RBI Temporarily Lifts Interest Rate Ceilings for Rural Co-op Banks
Current · Source: Reserve Bank of India · RBI/2026-27/143 · issued 17 Jun 2026 · ~1 min read
Quick answerRBI has temporarily lifted interest rate ceilings for rural co-operative banks on fresh FCNR(B) deposits and NRE deposits until September 30, 2026.
The rule, in the simplest words
Rural co-op banks can now offer higher interest (extra money for keeping money) on FCNR(B) deposits (foreign currency deposits from non-residents) for 3-5 years until September 30, 2026.
Rural co-op banks can also offer higher interest on NRE deposits (rupee deposits from non-residents) for 3 years or more until September 30, 2026.
This rule is temporary and ends on September 30, 2026, so banks must plan carefully.
Banks must still follow all other RBI rules for deposits.
How it plays out — a real example
A forex & trade-finance officer in Indore, Priya, sees the new rule and tells her rural co-op bank's manager they can now offer 1% more interest on 5-year FCNR(B) deposits from NRIs. She updates the deposit rate sheet and attracts a local NRI depositor, increasing the bank's lending funds for gold loans.
What changed
Interest rate ceiling on fresh FCNR(B) deposits of 3-5 year tenors has been temporarily withdrawn.
Restriction on interest rates on NRE deposits of 3 year and above tenors has been temporarily lifted.
What it means for you
Rural co-operative banks can now offer higher interest rates on these deposits, which may attract more deposits and increase their lending capacity.
However, this relaxation is only temporary and will be in effect until September 30, 2026.
What you must do
Review and update deposit interest rates accordingly.
Ensure compliance with RBI guidelines and regulations.
Who it affects
Rural co-operative banks, Depositors of NRE and FCNR(B) deposits
❓ Common questions
What is the duration of this relaxation?
This relaxation is effective until September 30, 2026.
Will this relaxation apply to all types of deposits?
No, this relaxation only applies to fresh FCNR(B) deposits of 3-5 year tenors and NRE deposits of 3 year and above tenors.
📜 Read the original circular — full text as issued by RBI
RBI/2026-27/143
DOR.SOG(SPE).REC.122/13.03.00/2026-27
June 17, 2026
Reserve Bank of India (Rural Co-operative Banks – Interest Rate on Deposits) Amendment Directions, 2026
Please refer to the Reserve Bank of India (Rural Co-operative 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 read with Section 56 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 (Rural Co-operative 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 24(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 29(7) shall be amended as under:
Period of Deposit
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2026-27/143 · 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 (Rural co-operative banks, Depositors of NRE and FCNR(B) deposits), your first concrete step on “RBI Temporarily Lifts Interest Rate Ceilings for Rural Co-op Banks” is: “Review and update deposit interest rates accordingly.” (RBI issued this 17 Jun 2026).
Action required: Review and update deposit interest rates accordingly.
Action required: Ensure compliance with RBI guidelines and regulations.
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=13514&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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