Summary: The Reserve Bank of India (RBI) has issued RBI/2026-27/244, DOR.SOG(SPE).REC.212/13.03.00/2026-27 dated August 25, 2026, titled Reserve Bank of India (Small Finance Banks – Interest Rate on Deposits) Third Amendment Directions, 2026. The Amendment Directions modify the Reserve Bank of India (Small Finance Banks – Interest Rate on Deposits) Directions, 2025, dated November 28, 2025 and updated as on June 17, 2026.
The amendment concerns a temporary relaxation introduced by RBI with effect from June 17, 2026. Under the Reserve Bank of India (Small Finance Banks – Interest Rate on Deposits) Amendment Directions, 2026 dated June 17, 2026, the interest-rate ceiling on fresh FCNR(B) deposits having three-to-five-year tenors was temporarily withdrawn, including for deposits renewed upon maturity. At the same time, the restriction on interest rates on fresh NRE deposits of three years and above, including deposits renewed upon maturity, was also temporarily withdrawn. The June 17, 2026 relaxation was originally specified to remain available until September 30, 2026.
The present Third Amendment Directions shorten that temporary relaxation period. RBI has decided to replace the date September 30, 2026 with August 31, 2026. Consequently, the specified temporary relaxation for Small Finance Banks will operate until August 31, 2026, rather than September 30, 2026.
The amendment makes two precise textual substitutions in the 2025 Directions. In paragraph 26(4) subscript (1), the reference to the period from June 17, 2026 until September 30, 2026 is replaced with a reference to the period until August 31, 2026. Paragraph 26(4) deals with the interest-rate framework for NRE/NRO deposits. In paragraph 31(7) subscript (2), the corresponding reference to the FCNR(B) interest-rate ceiling relaxation is similarly changed so that the temporary withdrawal operates until August 31, 2026.
The underlying 2025 Directions prescribe the interest-rate framework applicable to Small Finance Banks, including requirements relating to domestic deposits, NRE/NRO deposits and FCNR(B) deposits. In the normal framework, paragraph 26(4) provides that interest rates on NRE/NRO deposits cannot be higher than those offered on comparable domestic rupee term deposits, while paragraph 31(7) prescribes FCNR(B) interest-rate ceilings.
The Amendment Directions are issued in exercise of powers conferred by Section 35A of the Banking Regulation Act, 1949. The RBI states that it is satisfied that the amendment is necessary and expedient in the public interest. The Amendment Directions come into force with immediate effect. Thus, the principal regulatory consequence expressly stated in the supplied material is an earlier termination date for the specified temporary relaxation applicable to Small Finance Banks.
Reserve Bank of India
RBI/2026-27/244
DOR.SOG(SPE).REC.212/13.03.00/2026-27 | Dated: August 25, 2026
Reserve Bank of India (Small Finance Banks – Interest Rate on Deposits) Third Amendment Directions, 2026
Please refer to the Reserve Bank of India (Small Finance Banks – Interest Rate on Deposits) Directions, 2025 (hereinafter referred to as ‘Directions’), dated November 28, 2025 (Updated as on June 17, 2026), wherein temporary withdrawal of the interest rate ceiling on fresh FCNR(B) deposits of 3-5 year tenors and restriction on interest rates on NRE deposits of 3 year and above tenors, including the deposits that are renewed upon maturity, have been provided with effect from June 17, 2026, for the period until September 30, 2026. On a review, it has been decided to amend the date ‘September 30, 2026’ to the date ‘August 31, 2026’ for the aforementioned temporary relaxation.
2. Accordingly, in exercise of the powers conferred by Section 35A of the Banking Regulation Act,1949 and all other laws enabling the Reserve Bank India (RBI) in this regard, the RBI, being satisfied that it is necessary and expedient in public interest so to do, hereby, issues the Amendment Directions hereinafter specified.
3. These Amendment Directions shall be called the Reserve Bank of India (Small Finance Banks – Interest Rate on Deposits) Third Amendment Directions, 2026.
4. These Amendment Directions shall come into force with immediate effect.
5. These Amendment Directions shall modify the Directions, as under:
i. In paragraph 26(4) subscript (1), the phrase “with effect from June 17, 2026, for the period until September 30, 2026” shall be substituted with “with effect from June 17, 2026, for the period until August 31, 2026”.
ii. In paragraph 31(7) subscript (2), the phrase “with effect from June 17, 2026, for the period until September 30, 2026” shall be substituted with “with effect from June 17, 2026, for the period until August 31, 2026”.
(Dr. Sudarsana Sahoo)
Chief General Manager
