RBI changes current account opening rules for borrowers with exposure

New Delhi, India: For borrowers with credit exposure, the Reserve Bank of India (RBI) has changed the current account opening rules. Subject to safeguard provisions, the RBI has allowed banks to open current accounts for borrowers with credit exposure. "On a review and taking into account feedback received from the Indian Banks' Association (IBA) and other stakeholders, it has been decided that banks may open current accounts for borrowers who have used the banking system to obtain credit in the form of cash credit (CC) or overdraft (OD) (with provisions)," RBI said in a statement.

With the latest change, such borrowers will be able to open current accounts without any restrictions, and banks will be able to provide CC of OD facilities to borrowers with less than Rs 5 crore in exposure. However, obtaining a "undertaking from such borrowers that they shall notify the bank(s) as and when the credit facilities availed by them from the banking system reach Rs 5 crore or more" is a condition of this provision.

However, in some cases, according to the notification, such borrowers can keep current accounts with any of the banks with which they have a CC or OD facility if their exposure is Rs 5 crore or more, "provided that the bank has at least 10 percent of the banking system's exposure to that borrower."

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