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Banks Can Implement New Current Account Rules Till October 2021: RBI

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The Reserve Bank of India (RBI) said on August 4 that banks will have till October 31, 2021, to implement the current account circular's requirements. The RBI stated that banks can use the extra time to engage with their borrowers and reach mutually suitable resolutions within the scope of the circular.

 
Banks Can Implement New Current Account Rules Till October 2021: RBI

The banks will have until October 31, 2021, to implement the circular's requirements. Banks will use this additional time frame to engage with their borrowers in order to reach mutually suitable remedies within the scope of the circular. Such concerns that banks are unable to handle on their own will be referred to the Indian Banks' Association (IBA) for assistance.

IBA will notify the Reserve Bank by September 30, 2021, if there are any remaining issues that require regulatory attention.

IBA will identify any remaining issues that require regulatory consideration to the Reserve Bank for investigation by September 30, 2021," the central bank noted.

Notably, the RBI imposed new rules and restrictions on borrowing corporations opening current accounts on August 6, 2020. According to the circular, corporations must only open current accounts or cash-credit/overdraft accounts with banks that have provided them considerable loans.

In a recent announcement, the RBI emphasized that borrowers who have not used a CC/OD service from any bank are not restricted from opening current accounts with any bank if the banking system's exposure to such borrowers is less than Rs 5 crore.

There is no restriction on lending banks from opening current accounts for borrowers who have not used a CC/OD facility from any bank and the banking system's exposure is Rs 5 crore or more but less than Rs 50 crore, the central bank said, adding that "even non-lending banks can open current accounts for such borrowers though only for collection purposes."

 

It is reiterated that:

If the banking system's exposure to such borrowers is less than Rs 5 crore, there are no restrictions on any bank opening current accounts for borrowers who have not used a CC/OD facility from any bank.

There is no restriction on lending banks from opening a current account for borrowers who have not used a CC/OD facility from any bank and the banking system's exposure is $5 crore or more but less than Rs 50 crore. Non-lending banks can open current accounts for such borrowers, but exclusively for the purpose of collection.

The restriction applies to borrowers who use a CC/OD account because all operations that can be done with a current account can also be done with a CC/OD account in a CBS environment because banks operate a one-bank-one-customer model rather than a one-branch-one-customer model.

Read more about: banks current account rbi
Story first published: Wednesday, August 4, 2021, 18:10 [IST]
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