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RBI Caps NRE Deposit Rates at LIBOR/SWAP + 50 bps

No longer current — withdrawn, no replacement on file yet

Source: Reserve Bank of India · RBI/2008-09/179 · issued 18 Sep 2008 · ~2 min read

Quick answerRBI capped NRE term deposit rates for 1-3 year maturities at LIBOR/SWAP plus 50 bps, effective September 16, 2008. This replaces the earlier April 2007 benchmark and applies to fresh deposits and renewals.

What changed

RBI revised the interest rate ceiling on NRE term deposits from the earlier LIBOR/SWAP rates effective April 24, 2007, to a new formula: LIBOR/SWAP plus 50 bps for 1-3 year maturities, effective from close of business on September 16, 2008. The same cap applies for maturities beyond three years. The change also covers renewals of existing NRE deposits.

What it means for you

Banks must now ensure NRE deposit rates for 1-3 year tenors do not exceed the previous month's last working day LIBOR/SWAP for corresponding US dollar maturities plus 50 bps. This tightens the pricing benchmark, potentially lowering deposit costs for banks but making NRE deposits less attractive to NRIs compared to earlier higher rates. All other existing instructions remain unchanged.

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 rate slabs for 1-3 year tenors to comply with the new LIBOR/SWAP plus 50 bps ceiling effective September 16, 2008.
Apply the same cap to NRE deposits with maturities over three years using the three-year rate.
Ensure renewal rates for existing NRE deposits also adhere to the new ceiling.
Communicate the revised rate structure to branch staff and NRE deposit customers.

Who it affects

Regional Rural Banks, All banks offering NRE deposit accounts, NRI depositors with NRE term deposits

❓ Common questions

Regulatory timeline

Stated effective date effective September 16, 2008
Decoded by BankPulse 2026-06-19 12:32 IST
repealed_by — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
Status change: withdrawn 05 Aug 2026, 04:00 IST

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

What is the new interest rate ceiling for NRE term deposits?

For 1-3 year maturities, the rate must not exceed LIBOR/SWAP rates plus 50 basis points for US dollar of corresponding maturities, as on the last working day of the previous month.

Does this apply to deposits with maturities beyond three years?

Yes, the rate determined for three-year deposits also applies to maturities exceeding three years.

When did this change take effect?

The new rates are effective from close of business in India as on September 16, 2008.

📜 This document’s life story (1 recorded event, each backed by RBI’s own words)

Repealed by RBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)

RBI’s words: “Official withdrawal register entry #2105: RPCD.CO.RRB.Dir.No.32/03.05.33©/2008-09 — "Interest Rate on Non-Resident (External) Rupee (NRE) Deposits" dated September 18, 2008”

📜 Read the original circular — full text as issued by RBI

RBI/2008-09/179
 RPCD.No.RRB.BC.33/03.05.33©/2008-09 
 September 18, 2008 
 All Regional Rural Banks 
 Dear Sir,

 Interest Rate on Non-Resident (External) Rupee (NRE) Deposits 

 Please refer to our  Circular RPCD.No.RRB.BC.82/03.05.33©/2006-07 dated April 26, 2007  on Interest Rates on NRE Rupee Deposits. On a review, it has been decided that until further notice and with effect from close of business in India as on September 16,2008, the interest rates on Non-Resident (External) Rupee (NRE) Term Deposits will be as under:

 The interest rates on fresh Non-Resident (External) Rupee (NRE) Term deposits for one to three years' maturity should not exceed the LIBOR/SWAP rates plus 50 basis points, as on the last working day of the previous month, for US dollar of corresponding maturities (as against LIBOR / SWAP rates effective from close of business on April 24, 2007). The interest rates as determined above for three year deposits will also be applicable in case the maturity period exceeds three years. The change in interest rates will also apply to NRE deposits renewed after their present maturity period.

 2. All other instructions issued earlier shall remain unchanged. An amending directive  RPCD.CO.RRB.Dir.No.32/03.05.33©/2008-09 dated September 18, 2008  is enclosed.

 Yours faithfully,

 (G.Srinivasan)
 Chief General Manager-in-Charge
 RPCD.CO.RRB Dir.No.32/03.05.33©/2008-09 
 September 18, 2008 
 Interest Rate on Non-Resident (External) Rupee (NRE) Deposits 
 In exercise of the powers conferred by Section 35 A of the Banking Regulation Act, 1949 and in partial modification of Directive RPCD No.Dir.10053/03.05.33©/2006-07 dated April 26, 2007, as amended from time to time, on Interest Rates on Deposits, the Reserve Bank of India being satisfied that it is necessary and expedient in the public interest so to do, hereby directs undernoted changes in the interest rates on Non-Resident (External) Rupee (NRE) deposits:

 "With effect from the close of business as on September 16, 2008, the interest rates on fresh Non-Resident (External) Rupee (NRE) Term deposits for one to three years' maturity should not exceed the LIBOR /SWAP rates plus 50 basis points, as on the last working day of the previous month, for US dollar of corresponding maturities (as against LIBOR /SWAP rates effective from close of business on April 24, 2007). The interest rates as determined above for three year deposits will 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."
 (V.S.Das)
 Executive Director

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2008-09/179 · issued 18 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=4479&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.