What changed
RBI issued the Reserve Bank of India (Commercial Banks – Interest Rate on Deposits) Directions, 2025, consolidating and updating all prior instructions on deposit interest rates. The Directions apply to all commercial banks except Small Finance Banks, Payment Banks, RRBs, and Local Area Banks. They cover domestic rupee deposits, non-resident rupee deposits, and foreign currency deposits, including FCNR(B) accounts.
What it means for you
Banks must review and update their deposit interest rate policies to comply with the new consolidated framework. The Directions provide a single reference point, reducing ambiguity from multiple circulars. Lenders need to ensure their systems and product offerings align with the updated rules on premature withdrawal penalties, interest payment periodicity, and ARR-linked floating deposits.
What you must do
- Review and update your bank's deposit interest rate policy to align with the 2025 Directions.
- Ensure systems can handle updated rules on premature withdrawal penalties for domestic and NRE deposits.
- Train compliance and product teams on the new framework, especially for floating rate deposits linked to ARR.
- Verify that foreign currency deposit products (FCNR(B), RFC) comply with the revised interest calculation and renewal guidelines.
Who it affects
All commercial banks (excluding SFBs, Payment Banks, RRBs, Local Area Banks), Treasury and ALM teams, Retail and wholesale deposit product managers, Compliance and legal departments
When do these Directions take effect?
The Directions come into effect on the day they are placed on the RBI website, which is November 28, 2025.