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RBI Hikes NRE Deposit Rate Cap for UCBs to LIBOR+175 bps

No longer current — withdrawn, no replacement on file yet

Source: Reserve Bank of India · RBI/2008-09/293 · issued 17 Nov 2008 · ~2 min read

Quick answerRBI raised the maximum interest rate on fresh NRE term deposits (1-3 year maturity) for Urban Cooperative Banks from LIBOR/SWAP plus 100 bps to plus 175 bps, effective November 15, 2008. This applies to renewals too.

What changed

The ceiling on NRE term deposit rates for UCBs was increased from LIBOR/SWAP plus 100 basis points to plus 175 basis points for 1-3 year maturities. The new cap took effect from close of business on November 15, 2008, and also applies to deposits exceeding three years and renewals.

What it means for you

UCBs can now offer higher rates on NRE deposits, making them more competitive for attracting NRI funds. This move likely aimed to stem outflows or boost foreign currency inflows during the 2008 financial crisis. Banks need to recalibrate their NRE deposit pricing strategies within the new ceiling.

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 term deposit interest rate slabs to ensure they do not exceed LIBOR/SWAP plus 175 bps for 1-3 year maturities.
Apply the new ceiling to all fresh NRE deposits booked from November 15, 2008, and to renewals of existing deposits.
Communicate the revised rate structure to branches and NRI customers promptly.
Monitor LIBOR/SWAP rates monthly to compute the applicable ceiling for the following month.

Who it affects

All Primary (Urban) Cooperative Banks, NRI depositors holding NRE accounts with UCBs, Treasury and deposit pricing teams at UCBs

❓ Common questions

Regulatory timeline

Stated effective date effective November 15, 2008
Decoded by BankPulse 2026-06-19 11:35 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Status change: withdrawn 05 Aug 2026, 04:00 IST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).

Does the new rate cap apply to NRE deposits with maturity beyond three years?

Yes, the circular specifies that the rate determined for three-year deposits will also apply to deposits with maturity exceeding three years.

Are existing NRE deposits affected by this change?

The new ceiling applies to fresh deposits booked after November 15, 2008, and to renewals of existing deposits upon maturity. Existing deposits before that date are not affected.

How is the LIBOR/SWAP rate determined for computing the ceiling?

The ceiling is based on the LIBOR/SWAP rates for US dollar of corresponding maturities as on the last working day of the previous month.

📜 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 #2032: UBD.(PCB).CO.BPD.Cir.No.25/13.01.000/2008-09 — "Interest Rates on Non-Resident (External) Rupee (NRE) Deposits - UCBs" dated November 17, 2008”

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

RBI/2008-09/293
 UBD (PCB) CO BPD Cir No. 25 /13.01.000/2008-09
 November 17, 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: 22/13.01.000/2008-09 dated October 16, 2008  on the captioned subject.
 2. In view of the prevailing market conditions, it has been decided that until further notice and with effect from close of business in India as on November 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 175 basis points, as on the last working day of the previous month, for US dollar of corresponding maturities (as against LIBOR / SWAP rates plus 100 basis points effective from the close of business on October 15, 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,
 ( Sathyan David )
 General Manager
 UBD.No.Dir 8 /13.01.000/2008-09
 November 15, 2008
 Interest Rates on Deposits held in Non-Resident (External) Rupee (NRE) Deposits 
 In exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949, and in modification of the directive UBD.No.Dir 4/13.03.00/2008-09 dated October 15, 2008 on Interest Rates on Deposits held in Non-Resident (External) (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 November 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 175 basis points, as on the last working day of the previous month, for US dollar of corresponding maturities (as against LIBOR / SWAP rates plus 100 basis points effective from the close of business on October 15, 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".
 (Anand Sinha) 
 Executive Director

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2008-09/293 · issued 17 Nov 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=4655&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.