Reserve Bank of India (RBI) on August 6, 2020 vide circular no. RBI/2020-21/20 DOR. No. BP.BC/7/21.04.048/2020-21, Issued revised Guidelines on Opening Current Account with Banks, key points of which are as follows:
1. No Current Account, where Customer Availing Credit Facilities (CC/OD) from banking System
2. In Case, customer not availed CC/OD facility from any Bank, Bank may open Current Account as under (Exposure from Banking System):
A. With Exposure of Rs.50 Crore or More:
- Mandatory Escrow Mechanism required
- Only Escrow managing bank/agent will open the Current account
- Other lenders can open Collection Accounts
- Balances in such accounts shall not be used as margin for availing any non-fund based credit facilities.
- Non-Lending banks shall not open current accounts.
B. Exposure More than Rs.5 Crores but less then Rs.50 Crores:
- Lending Bank : Can open Current Account
- Non Lending Bank : Can open ONLY Collection Accounts.
C. Exposure Less than Rs.5 Crores:
- Any Bank can open the Current Account Subject to an undertaking (Undertaking that Customer shall inform bank(s) in case the exposure exceeds Rs.5 Crore)
D. Availed No Credit facilities from Banking System: Can open Current Account
3. Banks shall Monitor :
a) All Current accounts and CC/OD accounts on quarterly basis to ensure the exposure compliance with above exposure requirements
b) No routing of drawal from term loans through Current accounts. Since term loans are meant for specific purposes, the funds should be remitted directly to the supplier of goods and services. Expenses incurred by the borrower for day to day operations should be routed through CC/OD account, if the borrower has a CC/OD account, else through a current account.
c) For existing Current and OD/CC accounts, Banks shall ensure compliance to above guidelines within a period of 3 months from date of circular (i.e. latest by November 6, 2020)
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