MUMBAI, Aug.4 (Reuters) – The Reserve Bank of India has announced that it will give banks an additional three months until October 31 to implement revised rules on opening and maintaining current accounts.
Central bank rules are aimed at cracking down on people opening multiple accounts to borrow money. They have already led to the freezing or closure of current accounts and micro, small and medium-sized businesses have been hit the hardest, bankers said.
In August of last year, the RBI said banks with little or no credit exposure to a customer could not open a checking account for them. The existing non-compliant accounts had to be frozen.
The central bank also banned banks from opening a current account if their exposure was less than 10% of borrowers’ total exposure to the banking system.
“The instructions were issued to enforce credit discipline among borrowers as well as to facilitate better control by lenders,” the central bank said.
The RBI last set a deadline of July 31, 2021 for banks to comply.
“We have meanwhile received requests from the banks for additional time to resolve operational issues while implementing the circular in letter and spirit,” the RBI said in its latest notification.
The central bank said that to ensure its instructions are implemented in a non-disruptive manner, banks will have until October 31, 2021 to implement the provisions.
“This extended deadline will be used by banks to engage with their borrowers in order to reach mutually satisfactory resolutions.”
Report by Swati Bhat. Editing by Jane Merriman
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