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Tuesday, May 17, 2022

Opening current, cash credit/OD accounts: Banks’ scope widened

In the case of borrowers where aggregate exposure of the banking system is Rs 5 crore or more but less than Rs 50 crore, there is no restriction on opening of current accounts by the lending banks, the RBI said.

By: ENS Economic Bureau | Mumbai |
Updated: April 20, 2022 10:47:30 am
Banking and Finance, Reserve Bank of India, current accounts, overdraft (OD) accounts, debit card/ATM card/ credit card issuers, Business news, Indian express business news, Indian express, Indian express news, Current AffairsBanks are free to open current accounts of prospective customers who have not availed any credit facilities from the banking system, subject to necessary due diligence as per their board approved policies, it added.

The Reserve Bank of India (RBI) has expanded the scope of exemptions under its circular for “opening of current accounts and cash credit (CC)/overdraft (OD) accounts” by banks.

It has given exemptions for accounts for settlement of dues related to debit card/ATM card/ credit card issuers, accounts of white label ATM operators and their agents for sourcing of currency, cash-in-transit (CIT) companies/cash replenishment agencies (CRAs) for providing cash management services and accounts opened by a bank funding a specific project for receiving/ monitoring cash flows of that specific project, provided the borrower has not availed any CC/OD facility for that project, inter-bank accounts and accounts of All India Financial Institutions (AIFIs).

In the case of borrowers where aggregate exposure of the banking system is Rs 5 crore or more but less than Rs 50 crore, there is no restriction on opening of current accounts by the lending banks, the RBI said.

Banks are free to open current accounts of prospective customers who have not availed any credit facilities from the banking system, subject to necessary due diligence as per their board approved policies, it added.

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