“NO Current Accounts for customers having CC/OD Accounts” : RBI
After considering the concerns arising due to the use of multiple operating accounts by borrowers, RBI has notified certain restrictions on the use of multiple accounts by borrowers availing credit facilities from multiple banks.
In this notification, RBI has directed banks not to open current accounts of borrowers availing cash credit and overdraft facility elsewhere. The aim behind this decision is to route all transactions from Cash Credit (CC) or OverDraft (OD) account rather than opening a new current account, which altimetry creates net of bank accounts.
As per RBI’s notification on “Opening of Current Accounts by Banks – Need for Discipline”, no bank can open current accounts for customers who have availed credit facilities in the form of cash credit (CC)/ overdraft (OD) from the banking system and all transactions have to be routed through this CC/OD account.
Team GrowBizz Analysis:
If the borrower has CC/OD facility with a bank than no bank will open the current account of the borrower.
If borrower has no CC/OD facility with any bank than:
If the aggregate credit facility availed by the borrower is less than Rs. 5 Crore:
- Any Bank can open a current account of the borrower.
- The borrower has to submit a written declaration to the declaring that he has no CC/OD facility and his aggregate credit facility does not exceed Rs. 5 Crore.
If aggregate credit facility availed by the borrower is Rs. 5 Crore or More but less than Rs. 50 Crore:
- No bank other than lender bank can open a current account. The borrower can open a current account with any lender bank.
- Non-lender bank can open only a collection account
If the aggregate credit facility availed by the borrower is more than Rs. 50 Crore:
- Introduction of Mandatory Escrow Mechanism
- Only Escrow Managing Bank can open a current account
- Other lenders can open collection account only
- Non lending bank cannot open any account.