No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2012-13/137 · issued 18 Jul 2012 · ~2 min read
Quick answerRBI has withdrawn the discretion allowing banks to pay an additional 1% interest on FCNR(B) deposits to staff members. No non-resident depositor, including staff, can now receive any extra interest beyond the prescribed ceiling.
The rule, in the simplest words
Banks can no longer give extra interest (bonus money) to their own staff on FCNR(B) accounts (foreign currency deposits for people living abroad).
All non-resident depositors (people living outside India), including bank staff, must get the same maximum interest rate set by RBI (the central bank).
Banks must stop paying the 1% extra interest that was allowed before for staff on these deposits.
Banks should update their computer systems and tell their teams to follow this new rule.
How it plays out — a real example
Priya, a forex & trade-finance officer in Indore, checks her bank's system and sees that a retired staff member's FCNR(B) deposit is still getting an extra 1% interest. She immediately adjusts the rate to the normal ceiling and sends a note to the NRI team to stop any future extra payments, ensuring the bank follows RBI's new rule.
What changed
RBI has withdrawn the discretion allowing banks to pay an additional 1% interest on FCNR(B) deposits to staff members. No non-resident depositor, including staff, can now receive any extra interest beyond the prescribed ceiling. The effective date is not specified in the circular.
What it means for you
Banks must stop paying the staff premium on FCNR(B) accounts. This aligns non-resident deposit pricing with the general ceiling, removing a preferential treatment. Lenders need to update their systems and communication to ensure compliance and avoid penal action.
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
Immediately stop crediting any additional interest (including the 1% staff benefit) on FCNR(B) deposits of staff members.
Review all existing FCNR(B) staff accounts and adjust interest rates to the applicable ceiling as per the circular's instructions.
Update internal policy documents and product literature to reflect the withdrawal of the staff interest rate discretion.
Communicate the change to relevant branches and treasury teams handling NRI deposits.
Who it affects
Scheduled commercial banks (excluding RRBs) offering FCNR(B) accounts, Existing and retired staff members holding FCNR(B) deposits, NRI depositors and bank staff handling NRI accounts
❓ Common questions
Regulatory timeline
Decoded by BankPulse2026-06-18 18:36 IST
Status change: withdrawn2026-07-13T04:47:15
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
Does this circular affect only FCNR(B) deposits or other non-resident deposits too?
The circular states that banks should not allow the benefit of additional interest on any type of deposits of non-residents. So it applies to all non-resident deposit categories, not just FCNR(B).
What about existing FCNR(B) staff deposits that were opened before this circular?
The circular does not provide specific grandfathering or retroactive adjustment instructions. Banks should apply the new restriction as per the circular's terms.
Can banks still offer the staff interest rate on resident deposits?
This circular specifically addresses non-resident deposits. The restriction on additional interest applies only to non-resident accounts. Resident staff deposit benefits are not covered here.
📜 Read the original circular — full text as issued by RBI
RBI/2012-13/137
DBOD.Dir.BC. 30/13.03.00/2012-13
July 18, 2012
All Scheduled Commercial Banks
(Excluding RRBs)
Dear Sir/Madam,
Interest Rates on Deposits held in FCNR (B) Accounts
Please refer to paragraph 4 of the directives enclosed to our circular DBOD.Dir.BC.49/13.03.00/2000-2001 dated November 4, 2000 and mail box clarification dated May 13, 2005 in terms of which it was clarified that in the case of FCNR(B) deposits of staff members, existing or retired, interest rate including any additional interest paid to them by virtue of their being staff members, should not exceed the ceiling stipulated by RBI from time to time.
2. On a review, it has now been decided that banks should not allow the benefit of additional interest rate on any type of deposits of non-residents. Accordingly, the discretion given to banks to allow the benefit of additional interest rate of one per cent per annum as available to bank's own staff on deposits under FCNR(B) accounts stands withdrawn.
3. All other instructions in this regard, as amended from time to time, will remain unchanged.
Yours faithfully
(Sudha Damodar)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2012-13/137 · issued 18 Jul 2012. The plain-English explanation above is BankPulse’s own independent summary.
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.
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=7459&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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