Deadline for opening current accounts deferred

NEW DELHI: The Reserve Bank of India (RBI) on Monday extended the deadline given to banks on its fiat that current accounts of firms with more than Rs 50 crore in debt must be with lending bankers, after hectic lobbying by MNC banks which were affected by the new guidelines set to kick in from Thursday. The banks have been given time till December 15 to comply with the new norms.

Usually most large Indian corporates would borrow from state-run banks but would operate current accounts with MNC banks who gave better terms and services. Often money flowed from these accounts would go not towards paying back loans but for other purposes.

In a bid to stop that practise, the RBI had come up with guidelines which said a bank opening a dedicated current account of any company with Rs 50 crore or more in debt must have lent at least 10 per cent of the borrowings of the firm. The new rules led to a furore as MNC banks were likely to be hit with current account business worth tens of thousands of crores lost to PSU banks. Diplomatic missions and chambers of commerce interceded with the government on behalf of the aggrieved bankers and a lobbying war erupted in the corridors of North Block. 

Several top bankers had suggested that some leeway should be made as the strict implementation of the rule set forth by the RBI. “Certain pay-outs by a company such as payment of dividend could be separated from this rule and allowed to be done from current accounts held with banks which have not lent to the companies in question,” said Sanjay Bhattachryya, former managing Director, State bank of India.

“...Several references from banks seeking clarifications on operational issues regarding maintenance of current accounts already opened by the banks are being examined by the Reserve Bank,” the central banker said, adding it would soon come out with a set of FAQs clarifying issues regarding these current accounts.

RBI working on FAQs to address existing issues
The central bank said it has received several references from banks seeking clarifications on operational issues regarding maintenance of current accounts already opened by banks. These references are being examined.