Home › Circulars › RBI/2011-12/535

FCNR(B) Deposit Rates Hiked: Up to 300 bps Over LIBOR

Current · Source: Reserve Bank of India · RBI/2011-12/535 · issued 04 May 2012 · ~2 min read

Quick answerRBI raised FCNR(B) deposit interest ceilings from LIBOR/Swap plus 125 bps to 200 bps (1-3 years) and 300 bps (3-5 years), effective May 4, 2012. Floating rate deposits have a six-month reset period. This aims to attract foreign currency inflows.

The rule, in the simplest words

Banks can offer higher interest rates on FCNR(B) deposits, up to 200 bps [basis points, a unit of measurement for interest rates] over LIBOR [London Interbank Offered Rate, a benchmark interest rate] for 1-3 years and 300 bps over LIBOR for 3-5 years
Floating rate deposits must reset their interest rates every six months
This change aims to attract more foreign currency deposits from Non-Resident Indians (NRIs) and increase foreign currency inflows
Banks' cost of funds for these deposits may increase, but they will have more flexibility to compete for non-resident deposits

How it plays out — a real example

A foreign currency deposit officer in Mumbai can now offer higher interest rates to Non-Resident Indian customers, making FCNR(B) deposits more attractive to them. For instance, if the current LIBOR rate is 2%, the officer can offer an interest rate of up to 4% (2% + 200 bps) for a 2-year deposit, which could lead to an increase in foreign currency deposits and help the bank manage its foreign currency liquidity needs.

What changed

RBI revised the maximum interest rates on FCNR(B) deposits upward. For maturities of 1 year to less than 3 years, the ceiling increased from LIBOR/Swap plus 125 bps to plus 200 bps. For 3-5 year tenors, the ceiling rose from plus 125 bps to plus 300 bps. Floating rate deposits must reset every six months within these new caps.

What it means for you

Banks can now offer higher rates on FCNR(B) deposits, making them more attractive to NRIs and potentially boosting foreign currency inflows. This may increase banks' cost of funds for these deposits but also provides more flexibility to compete for non-resident deposits. The higher spreads could help banks manage their foreign currency liquidity needs.

What you must do

Update FCNR(B) deposit interest rate slabs to reflect new ceilings: 200 bps over LIBOR/Swap for 1-3 years and 300 bps for 3-5 years.
Ensure floating rate FCNR(B) deposits have a six-month interest reset period as mandated.
Review foreign currency lending from FCNR(B) funds, especially for PCFC/EBR and export capability loans, to align with revised deposit costs.
Communicate revised rates to branches and NRI customers to attract fresh deposits.

Who it affects

All Scheduled Commercial Banks (excluding RRBs) offering FCNR(B) accounts, NRI depositors holding or considering FCNR(B) deposits, Banks' treasury and foreign currency liability management teams, Exporters and entities availing foreign currency loans from FCNR(B) funds

❓ Common questions

Regulatory timeline

Stated effective date effective May 4, 2012
Decoded by BankPulse 2026-06-18 20:35 IST

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

What are the new interest rate ceilings for FCNR(B) deposits?

For deposits with maturity of 1 year to less than 3 years, the ceiling is LIBOR/Swap plus 200 basis points. For 3 to 5 years, it is LIBOR/Swap plus 300 basis points. Floating rate deposits must stay within these caps and reset every six months.

Can banks lend foreign currency from FCNR(B) deposits?

Yes, banks may extend foreign currency loans from FCNR(B) deposits as Pre-shipment Credit in Foreign Currency (PCFC) or Rediscounting of Export Bills Abroad (EBR) to exporters and other entities with natural hedge or a risk management policy for exchange risk.

When did these revised rates take effect?

The changes became effective from the close of business in India on May 4, 2012, and remain until further notice.

