RBI issues new guidelines on current accounts, extends deadline for implementation by banks

The Reserve Bank of India on Wednesday extended the deadline for banks to implement revised rules on opening and maintaining current accounts. Banks will now have time till Oct 31.

The central bank's rules aim to clamp down on people opening multiple accounts to borrow money as well as to facilitate better monitoring by lenders.

In August last year, the RBI had said banks with little or no loan exposure to a customer could not open a current account for them. Existing non-compliant accounts had to be frozen.

In a notification, the central bank reiterated that in the case of borrowers who have not availed of CC/OD facility from any bank, there is no restriction on opening of current accounts by any bank if exposure of the banking system to such borrowers is less than ₹5 crore.

For borrowers who have not availed of CC/OD facility from any bank and the exposure of the banking system is ₹5 crore or more but less than ₹50 crore, there is no restriction on lending banks to such borrowers from opening a current account. Even non-lending banks can open current accounts for such borrowers though only for collection purposes.

"This extended time line shall be utilised by banks to engage with their borrowers to arrive at mutually satisfactory resolutions within the ambit of the circular," the notification added.

The central bank also prohibited banks from opening a current account if their exposure was less than 10% of the borrowers' total exposure to the banking system.

The RBI had last set a deadline of July 31, 2021 for the banks to comply.

"We have in the meantime received requests from the banks for some more time to resolve the operational issues while implementing the circular in letter and spirit," the RBI said in its latest notification.

The central bank said to ensure that its instructions are implemented in a non-disruptive manner, banks will have until October 31, 2021, to implement the provisions.
"This extended timeline shall be utilised by banks to engage with their borrowers to arrive at mutually satisfactory resolutions."