What changed
The Reserve Bank of India released the 'Reserve Bank of India (Urban Co-operative Banks – Interest Rate on Deposits) Amendment Directions, 2026' on June 17, 2026. This document amends the existing directions by temporarily withdrawing the interest rate ceiling on fresh FCNR(B) deposits of 3-5 year tenors and the restriction on interest rates on NRE deposits of 3 year and above tenors (including renewals) from June 17, 2026 until September 30, 2026.
What it means for you
UCBs can now offer higher interest rates on fresh FCNR(B) deposits of 3-5 year tenors and NRE deposits of 3 year and above tenors (including renewals) without ceiling restrictions until September 30, 2026. This may affect pricing strategies and competitive positioning. Banks should review the full notification for compliance.
What you must do
- Obtain and read the full amendment directions from the RBI notification.
- Review your bank's current deposit interest rate policy for FCNR(B) and NRE deposits against the new temporary exemptions.
- Update internal guidelines and train staff on the revised rate-setting norms for these specific deposits.
- Ensure compliance with the temporary period ending September 30, 2026.
Who it affects
Urban Co-operative Banks (UCBs), Deposit operations teams at UCBs handling FCNR(B) and NRE deposits, Compliance officers at UCBs, Regulatory affairs departments
What is the effective date of these amendment directions?
The amendment directions came into effect from the date of issue, June 17, 2026, and the temporary withdrawal is valid until September 30, 2026.
Do these directions apply to all Urban Co-operative Banks?
Yes, the directions are titled for Urban Co-operative Banks and amend the existing deposit interest rate framework applicable to them.
What specific changes are made?
The directions temporarily withdraw the interest rate ceiling on fresh FCNR(B) deposits of 3-5 year tenors and the restriction on interest rates on NRE deposits of 3 year and above tenors (including renewals) until September 30, 2026.