The Reserve Bank of India has issued the Third Amendment Directions for Urban Co-operative Banks regarding interest rates on deposits. This amendment facilitates more competitive interest rates on fresh deposits.
RBI Amends Interest Rate Directions for Urban Co-operative Banks
On August 25, 2026, the Reserve Bank of India (RBI) released the Reserve Bank of India (Urban Co-operative Banks – Interest Rate on Deposits) Third Amendment Directions, 2026. This directive revises the existing regulations from the 2025 Directions, specifically focusing on updated interest rates for fresh deposits.
Among the pivotal changes introduced is the temporary removal of the interest rate ceiling on new deposits. This adjustment aims to enhance the competitiveness of urban co-operative banks, enabling them to attract more depositors with potentially higher returns. The update also incorporates revisions as of June 17, 2026, to adapt to the evolving financial landscape.
Legal practitioners should advise clients in the banking sector to reassess their deposit offerings in light of these changes. The capacity to offer competitive rates may significantly impact customer retention and acquisition in the urban banking segment.
Citations
- Reserve Bank of India (Urban Co-operative Banks – Interest Rate on Deposits) Third Amendment Directions, 2026