PR No. 2025-2026/1684; Dated: 11.12.2025
1. Regulatory Background
The Reserve Bank of India (RBI) has amended its directions governing the maintenance and operation of Cash Credit (CC), Current, and Overdraft (OD) accounts by banks. The amendments aim to simplify account operations for smaller borrowers, strengthen fund discipline, and ensure that banking facilities are used strictly for authorised business purposes.
2. Relaxation for Customers With Exposure Below ₹10 Crore
Under the amended directions:
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Banks may open and maintain a Current Account or an Overdraft (OD) Account without any restriction for customers whose aggregate exposure across the banking system is less than ₹10 crore.
2.3 Significance
- This relaxation reduces compliance friction for MSMEs, small businesses, and individual borrowers.
- It removes earlier operational constraints linked to consortium or multiple banking arrangements for such customers.
- Banks gain greater flexibility in offering transaction banking facilities to low-exposure customers.
3. Time Limit for Transfer From Collection Accounts
The amended framework mandates tighter fund movement controls:
- Funds credited into collection accounts must be transferred within two working days.
- Such funds must be remitted to the customer’s CC account, Current account, or OD account, as applicable.
3.1 Objective
- Prevents parking or misuse of funds in collection accounts
- Improves cash flow transparency and monitoring
- Ensures timely credit to operative accounts used for business activities
4. Restriction on Use of Accounts
RBI has reiterated that banks must ensure:
- Each CC, Current, or OD account is used exclusively for transactions related to the customer’s authorised business activities
- No unrelated, personal, or unauthorised transactions are permitted through these accounts
4.1 Compliance Focus
This measure strengthens:
- End-use monitoring
- Risk management and fraud prevention
- Alignment with KYC, AML, and account-usage controls
5. Regulatory Intent
The amendments seek to:
- Ease banking operations for small and mid-sized borrowers
- Improve discipline in fund flows
- Reduce complexity while maintaining strong supervisory safeguards
- Ensure that credit and transaction accounts serve their intended commercial purpose
6. Implications for Banks
Banks should:
- Update account opening and exposure-tracking systems to reflect the ₹10 crore threshold
- Monitor timely remittance of funds from collection accounts
- Strengthen transaction monitoring to ensure authorised-use compliance
- Revise internal SOPs, customer communication, and staff training
Non-compliance may attract supervisory observations or regulatory action.
7. Impact on Customers
- Customers with exposure below ₹10 crore benefit from simpler account operations
- Businesses must ensure proper segregation of transactions and timely fund movement
- Misuse of accounts may result in restrictions or corrective action by banks
Click Here To Read The Full Press Release
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