What changed
The interest rate ceiling on FCNR(B) deposits, previously set to expire on November 30, 2013, has been extended without any change. The new validity period runs through January 31, 2014, subject to further review. No modifications were made to the rate limits themselves.
What it means for you
Banks can continue offering FCNR(B) deposits at the same capped rates for another two months, providing stability for their foreign currency deposit pricing. This extension gives lenders more time to manage their FCNR(B) liability costs without immediate repricing pressure. However, the 'subject to review' clause means RBI could still alter rates before the new deadline.
What you must do
- Update internal systems and product documentation to reflect the extended validity of existing FCNR(B) rate ceilings until January 31, 2014.
- Communicate the unchanged rate caps to treasury and branch operations teams to ensure compliance in deposit pricing.
- Monitor RBI announcements closely for any mid-term review changes before the January 31 deadline.
- Review FCNR(B) deposit portfolio to assess impact of stable rates on funding costs and margins.
Who it affects
All scheduled commercial banks (excluding RRBs) offering FCNR(B) deposits, Treasury and asset-liability management teams, Retail and corporate depositors with FCNR(B) accounts
What is the new deadline for the FCNR(B) interest rate ceiling?
The ceiling remains unchanged and is now valid until January 31, 2014, instead of the earlier November 30, 2013 deadline.
Have the actual interest rate limits on FCNR(B) deposits changed?
No, the rate ceilings themselves have not been altered. Only the validity period has been extended.
Does this circular affect all banks?
It applies to all scheduled commercial banks except Regional Rural Banks (RRBs).