Home › Circulars › RBI/2011-12/565

RBI Hikes FCNR(B) Deposit Rates for UCBs

No longer current — withdrawn, no replacement on file yet

Source: Reserve Bank of India · RBI/2011-12/565 · issued 17 May 2012 · ~2 min read

Quick answerRBI raised FCNR(B) deposit rate ceilings for AD Category-1 UCBs: 1-3 year deposits now LIBOR/Swap plus 200 bps (from 125 bps), and 3-5 year deposits at plus 300 bps (from 125 bps), effective May 4, 2012.

What changed

RBI revised interest rate ceilings on FCNR(B) deposits for AD Category-1 UCBs, effective from close of business on May 4, 2012. 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 maturities, the ceiling rose from plus 125 bps to plus 300 bps. Floating rate deposits must use a six-month reset period and stay within the new ceilings.

What it means for you

UCBs can now offer higher rates on FCNR(B) deposits, making them more attractive to NRI depositors. This could help banks raise foreign currency deposits, but also increases funding costs. The wider spreads may improve competitiveness against other banks, but lenders must manage the higher interest expense and ensure compliance with the revised ceilings.

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 FCNR(B) deposit rate slabs for 1-3 year and 3-5 year maturities to the new ceilings immediately.
Ensure floating rate deposits use a six-month interest reset period and stay within the revised swap rate plus spread limits.
Review foreign currency lending guidelines to align with the updated deposit rates, especially for PCFC/EBR and export-related loans.
Communicate the revised rates to branches and NRI customers to attract fresh deposits.

Who it affects

AD Category-1 Urban Cooperative Banks (UCBs), NRI depositors holding FCNR(B) accounts, Treasury and ALM teams at UCBs, Exporters 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 20:19 IST
clarified_by — FCNR(B) Deposit Rate Ceiling Raised for 3-5 Year Tenors
repealed_by — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
Status change: withdrawn 03 Aug 2026, 04:00 IST

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

What are the new FCNR(B) deposit rate ceilings for UCBs?

For 1 year to less than 3 years, the ceiling is LIBOR/Swap plus 200 bps. For 3-5 years, it is LIBOR/Swap plus 300 bps, effective May 4, 2012.

Do these changes affect floating rate FCNR(B) deposits?

Yes, floating rate deposits must have a six-month interest reset period and cannot exceed the swap rate plus 200 bps (for 1-3 year) or 300 bps (for 3-5 year) ceilings.

Can UCBs use FCNR(B) funds for foreign currency loans?

Yes, these funds can be used for pre-shipment credit in foreign currency (PCFC), rediscounting of export bills abroad (EBR), and term loans to exporters with natural hedge or risk management policies.

📜 This document’s life story (2 recorded events, each backed by RBI’s own words)

Clarified by FCNR(B) Deposit Rate Ceiling Raised for 3-5 Year Tenors

RBI’s words: “Please refer to our circular No. UBD.BPD.AD.CIR.No.7/13.01.000/2011-12 dated May 17, 2012”

Repealed by RBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)

RBI’s words: “Official withdrawal register entry #1339: UBD.BPD.DIR.No.8/13.01.000/2011-12 — "Notification on Interest Rates on FCNR(B) Deposits" dated May 17, 2012”

📜 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 ( 547 kb ) Interest Rates on FCNR(B) Deposits RBI/2011-12/565 UBD.BPD.AD.CIR.No.7/13.01.000/2011-12 May 17, 2012 The Chief Executive Officers All AD Cateogry -1 UCBs Dear Sir/Madam, Interest Rates on FCNR(B) Deposits Please refer to our circular No. UBD.BPD.AD.CIR.No. 4/13.01.000/2011-12 dated November 24, 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 UBD.BPD.DIR.No. 8/13.01.000/2011-12 dated May 17, 2012 is enclosed . Yours faithfully, (A.Udgata) Chief General Manager-in-Charge Encl: As above. UBD.BPD.DIR.No. 8/13.01.000/2011-12 May 17, 2012 Interest Rates on FCNR(B) Deposits In exercise of the powers conferred by Section 35A read with Section 56 of the Banking Regulation Act, 1949, and in modification of the directive UBD.BPD.DIR.No.3/13.01.000/2011-12 dated November 23, 2011 on Interest Rates on FCNR(B) Deposits, 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. ( S. 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Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2011-12/565 · issued 17 May 2012. The plain-English explanation above is BankPulse’s own independent summary.

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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=7219&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.