The RBI has introduced the Third Amendment Directions for regional rural banks, temporarily lifting the interest rate ceiling on new deposits. This move is anticipated to improve liquidity and increase deposit rates.
RBI Announces Third Amendment Directions for Regional Rural Banks
On August 25, 2026, the Reserve Bank of India published the Third Amendment Directions regarding interest rates for regional rural banks. This amendment signifies a temporary withdrawal of the interest rate ceiling on fresh deposits, allowing these banks to offer more competitive rates.
This change follows the earlier Directions released on November 28, 2025, which were updated on June 17, 2026. By removing the ceiling on interest rates, the RBI aims to enhance the financial stability of regional rural banks and strengthen their capacity to mobilize deposits.
The direct impact of this amendment is expected to be an uptick in deposit acquisition among regional rural banks, empowering them to offer better financial products to their customers and stabilize their lending operations.
“This flexibility in interest rates will likely encourage more deposits, facilitating growth within regional banking sectors,” said an official from the RBI.
For legal practitioners, understanding these amendments is vital for advising clients operating within the banking framework and anticipating changes in deposit strategies that may arise from these regulatory shifts.
Citations
- Reserve Bank of India (Regional Rural Banks – Interest Rate on Deposits) Directions (2026) RBI/2026-27/246