What changed
The ceiling rate for FCNR(B) deposits of all maturities was increased from LIBOR/SWAP minus 75 basis points to LIBOR/SWAP minus 25 basis points, effective from the close of business on September 16, 2008. For floating rate deposits, the ceiling is now SWAP rates minus 25 bps, with a six-month interest reset period.
What it means for you
Regional Rural Banks must now apply the new ceiling of LIBOR/SWAP minus 25 bps for FCNR(B) deposits of all maturities, replacing the previous ceiling of minus 75 bps. Floating rate deposits are subject to a SWAP minus 25 bps ceiling with a six-month reset period.
What you must do
- Update FCNR(B) deposit interest rate slabs to reflect the new ceiling of LIBOR/SWAP minus 25 bps for all maturities.
- Ensure floating rate deposits have a six-month reset period and adhere to the SWAP minus 25 bps ceiling.
- Communicate the revised rates to branch managers and treasury teams for immediate implementation.
- Review deposit pricing strategy to balance competitiveness with margin management.
Who it affects
Regional Rural Banks, Non-resident depositors holding FCNR(B) accounts, Treasury and deposit operations teams at RRBs
What is the effective date for the new FCNR(B) interest rate ceiling?
The revised ceiling applies to deposits contracted from the close of business in India on September 16, 2008.
How does this change affect floating rate FCNR(B) deposits?
Floating rate deposits now have a ceiling of SWAP rates minus 25 basis points, with a mandatory six-month interest reset period.