Active Stocks
Fri Apr 19 2024 15:56:00
  1. Tata Steel share price
  2. 162.10 1.31%
  1. Tata Motors share price
  2. 963.20 -0.84%
  1. NTPC share price
  2. 350.90 -0.14%
  1. ITC share price
  2. 424.80 1.40%
  1. Power Grid Corporation Of India share price
  2. 281.70 0.54%
Business News/ Industry / Banking/  RBI relaxes new current account norms deadline
BackBack

RBI relaxes new current account norms deadline

RBI has asked banks to ensure that the instructions are implemented in a non-disruptive manner

Under the extant guidelines, RBI had allowed banks to open current accounts for customers who have not availed any cash credit or overdraft facility, provided its exposure to the banking system is less than ₹5 crore.Premium
Under the extant guidelines, RBI had allowed banks to open current accounts for customers who have not availed any cash credit or overdraft facility, provided its exposure to the banking system is less than 5 crore.

Mumbai: The Reserve Bank of India has further extended the deadline for implementing the new current account norms by another three months, following requests from banks. This extension comes one year after the guidelines were first introduced and nine months since the first deadline. RBI has asked banks to ensure that the instructions are implemented in a non-disruptive manner.

“Banks will be permitted time till October 31, 2021 to implement the provisions of the circular. This extended time line shall be utilised by banks to engage with their borrowers to arrive at mutually satisfactory resolutions within the ambit of the circular. Such issues which banks are unable to resolve themselves shall be escalated to Indian Banks’ Association (IBA) for appropriate guidance. Residual issues, if any, requiring regulatory consideration shall be flagged by IBA to the Reserve Bank for examination by September 30, 2021.

In a bid to enforce credit discipline and check diversion of funds, RBI had put in place certain safeguards for the opening of current accounts by banks in August last year. Broadly, these rules say banks cannot open current accounts for borrowers where their exposure is less than 10% of the borrower’s total exposure to the banking system.

RBI had first asked banks to comply within three months of issuing the circular, but with banks dragging their feet on compliance, the regulator had extended the deadline to July end.

The regulator’s decision to further extend the deadline till October end comes after the closure of current accounts caused huge disruption for current account holders, who are mostly businesses/traders and entrepreneurs.

Mint had reported on 4 August that banks faced stiff resistance from government enterprises over the closure of these accounts. Some government enterprises threatened banks that they will blacklist the lender, if their current accounts were closed, the report said. Separately, several borrowers also took to the social media to express their angst, and seek government intervention to prevent these disruptions.

Under the extant guidelines, RBI had allowed banks to open current accounts for customers who have not availed any cash credit or overdraft facility, provided its exposure to the banking system is less than 5 crore. The regulator had also allowed lending banks to open current account for those customers which has an exposure of 5 crore or more but less than 50 crore. Even non-lending banks can open current accounts for such borrowers though only for collection purposes, RBI said.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Industry News, Banking News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 04 Aug 2021, 07:39 PM IST
Next Story footLogo
Recommended For You
Banking Stocks
₹1,024.150.52%
₹1,494.62.46%
₹1,055.451.04%
₹129.55-1%
₹744.80.81%
Switch to the Mint app for fast and personalized news - Get App