What changed
RBI has temporarily withdrawn interest rate ceiling on fresh FCNR(B) deposits of 3-5 year tenors and restriction on interest rates on NRE deposits of 3 year and above tenors for Small Finance Banks (SFBs) till September 30, 2026.
What it means for you
This means SFBs can offer higher interest rates on these deposits, but only until September 30, 2026. This may attract more deposits and increase competition among SFBs.
What you must do
- Review and update deposit interest rates for NRE and FCNR(B) deposits
- Communicate changes to customers and stakeholders
- Monitor and manage deposit growth and interest expenses
Who it affects
Small Finance Banks (SFBs), Customers with NRE and FCNR(B) deposits, Competitors in the banking industry
Will this change affect NRO accounts?
No, any transfer from NRO accounts to NRE accounts will not qualify for the exemption.