RBI extends deadline for closing of banks current accounts by those availing CC/OD facility
RBI, in order to enforce credit discipline amongst the borrowers as well as to facilitate better monitoring by the lenders had put restrictions on opening of current accounts by borrowers having Cash Credit / Overdraft Facilities.
The restrictions imposed are as under
a. 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 ₹5 crore.
b. In case of borrowers who have not availed of CC/OD facility from any bank and the exposure of the banking system is ₹5 crore or more but less than ₹50 crore, there is no restriction on lending banks to such borrowers from opening a current account. Even non-lending banks can open current accounts for such borrowers though only for collection purposes.
c. 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.
However, RBI received requests from the banks for some more time to resolve the operational issues while implementing the instructions.
Therefore, RBI, in order to ensure that the instructions are implemented in a non-disruptive manner, has decided that:
a. Banks will be permitted time till October 31, 2021 to implement the restrictions. 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 directions. 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
It has been stated that Banks shall put in place a monitoring mechanism, both at head office and regional/zonal office levels to monitor non-disruptive implementation of the circular and to ensure that customers are not put to undue inconvenience during the implementation process.