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

Notifications - Reserve Bank of India Skip to main content Selected Selected Change Language हिंदी Search the Website Search Home About Us ▼ About Us Organisation & Functions ▶ Organisation Structure Departments Offices Training Establishment ▶ College of Agricultural Banking Reserve Bank Staff College College of Supervisors RBI's Functions and Working Governors Deputy Governors Executive Directors Communication Policy of RBI Sources of Information ▶ Annual Publications Half-yearly Publications Quarterly Publications Monthly Publications Weekly Publications Occasional Publications SDDS NSDP Data Releases Publications available on Subscription General Information RBI History Museum ▶ The RBI Museum RBI Monetary Museum Notification ▼ Notifications Master Directions Master Circulars Amendment Directions Draft Notifications/Guidelines ▶ Draft Notifications/Guidelines Draft Directions (RE-wise) Index To RBI Circulars Standalone Circulars Circulars Withdrawn Press Releases Speeches & Media Interactions ▼ Speeches Media Interactions Memorial Lectures Podcasts Publications ▼ Biennial Annual Half-Yearly Quarterly Bi-monthly Monthly Weekly Occasional Reports Working Papers Legal Framework ▼ Act Rules Regulations Schemes Research ▼ External Research Schemes RBI Occasional Papers Working Papers RBI Bulletin History DRG Studies KLEMS State Statistics and Finances Statistics ▼ Data Releases Database on Indian Economy Public Debt Statistics Regulatory Reporting ▼ List of Returns Data Definition Validation rules/ Taxonomy List of RBI Reporting Portals FAQs of RBI Reporting Portals Home Notifications Notifications ( 131 kb ) Interest Rates on FCNR(B) Deposits RBI/2011-12/535 DBOD.Dir.BC. 102/13.03.00/2011-12 May 4, 2012 All Scheduled Commercial Banks (excluding RRBs) Dear Sir/Madam Interest Rates on FCNR(B) Deposits Please refer to paragraph 2 of our circular No.DBOD.Dir.BC.59/13.03.00/2011-12 dated November 23, 2011 on Interest Rates on Deposits held in FCNR(B) Accounts. In view of the prevailing market conditions, it has been decided that until further notice and with effect from the close of business in India as on May 4, 2012, the interest rates on FCNR(B) Deposits will be as under: Maturity Period Existing Revised 1 year to less than 3 years LIBOR/Swap plus 125 basis points LIBOR/Swap plus 200 basis points 3 - 5 years LIBOR/Swap plus 125 basis points LIBOR/Swap plus 300 basis points On floating rate deposits, interest shall be paid within the ceiling of swap rates for the respective currency/maturity plus 200 bps/300 bps as the case may be. For floating rate deposits, the interest reset period shall be six months. 2. Foreign currency loans out of FCNR(B) deposits may be given as Pre-shipment Credit in Foreign Currency (PCFC)/ Rediscounting of Export Bills Abroad (EBR) to exporters and other entities (including exporters who desire to avail of foreign currency term loans for creating export capability) having a natural hedge or entities having a risk management policy for managing the exchange risk. 3. All other instructions in this regard, as amended from time to time, will remain unchanged. 4. An amending directive DBOD.No.Dir.BC. 101/13.03.00/2011-12 dated May 4, 2012 is enclosed . Yours faithfully, (Rajesh Verma) Chief General Manager DBOD.Dir.BC. 101/13.03.00/2011-12 May 4, 2012 Interest Rates on FCNR(B) Deposits In exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949, and in modification of the directive DBOD.No.Dir.BC.58/13.03.00/2011-12 dated November 23, 2011 on Interest Rates on Deposits held in Non-Resident (External) (NRE) Accounts and FCNR(B) Accounts, the Reserve Bank of India being satisfied that it is necessary and expedient in the public interest so to do, hereby directs that with effect from the close of business in India as on May 4, 2012 the interest rates on FCNR(B) deposits shall be as under: Maturity Period Existing Revised 1 year to less than 3 years LIBOR/Swap plus 125 basis points LIBOR/Swap plus 200 basis points 3 - 5 years LIBOR/Swap plus 125 basis points LIBOR/Swap plus 300 basis points On floating rate deposits, interest shall be paid within the ceiling of swap rates for the respective currency/maturity plus 200 bps/300 bps as the case may be. For floating rate deposits, the interest reset period shall be six months. (B. Mahapatra) Executive Director Related Press Release/Notification May 4, 2012 RBI takes measures to ease foreign currency flows May 4, 2012 Deregulation of Interest Rates on Export Credit in Foreign Currency 2026 All Months January February March April May June July August September October November December 2025 All Months January February March April May June July August September October November December 2024 All Months January February March April May June July August September October November December 2023 All Months January February March April May June July August September October November December 2022 All Months January February March April May June July August September October November December 2021 All Months January February March April May June July August September October November December 2020 All Months January February March April May June July August September October November December 2019 All Months January February March April May June July August September October November December 2018 All Months January February March April May June July August September October November December 2017 All Months January February March April May June July August September October November December Archives 2016 All Months January February March April May June July August September October November December 2015 All Months January February March April May June July August September October November December 2014 All Months January February March April May June July August September October November December 2013 All Months January February March April May June July August September October November December 2012 All Months January February March April May June July August September October November December 2011 All Months January February March April May June July August September October November December 2010 All Months January February March April May June July August September October November December 2009 All Months January February March April May June July August September October November December 2008 All Months January February March April May June July August September October November December 2007 All Months January February March April May June July August September October November December 2006 All Months January February March April May June July August September October November December 2005 All Months January February March April May June July August September October November December 2004 All Months January February March April May June July August September October November December 2003 All Months January February March April May June July August September October November December 2002 All Months January February March April May June July August September October November December 2001 All Months January February March April May June July August September October November December 2000 All Months January February March April May June July August September October November December 1999 All Months January February March April May June July August September October November December 1998 All Months January February March April May June July August September October November December 1997 All Months January February March April May June July August September October November December 1996 All Months January February March April May June July August September October November December 1995 All Months January February March April May June July August September October November December 1994 All Months January February March April May June July August September October November December 1993 All Months January February March April May June July August September October November December 1992 All Months January February March April May June July August September October November December 1991 All Months January February March April May June July August September October November December Top Back to previous page More Links Bank Holidays Banking Glossary Citizen's Charter Complaints Contact Us COVID-19 Measures E-LMS Events FAQs Financial Education Forms IFSC/MICR Codes Important Websites Opportunities @ RBI RBI Clarifications RBI Kehta Hai RBI’s Vision and Values (1257 kb)--> Right to Information Act Tenders Follow RBI RSS Twitter YouTube Instagram Facebook LinkedIn &copy; Reserve Bank of India. All Rights Reserved. Sitemap | Disclaimer Website owned and managed by Reserve Bank of India. Contact us on helpdoc[at]rbi[dot]org[dot]in Website last updated date: Jul 27, 2026 Supports: Google Chrome 147+ | Firefox 150+ | Microsoft Edge Version 147+ | Safari 17+ Accessibility Statement | Screen Reader and Accessibility Help

