The Reserve Bank of India has issued Second Amendment Directions regarding interest rates on deposits for Rural Co-operative Banks. The update temporarily withdraws the ceiling on interest rates for fresh deposits effective from the dates specified in earlier Directions.
RBI's Second Amendment on Rural Co-operative Banks
On August 25, 2026, the Reserve Bank of India (RBI) released the Second Amendment Directions concerning interest rates on deposits for Rural Co-operative Banks. This amendment follows prior regulations set forth in November 2025, updated as of June 17, 2026.
The amendment effectively withdraws the interest rate ceiling on fresh deposits, allowing banks more flexibility in setting rates. This adjustment is focused on attracting depositors in the context of competitive financial environments.
With this direction, the RBI aims to ensure that Rural Co-operative Banks remain viable and competitive, encouraging the influx of funds which is critical for these institutions. Such adjustments are crucial for sustaining the liquidity of rural economies.
Practitioners should note the implications on deposit strategies and customer engagement as banks are now empowered to offer potentially higher interest rates on fresh deposits, which could influence deposit growth.
Citations
- RBI/2026-27/248 DOR.SOG(SPE).REC.214/13.03.00/2026-27