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RBI raises loan limit against NRE/FCNR deposits to Rs 100 lakh

Current · Source: Reserve Bank of India · RBI/2008-09/462 · issued 28 Apr 2009 · ~2 min read
Quick answerRBI has increased the maximum loan against NRE/FCNR(B) deposits from Rs 20 lakh to Rs 100 lakh for depositors or third parties, effective immediately. Banks must not artificially split loans to bypass this cap.
The rule, in the simplest words
How it plays out — a real example

Rohit Sharma, a loan officer at State Bank of India in Mumbai, receives a request from Mr. Patel, who has an NRE account, for a Rs 80 lakh loan. Rohit approves the loan in one go, checks that it stays below the Rs 100 lakh limit, and makes sure he does not split it into multiple smaller loans, keeping everything clear and compliant.

What changed

The ceiling on loans against NR(E)RA and FCNR(B) deposits has been raised from Rs 20 lakh to Rs 100 lakh. This change, announced in the Annual Policy Statement 2009-10, applies to both depositors and third parties. The prohibition on artificial slicing of loan amounts to circumvent the limit remains in place.

What it means for you

Banks can now offer larger loans secured by NRE/FCNR deposits, potentially boosting credit uptake from non-resident customers. This may increase demand for such deposit products as collateral. Lenders must ensure strict adherence to the Rs 100 lakh cap and avoid any structuring of loans to evade the limit.

What you must do

Who it affects

All Category-I Authorised Dealer banks, Authorised banks handling NRE/FCNR deposits, Non-resident depositors with NR(E)RA or FCNR(B) accounts, Third parties seeking loans against such deposits

❓ Common questions

Does the new Rs 100 lakh limit apply to both fresh loans and renewals?

Yes, the circular states that banks may now grant loans against these deposits up to Rs 100 lakh, covering both new loans and renewals of existing ones.

Can a bank split a Rs 150 lakh loan into two parts to stay under the cap?

No, the circular explicitly advises banks not to undertake artificial slicing of the loan amount to circumvent the ceiling.

When does this change take effect?

The instructions come into force with immediate effect from the date of the circular, April 28, 2009.

📜 Read the original circular — full text as issued by RBI
Attention of Authorised Dealer Category - I banks and Authorised banks (the banks) is invited to Para 6 (a), (b), (c) and (d) of Schedule 1 and Para 9 of Schedule 2 to Foreign Exchange Management (Deposit) Regulations, 2000 notified vide Notification No. FEMA 5 / 2000-RB dated May 3, 2000, as amended from time to time regarding loans against security of funds held in deposit accounts. Further, attention of the banks is also invited to A. P. (DIR Series) Circular No.29 dated January 31, 2007 prohibiting banks from granting fresh loans or renewing existing loans in excess of Rs.20 lakh against NR(E)RA and FCNR(B) deposits either to the depositors or third parties. The banks were also advised not to undertake artificial slicing of the loan amount to circumvent the ceiling. 2. As announced in Para 111 of the Annual Policy Statement 2009-10 , it has been decided to enhance the existing cap of Rs.20 lakh to Rs.100 lakh on loans against security of funds held in  NR(E)RA and FCNR(B) deposits either to the depositors or third parties. 3.Accordingly, the banks may now grant loans against NR(E)RA and FCNR(B) deposits either to the depositors or third parties up to a maximum limit of Rs.100 lakh. The banks are also advised not to undertake artificial slicing of the loan amount to circumvent the aforesaid ceiling. 4.The above instructions shall come into force with immediate effect. 5.The banks may bring the contents of this circular to the notice of their constituents and customers concerned.  6. The directions contained in this circular have been issued under sections 10(4) and 11 (1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and is without prejudice to permissions/approvals, if any, required under any other law. Yours faithfully, (Salim Gangadharan) Chief General Manager-in-Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2008-09/462 · issued 28 Apr 2009. The plain-English explanation above is BankPulse’s own independent summary.
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Who does what — compliance checklist
💻 IT / Systems
  • Update internal loan policies and systems to reflect the new Rs 100 lakh limit for loans against NR(E)RA and FCNR(B) deposits.
  • Communicate the change to customers holding NRE/FCNR deposits to encourage loan applications.
📜 Compliance
  • Train staff on the revised ceiling and reinforce the prohibition on artificial slicing of loan amounts.
  • Review existing loan portfolios to ensure compliance with the new limit and adjust any loans exceeding Rs 100 lakh.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template

Example: if you are an IT/Systems lead at a bank this circular applies to (All Category-I Authorised Dealer banks, Authorised banks handling NRE/FCNR deposits, Non-resident depositors with NR(E)RA or FCNR(B) accounts, Third parties seeking loans against such deposits), your first concrete step on “RBI raises loan limit against NRE/FCNR deposits to Rs 100 lakh” is: “Update internal loan policies and systems to reflect the new Rs 100 lakh limit for loans against NR(E)RA and FCNR(B) deposits.” (RBI issued this 28 Apr 2009).

  1. Circular: RBI/2008-09/462 -- RBI raises loan limit against NRE/FCNR deposits to Rs 100 lakh
  2. Issued: 28 Apr 2009
  3. Action required: Update internal loan policies and systems to reflect the new Rs 100 lakh limit for loans against NR(E)RA and FCNR(B) deposits.
  4. Action required: Train staff on the revised ceiling and reinforce the prohibition on artificial slicing of loan amounts.
  5. Action required: Communicate the change to customers holding NRE/FCNR deposits to encourage loan applications.
  6. Action required: Review existing loan portfolios to ensure compliance with the new limit and adjust any loans exceeding Rs 100 lakh.
  7. Owner: ____________ Target date: ____________
  8. Board/committee approval needed? Y / N
  9. Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.

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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=4960&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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