RBI eases transaction account norms for banks
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For the purpose of ensuring ongoing compliance with the new rules, all banks shall monitor transaction accounts maintained with them on a regular basis, and in any case at least once every half-year
The Reserve Bank of India (RBI) on Thursday relaxed regulations concerning the opening and management of cash credit, current, and overdraft accounts, as outlined in updated master directions. This follows an October draft proposal seeking to enhance operational flexibility for financial institutions. “Responses to the draft framework were reviewed, and final directions incorporate necessary modifications,” the central bank stated.
Under revised guidelines, lenders may now customize cash credit facilities according to client requirements without limitations. Additionally, institutions can maintain unrestricted current or overdraft accounts for clients whose total borrowing across banks falls below ₹10 crore.
For borrowers exceeding ₹10 crore in systemic exposure, banking partners holding over 10% of this borrowing may offer current and overdraft services. Where only one or no bank meets this threshold, the RBI now permits the two largest lending institutions (by exposure) to maintain these accounts, revising prior limitations.
The directives specify that funds received in collection accounts must be transferred within two business days to nominated cash credit, current, or overdraft accounts. Furthermore, overdraft disbursements originating from collection-oriented overdraft accounts must exclusively route through these designated accounts.
To maintain adherence, banks must conduct periodic reviews of transaction accounts, with mandatory compliance checks occurring at least semiannually.
Published on December 11, 2025
