Reserve Bank of India (RBI) Issues Transaction Account Directions, Eases Limits

Key facts

• The Reserve Bank of India (RBI) released final guidelines on transaction account directions.
• The final guidelines removed restrictions on cash credit (CC) accounts.
• The revised rule permits any lending bank with more than 10% exposure to open a current or overdraft account for the borrower.
• In situations where no bank or only one bank meets this threshold, the two lenders with the largest exposure will be allowed to operate such accounts.
• The requirement to transfer funds from collection accounts to designated transaction accounts within two working days remains unchanged.
• The guidelines will come into effect from April 1.