The Reserve Bank of India announced on Friday, October 29 revised guidelines for its current account circular that was issued earlier this year in August. As per the new rules, current account holders with less than Rs 5 crore of banking system exposure will be exempted from the restrictions posed by the current account circular.
Moreover, the RBI has also agreed to exempt those accounts that were opened under specific directions of the central or state government from the restrictions of the August 6 circular. The RBI stated that revisions were made to the circular in light of the feedback received from the Indian Bank’s Association and other stakeholders.
In a notification, RBI directed that there will be no restrictions on opening current accounts or provision of cash credit or overdraft facilities by banks for borrowers whose banking system exposure is less than Rs 5 crores.
However, the rule is subjected to securing an undertaking from such borrowers that they shall notify the lenders when the credit facilities availed by them through the banking system exceeds Rs 5 crore mark.
Meanwhile, borrowers whose exposure to the banking system exceeds Rs 5 crore shall be permitted to maintain a current account with only one of the banks from where they have availed cash credit or overdraft facility, on a condition that the lender has at least 10 per cent of the total exposure of the banking system on the borrower.
Other lenders will be permitted to open only collection account for such borrowers, subject to a condition that the bank will remit funds deposited in collection accounts within two working days of receiving them to the CC/OD account maintained with the bank that maintains the current account of the borrower.
If no lender has 10 per cent of banking system exposure on the borrower, the bank with the highest exposure will be authorised to open a current account for the borrower.
The Central Bank also allowed banks to open and maintain inter-bank accounts, all accounts with institutions like EXIM Bank, NABARD, NHB, and SIDBI, accounts attached by orders of central or state government, courts or investigative agencies with no restrictions.
RBI notified the banks to monitor all accounts regularly, “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.”
