The Reserve Bank of India (RBI) on August 4 said banks will be permitted time till October 31, 2021 to implement the provisions of the current account circular.
This extended time can be utilised by banks to engage with their borrowers to arrive at mutually satisfactory resolutions within the ambit of the circular, the RBI said.
Such issues which banks are unable to resolve themselves shall be escalated to Indian Banks’ Association (IBA) for appropriate guidance, the RBI said.
"Residual issues, if any, requiring regulatory consideration shall be flagged by IBA to the Reserve Bank for examination by September 30, 2021," the central bank added.
Notably, the RBI had on on August 6, 2020, announced new rules and restrictions on the opening of current accounts by borrowing companies. The rules require companies to open current accounts or cash-credit/overdraft accounts only with banks who have lent substantial loans to them, the circular had stated.
Also Read | RBI exempts certain accounts from its new current account rules; here are the details
The RBI, in its latest statement, reiterated that 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 Rs 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 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, the central bank said, adding that "even non-lending banks can open current accounts for such borrowers though only for collection purposes".
The RBI, however, noted that 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".
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