New Delhi, June 18, 2026: The Reserve Bank of India (RBI) has announced a temporary relaxation of interest rate restrictions on certain non-resident deposits, allowing banks to offer higher returns to Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs). The move is aimed at attracting foreign currency inflows and strengthening the country’s foreign exchange reserves.
Under the revised framework, banks will be permitted to offer higher interest rates on fresh Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits with tenures ranging from three to five years. The relaxation will also apply to Non-Resident External (NRE) deposits with maturities of three years and above, including deposits renewed upon maturity.
The exemption will remain in effect until September 30, 2026, providing banks with greater flexibility to attract overseas deposits during the period.
The RBI has clarified that interest rates on NRE and Non-Resident Ordinary (NRO) deposits should generally remain aligned with rates offered on comparable domestic rupee term deposits. However, the temporary relaxation allows banks to offer more competitive returns for eligible foreign currency deposits.
For FCNR(B) deposits with tenures ranging from one year to less than three years, banks can offer rates up to 250 basis points above the applicable Overnight Alternative Reference Rate or swap benchmark for the respective currency. For deposits with tenures between three and five years, the permissible spread has been increased to 350 basis points above the benchmark rate.
The central bank has also specified that transfers from NRO accounts to NRE accounts will not be eligible for the exemption.
The policy is expected to benefit NRIs and PIOs seeking higher returns on their overseas savings while providing Indian banks with an additional source of foreign currency funding.
Financial experts believe the measure could help increase dollar inflows into the country, strengthen India’s foreign exchange reserves, support the rupee during periods of volatility, and assist in meeting external payment obligations. The move reflects the RBI’s continued efforts to maintain financial stability and ensure adequate foreign currency liquidity in the economy.
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