RBI ended its NRE and FCNR(B) deposit rate relaxation on 31 August 2026, a month earlier than announced

For about ten weeks this summer, Indian banks were free to offer NRIs higher rates on long-term NRE and FCNR(B) deposits than the Reserve Bank’s rules normally allow. The RBI closed that window on 31 August 2026, a month before the date it first announced.

What changed

On 17 June 2026 the RBI issued the Interest Rate on Deposits Amendment Directions, 2026 (circular RBI/2026-27/138 for commercial banks, with matching circulars for small finance banks and other bank categories). Two limits were suspended with immediate effect:

• NRE deposits: Normally, interest on NRE and NRO deposits cannot exceed what the bank pays on comparable domestic rupee term deposits. That restriction was lifted for fresh NRE deposits of three years and above.
• FCNR(B) deposits: For tenors from three years up to and including five years, the usual ceiling is the overnight alternative reference rate for the currency (or the swap rate) plus 350 basis points. That ceiling was lifted for fresh deposits.

Both relaxations covered deposits renewed on maturity during the window. The NRE relaxation excluded money moved from NRO to NRE accounts. The period was set as 17 June to 30 September 2026.

On 25 August 2026, “on a review”, the RBI issued the Third Amendment Directions (circular RBI/2026-27/243). This replaced 30 September with 31 August 2026 in both footnotes, with immediate effect. The law firm King Stubb & Kasiva reports that six parallel amendments made the same change for commercial banks, small finance banks, regional rural banks, local area banks, and urban and rural co-operative banks.

Who it affects

• NRIs who opened or renewed a qualifying NRE (three years or more) or FCNR(B) (three to five years) deposit between 17 June and 31 August 2026.
• NRIs who planned to book in September expecting the original deadline. Those deposits fall under the normal caps.
• Anyone moving NRO money into an NRE deposit. That money was never eligible for the relaxed rate.

What it means for you

The circulars only changed which rates banks could offer on fresh deposits during the window. Neither circular addresses deposits already booked, and the RBI has not published a separate clarification on them. Your deposit receipt and the bank’s terms are what fix your rate.

1. Find your deposit advice and check three things: the booking or renewal date, the tenor, and the contracted rate.
2. If it was booked between 17 June and 31 August 2026, ask your bank in writing to confirm that the rate holds until maturity.
3. Read the premature-withdrawal terms before you break a high-rate deposit to chase a better rate elsewhere. Closing early can mean a penalty or a lower rate. You would also be reinvesting under the normal ceilings.
4. For renewals from 1 September onward, expect rates within the usual ceilings and compare banks before you agree to an auto-renewal.
5. Neither circular changed how NRE or FCNR(B) interest is taxed. Only the rates banks could offer changed.

Key dates

• 17 June 2026: Caps lifted on fresh 3-year-plus NRE and 3-5 year FCNR(B) deposits.
• 25 August 2026: RBI brings the end date forward.
• 31 August 2026: Last day of the relaxation.
• 1 September 2026: Normal ceilings apply again.