The Reserve Bank of India (RBI) on Monday, November 2, extended the deadline for banks to comply with the revised current account opening norms to smooth their operational problems. Accordingly, now banks have up to 15 December in place of 5 November to comply with the regulator's changes in rules to prevent the misuse of the current account facility and fund diversions.

The Central Bank has suggested banks to not route withdrawal from term loans through current accounts since term loans are meant for specific purposes and funds should also be remitted directly to the supplier of goods and services. Moreover, the regulator has excluded banks from opening current accounts for customers who have availed credit facilities in the form of cash credit (CC)/ overdraft (OD) from the banking system.

RBI said that borrowers with more than Rs 50 crore exposure to the banking system need to have an escrow mechanism, and only banks managing such escrow accounts can open current accounts. Companies with less than Rs 50 crore exposures to the banking system will have fewer restrictions in opening such accounts.

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