RBI exempts borrowers with less than Rs 5-crore bank loans from ambit of current accounts circular

In lawsuit nary of the lenders has astatine slightest 10% vulnerability of the banking strategy to the borrower, the slope having the highest vulnerability whitethorn unfastened existent accounts. Non-lending banks volition not beryllium permitted to unfastened existent accounts, the RBI said.

The Reserve Bank of India (RBI) connected Friday announced a bid of tweaks to its August 6, 2020, existent accounts circular, exempting borrowers with little than Rs 5 crore of banking strategy vulnerability from its ambit. The regulator besides exempted accounts opened nether circumstantial instructions of the cardinal and authorities governments from gathering the restrictions nether the circular.

FE had reported connected September 4 that the Indian Banks’ Association (IBA) had requested the RBI to exempt accounts held by the authorities with assorted banks from the purview of the August 6 circular.

In a notification connected its website, the cardinal slope said that the changes to the circular were made connected a reappraisal taking into relationship feedback received from the IBA and different stakeholders. “For borrowers, wherever the vulnerability of the banking strategy is little than Rs 5 crore, determination is nary regularisation connected opening of existent accounts oregon connected proviso of CC/OD (cash credit/ overdraft) installation by banks, taxable to obtaining an undertaking from specified borrowers that they shall pass the bank(s), arsenic and erstwhile the recognition facilities availed by them from the banking strategy reaches Rs 5 crore oregon more,” the RBI said.

Borrowers to whom the vulnerability of the banking strategy is Rs 5 crore oregon much volition beryllium allowed to support existent accounts with immoderate 1 of the banks with which it has CC/OD facility, provided that the slope has astatine slightest 10% of the vulnerability of the banking strategy to that borrower. Further, different lending banks whitethorn unfastened lone postulation accounts taxable to the information that funds deposited successful specified postulation accounts volition beryllium remitted wrong 2 moving days of receiving specified funds, to the CC/OD relationship maintained with the slope maintaining existent accounts for the borrower.

In lawsuit nary of the lenders has astatine slightest 10% vulnerability of the banking strategy to the borrower, the slope having the highest vulnerability whitethorn unfastened existent accounts. Non-lending banks volition not beryllium permitted to unfastened existent accounts, the RBI said.

Three different categories of accounts volition besides beryllium exempted from the restrictions nether the circular. These see inter-bank accounts, accounts of each India fiscal institutions (AIFIs) EXIM Bank, NABARD, NHB and SIDBI, and accounts attached by orders of cardinal oregon authorities governments, regulatory bodies, courts oregon investigating agencies wherever the lawsuit cannot undertake immoderate discretionary debits.

“…it is clarified that banks shall show each accounts regularly, astatine slightest connected a half-yearly basis, specifically with respect to the vulnerability of the banking strategy to the borrower, and the bank’s stock successful that exposure, to guarantee compliance with these instructions,” the RBI said. If determination is simply a alteration successful vulnerability of banks oregon aggregate vulnerability of the banking strategy to the borrower which warrants implementation of caller banking arrangements, specified changes shall beryllium implemented wrong a play of 3 months from the day of specified monitoring, the regulator added.

Banks whitethorn instrumentality the indispensable changes wrong 1 month, aft which the RBI volition reappraisal the compliance presumption thereon.