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RBI allows banks to open current accounts for borrowers availing credit from other banks

Banks may open current accounts for borrowers who have availed credit facilities in the form of cash credit/overdraft from the banking system, the RBI stated in a release.

The development comes after the RBI reviewed and took into account the feedback from the Indian Banks’ Association and other stakeholders.

According to the new guidelines, there are no restrictions on banks opening current accounts or providing CC/OD facilities to borrowers where the exposure to the banking system is less than Rs 5 crore, subject to obtaining an undertaking from such borrowers that they will notify the bank as and when the credit facilities availed by them from the banking system reach Rs 5 crore.

Further, borrowers with exposure of over Rs 5 crore can maintain current accounts with any one of the banks with which they have a CC/OD facility, provided that the bank has at least 10% of the exposure of the banking system to that borrower.

If none of the lenders has at least 10% exposure of the banking system to the borrower, the bank having the highest exposure may open current accounts. Non-lending banks are not permitted to open current accounts.

 

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