RBI Gives Bank More Time To Comply With New Guidelines On Current Accounts

On Monday, the Reserve Bank of India (RBI) extended the deadline for banks to comply with the revised current account opening norms to ease their operational glitches.

Now banks have up to 15 December instead of 5 November to comply with the regulator's change in rules to prevent the misuse of the current account facility and fund diversions.

RBI has suggested banks to not route drawal from term loans through current accounts since term loans are meant for specific purposes and funds should also be remitted directly to the supplier of goods and services.

Further, the regulator has barred banks from opening current accounts for customers who have availed credit facilities in the form of cash credit (CC)/ overdraft (OD) from the banking system. It suggested that all such transactions shall be routed through the CC/OD accounts.

RBI said that borrowers with more than Rs 50 crore exposure to the banking system need to have an escrow mechanism, and only banks managing such escrow accounts can open current accounts.

Companies with less than Rs 50 crore exposure to the banking system will have fewer restrictions in opening such accounts.

The central bank will be releasing a list of frequently asked questions (FAQs) and its responses on current accounts soon it said.

"We have received several references from banks seeking clarifications on operational issues regarding the maintenance of current accounts already opened by the banks. These references are being examined by the Reserve Bank and will be clarified separately by means of a FAQ," RBI said on Monday.