RBI Temporarily Withdraws Interest Rate Ceiling for SFBs
Current · Source: Reserve Bank of India · RBI/2026-27/139 · issued 17 Jun 2026 · ~1 min read
Quick answerRBI temporarily withdraws interest rate ceiling for fresh FCNR(B) deposits and NRE deposits of 3 years and above tenors for SFBs till September 30, 2026.
The rule, in the simplest words
RBI has temporarily withdrawn interest rate ceiling on fresh FCNR(B) deposits of 3-5 year tenors for SFBs.
RBI has also withdrawn restriction on interest rates on NRE deposits of 3 year and above tenors for SFBs.
This change is only till September 30, 2026, and SFBs can offer higher interest rates on these deposits.
How it plays out — a real example
A forex & trade-finance officer in Indore, Rohan, is excited to offer higher interest rates on NRE deposits to attract more customers. He updates the deposit interest rates and communicates the changes to his customers and stakeholders. With this change, Rohan expects more deposits and increased competition among SFBs in the region. ['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']
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RBI has temporarily withdrawn interest rate ceiling on fresh FCNR(B) deposits of 3-5 year tenors and restriction on interest rates on NRE deposits of 3 year and above tenors for Small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
❓ Common questions
Will this change affect NRO accounts?
No, any transfer from NRO accounts to NRE accounts will not qualify for the exemption.
📜 Read the original circular — full text as issued by RBI
RBI/2026-27/139
DOR.SOG(SPE).REC.119/13.03.00/2026-27
June 17, 2026
Reserve Bank of India (Small Finance Banks – Interest Rate on Deposits) Amendment Directions, 2026
Please refer to the Reserve Bank of India (Small Finance Banks – Interest Rate on Deposits) Directions, 2025 (hereinafter referred to as ‘Directions’), dated November 28, 2025. On a review, it has been decided to temporarily withdraw 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, including the deposits that are renewed upon maturity, from the date of this Amendment Directions till September 30, 2026.
2. Accordingly, in exercise of the powers conferred by Section 35A of the Banking Regulation Act,1949 and all other laws enabling the Reserve Bank India (RBI) in this regard, the RBI, being satisfied that it is necessary and expedient in public interest so to do, hereby, issues the Amendment Directions hereinafter specified.
3. These Amendment Directions shall be called the Reserve Bank of India (Small Finance Banks – Interest Rate on Deposits) Amendment Directions, 2026.
4. These Amendment Directions shall come into effect from the date of issue.
5. These Amendment Directions shall modify the Directions, as under:
(1) In Chapter IV on Rupee Deposits of Non-Residents, the paragraph 26(4) shall be amended as under:
Interest rates on NRE / NRO deposits shall not be higher than those offered by the bank on comparable domestic rupee term deposits 1 .
(2) In Chapter V on Foreign Currency Deposits, the paragraph 31(7) shall be amended as under:
Period of Deposit
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2026-27/139 · issued 17 Jun 2026. The plain-English explanation above is BankPulse’s own independent summary.
Example: if you are a Compliance officer at a bank this circular applies to (Small Finance Banks (SFBs), Customers with NRE and FCNR(B) deposits, Competitors in the banking industry), your first concrete step on “RBI Temporarily Withdraws Interest Rate Ceiling for SFBs” is: “Review and update deposit interest rates for NRE and FCNR(B) deposits” (RBI issued this 17 Jun 2026).
Action required: Review and update deposit interest rates for NRE and FCNR(B) deposits
Action required: Communicate changes to customers and stakeholders
Action required: Monitor and manage deposit growth and interest expenses
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=13510&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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