RBI extends deadline for implementation of current account norms: Here’s how new rules will benefit businesses

The deadline related to the implementation has been extended so that customers don't face any problems as banks comply with new rules.

New Delhi: The Reserve Bank of India (RBI) on Wednesday (August 4) announced an extension of the deadline for banks to implement circulars on new rules regarding the opening of current accounts. According to the new RBI notification, banks will have to comply with the new rules related to the opening of current accounts by October 31, 2021. The circulars were introduced by the RBI in a circular last year. 

Previously, the RBI had set a deadline of July 31, 2021, for the implementation of the rules. The deadline has been extended so that customers don't face any problems as banks comply with new rules. 

The RBI said in a statement that the instructions were issued in order to enforce credit discipline amongst the borrowers as well as to facilitate better monitoring by the lenders. 

“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,” the regulator notes. 

What are the new rules? 

1. Business customers will be able to open multiple current bank accounts, provided that they haven’t availed cash credit (CC) or overdraft facility (OD) from any bank. Exposure of the banking system to such borrowers should be less than Rs 5 crore.

2. In the case of 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, 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, but only for collection purposes. Also Read: Gold Price Today, 4 August 2021: Gold cheaper by Rs 8300 from record levels, right time to invest? 

3. 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. Also Read: Markets maintain record run on earnings boost; Sensex scales 54,000-mark for 1st time