NRE Deposit Rate Ceiling Extended Till Feb 28, 2014
Current · Source: Reserve Bank of India · RBI/2013-14/476 · issued 31 Jan 2014 · ~2 min read
Quick answerRBI extends the freedom for banks to offer uncapped interest rates on incremental NRE deposits of 3 years and above until February 28, 2014. From March 1, 2014, rates must revert to not exceed comparable domestic rupee deposit rates.
The rule, in the simplest words
Banks can offer any interest rate (no upper limit) on new NRE deposits (money from Indians living abroad) that are for 3 years or more, but only until February 28, 2014.
From March 1, 2014, banks must not pay more interest on NRE deposits than they pay on similar rupee deposits from people living in India.
This extra month (February 2014) gives banks more time to attract foreign money by offering higher rates on long-term NRE deposits.
How it plays out — a real example
A forex & trade-finance officer in Indore, Priya, updates her bank's NRE deposit rate sheet on February 1, 2014, to show a special 9% rate for 3-year NRE deposits. She tells her NRI customers, 'You can lock in this high rate until February 28, but after that, rates will drop to match our domestic deposits.' This helps her bank pull in more foreign currency before the March 1 deadline.
What changed
The earlier dispensation allowing banks to set interest rates on incremental NRE deposits (3 years and above) without any ceiling, linked to CRR/SLR exemption benefits, was set to expire on January 31, 2014. RBI has now extended this flexibility by one month, up to February 28, 2014. From March 1, 2014, the old ceiling rule will be restored: NRE deposit rates cannot exceed rates on comparable domestic rupee deposits.
What it means for you
Banks get an additional month to attract NRE deposits without rate caps, which can help shore up foreign currency inflows. After February 28, the pricing advantage on longer-tenor NRE deposits disappears, potentially reducing their appeal. Lenders must plan their NRE deposit pricing strategy carefully for the transition.
What you must do
Update NRE deposit product brochures and system rate tables to reflect the extended uncapped period until February 28, 2014.
Prepare internal guidelines to revert NRE deposit rates to domestic comparable rates from March 1, 2014.
Communicate the change to branch heads and treasury teams to avoid any inadvertent rate violations post-February 28.
Monitor NRE deposit inflows during the extended window and adjust pricing strategy accordingly.
Who it affects
All scheduled commercial banks (excluding RRBs) offering NRE deposits, Treasury and asset-liability management teams, NRE deposit customers and relationship managers
❓ Common questions
What is the key change in this circular?
RBI has extended the period during which banks can offer uncapped interest rates on incremental NRE deposits of 3 years and above from January 31, 2014 to February 28, 2014. From March 1, 2014, the old ceiling rule applies again.
What happens after February 28, 2014?
From March 1, 2014, interest rates on NRE deposits cannot exceed the rates offered by the same bank on comparable domestic rupee deposits, reverting to the pre-August 14, 2013 position.
Does this affect all NRE deposits or only specific tenors?
The uncapped rate flexibility applies only to incremental NRE deposits with maturity of 3 years and above. Other NRE deposit instructions remain unchanged.
📜 Read the original circular — full text as issued by RBI
RBI/2013-14/476
DBOD.No.Dir.BC.90/13.03.00/2013-14
January 31, 2014
All Scheduled Commercial Banks
(Excluding RRBs)
Dear Sir/ Madam
Deregulation of Interest Rates on Non-Resident (External) Rupee (NRE) Deposits
Please refer to our circular DBOD.Dir.BC.71/13.03.00/2013-14 dated November 29, 2013 advising banks that the freedom to offer interest rates on incremental NRE deposits with maturity of 3 years and above without any ceiling in order to pass on the benefit of exemption provided on such deposits from CRR/ SLR requirements will remain unchanged up to January 31, 2014, subject to review.
2. On a review and in order to give banks some time, it has been decided to extend the above dispensation till February 28, 2014. With effect from March 1, 2014, the interest rate ceiling will revert to the position prior to August 14, 2013, i.e. interest rates offered by banks on NRE deposits cannot be higher than those offered by them on comparable domestic rupee deposits.
3. All other instructions in this regard, as amended from time to time, will remain unchanged.
4. An amending directive DBOD.Dir.BC.89/13.03.00/2013-14 dated January 31, 2014 is enclosed .
Yours faithfully,
(Prakash Chandra Sahoo)
Chief General Manager
Encl: As above
DBOD.Dir.BC.89/13.03.00/2013-14
January 31, 2014
Deregulation of Interest Rates on Non-Resident (External) Rupee (NRE) Deposits
In exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949, and in modification of the directive DBOD.Dir.BC.70/13.03.00/2013-14 dated November 29, 2013 on Deregulation of Interest Rates on Non-Resident (External) Rupee (NRE) Deposits, the Reserve Bank of India being satisfied that it is necessary and expedient in the public interest so to do, hereby directs that instructions issued vide directive DBOD.Dir.BC.39/13.03.00/ 2013-14 dated August 14, 2013 will continue till February 28, 2014. With effect from March 1, 2014, the interest rate ceiling will revert to the position prior to August 14, 2013, i.e. interest rates offered by banks on NRE deposits cannot be higher than those offered by them on comparable domestic rupee deposits.
(B. Mahapatra)
Executive Director
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2013-14/476 · issued 31 Jan 2014. The plain-English explanation above is BankPulse’s own independent summary.
Communicate the change to branch heads and treasury teams to avoid any inadvertent rate violations post-February 28.
💻 IT / Systems
Update NRE deposit product brochures and system rate tables to reflect the extended uncapped period until February 28, 2014.
📜 Compliance
Prepare internal guidelines to revert NRE deposit rates to domestic comparable rates from March 1, 2014.
Monitor NRE deposit inflows during the extended window and adjust pricing strategy accordingly.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are an IT/Systems lead at a bank this circular applies to (All scheduled commercial banks (excluding RRBs) offering NRE deposits, Treasury and asset-liability management teams, NRE deposit customers and relationship managers), your first concrete step on “NRE Deposit Rate Ceiling Extended Till Feb 28, 2014” is: “Update NRE deposit product brochures and system rate tables to reflect the extended uncapped period until February 28, 2014.” (RBI issued this 31 Jan 2014).
Circular: RBI/2013-14/476 -- NRE Deposit Rate Ceiling Extended Till Feb 28, 2014
Issued: 31 Jan 2014
Action required: Update NRE deposit product brochures and system rate tables to reflect the extended uncapped period until February 28, 2014.
Action required: Prepare internal guidelines to revert NRE deposit rates to domestic comparable rates from March 1, 2014.
Action required: Communicate the change to branch heads and treasury teams to avoid any inadvertent rate violations post-February 28.
Action required: Monitor NRE deposit inflows during the extended window and adjust pricing strategy accordingly.
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=8725&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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