The Reserve Bank of India (“RBI”) by a Circular dated 14th December, 2020 has permitted banks to open specific accounts which are stipulated under various statutes and instructions of other regulators / regulatory departments, without any specific restrictions.
The list of accounts which are permitted are –
- Accounts for real estate projects mandated under the Real Estate (Regulation and Development) Act, 2016 for the purpose of maintaining 70% of advance payments collected from the home buyers.
- Nodal or escrow accounts of payment aggregators / prepaid payment instrument issuers for specific activities as permitted by Department of Payments and Settlement Systems (DPSS), Reserve Bank of India under Payment and Settlement Systems Act, 2007.
- Accounts for settlement of dues related to debit card / ATM card / credit card issuers / acquirers.
- Accounts permitted under FEMA, 1999.
- Accounts for the purpose of IPO / NFO / FPO / share buyback / dividend payment / issuance of commercial papers / allotment of debentures / gratuity, etc. which are mandated by respective statutes or regulators and are meant for specific / limited transactions only.
- Accounts for payment of taxes, duties, statutory dues, etc. opened with banks authorized to collect the same, for borrowers of such banks which are not authorized to collect such taxes, duties, statutory dues, etc.
- Accounts of White Label ATM Operators and their agents for sourcing of currency.
The banks will have to ensure that the abovementioned accounts are used for permitted / specified transactions only. In addition to this, the banks will flag the accounts in the CBS for easy monitoring. Lenders to such borrowers may also enter into agreements / arrangements with the borrowers for monitoring of cash flows / periodic transfer of funds (if permissible) in these current accounts.
Moreover, banks will need to monitor all current accounts and CC / ODs regularly, at least on a half-yearly basis, specifically with respect to the exposure of the banking system to the borrower.
Background
The RBI by a Notification dated 6th August, 2020 and 2nd November, 2020 issued instructions on opening of current accounts by banks. The instructions were issued after review and all banks had to comply by the instructions w.r.t. existing current and CC / OD account.
For a detailed read on the Notification / Circular along with frequently asked questions (FAQs) providing clarifications related to implementation of opening of different type of bank accounts please refer to the hyperlinks provided in the update and source below.
Source : Reserve Bank of India
