New Delhi, India: For borrowers with credit exposure, the Reserve Bank of India (RBI) has changed the rules for opening current accounts. Subject to security provisions, RBI has permitted banks to open current accounts for borrowers with credit exposure. “On a review and account of the feedback received from the Indian Banks’ Association (IBA) and other stakeholders, it has been decided that banks may open current accounts for those borrowers who have used the banking system for availing credit in the form of cash credits. (CC) or overdraft (OD) (with provisions),” the RBI said in a statement.
With the latest change, such borrowers will be able to open current accounts without any restrictions, and banks will be able to offer CC of OD facilities to borrowers with exposures below Rs 5 crore. However, “obtaining an undertaking from such borrowers that they will inform the bank(s) as and when the credit facilities availed by them from the banking system reach Rs 5 crore or more” is a condition of this provision.
However, in certain cases, as per the notification, such borrowers may maintain current accounts with any bank having CC or OD facility, if their exposure is Rs 5 crore or more, “provided the bank has at least Rs. 10 percent of the exposure of the banking system to that borrower.”