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RBI Eases NRE Deposit Rate Cap for UCBs to 100 bps Over LIBOR/SWAP

No longer current — withdrawn, no replacement on file yet

Source: Reserve Bank of India · RBI/2008-09/237 · issued 16 Oct 2008 · ~2 min read

Quick answerRBI has raised the ceiling on NRE term deposit rates for Urban Cooperative Banks from LIBOR/SWAP plus 50 bps to plus 100 bps, effective October 15, 2008. This applies to fresh deposits of 1-3 year maturities and renewals, giving UCBs more room to attract NRI funds.

What changed

RBI revised the interest rate cap on fresh NRE term deposits for UCBs from LIBOR/SWAP plus 50 basis points to plus 100 basis points, effective from close of business on October 15, 2008. The new ceiling applies to deposits with maturities of one to three years, and the rate for three-year deposits also applies to longer maturities. The change also covers renewals of existing NRE deposits after their maturity.

What it means for you

UCBs can now offer up to 100 bps over the corresponding LIBOR/SWAP rate on NRE deposits, doubling the previous spread. This allows them to compete more aggressively for NRI deposits, potentially improving their liability franchise. However, the higher cost of funds may pressure net interest margins if not matched with profitable deployment.

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 NRE deposit product pricing to align with the new ceiling of LIBOR/SWAP plus 100 bps.
Communicate the revised rates to branches and ensure compliance with the directive for fresh deposits and renewals.
Monitor LIBOR/SWAP rates monthly to set competitive yet compliant rates.
Review your NRE deposit portfolio to assess the impact on cost of funds and margins.

Who it affects

All Primary (Urban) Cooperative Banks (UCBs), NRI depositors with UCBs, Treasury and ALM teams at UCBs

❓ Common questions

Regulatory timeline

Stated effective date effective October 15, 2008
Decoded by BankPulse 2026-06-19 11:59 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Status change: withdrawn 05 Aug 2026, 04:00 IST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 deposits at UCBs?

Effective October 15, 2008, the ceiling is LIBOR/SWAP rates plus 100 basis points for US dollar of corresponding maturities, up from the earlier 50 bps.

Does this apply to all NRE deposit tenures?

The directive specifically covers fresh term deposits of one to three years. For maturities beyond three years, the rate determined for three-year deposits applies.

Are existing NRE deposits affected?

Yes, the new ceiling applies to renewals of existing NRE deposits after their present maturity period.

📜 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 #2063: UBD(PCB) CO BPD Cir No:22/13.01.000/2008-09 — "Interest Rates on Non-Resident (External) Rupee (NRE) Deposits - UCBs" dated October 16, 2008”

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

RBI/2008-09/237 
 UBD (PCB) CO BPD Cir No: 22 /13.01.000/2008-09 
 October 16, 2008 
 Chief Executive Officer of 
 All Primary (urban) Cooperative Banks 
 Dear Sir/Madam, 
 Interest Rates on Non-Resident (External) Rupee (NRE) Deposits- UCBs 
 Please refer to our circular  UBD (PCB) CO BPD Cir No: 16/13.01.000/2008-09 dated September 19, 2008  on the captioned subject.
 2. On a review, it has been decided that until further notice and with effect from close of business in India as on October 15, 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 100 basis points, as on the last working day of the previous month, for US dollar of corresponding maturities (as against LIBOR /SWAP rates plus 50 basis points effective from close of business on Sept 16, 2008). 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.
 3. A  directive  to this effect is enclosed. All other terms and conditions applicable to NRI deposits remain unchanged.
 4. Please acknowledge receipt to our Regional Office concerned.
 Yours faithfully,
 (A. K. Khound) 
 Chief General Manager in-Charge
 UBD.No.Dir.4 /13.01.000/2008-09 
 October 15, 2008 
 Interest Rate on Non-Resident (External) Rupee (NRE) Deposits 
 In exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949 (As Applicable to Co-operative Societies) and in modification of the directive UBD.No.Dir.1 /13.01.000/2008-09 dated September 16, 2008 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 directs that Interest Rates on Non-Resident (External) Rupee (NRE) deposits shall be as under:
 " With effect from the close of business as on October 15, 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 100 basis points, as on the last working day of the previous month, for US dollar of corresponding maturities (as against LIBOR / SWAP rates plus 50 basis points effective from the close of business on September 16, 2008). 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/2008-09/237 · issued 16 Oct 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=4551&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.