The Reserve Bank of India (RBI) has eased the current account rules for bank exposures less than ₹5 crore. The decision was taken after the feedback from Indian Banks’ Association (IBA) and other stakeholders.
“It has been decided that banks may open current accounts for borrowers who have availed credit facilities in the form of cash credit (CC)/ overdraft (OD) from the banking system,” RBI said in a statement.
In August this year, RBI had extended the deadline for implementing the new current account norms by another three months till October end, following requests from banks. This extension came a year after the central bank introduced guidelines around current account opening to ensure credit discipline and check diversion of funds
As per the revised rules released by RBI, banks can open current accounts of all financial institutions like NABARD, National Housing Bank, Exim Bank and SIDBI without any restrictions. Banks can also open current accounts under specific instructions of state and central governments. It can also open accounts attached by the orders of central or state governments, regulatory bodies, courts, investigative agencies, etc. where a customer cannot make discretion.
For borrowers, where the exposure of the banking system is less than ₹5 crore, there is no restriction on opening of current accounts or on provision of CC/OD facility by banks, subject to obtaining an undertaking from such borrowers that they shall inform the banks, as and when the credit facilities availed by them from the banking system reaches ₹5 crore or more.
Under the new rules, RBI has also allowed banks to open collection accounts provided the funds deposited in such accounts will be remitted within 2 working days to the CC/OD account.
RBI has said that borrower with exposure over ₹5 crore can maintain current accounts with any one of the banks with which it has CC/OD facility, provided that the bank has at least 10% of the exposure of the banking system to that borrower.
Further, other lending banks may open only collection accounts subject to the condition that funds deposited in such collection accounts will be remitted within two working days of receiving such funds to the CC/OD account maintained with the above-mentioned bank maintaining current accounts for the borrower.
Never miss a story! Stay connected and informed with Mint.
our App Now!!