The Reserve Bank of India (RBI) has increased the interest rate cap on Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits. Banks can now offer rates up to the Overnight Alternative Reference Rate (ARR) + 400 basis points for deposits with maturities between 1 year and less than 3 years.
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This is a significant increase from the earlier limit of ARR + 200 basis points.
Governor Shaktikanta Das announced this during the Monetary Policy Committee (MPC) briefing on Friday, December 6.
FCNR(B) deposits are accounts where Non-Resident Indians (NRIs) can hold their earnings in foreign currencies like USD or GBP, protecting them from exchange rate fluctuations.
By allowing higher interest rates, the RBI aims to attract more foreign currency inflows, which can strengthen India’s foreign exchange reserves.
The move is part of the RBI’s broader efforts to ensure financial stability and support the country’s external sector amidst global uncertainties.
This is a developing copy
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