Government’s regulatory body, the Reserve Bank of India (RBI) issued guidelines for the implementation of the circular on the opening of current accounts by banks on Wednesday.
Prior to this, the country’s central bank has given banks time until October end so that they can implement the new rules on current accounts issued in 2020.
Earlier, the RBI had set a deadline of 31 July.
For this implementation, the banks have been directed to put in place a monitoring mechanism, both at head office and regional/zonal office levels.
This will ensure that customers would not go through any undue inconvenience during the implementation process, according to the RBI notification.
RBI New Rules
A. For the borrowers, who have not availed of the CC/OD facility from any bank, there is no restriction on the opening of current accounts by any bank if exposure of the banking system to such borrowers is less than Rs 5 crore.
B. For the borrowers who have not availed of the CC/OD facility from any bank and the exposure of the banking system is Rs 5 crore or more but less than Rs 50 crore. In such cases, there is no restriction on lending banks to such borrowers from opening a current account.
Apart from that, the non-lending banks can also open current accounts for such borrowers but only for collection purposes.
C. The restriction will be applicable to the borrowers if they avail the 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.
Implementation Deadline
According to the RBI, the banks will be permitted time till 31 October, 2021 to implement the provisions of the circular.
The banks can utilize this extended timeline to engage with their borrowers to arrive at mutually satisfactory resolutions within the ambit of the circular.
The issues which banks are unable to resolve themselves shall be escalated to Indian Banks’ Association (IBA) for appropriate guidance.
The circular noted that the residual issues which require regulatory consideration shall be flagged by IBA to the Reserve Bank for examination by September 30, 2021.