Borrowers below Rs 5 crore will be able to open a current account with another bank

The Reserve Bank relaxed the rules regarding current accounts

New Delhi: The Reserve Bank of India (RBI) has relaxed the current account / current account rules so that borrowers who have availed loan facility through cash credit or overdraft can now open a current account. However, the main condition is that the loan taken by the debtor should be less than Rs 5 crore.

The RBI has changed the rules after receiving feedback from the Indian Banks Association (IBA) and other stakeholders. The RBI has asked banks to implement the rules within a month.

Earlier, the RBI had tightened the rules attached to the current account in August 2020 to reduce loan fraud cases. These restrictions were to enforce credit discipline and prevent diversion of funds. The RBI had barred banks from opening current accounts of customers who had taken loans from other banks.

"Creditors with banking sector exposure of less than Rs 5 crore can open a current account without any restriction," the RBI said in a circular. Cash can take credit account and overdraft facility. However, for that the creditors have to give an undertaking. Banks will have to be notified when there is a credit facility of Rs 5 crore or more under Undertaking.