Current · Source: Reserve Bank of India · RBI/2012-13/247 · issued 12 Oct 2012 · ~2 min read
Quick answerRBI has removed the Rs 100 lakh ceiling on rupee and foreign currency loans against NRE/FCNR(B) deposits, allowing banks to sanction loans up to the deposit balance subject to margin requirements.
The rule, in the simplest words
Banks can now give loans against NRE/FCNR deposits without any upper limit (no more Rs 100 lakh cap).
The loan amount can be up to the full deposit balance, but banks must keep a margin (a safety gap between loan and deposit value).
If you take a loan against these deposits, you cannot withdraw the deposit early (premature withdrawal is not allowed).
For FCNR deposits (foreign currency), the margin is calculated on the rupee equivalent (the deposit's value in Indian rupees).
Old loans that were above the old limit can continue until they end, but cannot be renewed or rolled over.
How it plays out — a real example
A forex & trade-finance officer in Mumbai, Priya, receives a request from an NRI customer who wants a Rs 2 crore loan against his FCNR deposit of Rs 2.5 crore. Under the new rule, Priya can approve the full Rs 2 crore loan (after applying the required margin) without worrying about the old Rs 100 lakh cap. She ensures the loan letter clearly states that the deposit cannot be withdrawn early, and she calculates the margin on the rupee equivalent of the FCNR deposit.
What changed
Previously, loans against NRE/FCNR(B) fixed deposits were capped at Rs 100 lakh. The new circular removes this ceiling entirely for both rupee and foreign currency loans, whether granted to the depositor or a third party. The facility of premature withdrawal of these deposits is not available when a loan is availed.
What it means for you
Banks can now offer larger loans against NRE/FCNR deposits without a statutory upper limit, subject to usual margin norms. This expands lending opportunities for NRIs and third parties, but banks must ensure margin requirements are met, especially for FCNR deposits where margin is notionally calculated on rupee equivalent. Existing loans not conforming to these rules can continue until maturity but cannot be rolled over.
What you must do
Update internal loan policies to remove the Rs 100 lakh ceiling on loans against NRE/FCNR(B) deposits.
Ensure loan sanction letters clearly state that premature withdrawal of the deposit is not allowed when a loan is availed.
Verify margin requirements as per existing regulations, including notional margin on FCNR deposits.
Communicate the revised facility to NRI customers and branch staff handling NRE/FCNR accounts.
Who it affects
Category-I Authorised Dealer banks, Authorised banks handling NRE/FCNR accounts, NRI depositors with NRE/FCNR(B) accounts, Third parties seeking loans against NRE/FCNR deposits
❓ Common questions
Is there any upper limit now for loans against NRE/FCNR deposits?
No, the circular removes the earlier Rs 100 lakh ceiling. Loans can be granted up to the deposit balance, subject to usual margin requirements.
Can the depositor withdraw the deposit prematurely if a loan is taken against it?
No, the facility of premature withdrawal is not available when a loan is availed against the deposit. This condition must be communicated to the depositor at the time of sanction.
Does this circular apply to existing loans?
Existing loans that do not conform to the new instructions can continue for their existing term but cannot be rolled over or renewed.
📜 Read the original circular — full text as issued by RBI
RBI/2012-13/247
A. P. (DIR Series) Circular No. 44
October 12, 2012
To,
All Category-I Authorised Dealer banks and Authorised banks
Madam / Sir,
Foreign Exchange Management (Deposit) Regulations, 2000-
Loans to Non Residents / third parties against security of Non Resident (External) Rupee Accounts [NR (E) RA] / Foreign Currency Non Resident (Bank) Accounts [FCNR (B)] Deposits
Attention of Authorised Dealer Category-I banks and Authorised banks (the banks) is invited to Para 6 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.66 dated April 28, 2009 in terms of which it was decided to enhance the then 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.
2. The Committee to review the facilities for individuals under FEMA, 1999 (Chairperson: Smt. K.J.Udeshi) has recommended that the banks may sanction Rupee loans in India or foreign currency loans outside India to either the account holder or a third party to the extent of the balance in the NRE/FCNR (B) account subject to margin requirements. The existing position in this regard has been reviewed and it has been decided, in exercise of powers under paragraph 6(d) of Schedule-1 read with para 9(1) of Schedule-2 of the Foreign Exchange Management (Deposit) Regulations, 2000, that the banks may now grant loans against NR(E)RA and FCNR(B) deposits either to the depositors or the third parties as under:-
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2012-13/247 · issued 12 Oct 2012. The plain-English explanation above is BankPulse’s own independent summary.
Communicate the revised facility to NRI customers and branch staff handling NRE/FCNR accounts.
💰 Credit
Ensure loan sanction letters clearly state that premature withdrawal of the deposit is not allowed when a loan is availed.
📜 Compliance
Update internal loan policies to remove the Rs 100 lakh ceiling on loans against NRE/FCNR(B) deposits.
Verify margin requirements as per existing regulations, including notional margin on FCNR deposits.
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 (Category-I Authorised Dealer banks, Authorised banks handling NRE/FCNR accounts, NRI depositors with NRE/FCNR(B) accounts, Third parties seeking loans against NRE/FCNR deposits), your first concrete step on “RBI removes loan cap on NRE/FCNR deposits” is: “Update internal loan policies to remove the Rs 100 lakh ceiling on loans against NRE/FCNR(B) deposits.” (RBI issued this 12 Oct 2012).
Circular: RBI/2012-13/247 -- RBI removes loan cap on NRE/FCNR deposits
Issued: 12 Oct 2012
Action required: Update internal loan policies to remove the Rs 100 lakh ceiling on loans against NRE/FCNR(B) deposits.
Action required: Ensure loan sanction letters clearly state that premature withdrawal of the deposit is not allowed when a loan is availed.
Action required: Verify margin requirements as per existing regulations, including notional margin on FCNR deposits.
Action required: Communicate the revised facility to NRI customers and branch staff handling NRE/FCNR accounts.
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.
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=7622&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.
Help us keep this accurate
Found an inaccuracy or have an improvement? Tell us. Every report is reviewed by our team before any change is made — nothing goes live unverified.
Public beta — plain-English informational summaries. Always verify against the official RBI source (circular number cited on every page) before making compliance, credit, treasury, audit, or operational decisions. · Join our WhatsApp channel ↗
BANKPULSE · FREE DAILY BRIEF
Get RBI updates for your role
Every important RBI update, decoded in plain English — for your career, exams & financial awareness.
We collect only your email, name and role, used solely to send your brief — never sold or shared. Withdraw anytime via the unsubscribe link in any email. Independent platform, not affiliated with the RBI. Information, not legal advice.
REPORT AN ERROR · BETA
Spotted an error? Earn 500 BankPulse Credits
Help us stay accurate. If your correction is verified true and approved by our founder, you earn 500 BankPulse Credits — redeemable when the platform monetises.
Reviewed by a human before any credit is awarded. We never change the site from crowd input without verification.
WANT A NEW FEATURE · BETA
What would make BankPulse more useful for you?
Tell us what to build next — a tool, a data view, a role page, anything. We read every suggestion.
Thank you — your ideas directly shape what we build.