The Reserve Bank of India has released the Second Amendment Directions for interest rates on deposits in rural co-operative banks. This amendment temporarily withdraws the ceiling on interest rates for fresh deposits, impacting rural banking operations.
RBI Issues Second Amendment Directions for Rural Co-operative Banks
On August 25, 2026, the Reserve Bank of India (RBI) published the 'RBI (Rural Co-operative Banks – Interest Rate on Deposits) Second Amendment Directions, 2026.' This amendment updates the interest rate framework originally established in the RBI (Rural Co-operative Banks – Interest Rate on Deposits) Directions, 2025, allowing for more flexible interest rates on new deposits.
The amendment specifically marks a temporary withdrawal of the interest rate ceiling for fresh deposits made under the Foreign Currency Non-Resident (Bank) term deposit scheme (FCNR(B)), thus aiming to enhance the attractiveness of rural co-operative banks to depositors. This is in light of the ongoing economic conditions and the need for rural banks to remain competitive.
Practitioners and financial institutions should take note of this change as it may lead to a shift in customer behavior towards rural co-operative banks. As competitiveness in interest rates increases, it may also encourage better financial inclusion efforts within rural areas.
Citations
- Reserve Bank of India (Rural Co-operative Banks – Interest Rate on Deposits) Second Amendment Directions (2026)