February 7, 2014
The Chief Executive Officers
All Primary (Urban) Co-operative Banks
Deregulation of Interest Rates on
Non-Resident (External) Rupee (NRE) Deposits
Please refer to our circular UBD.BPD.(PCB) CIR.No.8/13.01.000/2013-14 dated September 3, 2013 allowing banks the freedom to offer interest rates on incremental NRE deposits with maturity of 3 years and above without any ceiling in order to pass on the benefit of exemption provided on such deposits from CRR / SLR requirements. These instructions were valid upto November 30, 2013. Further in terms of para 2 of our circular UBD.BPD.(PCB).40/13.01.000/2013-14 dated December 2, 2013 the validity of these instructions were extended up to January 31,2014, subject to review.
2. On a review and in order to give banks some time, it has been decided to extend the above dispensation till February 28, 2014. With effect from March 1, 2014, the interest rate ceiling will revert to the position prior to August 30, 2013, i.e. interest rates offered by banks on NRE deposits cannot be higher than those offered by them on comparable domestic rupee deposits.
3. All other instructions in this regard, as amended from time to time, will remain unchanged.
Principal Chief General Manager