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2011-12/535 · issued 04 May 2012. The plain-English explanation above is BankPulse’s own independent summary.

🧰 Tools — save, print, templates & related

Most relevant forTreasury Team / ALM NRI Relationship Manager Product Manager (Digital & Lending)Compliance Team Branch Manager — Private Bank / SFB Branch Operations (Accounts / FD / CASA)

🛠 Banker’s toolkit — checklists & reply templates →

Related circulars · Department of Regulation

SFB Pillar 3 Disclosure Norms Aligned with Basel UCB Deposit Rate Disclosure & Uniformity Rules Updated LAB Deposit Rate Disclosure & Uniformity Rules Tightened Payments Banks: Interest Rates Must Match Disclosed Schedule RBI Updates Bulk Deposit Rate Rules and Disclosure Timing

Browse all departments →

Who does what — compliance checklist

🏦 Branch Manager

Communicate revised rates to branches and NRI customers to attract fresh deposits.

📜 Compliance

Update FCNR(B) deposit interest rate slabs to reflect new ceilings: 200 bps over LIBOR/Swap for 1-3 years and 300 bps for 3-5 years.
Ensure floating rate FCNR(B) deposits have a six-month interest reset period as mandated.
Review foreign currency lending from FCNR(B) funds, especially for PCFC/EBR and export capability loans, to align with revised deposit costs.

Grouped from the action items above — a single circular may involve more than one team.

Worked example & action-note template

Example: if you are a Compliance officer at a bank this circular applies to (All Scheduled Commercial Banks (excluding RRBs) offering FCNR(B) accounts, NRI depositors holding or considering FCNR(B) deposits, Banks' treasury and foreign currency liability management teams, Exporters and entities availing foreign currency loans from FCNR(B) funds), your first concrete step on “FCNR(B) Deposit Rates Hiked: Up to 300 bps Over LIBOR” is: “Update FCNR(B) deposit interest rate slabs to reflect new ceilings: 200 bps over LIBOR/Swap for 1-3 years and 300 bps for 3-5 years.” (RBI issued this 04 May 2012).

Circular: RBI/2011-12/535 -- FCNR(B) Deposit Rates Hiked: Up to 300 bps Over LIBOR
Issued: 04 May 2012
Action required: Update FCNR(B) deposit interest rate slabs to reflect new ceilings: 200 bps over LIBOR/Swap for 1-3 years and 300 bps for 3-5 years.
Action required: Ensure floating rate FCNR(B) deposits have a six-month interest reset period as mandated.
Action required: Review foreign currency lending from FCNR(B) funds, especially for PCFC/EBR and export capability loans, to align with revised deposit costs.
Action required: Communicate revised rates to branches and NRI customers to attract fresh deposits.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
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.

💬 Banker Discussion

Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.

Loading comments…

BankPulse Compliance Evidence Pack — generated 03 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=7179&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.