The central bank also said it would issue some clarifications on the operational aspects of the circular. “...banks were advised that in respect of existing current and CC/OD (cash credit/overdraft) accounts, banks shall ensure compliance with the above instructions within a period of three months from the date of issue of the circular i.e. by November 5, 2020.
The Reserve Bank of India (RBI) on Monday extended the final date for complying with its circular on opening of current accounts to December 15. The move comes amid demands and requests from banks that they be given more time than three months to comply with the circular.
The central bank also said it would issue some clarifications on the operational aspects of the circular. “…banks were advised that in respect of existing current and CC/OD (cash credit/overdraft) accounts, banks shall ensure compliance with the above instructions within a period of three months from the date of issue of the circular i.e. by November 5, 2020.
We have since received several references from banks seeking clarifications on operational issues regarding maintenance of current accounts already opened by the banks,” the RBI said in its notification. These references are under examination and will be clarified separately by means of a set of frequently asked questions (FAQs).
In its August 6 circular, the regulator had mandated that no bank shall open current accounts for customers who have availed credit facilities in the form of CC/OD from the banking system, and all transactions shall be routed through the CC/OD account. The circular was aimed at ensuring greater discipline and transparency in the way large borrowers move funds.
It also stated that in case where a bank’s exposure to a borrower was less than 10% of the banking system’s exposure to that borrower, debits to the CC/OD account can only be for credit to the CC/OD account of that borrower with a bank that has 10% or more of the exposure of the banking system to that borrower.
Banks were directed to monitor all current accounts and CC/ODs regularly, at least on a quarterly basis, specifically with respect to the exposure of the banking system to the borrower, to ensure compliance with these instructions. The guidelines, including the requirement for ongoing monitoring of exposures, rattled several banks, which claimed that there was no mechanism or technological framework for such close tracking of exposures.
FE had reported in September that some banks had written to the RBI seeking clarifications on matters such as whether non- fund-based exposures would also count for the purpose of compliance and whether the norms would also apply to current accounts opened to distribute dividends.
Source:-financialexpress.com