“For borrowers, where the exposure to the banking system is less than Rs 5 crore, there is no restriction on opening of current account or provision of CC/OD facility by banks, subject to obtaining an undertaking from such borrowers that they will notify Bank(s), as and when the credit facilities availed by them from the banking system reach Rs 5 crore or more,” reserve Bank of India stated in its guidelines.
For borrowers where the exposure exceeds Rs 5 crore, shall continue to maintain a current account with any bank having cash credit or overdraft facility, provided the bank has at least 10 per cent of the banking exposure to that system for the borrower.
The banking regulator allowed banks to open and maintain inter-bank accounts, all accounts of institutions such as Exim Bank, NABARD, NHB and SIDBI, accounts linked by orders of the Central or State government and investigative agencies without any restriction.
In August last year, the banking regulator had introduced new rules for opening current accounts, mandating that a borrower can only have a current account with a bank that accounts for at least 10% of his total borrowings. % Is.
While banks were given three months to comply with the new strictures, delays in implementation forced the Reserve Bank to extend the deadline till July 31. The deadline was extended till October 31 after thousands of current accounts were closed in the last few months. , inconvenience to many firms and small business owners. SBI alone is said to have closed more than 60,000 such accounts.
RBI also clarified that other lending banks would be allowed to open only collection accounts and the money deposited in those accounts would be remitted within two days of receiving the funds. The central bank also said that if any lender does not have at least 10% exposure to the banking system to the borrower, the bank with the highest risk can open a current account.
RBI’s new rules are aimed at disciplining the use of current account to efficiently monitor cash flow and control misappropriation of funds by regulating the already over-regulated sector.
RBI had observed that despite existing guidelines and penal provisions, borrowers are diverting and siphoning money by opening multiple current accounts with different banks. While the intention is clear, the need to bring in credit discipline has created a lot of disruption.