RBI Eases Current A/C Rules for Bank Exposures Less than Rs. 5 crores

The Reserve Bank of India (RBI) on Friday eased current account rules for bank exposures less than Rs. 5 crores, allowing lenders to open current account, cash credit and overdraft facilities without any restrictions. The regulator asked banks to implement the changes within one month.

“For borrowers where the exposure of the banking system is less than Rs 5 crores, 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 bank (s), as and when the credit facilities availed by them from the banking system reaches Rs. 5 crores or more,” the RBI said in its guidelines.

Where the exposure is more than Rs. 5 crores, borrowers will continue to maintain current accounts with any one of the banks with which they have cash credit or overdraft facility, provided that the bank has at least 10% of the exposure of the banking system for that borrower.

The banking regulator also permitted banks to open and maintain inter-bank accounts with institutions like EXIM Bank, NABARD, NHB, AND SIDBI.

In august last year, the banking regulator had introduced new rules for opening of current accounts, which mandated that a borrower can have a current account with only the bank which accounts for at least 10% its total borrowing.

While bank was given three months to adhere to the new rules, delay in implementation had forced the Reserve Bank of India to extend the deadline to July 31.

The deadline was further extended to October 31, after thousands of current accounts were closed in the last few months, inconveniencing many firms and small business owners.

SBI alone is said to have closed more than 60,000 such accounts.

The RBI also clarified that other lending banks will only be allowed to open collection accounts and the money deposited in those accounts will be remitted within two days of receiving the funds.

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