To assist small company owners, the RBI has reduced the requirements for opening current accounts with less than 5 crore in loans and overdraft.
Banks are now free to offer current accounts, cash credit, and overdraft facilities to these clients, provided they get an assurance from the consumers that they would notify the banks if the total credit and overdraft reaches 5 crore.
Simultaneously, borrowers with exposures above 5 crore rupees can retain a current account with any of the banks with which they have an overdraft capacity. However, the sole stipulation is that these institutions own at least 10% of overall banking exposure.
If no bank has a 10% or more exposure, the bank with the greatest exposure may create a current account.
The RBI also waived limitations on banks opening inter-bank accounts, accounts with organisations like as NABARD, NHB, EXIM Bank, and SIDBI, as well as accounts attached by government and investigative agencies.
A current account is one that is kept by business people who conduct a high volume of transactions on a daily basis. In contrast to a savings account, which allows only a limited number of transactions, a current account allows unlimited withdrawals and deposits.
It was announced in August 2020 that the central bank was implementing new criteria for the establishment of current accounts, which meant that only banks with at least 10% of total borrowing may open current accounts for borrowers.
Other lending institutions are no longer allowed to operate collection accounts, according to the banking authority, which stipulates that payments put in these accounts must be returned within two days of receipt.