What changed
The previous circular (August 21, 2013) set interest rate ceilings on FCNR(B) deposits valid until November 30, 2013. This new circular extends that same ceiling unchanged until January 31, 2014, subject to further review.
What it means for you
UCBs can continue offering FCNR(B) deposits at the existing capped rates for two more months, providing stability for their foreign currency deposit pricing. No new rate adjustments are permitted during this period, so lenders must maintain current offerings without raising rates to attract deposits.
What you must do
- Ensure FCNR(B) deposit interest rates for all tenors remain within the ceiling prescribed in the August 21, 2013 circular until January 31, 2014.
- Update internal systems and product documentation to reflect the extended validity period.
- Communicate the unchanged rate ceiling to treasury and branch operations teams to avoid any inadvertent rate breaches.
Who it affects
All AD Category-1 Urban Co-operative Banks, Treasury departments of UCBs, Deposit operations teams handling FCNR(B) accounts
Does this circular change the actual interest rate ceiling on FCNR(B) deposits?
No, the ceiling remains exactly as prescribed in the August 21, 2013 circular. Only the validity period is extended to January 31, 2014.
Which UCBs are covered by this directive?
Only AD Category-1 Urban Co-operative Banks are covered, as the circular is addressed to their Chief Executive Officers.
What happens after January 31, 2014?
The ceiling is subject to review by RBI. Banks should watch for further circulars before that date for any changes.