By Saurabh Garg, founder·4 min read·Published 2026-09-07

Short answer: On 25 August 2026 the RBI moved the end of its NRE and FCNR(B) interest rate ceiling relaxation from 30 September 2026 to 31 August 2026. Fresh deposits booked on or after 1 September sit under the old caps again. Deposits already booked are not repriced, and rent sitting in an NRO account was never in scope.

RBI Ended the NRE and FCNR(B) Rate Holiday a Month Early, on 31 August 2026

On 25 August 2026 the Reserve Bank moved the end date of its NRE and FCNR(B) interest rate relaxation from 30 September 2026 to 31 August 2026. From 1 September the old ceilings apply again to fresh deposits, so the headline rate an NRI landlord was quoted in July may no longer be on the counter.

What changed

Since 17 June 2026 banks had been free to price two kinds of non-resident deposit above the normal caps. Fresh FCNR(B) deposits of three years and above, up to five years, could be priced above the ceiling. Fresh NRE deposits of three years and above could be priced above the bank's own comparable domestic rupee term deposit rate. Both freedoms were set to run until 30 September 2026.

The Reserve Bank cut that short. Its amendment of 25 August replaced the phrase "for the period until September 30, 2026" with "for the period until August 31, 2026" in both places, and said the change comes into force with immediate effect. The relaxation ran for 76 days instead of 106.

From 1 September 2026 the standing rules are back. Paragraph 27(4) of the Directions says interest rates on NRE and NRO deposits shall not be higher than those the bank offers on comparable domestic rupee term deposits. Paragraph 32(7) sets the FCNR(B) ceiling at the overnight ARR for the currency, or the swap, plus 250 basis points for one year to under three years, and plus 350 basis points for three years and above up to five years.

The source

The document is Reserve Bank of India (Commercial Banks – Interest Rate on Deposits) Third Amendment Directions, 2026, circular RBI/2026-27/243, dated 25 August 2026, signed by Chief General Manager Dr Sudarsana Sahoo and issued under Section 35A of the Banking Regulation Act, 1949.

The same day the Reserve Bank issued matching amendments for Small Finance Banks, Local Area Banks, Regional Rural Banks, Urban Co-operative Banks and Rural Co-operative Banks, so the earlier end date runs across every bank category that takes these deposits. The consolidated Directions on the Reserve Bank site now carry the line "Updated as on August 25, 2026" and show the restored ceilings.

What it means if you own a flat in India

Three practical effects.

Rate quotes go stale. A three-year NRE or FCNR(B) rate a bank quoted you in July or early August was priced inside the relaxation. A fresh deposit booked on or after 1 September sits under the ceiling again. Ask the bank what rate applies on the day you book, not the rate on the brochure.

Deposits already booked are not touched. The amendment changes the window for pricing fresh deposits. It does not reprice a contract you already hold. Your existing term stays on its own terms until maturity, and renewal after 1 September is a fresh booking priced under the ceiling.

Rent money in an NRO account was never in scope. The relaxation covered fresh NRE and FCNR(B) deposits. Rent from your flat lands in an NRO account, and moving it to NRE requires the repatriation route with its own paperwork and its own limit. That path is unchanged by this circular. Our guide on repatriating money out of an NRO account walks the steps, and the Form 15CA and 15CB guide covers the filings.

What to do

Call the bank before you book or renew anything with a three-year or five-year tenor and get the rate in writing with the booking date on it. If you were told in August that a rate was good until 30 September, that is no longer the position and the bank's own website now shows the post-31-August pricing.

If your flat's rent has been building up in an NRO account and you were waiting on a rate, the deposit rate and the repatriation route are two separate questions. Settle the repatriation paperwork first. The rate follows.

FAQ

Did my existing NRE deposit get repriced on 1 September 2026? No. The 25 August amendment changed the period during which banks may price fresh deposits above the ceiling. A deposit already booked runs to maturity on its contracted rate.

What is the FCNR(B) ceiling now? Overnight ARR for the currency, or the swap, plus 250 basis points for one year to under three years, and plus 350 basis points for three years and above up to five years, per paragraph 32(7) of the Directions.

Can I move NRO rent into an NRE deposit to get the better rate? An NRO to NRE transfer is a repatriation, with its own conditions and filings, and it is not the same act as booking a fresh deposit. Read the repatriation guide and speak to your bank about your own case.

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Sources

Information on this page is as on 2026-09-07. Rules, rates, deadlines and government portals change without notice, so verify against the official source before you act. This page is for information only. It is not tax or legal advice, and it is not a substitute for a qualified adviser who knows your position.