RBI Guidelines on Opening of Current Account - 2021

To strengthen the credit discipline, vide circular no. RBI/2021-22/116 dated 29^thOctober 2021, the Reserve Bank of India has reviewed and revised the instruction on the opening of the Current Account with the Banks. With the latest RBI guidelines for current account, borrowers will be allowed to open current accounts without any restriction or on the provision of CC or OD facility by banks for borrowers with exposure of less than Rs.5 crore. The key highlights of the RBI Circular on Current Account are covered under the present article.

Highlights of the New RBI Guidelines on Current Account

Under the latest RBI circular on current account, the Reserve Bank of India has also removed restrictions on all Indian financial institutions and accounts opened under specific instructions of the central government and state governments
RBI has come up with specific alterations to ease the present account rules for borrowers with bank exposures of less than Rs 5 crore. This RBI circular on current account 5 crore helps the borrowers immensely.
Any lending bank can now open a current account or cash credit or overdraft facilities without any restrictions.
Under the Non-lending banks are not permitted to open current accounts.

Current Account for Borrowers Availing the Cash credit or Overdraft facility

The instructions for the opening of the current account for customers who have availed of the cash credit or overdraft facility are listed hereunder, as per RBI current account circular:

For borrowers, whose exposure to the banking system is less than Rs 5crore

As per RBI’s revised Guidelines, for borrowers whose exposure to the banking system is less than Rs 5 crore, there's no restriction on opening current accounts.

The customer will also not face any curbs on the provision of cash credit or overdraft facilities by banks.
The customer is required to give an undertaking to the bank stating that the bank will be informed about the increase in the total credit facility, as and when the credit facility availed by the customer becomes INR 5 Crore or more.

For borrowers, whose exposure to the banking system is Rs 5 crore or more

As per RBI circular on current account, in respect of borrowers where exposure of the banking system is Rs.5 crore or more, such borrower can maintain current accounts with any one of the banks with which it has cash credit or overdraft facility. Note: The bank should have at least 10 percent of the banking system's exposure to that borrower.

Current Account for Borrowers not availing of Cash credit or Overdraft Facility

Borrowers not availing of cash credit or overdraft facility from the banking system will continue to maintain current accounts as per the RBI guidelines for current account issued on August 6, 2020. Click here to Know more about Guidelines on Opening of Current Account - 2020

Other Important Instructions

Other lending banks may open only collection accounts subject to the condition that funds deposited in such collection accounts will be remitted within two working days of receiving such funds, to the CC/OD account maintained with the above-mentioned bank maintaining current accounts for the borrower. In case 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. Banks maintaining collection accounts are permitted to debit fees/charges from such accounts before transferring the funds to the borrower's escrow account/CC/OD account. Banks are permitted to open/ maintain the following accounts, without any curbs placed under the RBI earlier circular dated August 6, 2020.

Inter-bank accounts
Accounts of All India Financial Institutions (AIFIs), viz., EXIM Bank, NABARD, NHB, and SIDBI
Accounts opened under specific instructions of Central Government and State Governments
Accounts attached by orders of Central or State governments/regulatory bodies/Courts/investigating agencies etc. wherein the customer cannot undertake any discretionary debits

Synopsis of Revised RBI Current Account Circular Guidelines

Particulars	RBI Guidelines for Current Account
Opening of the current account for a borrower with an already existing credit facility	Amount of Aggregate credit facility availed	Corresponding condition/ guideline
	Less than INR 5 Crore	A current account can easily be opened with only an undertaking.
	More than INR 50 Crore	The borrower can maintain current accounts with any one of the banks with which it has a CC/OD facility, the bank has at least 10 percent of the exposure of the banking system to that borrower.