Kashvi Pathak, an NRI in Dubai, has Rs. 40 lakh she wants to park in India and is unsure whether to wait. The answer for now is do not wait. From 17 June 2026 to 30 September 2026, the RBI has temporarily withdrawn the interest-rate ceiling on fresh NRE term deposits of 3 years and above, and on fresh FCNR(B) deposits of 3 to 5 years, so banks can offer higher rates in this short window only.
This is a time-limited measure under RBI Directions RBI/2026-27/138, meant to attract foreign-currency inflows. It is NOT a permanent deregulation. After 30 September 2026, the normal ceilings return.
Both accounts are only for Non-Resident Indians (NRIs), but they work very differently.
| Feature | NRE term deposit | FCNR(B) deposit |
|---|---|---|
| Currency held | Indian rupees | Foreign currency (USD, GBP, etc.) |
| Repatriable | Yes, fully | Yes, fully |
| Interest taxable in India | No, tax-free | No, tax-free |
| Exchange-rate risk | You bear rupee-fall risk | Bank bears it, you are shielded |
| Covered tenor in this window | 3 years and above | 3 years up to and including 5 years |
| Best for | NRIs comfortable holding rupees | NRIs who fear rupee depreciation |
In short, NRE keeps your money in rupees, while FCNR(B) keeps it in the foreign currency you deposited, so a falling rupee does not eat into your principal.
WINDOW CLOSES 30 SEPTEMBER 2026. The higher-rate freedom applies only to fresh deposits booked (or renewed on maturity) between 17 June 2026 and 30 September 2026. Deposits booked after this date fall back under the normal ceiling.
The interest rates banks may pay on deposits are governed by the Reserve Bank of India Act, 1934 and the Banking Regulation Act, 1949, through the RBI master directions on interest rates on deposits.
The change here comes from the Reserve Bank of India (Commercial Banks - Interest Rate on Deposits) Amendment Directions, 2026, notification number RBI/2026-27/138, issued on 17 June 2026. It temporarily withdraws:
Both relaxations take effect from 17 June 2026 and expire on 30 September 2026. After that date the usual ceiling returns. For FCNR(B) deposits, the normal ceiling referenced is the Overnight Alternative Reference Rate (ARR) for that currency plus 350 basis points for the 3 to 5 year tenor. Because the cap is lifted in this window, banks may price above that level.
Real-life example. Dr. Shrawan Kumar Pathak, an NRI doctor in London, has Rs. 50 lakh equivalent in savings. On 1 July 2026 he splits it: half into a 5-year NRE term deposit and half into a 5-year FCNR(B) deposit in GBP, both booked before 30 September 2026. Because the ceiling is lifted, his bank offers a sharper rate than usual. He keeps the written deposit advice showing the locked rate and maturity date. If he had waited until October 2026, the normal ceiling would have applied and the offered rate would have been lower.
No. The withdrawal is temporary, from 17 June 2026 to 30 September 2026 only. After that the normal ceilings return, so this is a limited window, not a permanent deregulation.
Only fresh NRE term deposits of 3 years and above tenor, and fresh FCNR(B) deposits of 3 years and above up to and including 5 years, booked or renewed in the window.
NRE deposits are held in rupees, so you carry rupee-depreciation risk. FCNR(B) deposits stay in the foreign currency you deposited, shielding your principal from a falling rupee. Both are repatriable and tax-free in India.
A deposit you booked inside the window keeps its locked rate for its full tenor. But any new deposit booked after 30 September 2026 falls back under the normal ceiling, such as ARR plus 350 basis points for FCNR(B) of 3 to 5 years.
Interest on both NRE and FCNR(B) deposits is exempt from income tax in India under current rules, for as long as you remain an NRI. Confirm your residency status with the bank.