RBI extends the deadline for shifting of current accounts till Oct 31

The Reserve Bank of India (RBI) gave banks time till October 31 to acknowledge with its approaches on recent account and overdraft capabilities. The central bank demonstrated that it was in zero situation to shift the proposed regulations, but would barely authorize for spanning the timeline for the steadier undertaking.

The preliminary deadline had passed on July 31, directing to thousands of current accounts being secured or frozen by banks. Lenders had desired the RBI for some additional duration to untangle the functional problems in enforcing the requirements of the August 2020 circular in letter and courage.

According to bankers, the accounts that occurred frozen can immediately be operationalised for three extra months, during which would be eligible to sort out the problems. State Bank of India Chairman Dinesh Khara told while a maximum of the challenges had already been dealt with, the timeframe provided by the RBI was adequate “to engage with customers on the matter”

“Banks will be eligible to clear up the extraordinary issues peacefully in this duration,” Khara said. The frozen accounts, he told, could immediately be reopened for the comfort of migration to a current structure.

Till date, banks were shutting down accounts or freezing them unilaterally, but now they will have to discuss the consumers about the migration direction, bankers confess.

A senior banker with a private bank told ample current accounts were frozen and not locked out rightly. The debit aspect was held available, while the credit side was frozen. That implies the accounts could be utilized for payment, but no fresh money was authorized to be inserted in them.

“Banks have been providing notifications to their clients for 30 days. Reacting to those notices, several accounts have been shut already. Moreover, banks furthermore shut down some accounts, and resolved the notable in several issues. They cannot be reopened,” said another private banker, who told the RBI assistance should have appeared before the last date, and not after four days.

Lifting the deadline to October 31, the RBI told, “This extended timeline shall be utilised by banks to immerse with their borrowers to appear at mutually reasonable determinations within the ambit of the brochures.”

“Banks shall guarantee that the quantities of the brochure are enforced in letter and courage without resulting in unnecessary obstacle to their borrowers,” the RBI said in its statement.

Cases that banks are incapable to settle themselves will have to be escalated to the Indian Banks’ Association (IBA) for a reasonable recommendation. The banking industry lobby would flag any regulatory deliberations mandated to the RBI by September 30. This may demonstrate that the October 31 deadline is adaptable, furnished banks resolve the problem with their clients and appear to an outcome.

In the actual circular, the RBI had said a client can unlock a current account with any bank if she has not benefited of overdraft establishment from any bank, and the disclosure to the banking system is limited to Rs 5 crore. If the disclosure is between Rs 5 crore and Rs 50 crore, the lending bank can authorize the consumer to unlock a current account as well.

Though, for huge borrowers above Rs 50 crore orientation and possessing numerous bank orientations, current account and cash credit/overdraft establishment has to be with an individual bank. In significance, a consumer has to maintain an individual current account and that too with the bank with which it has a loan structure operating. In the case of numerous banks, the policy holder and the banks can authorize mutually where to maintain the current account.