RBI has permitted opening of current account with Any other Bank for CC/OD Facility upto Rs.5 cr
The Reserve Bank of India (RBI) on Friday relaxed requirements for opening current accounts with a banking system exposure of less than Rs 5 crore, providing assistance to small businesses. The Reserve Bank of India has requested banks to obtain an undertaking from borrowers that they will notify lenders when credit facilities are used up to Rs 5 crore.
The RBI stated the guidelines have been revised in response to feedback from the Indian Banks’ Association (IBA) and other stakeholders.
Borrowers with a banking system exposure of Rs 5 crore or more can open current accounts with any of the banks with which it has a CC/OD arrangement. Such banks must hold at least 10% of the banking system’s exposure to that borrower.
The RBI also stated that other lending banks may only open collection accounts. This is possible if funds placed in such accounts are transferred to the CC/OD account within two working days of receiving them.
When no lender has a 10% or more exposure to the borrower, the bank with the biggest exposure may open current accounts. Current accounts cannot be opened by non-lending banks. Borrowers who do not use the CC/OD service will keep their current accounts open in accordance with the current guidelines.
Furthermore, banks will not encounter any restrictions when it comes to opening and maintaining interbank accounts, which are accounts that are opened as a result of explicit orders from the federal and state governments. Banks must verify that these accounts are only used for transactions that are approved or stated. Banks will also be required to mark these accounts in their basic banking systems so that they can be easily monitored.
Lenders to such borrowers may additionally enter into agreements or arrangements with borrowers for cash flow monitoring and periodic fund transfers (if permitted) in these current accounts. Accounts attached by orders from the federal or state governments, regulatory bodies, courts, and investigating authorities shall not be hampered. The RBI stated that banks must examine all accounts on a semi-annual basis, specifically for the banking system’s exposure to the borrower and the bank’s portion of that exposure.
If there is a change in the banks’ exposure to the borrower that necessitates new banking arrangements, the adjustments must be executed within three months of the monitoring date.
To Read Official Notification Download PDF Given Below :