The RBI has introduced the Third Amendment Directions for interest rates applicable to deposits in regional rural banks, enabling temporary suspension of interest rate limitations.
RBI Releases Third Amendment Directions for Regional Rural Banks
On August 25, 2026, the Reserve Bank of India published the 'RBI (Regional Rural Banks – Interest Rate on Deposits) Third Amendment Directions, 2026.' This directive serves as an update to the 2025 framework, focusing on the interest rate structures applicable to regional rural banks.
Specifically, the amendment permits a temporary withdrawal of the ceiling on interest rates for fresh FCNR(B) deposits, allowing regional rural banks greater freedom in setting competitive interest rates for depositors. This change aims to enhance the liquidity and competitiveness of these banks in the regional banking sector.
Legal and financial practitioners should be mindful of these adjustments as they impact the offerings and strategies of regional rural banks. The greater flexibility in interest rates may incentivize increased deposit inputs, fostering economic growth in rural areas.
Citations
- Reserve Bank of India (Regional Rural Banks – Interest Rate on Deposits) Third Amendment Directions (2026)