Mumbai, Aug 6: There is no "blanket ban" on opening of current accounts and the Reserve Bank is following a "graded approach" on the basis of overall banking system's exposure to an account, Deputy Governor M Rajeshwar Rao said on Friday.
The assertion came amid reports that many small businesses had suffered freezing of accounts after the July 31 deadline for revised norms. The RBI responded to this by extending the deadline for application of new norms to October 31. "There is no blanket ban on opening of current accounts. We are following a graded approach," Rao told reporters at the post-policy review press conference.
There are no restrictions on opening of the current account if the exposure of the borrower is less than Rs 5 crore, and if they have not availed of CC/OD (cash credit and overdraft) facilities from any bank, Rao said. If the exposure is Rs 5 crore and above, but less than Rs 50 crore, there are no restrictions on the opening of a current account for such borrowers but the borrowing current accounts can be used only for collection purposes, he added. For the CC/OD front, technology enables the anywhere anytime banking for such things, so there is no likelihood of disruptions as far as opening of current accounts is concerned, the DG said.
The proposal which we have tried to implement ensures better discipline on the borrowers. We have been very flexible with the borrowers, he said. The RBI has addressed issues regarding the opening of the current account and operation of the current account in the FAQs (frequently asked questions) issued in December, he added. Now, taking into consideration some of the concerns put out by the banks, we have extended the timeline till October 31, and will be addressing issues in consultation with IBA and banks so that any residual issues can be sorted out, he said.