For borrowers with bank exposure of less than Rs 5 crore, there will be no restriction on the opening of current accounts. The Reserve Bank of India (RBI) has eased the current account rules for them, after getting a feedback from Indian Banks’ Association (IBA) and other stakeholders.

The RBI had earlier imposed certain curbs on opening of current accounts in a new set of guidelines to ensure credit discipline and check diversion of funds. But in August this year, the central bank had extended the deadline for implementing the new current account norms by another three months till October end, following requests from banks. 

"It has been decided that banks may open current accounts for borrowers who have availed credit facilities in the form of cash credit (CC)/ overdraft (OD) from the banking system," RBI said in a statement. 

Banks, however, will have to obtain an undertaking from such borrowers stating that they shall inform them when their credit facilities reach Rs 5 crore or more.

Borrowers with exposure of over Rs 5 crore to the banking system can maintain current accounts with any one of the banks with which it has cash credit or overdraft facility, provided that the bank has at least 10% of the exposure to that borrower.

As per the revised rules release by the RBI, other lending banks may open only collection accounts, provided funds deposited in them will be remitted within two working days of receiving such funds to the cash credit or overdraft account maintained with the bank maintaining current accounts for the borrower.

"In case none of the lenders has at least 10 per cent 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," the RBI said.

Borrowers not availing of cash credit or overdraft facility from the banking system will continue to maintain current accounts as per the RBI's guidelines issued on August 6, 2020.

As per the new RBI circular, banks can open current accounts of all financial institutions like NABARD, National Housing Bank, Exim Bank and SIDBI without any restrictions. Banks can also open current accounts under specific instructions of state and central governments. It can also open accounts attached by the orders of central or state governments, regulatory bodies, courts, investigative agencies, etc. where a customer cannot make discretion.