NRE Deposit Interest Rate Deregulation for Urban Co-op Banks
No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2013-14/215 · issued 03 Sep 2013 · ~2 min read
Quick answerRBI allows urban co-operative banks to offer interest rates without any ceiling on NRE deposits with maturity of 3 years and above, effective until November 30, 2013. This is to pass on the benefit of CRR/SLR exemption on such deposits. NRO account interest rate ceiling remains unchanged.
What changed
Earlier, interest rates on NRE deposits could not exceed those on comparable domestic rupee deposits. Now, for NRE deposits with maturity of 3 years and above, banks have full freedom to set interest rates without any ceiling, leveraging the CRR/SLR exemption on these deposits. The existing ceiling on NRO accounts continues unchanged.
What it means for you
Urban co-operative banks can now offer more competitive rates on long-term NRE deposits to attract non-resident rupee funds. This flexibility may help improve deposit mobilization from NRIs, but banks must manage interest rate risk and ensure pricing aligns with their asset-liability management. The benefit is temporary, valid only until November 30, 2013, subject to review.
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
Review and update your NRE deposit interest rate policy to offer rates without ceiling for tenors of 3 years and above.
Ensure NRO account interest rates remain within the existing ceiling as per earlier directives.
Communicate the revised rates to branches and marketing teams to attract NRE deposits before the November 30, 2013 deadline.
Monitor the impact on deposit mix and interest cost, and prepare for possible extension or withdrawal of this relaxation.
Who it affects
Primary (Urban) Co-operative Banks, NRE depositors (non-resident Indians), Treasury and deposit operations teams
❓ Common questions
Regulatory timeline
Decoded by BankPulse2026-06-18 13:14 IST
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).
Can we offer higher rates on NRE deposits below 3 years maturity?
No, the deregulation applies only to NRE deposits with maturity of 3 years and above. For shorter tenors, the earlier ceiling (not higher than comparable domestic rupee deposits) continues to apply.
Does this circular affect NRO account interest rates?
No, the existing ceiling on NRO account interest rates remains unchanged. Only NRE deposits of 3 years and above are freed from the ceiling.
Is this relaxation permanent?
No, the instructions are valid only up to November 30, 2013, subject to review. Banks should plan accordingly and watch for further RBI communication.
📜 Read the original circular — full text as issued by RBI
RBI/2013-14/215
UBD.BPD.(PCB) CIR No.8/13.01.000/2013-14
September 3, 2013
The Chief Executive Officers
All Primary (Urban) Co-operative Banks
Dear Sir/Madam,
Deregulation of Interest Rates on
Non-Resident (External) Rupee (NRE) Deposits
Please refer to our circular UBD.BPD.(PCB) CIR No.16/13.01.000/2011-12 dated December 28, 2011 on Deregulation of Interest Rates on Non-Resident (External) Rupee (NRE) Deposits and Ordinary Non- Resident (NRO) Accounts.
2. In terms of paragraph 2 ibid, interest rates offered by banks on NRE deposits cannot be higher than those offered by them on comparable domestic rupee deposits. However, in order to pass on the benefit of exemption provided on incremental NRE deposits with maturity of 3 years and above from CRR/ SLR requirements, it has been decided to give banks the freedom to offer interest rates on such deposits without any ceiling. The extant ceiling on NRO Accounts will continue.
3. All other instructions in this regard, as amended from time to time, will remain unchanged.
4. These instructions will be valid up to November 30, 2013, subject to review.
5. An amending directive UBD.BPD.DIR No.3/13.01.000/2013-14 dated August 30, 2013 is enclosed.
Yours faithfully,
(A.K.Bera)
Principal Chief General Manager
UBD.BPD.DIR No. 3 /13.01.000/2013-14
August 30, 2013
Deregulation of Interest Rates on Non-Resident
(External) Rupee (NRE) 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. 5/13.01.000/2011-12 dated December 28, 2011 on Deregulation of Interest Rates on Non-Resident (External) (NRE) Deposits and Ordinary Non-Resident (NRO) Accounts, the Reserve Bank of India being satisfied that it is necessary and expedient in the public interest so to do, hereby directs that banks are free to offer interest rates without any ceiling on NRE deposits with maturity of 3 years and above. The extant ceiling on NRO Accounts will continue. These instructions will be valid up to November 30, 2013, subject to review.
(S. Karuppasamy)
Executive Director
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2013-14/215 · issued 03 Sep 2013. 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=8364&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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