RRBs Can No Longer Offer Extra Interest on Staff FCNR (B) Deposits
No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2012-13/149 · issued 31 Jul 2012 · ~2 min read
Quick answerRBI has withdrawn the discretion allowing RRBs to pay an additional 1% interest on FCNR (B) deposits to staff members, effective July 31, 2012. Now, no extra interest can be given on any non-resident deposits, including staff accounts.
What changed
Earlier, RRBs could offer an additional 1% interest per annum on FCNR (B) deposits to their own staff (existing or retired), as per earlier circulars. RBI has now withdrawn this discretion, effective July 31, 2012, and clarified that no additional interest benefit is allowed on any type of non-resident deposits.
What it means for you
RRBs must stop paying the extra 1% interest on staff FCNR (B) accounts, aligning them with the standard ceiling. This removes a staff perk and simplifies compliance, but may affect staff retention strategies. All other FCNR (B) deposit rules remain unchanged.
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 cease offering the additional 1% interest on FCNR (B) deposits to staff members.
Update internal policies and system parameters to remove the staff interest rate concession for non-resident deposits.
Communicate the change to all branches and staff to ensure no further such interest is paid.
Review existing staff FCNR (B) accounts to ensure no future renewals include the extra interest.
Who it affects
Regional Rural Banks (RRBs), RRB staff members with FCNR (B) deposits, RRB compliance and treasury departments
repealed_by — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
Status change: withdrawn03 Aug 2026, 04:00 IST
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
Does this circular affect all non-resident deposits or only FCNR (B)?
The circular states that RRBs should not allow the benefit of additional interest rate on any type of deposits of non-residents. The withdrawal of the staff benefit is explicitly for FCNR (B) accounts, but the prohibition on additional interest applies to all non-resident deposits.
Can RRBs still offer the additional 1% interest to staff on domestic deposits?
The circular does not address domestic deposits; it only covers non-resident deposits. For domestic deposits, earlier instructions remain unchanged.
When does this change take effect?
The circular is dated July 31, 2012, and is effective from that date. No transition period is mentioned.
📜 This document’s life story (2 recorded events, each backed by RBI’s own words)
RBI’s words: “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.”
Repealed byRBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
RBI’s words: “Official withdrawal register entry #1249: RPCD.CO.RRB.NO.17/03.05.33(C)/2012-13 — "Interest Rates Deposits held in FCNR(B)& Accounts" dated July 31, 2012”
📜 Read the original circular — full text as issued by RBI
RBI/2012-13/149
RPCD.CO.RRB.NO.17/03.05.33(C)/2012-13
July 31, 2012
The Chairmen
All Regional Rural Banks (RRBs)
Dear Sir,
Interest Rates on Deposits held in FCNR (B) Accounts
Please refer to paragraph 4 of the directives enclosed to the 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 RRBs should not allow the benefit of additional interest rate on any type of deposits of non-residents. Accordingly, the discretion given to RRBs 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
(C.D.Srinivasan)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2012-13/149 · issued 31 Jul 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=7481&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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