In the event that none of the lenders has at least 10% of the exposure of the borrower's banking system, the bank with the highest exposure may open checking accounts.  The Reserve Bank of India said that non-lending banks would not be allowed to open current accounts.In the event that none of the lenders has at least 10% of the exposure of the borrower’s banking system, the bank with the highest exposure may open checking accounts. The Reserve Bank of India said that non-lending banks would not be allowed to open current accounts.

The Reserve Bank of India (RBI) on Friday announced a series of amendments to its current accounts circular on August 6, 2020, while exempting borrowers with less than Rs 5 crore from the banking system exposure from its scope. The regulator also exempted accounts opened under specific instructions from the central and state governments from meeting the restrictions under the circular.

FE reported on September 4 that the Association of Indian Banks (IBA) had asked the Reserve Bank of India to exempt the accounts held by the government with various banks from the jurisdiction of the August 6 circular.

In a notice on its website, the central bank said the changes to the circular were made on review taking into account comments from the IBA and other stakeholders. “For the borrowers, where the exposure of the banking system is less than Rs 5 crore, there are no restrictions on the opening of checking accounts or on the provision of CC/OD (cash credit/overdraft) facilities by the banks, provided that an undertaking is obtained from these borrowers they must Inform the bank(s), when the credit facilities they get from the banking system reach Rs 5 crore or more,” the RBI said.

Borrowers with exposure to the banking system of Rs 5 crore or more will be allowed to maintain current accounts with any of the banks having CC/OD facilities, provided that the bank has at least 10% exposure to the banking system of that borrower. Further, other lending banks may open collection accounts only provided that funds deposited in such collection accounts are transferred within two business days of receipt of such funds, to the CC/OD account maintained by the bank with the borrower’s current accounts.

In the event that none of the lenders has at least 10% of the exposure of the borrower’s banking system, the bank with the highest exposure may open checking accounts. The Reserve Bank of India said that non-lending banks would not be allowed to open current accounts.

Three other categories of accounts will also be exempted from restrictions under the circular. These include inter-bank accounts, accounts of all Indian Financial Institutions (AIFIs), EXIM Bank, NABARD, NHB, SIDBI and accounts attached to orders from central or state governments, regulatory bodies, courts or investigative agencies where the customer cannot make any discretionary debt.

“…It is clear that banks should monitor all accounts regularly, at least every half year, specifically with regard to exposure of the borrower’s banking system, and the share of the bank in that exposure, to ensure compliance with these instructions,” the RBI said. The regulator added that if there was A change in the exposure of the banks or an overall exposure of the borrower’s banking system that calls for the implementation of new banking arrangements, such changes must be implemented within three months from the date of such monitoring.

Banks may implement necessary changes within one month, after which RBI will review compliance position on it.

Get live stock quotes from BSE, NSE, US market and latest NAV, mutual fund portfolio, see the latest underwriting news, best IPOs, calculate your tax with income tax calculator, see top market gainers, biggest losers and best stock funds. like us Facebook social networking site and follow us Twitter.

Financial Express is now available on Telegram. Click here to join our channel And stay up-to-date with the latest Biz news and updates.

Source link

By admin

Leave a Reply

Your email address will not be published. Required fields are marked *