The Reserve Bank of India (RBI) has officially opened several services with the improved process on IPO, advance payment for home purchases, and FPO application that are mandatorily used for settlement of debit, credit or ATM dues from the limitations of opening current accounts without lending exposure. However, the central bank has reportedly mentioned eight specific services that have been exempted from its circular in the month of August.
Moreover, escrow accounts of payment or pre-paid payment companies, current accounts, and payment settlement accounts under the Foreign Exchange Management Act (FEMA) are specifically used for duties ad statutory and payment of taxes dues and accounts of white label ATM operators and their agents for sourcing currency have exempted from the RBI regulations.
In August, RBI has stated that banks do not have cash credit or overdraft facilities and cannot open a current account for many borrowers. Moreover, if a particular bank has an exposure of less than 10% of loans of the banking system to a borrower, all debits to their accounts can direct through a bank that has 10% or more of the loan exposure.
Now, banks are authorized to open CC/OD account for companies that have loans to the banking system of or above Rs 5 crore but for exposure between Rs. 5 crore and Rs. 50 crore. Lending banks are authorized to open current accounts and non-lending banks can only open an escrow account.
The circular for banks have improved their business to comply with the new central bank rules. Moreover, RBI has two main businesses named transaction banking business and cash management business that might bring new impact with the refined rules and regulations.
