RBI Current Account Rules: Banks Split Over Draft
Why in the news
RBI’s draft tightening of current account norms for large borrowers split private and public sector banks inside the Indian Banks’ Association (IBA), since it may shift low-cost deposits and transaction-banking income.
Key facts
- Rule proposed: for a borrower with ₹10 crore or more outstanding, only two banks holding at least 10% of total exposure may open current accounts.
- Goal: stop fund diversion and give primary lenders full view of cash flows.
- Timeline: draft issued October 2025; implementation date pending.
- Collection accounts allowed for receipts, provided money moves to the main current account within two working days.
| View | Points |
|---|---|
| Private banks | Lose cheap CASA deposits; PSBs dominate as consortium lead lenders; fewer choices for borrowers; hit to cash management and fee income |
| RBI | Many current accounts for one borrower raise diversion risk; non-lending banks hide true cash flows |
Rationale
- Borrowers keeping accounts with non-lending banks mask real cash flows.
- Stronger supervision of how borrowers manage liquidity.
- Builds on 2020 directives that restricted non-lending banks from holding borrowers’ current accounts.
Exam angle
- Threshold terms: ₹10 crore loans and 10% exposure.
- Number of banks allowed: two.
- Related terms: CASA ratio, fund diversion, lead lender.