RBI Shortens Temporary FCNR(B) and NRE Deposit-Rate Window to August 31 Across Bank Categories

The Reserve Bank of India has brought forward the end date of a temporary deposit-rate relaxation for foreign-currency and non-resident rupee deposits, shortening the window from September 30, 2026 to August 31, 2026. The change was notified on August 25 through separate amendment directions covering commercial banks, small finance banks, local area banks, regional rural banks, urban co-operative banks and rural co-operative banks.

What RBI changed

RBI's 2025 deposit-interest directions had been amended in June 2026 to provide a temporary regime from June 17. The framework included withdrawal of the interest-rate ceiling on fresh FCNR(B) deposits with tenors of three to five years and a restriction relating to interest rates on NRE deposits with tenors of three years and above, including deposits renewed on maturity. The temporary arrangement had originally been stated to run until September 30, 2026.

In the August 25 amendments, RBI replaced that September 30 end date with August 31, 2026. The amendment directions state that they come into force immediately. For commercial banks, the change is contained in RBI/2026-27/243, DOR.SOG(SPE).REC.211/13.03.00/2026-27. Parallel directions were issued for the other bank categories so that the revised cut-off applies across the covered deposit-interest frameworks.

Which banks are covered

RBI's August 25 update spans six categories of banks:

- Commercial banks

- Small finance banks

- Local area banks

- Regional rural banks

- Urban co-operative banks

- Rural co-operative banks

The individual amendment directions use the same core change: the temporary period that had run from June 17 through September 30 is now stated to run only through August 31.

Why the revised date matters

The practical significance is timing. Banks that were operating under the temporary FCNR(B) and NRE deposit-rate treatment now have a much shorter remaining window than the earlier September 30 date suggested. Treasury, deposit-pricing, finance, regulatory-compliance and operations teams therefore need to ensure that product terms, internal rate approvals, customer communications and system parameters reflect the August 31 cut-off rather than the superseded September 30 date.

The change is particularly relevant for fresh FCNR(B) deposits in the three-to-five-year tenor band and for NRE deposits of three years and above, including renewals at maturity, because those are the deposit categories specifically referenced in the amendment directions. Professionals reviewing deposit-rate compliance should use the direction applicable to the bank category concerned rather than relying on an older copy of the 2025 directions or on the earlier September deadline.

Immediate compliance points

Finance and compliance teams should first identify any internal circulars, rate sheets or customer-facing material that still cite September 30, 2026. Those documents should be checked against the August 25 RBI amendment applicable to the institution. Banks should also review transactions or renewals scheduled around the end of August so that the applicable deposit-rate treatment is determined using the revised regulatory timeline.

For audit and assurance teams, the date change is a useful cut-off item for testing. Evidence supporting rate-setting decisions, system changes and communications around August 31 may be relevant when reviewing compliance with RBI's deposit-interest directions. Where a bank belongs to a specific regulated category such as a small finance bank, regional rural bank or co-operative bank, the corresponding category-specific amendment should be retained in the compliance file.

What has not changed in these amendments

The August 25 directions are narrowly focused on the end date of the temporary arrangement. They do not, in the text of these amendments, introduce a new start date or replace the underlying deposit categories referenced in the June framework. The key operative change is the substitution of August 31, 2026 for September 30, 2026.

Useful official links

RBI Commercial Banks – Interest Rate on Deposits Third Amendment Directions, 2026

Key takeaway

RBI has effectively shortened the temporary FCNR(B) and NRE deposit-rate window by one month. Banks and professionals working on treasury, deposit pricing, financial control, compliance and audit should treat August 31, 2026 as the revised cut-off and verify implementation against the exact amendment direction applicable to their bank category.