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Concerned over borrowers using multiple operating accounts, both current as well as cash credit (CC)/overdraft (OD), the RBI has put in place certain safeguards.
The measures will also help discipline collective actions by creditors to speed up the resolution of accounts, critical in the implementation of the new restructuring framework, according to the RBI.
To ensure that customers do not open current accounts even while availing themselves of credit facilities through CC/OD accounts across multiple banks, the RBI has stated that no bank can open a current account for a customer who has already availed himself of credit facilities from the banking system. All transactions should be routed through the CC/OD account.
While existing rules on opening current accounts are also aimed at bringing in discipline, it would appear that many banks have not been following the protocol, nudging the RBI to tighten up. This can help check diversion of funds and frauds to some extent, according to bankers.
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Positive Pay mechanism for high value chequesCurrently, banks must ensure that they do not open current accounts of entities which enjoy credit facilities from the banking system without specifically obtaining a No-Objection Certificate (NOC) from the lending bank(s).
But many banks don’t seem to follow such due diligence while opening current accounts.
The RBI has now also placed restrictions on debits from the CC/OD account in certain cases. If a bank’s exposure to a borrower is less than 10 per cent of the total exposure of the borrower in the banking system, then debits from the borrower’s CC/OD account can only be for credit to another CC/OD account of that borrower with a bank that has 10 per cent or more of the exposure.
For instance, if a borrower enjoys credit facilities of ₹100 crore across several banks. Of this, if Bank A has given a facility of ₹8 crore (under 10 per cent of the total exposure) and Bank B has provided ₹92 crore, then debits from Bank A can only be for transfer of funds to Bank B (and not for other vendor payments). Credits, however, are freely permitted to any account.
These measures may impact the growth in current accounts for certain banks in the coming months.
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