RBI Curtails Temporary Interest Rate Relaxation on Non-Resident Deposits for Rural Co-operative Banks

The Reserve Bank of India (RBI) has issued a critical regulatory update modifying the compliance timeline for rural co-operative banking institutions. Through a recent notification, the apex bank has officially truncated the temporary relaxation window previously granted for interest rate ceilings on specific foreign currency and non-resident deposit accounts.

This regulatory shift is formally introduced via the Reserve Bank of India (Rural Co-operative Banks – Interest Rate on Deposits) Second Amendment Directions, 2026, documented under circular reference RBI/2026-27/248 and DOR.SOG(SPE).REC.214/13.03.00/2026-27, dated August 25, 2026.

Background of the Regulatory Adjustment

To understand the current modification, it is essential to trace the regulatory timeline governing these deposits. Originally, the central bank governed these financial instruments through the Reserve Bank of India (Rural Co-operative Banks – Interest Rate on Deposits) Directions, 2025, which were initially promulgated on November 28, 2025.