RBI Issues Guidelines On Its Earlier  Circulars On Opening Of Current Accounts By Banks

RBI Issues Guidelines On Its Earlier Circulars On Opening Of Current Accounts By Banks

Lucknow/New Delhi, August 6 (TNA) The Reserve Bank Of India (RBI) has issued guidelines with regards to its earlier circulars (August 6, 2020, November 2, 2020 and December 14, 2020) with reference to opening of Current Accounts by Banks and the "Need for Discipline".

Manoranjan Mishra, Chief General Manager has said that the instructions were issued vide the above circulars in order to enforce credit discipline amongst the borrowers as well as to facilitate better monitoring by the lenders, and for this purpose, a graded approach had been prescribed on opening and operating of current accounts and CC/OD facilities.

Banks were required to implement these instructions in a non-disruptive manner while keeping the bonafide business requirements of the borrowers in mind, it further added.

Such issues which banks are unable to resolve themselves shall be escalated to Indian Banks’ Association (IBA) for appropriate guidance. Residual issues, if any, requiring regulatory consideration shall be flagged by IBA to the Reserve Bank for examination by September 30, 2021, it said.

The RBI has further said that in 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.

In case of 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, the Bank further said, "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".

RBI, vide this letter to banks, has also clarified that "the restriction applies to borrowers in case they avail of CC/OD facility since all operations that can be carried out from a current account can also be carried out from a CC/OD account as banks in a CBS environment follow a one-bank-one-customer model as against a one-branch-one-customer model."

It has also been mentioned that the RBI has 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".

Therefore, in order to ensure that the instructions are implemented in a non-disruptive manner, it has been decided that banks will be permitted time till October 31, 2021 to implement the provisions of the circular. 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 RBI official further stated.

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