The Kanara Chamber of Commerce and Industries (KCCI) on Friday told the Indian Banks Association that banks have gone beyond Reserve Bank of India restrictions on opening multiple accounts by business entities causing hardship to entrepreneurs.
In a letter to association CEO Sunil Mehta, KCCI president Isaac Vas said that the RBI had, on August 6, 2020, imposed certain restrictions on having bank accounts with multiple banks to prevent diversion of funds. While the business community had welcomed the move despite severe inconveniences, several banks were going beyond these guidelines thereby affecting business.
He urged the association to advise its members to permit opening of multiple current accounts with the same bank and permit opening of collection accounts with other banks as per the RBI notification. The chamber has been receiving several complaints that such a hurriedly imposed directive from the RBI was causing difficulties. Some banks have closed current accounts abruptly without giving any notice.
Mr. Vas said that some banks do not allow businesses to have current accounts and overdraft accounts in the same branch, while current accounts are used for collection of funds from customers. Banks are, however, mandating retaining only one account.
Some businesses have branches in multiple locations, while banks do not permit them to have multiple current accounts in different cities. Banks are also not allowing businesses to open collection accounts in other banks where they do not have branches.
MSMEs ought to maintain current accounts to safeguard their transactions. Denying them the facility adversely affects their business, he said. MSMEs should, therefore, be permitted to operate different current accounts, Mr. Vas added.