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NEWS Details


News Details

29

Apr - 2019

RBI moves to tighten current account operating norms to check fund diversion

In a move to tackle fund diversion, the Reserve Bank of India (RBI) has proposed sterner rules on opening and running of current accounts of corporate borrowers.

Current accounts, according to a draft circular shared by the regulator with the banking industry, can “only be opened” with the lead bank in a lending consortium while other banks having collection accounts will have to transfer funds at the end of the day to the current account with the consortium leader.

RBI has suggested that the rule would apply to accounts of corporates which have borrowed and availed credit facilities of Rs 50 crore or more from the banking system

According to RBI, while there would be no restriction on the amount or number of ‘credits’ in collection accounts with other banks (which are not leading consortium), the ‘debits’ should be limited to remitting the proceeds to the current or escrow accounts maintained with the lead bank.

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