FCNR(B) Rate Ceiling Extended for RRBs and Cooperatives
Current · Source: Reserve Bank of India · RBI/2013-14/489 · issued 11 Feb 2014 · ~2 min read
Quick answerRBI extends the current FCNR(B) deposit interest rate ceiling for RRBs and cooperative banks until February 28, 2014. From March 1, 2014, the ceiling for 3-5 year deposits will drop from LIBOR/Swap plus 400 bps to plus 300 bps. The 1-3 year ceiling stays at LIBOR/Swap plus 200 bps.
The rule, in the simplest words
The RBI (India's central bank) says the highest interest rate for FCNR(B) deposits (foreign currency accounts for people living outside India) at RRBs (rural banks) and cooperative banks stays the same until February 28, 2014.
From March 1, 2014, the highest rate for deposits kept for 3 to 5 years will drop from LIBOR/Swap (a global interest rate) plus 4% to LIBOR/Swap plus 3%.
For deposits kept for 1 to 3 years, the highest rate stays at LIBOR/Swap plus 2% both before and after March 1, 2014.
Banks get extra time until February 28, 2014 to change their pricing before the lower ceiling for longer deposits starts.
How it plays out — a real example
A forex & trade-finance officer in Indore at a cooperative bank checks the new rule and sees that for FCNR(B) deposits of 4 years, the interest rate ceiling will drop from LIBOR plus 4% to LIBOR plus 3% on March 1, 2014. She tells her team to stop offering the higher rate for new 3-5 year deposits after February 28, so they don't break the rule.
What changed
The RBI has extended the existing FCNR(B) deposit interest rate ceilings for Regional Rural Banks and State/Central Cooperative Banks until February 28, 2014. From March 1, 2014, the ceiling for deposits with a maturity of 3 to 5 years will revert to LIBOR/Swap plus 300 basis points, down from the current LIBOR/Swap plus 400 basis points. The ceiling for deposits of 1 year to less than 3 years remains unchanged at LIBOR/Swap plus 200 basis points.
What it means for you
Banks get a short extension to adjust their FCNR(B) deposit pricing strategies before the rate ceiling tightens for longer-tenor deposits. The reduction in the 3-5 year ceiling from March 1 will likely lower the cost of these foreign currency deposits for banks. This move aims to align FCNR(B) rates with broader market conditions while giving banks time to manage their liability profiles.
What you must do
Review your FCNR(B) deposit pricing for 3-5 year tenors to ensure compliance with the new ceiling of LIBOR/Swap plus 300 bps from March 1, 2014.
Communicate the revised rate ceiling to your treasury and deposit operations teams to avoid any breaches after February 28.
Assess the impact on your foreign currency deposit mobilization and adjust your funding mix if needed before the change takes effect.
Update your internal systems and product documentation to reflect the new interest rate ceiling for 3-5 year FCNR(B) deposits.
Who it affects
Regional Rural Banks (RRBs), State Cooperative Banks (StCBs), Central Cooperative Banks (CCBs), Treasury and deposit operations teams at these banks
❓ Common questions
What is the new FCNR(B) interest rate ceiling for 3-5 year deposits from March 1, 2014?
From March 1, 2014, the ceiling for 3-5 year FCNR(B) deposits will be LIBOR/Swap plus 300 basis points, reduced from the current LIBOR/Swap plus 400 basis points.
Does the interest rate ceiling for 1-3 year FCNR(B) deposits change?
No, the ceiling for 1 year to less than 3 years remains unchanged at LIBOR/Swap plus 200 basis points.
Which banks are affected by this circular?
This circular applies to all Regional Rural Banks (RRBs), State Cooperative Banks (StCBs), and Central Cooperative Banks (CCBs).
📜 Read the original circular — full text as issued by RBI
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2013-14/489 · issued 11 Feb 2014. The plain-English explanation above is BankPulse’s own independent summary.
Communicate the revised rate ceiling to your treasury and deposit operations teams to avoid any breaches after February 28.
💻 IT / Systems
Update your internal systems and product documentation to reflect the new interest rate ceiling for 3-5 year FCNR(B) deposits.
📜 Compliance
Review your FCNR(B) deposit pricing for 3-5 year tenors to ensure compliance with the new ceiling of LIBOR/Swap plus 300 bps from March 1, 2014.
Assess the impact on your foreign currency deposit mobilization and adjust your funding mix if needed before the change takes effect.
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 (Regional Rural Banks (RRBs), State Cooperative Banks (StCBs), Central Cooperative Banks (CCBs), Treasury and deposit operations teams at these banks), your first concrete step on “FCNR(B) Rate Ceiling Extended for RRBs and Cooperatives” is: “Review your FCNR(B) deposit pricing for 3-5 year tenors to ensure compliance with the new ceiling of LIBOR/Swap plus 300 bps from March 1, 2014.” (RBI issued this 11 Feb 2014).
Circular: RBI/2013-14/489 -- FCNR(B) Rate Ceiling Extended for RRBs and Cooperatives
Issued: 11 Feb 2014
Action required: Review your FCNR(B) deposit pricing for 3-5 year tenors to ensure compliance with the new ceiling of LIBOR/Swap plus 300 bps from March 1, 2014.
Action required: Communicate the revised rate ceiling to your treasury and deposit operations teams to avoid any breaches after February 28.
Action required: Assess the impact on your foreign currency deposit mobilization and adjust your funding mix if needed before the change takes effect.
Action required: Update your internal systems and product documentation to reflect the new interest rate ceiling for 3-5 year FCNR(B) deposits.
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=8741&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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