RBI relaxes rules of opening current accounts
Opening of Current Accounts in banks by the borrowers- RBI relaxes the norms
The Reserve Bank of India has eased some of the requirements of its current account guidelines vide its DOR.CRE.REC.63/21.04.048/2021-22 dated 29th October 2021. The said relaxations have been made by the RBI taking into account the feedback received from Indian Bank’s Association (IBA) and other stakeholders.
On a review and taking into account feedback received from the Indian Banks’ Association (IBA) and other stakeholders it has been decided that banks may open current accounts for borrowers who have availed of credit facilities in the form of cash credit (CC)/ overdraft (OD) from the banking system as per the provisions below:
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Borrowings less than Rs. 5 crores |
Borrowings equal to or more than Rs. 5 crores |
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Where the exposure of the banking system is less than Rs. 5 crores, there is no restriction on the opening of current accounts or on the provision of CC/OD facility by banks, subject to obtaining an undertaking from such borrowers that they shall inform the banks (s), as and when the credit facilities availed by them from the banking system reaches Rs. 5 crores or more. |
In respect of borrowers where the exposure of the banking system is Rs. 5 crores or more, such borrower can maintain current accounts with any one of the banks with which it has CC/OD facility provided that the banks have 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 2 working days of receiving such funds, to the CC/OD account maintained with the above-mentioned bank maintaining a current account for the borrower. In case, none of the lenders has at least 10% exposure of the banking system to the borrower, the bank having the highest exposure may open current accounts. Non-lending banks are not permitted to open current accounts. |
Further, according to revised rules released by RBI, banks can open current accounts of all financial institutions, including NABARD, National Housing Bank, Exim Bank, and SIDBI, without any restriction. Banks can also open current accounts under specific instructions of Central Government and State Governments. It can also open accounts attached by the orders of central or state governments, regulatory bodies, investigative agencies, where a customer cannot undertake any discretionary debits.
It is clarified that the banks shall monitor all accounts regularly, at least on a half-yearly basis, specifically with respect to the exposure of the banking system to the borrower, and the bank’s share in that exposure, to ensure compliance with these instructions. If there is a change in the exposure of banks or aggregate exposure of the banking system to the borrower which warrants the implementation of new banking arrangements, such changes shall be implemented within a period of 3 months from the date of such monitoring.
Read the Detailed Circular: RBI Circular dated 29th October 2021
