The Reserve Bank of India (RBI) has allowed banks time till October 31, 2021 to implement its guidelines on opening and operating of current accounts.
In a letter to banks, the RBI said its restriction on current accounts applies to borrowers in case they avail of CC/OD [cash credit/overdraft] 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.
“We have 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,” the RBI said.
It said this extended time line should be utilised by banks to engage with their borrowers to arrive at mutually satisfactory resolutions within the ambit of the circular.
“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.
Banks shall put in place a monitoring mechanism, both at head office and regional/zonal office levels to monitor non-disruptive implementation of the circular and to ensure that customers are not put to undue inconvenience during the implementation process.
Previously, instructions were issued through several circulars to enforce credit discipline among the borrowers as well as to facilitate better monitoring by the lenders.
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, the RBI said.
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, 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, it said.
RBI said accounts of White Label ATM operators and their agents are exempt from the provisions of the Current Account circular dated August 6, 2020.
As per norms banks are not permitted to open current accounts for borrowers who have availed agricultural/ personal OD or OD against deposits.