What changed
The reference rates for FCNR(B) deposits are now quoted by Financial Benchmarks India Pvt. Ltd. (FBIL) instead of FEDAI, effective January 31, 2022. Additionally, the savings account opening restrictions have been made more explicit, specifically barring accounts for political parties and any trading/business/professional concerns, with a clear definition of 'political party' added.
What it means for you
Banks must update their FCNR(B) deposit pricing systems to use FBIL rates, ensuring compliance with the revised Master Directions. The clarified savings account rules reduce ambiguity, preventing inadvertent openings for ineligible entities like political parties or businesses, which could lead to regulatory penalties.
What you must do
- Update FCNR(B) deposit interest rate calculation systems to reference FBIL rates instead of FEDAI.
- Revise internal savings account opening checklists to explicitly exclude political parties and all trading/business/professional entities.
- Train branch staff on the updated eligibility criteria for savings accounts, including the definition of political party.
Who it affects
All Scheduled Commercial Banks, Regional Rural Banks, Small Finance Banks, Payment Banks, Local Area Banks, Primary (Urban) Co-operative Banks, District Central Co-operative Banks, State Co-operative Banks
What is the effective date for using FBIL reference rates for FCNR(B) deposits?
The change from FEDAI to FBIL reference rates is effective from January 31, 2022, as stated in the RBI circular dated September 16, 2022.