The Reserve Bank of India has amended the interest rate on deposits for rural co-operative banks. The temporary withdrawal of the interest rate ceiling on fresh deposits aims to enhance their competitiveness.
RBI Issues Third Amendment Directions for Rural Co-operative Banks
On August 25, 2026, the Reserve Bank of India (RBI) issued the Reserve Bank of India (Rural Co-operative Banks – Interest Rate on Deposits) Second Amendment Directions, 2026. This amendment modifies the earlier 2025 directions, specifically addressing the interest rates applicable to fresh deposits.
The Directions include a significant change: the temporary withdrawal of the interest rate ceiling on fresh deposits. This initiative is part of a broader strategy to boost competitiveness and facilitate better rates for depositors. Additionally, the amendment reflects updates made as of June 17, 2026, to ensure the guidelines remain relevant to current economic conditions.
Practitioners should note that this change may influence deposit strategies among rural co-operative banks, encouraging them to offer more attractive interest rates to attract liquidity. This alteration aligns with the regulatory goal of nurturing competitive banking environments among rural financial institutions.
Citations
- Reserve Bank of India (Rural Co-operative Banks – Interest Rate on Deposits) Second Amendment Directions, 2026