Skip to main content

RBI eases current account opening rules for exposure below Rs 5 cr

By

 In a relief to small-size firms, the Reserve Bank of India (RBI) on Friday relaxed rules for opening current accounts with the banking system’s exposure of less than Rs 5 crore. The RBI asked banks to take an undertaking from borrowers that they will inform lenders when the credit facilities availed reaches Rs 5 crore or more.

 

The rules have been tweaked based on feedback received from Indian Banks’ Association (IBA) and other stakeholders, the RBI said. Borrowers with banking system’s exposure of Rs 5 crore or more can maintain current accounts with any one of the banks with which it has CC/OD facility. Such banks must have at least 10 per cent of the exposure of the banking system to that borrower.Further, other lending banks may open only collection accounts, the RBI said. This can be done on condition that funds deposited in such accounts are remitted within two working days of receiving these to the CC/OD account.

 

The bank having the highest exposure may open current accounts when no lender has at least 10 per cent exposure to the borrower. Non-lending banks are not permitted to open current accounts. Borrowers who are not availing CC/OD facility will continue to maintain current accounts in line with present rules.Illustration: Binay SinhaIllustration: Binay Sinha Further, banks will not face any curbs in opening and maintaining interbank accounts, accounts opened under specific instructions of the central government and state governments. Banks have to ensure that these accounts are used for permitted/specified transactions only. Further, banks will be required to flag these accounts in the core banking system for easy monitoring.

 

Lenders to such borrowers may also enter agreements or arrangements with borrowers for monitoring of cash flows/periodic transfer of funds (if permissible) in these current accounts. There will not be curbs on accounts attached by orders from the central or state governments, regulatory body, courts and investigating agencies. The RBI said banks have to monitor all accounts regularly, at least on a half-yearly basis, specifically for the exposure of the banking system to the borrower, and the bank’s share in that exposure.

 

If there is any change in exposure of banks to the borrower which warrants new banking arrangements, such changes shall be implemented within three months from the date of monitoring.

Comments

Post a Comment

Popular posts from this blog

Data storage norm splits digital payments industry

By
Data storage norm splits digital payments industry  India’s nascent digital payment industry could be thrown into disarray due to the demand by the Reserve Bank of India (RBI) that all user data be stored within the country, fears an industry grouping, which has termed the decision as “heavy-handed”, even as others, including the country’s largest digital payment provider Paytm, have hailed the move.  In a bid to narrow the growing schism, the industry is planning to send a formal representation to the regulator highlighting its concerns, a top official told ET.  “We are trying to build a consensus on the issue," said the person adding that the representation to the central bank will be ready this week.  RBI on April 6, mandated all payment companies—global and local—to set up data storage facilities within India by October. The stringent six-month deadline has attracted the ire of several sections of the industry that fear it will lead to a disruption of wel...
18 comments
Read more

Offer’s for all of you

By
Great Bumper Dhamaka Offer’s for all of you... It's Time to see your Business Online, WebeCreator Offer Website Designing with domain & Email @ nominal charges. For a year For More information visit us http://goo.gl/KlpppF call on 9890151261/9773197533  drop a mail to sales@webecreator.com
Post a Comment
Read more

Sebi to finalise options in commodities today

By
The Commodity Derivatives Advisory Committee of the Securities and Exchange Board of India ( Sebi) will meet on Friday with senior officials of the latter, to give a final shape to the rules on options trading in commodity futures, beside revising the warehousing norms to ensure good delivery on settlement. The decision taken, after discussing with the advisory committee, will be placed before the regulator’s board, to finalise the regulations. According to knowledgeable sources, three commodities in each segment, agricultural and non- agricultural, have been proposed for introducing options. It appears commodities from the soya and guar segments are preferred in the former. From the non- agri segment, it is likely that gold, silver and crude oil will be finalised. All these These have better liquidity and both the National Commodity and Derivatives Exchange and the Multi Commodity Exchange, respectively, will be able to introduce the options. In the equity segments, options ar...
17 comments
Read more