RBI allows banks to offer higher interest rates to NRIs/PIOs to mobilise forex
The Reserve Bank of India has temporarily removed interest rate ceilings on certain foreign currency deposits to attract more foreign exchange. This policy change aims to bolster India's forex reserves and support the rupee against depreciation.
Why it matters
Adjusting interest rate caps on non-resident deposits is a key monetary tool for central banks to manage balance of payments and currency stability.
The Reserve Bank of India (RBI), on a review of it’s 2025 direction, has decided to temporarily withdraw interest rate ceiling on fresh Foreign Currently Non-Resident- Bank [FCNR(B)] deposits of 3-5 year tenors and restriction on interest rates on Non-Resident External (NRE) deposits of three year and above tenors, including the deposits that are renewed upon maturity, till September 30, 2026 to boost forex reserves.
The article provides a factual summary of a central bank policy announcement.
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