RBI Announces Third Amendment on Interest Rates for Small Finance Banks

Regulatory Changes Impacting Small Finance Banks by RBI

On August 25, 2026, the Reserve Bank of India (RBI) introduced the Third Amendment Directions, 2026 affecting Small Finance Banks, which alters the previous framework stipulated on November 28, 2025. Notably, this amendment facilitates a temporary withdrawal of interest rate ceilings for new deposit accounts.

The adjustments in regulatory requirements allow for greater flexibility in interest rate offerings, which is aimed at fostering competitive conditions in the banking sector. Small Finance Banks are now positioned to more effectively attract deposits without the constraints of previously established ceilings.

Compliance with these new directions is essential for Small Finance Banks, as they play an instrumental role in the financial inclusivity agenda of the RBI. Adapting to this regulatory shift will be critical for their growth strategies.

For legal professionals advising clients in banking, understanding the nuances of these amendments will be imperative in providing sound legal counsel regarding deposit negotiations and banking compliance matters.