 16, 2008, interest shall be paid within the ceiling rate of LIBOR / SWAP rates minus 25 basis points for the respective currency / corresponding maturities (as against LIBOR /SWAP rates minus 75 basis points effective from close of business on April 24, 2007). On floating rate deposits, interest shall be paid within the ceiling of SWAP rates for the respective currency / maturity minus 25 basis points. For floating rate deposits, the interest reset period shall be six months.
2. An amending Directive RPCD.CO.RF.BC.Dir.No.30/07.38.01/2008-09 dated September 17, 2008 is enclosed.
Yours faithfully,
(B.P.Vijayendra)
Chief General Manager
RPCD.CO.RF.BC. Dir.No.30/07.38.01/2008-09
September 17, 2008
Foreign Currency (Non-Resident) Accounts (Banks) Scheme
In exercise of the powers conferred by Section 35 A of the Banking Regulation Act, 1949 (As Applicable to Co-operative Societies), the Reserve Bank of India, being satisfied that it is necessary and expedient in the public interest so to do, hereby directs the following:
Interest rates applicable to deposits accepted under Foreign Currency Non-Resident Accounts (Banks) Scheme
In respect of FCNR(B) deposits of all maturities contracted effective from the close of business in India as on September 16, 2008, interest shall be paid within the ceiling rate of LIBOR / SWAP rates minus 25 basis points for the respective currency / corresponding maturities (as against LIBOR / SWAP rates minus 75 basis points effective from close of business on April 24, 2007). On floating rate deposits, interest shall be paid within the ceiling of SWAP rates for the respective currency / maturity minus 25 basis points. For floating rate deposits, the interest reset period shall be six months.
(V.S.Das)
Executive Director
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2008-09/172 · issued 17 Sep 2008. 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=4478&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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