The Reserve Bank of India issued amendment directions to its Commercial Banks – Credit Risk Management Directions, replacing the existing chapter on opening current accounts and cash credit or overdraft accounts with a new framework for maintaining cash credit (CC), current and overdraft (OD) accounts. The revised approach treats these as potential transaction accounts and sets conditions intended to strengthen credit discipline and lenders’ ability to monitor cashflows and fund utilisation. CC facilities remain unrestricted under the new chapter. For current and OD accounts, banks face no restrictions where the aggregate exposure of the banking system to a customer is below INR 10 crore, with “exposure” defined as the sum of sanctioned fund-based and non-fund-based facilities across the banking system (including commercial banks excluding payments banks, urban co-operative banks, and rural co-operative banks). Where system exposure is INR 10 crore or more, only banks meeting a minimum 10% share of system aggregate exposure or system aggregate fund-based exposure may maintain current or OD accounts, with fallback arrangements allowing the two largest lenders to do so in specified cases and, in certain scenarios, requiring no-objection certificates for additional current accounts (including where a borrower wants a scheduled commercial bank current account). Banks that do not meet the eligibility criteria may maintain only “collection accounts”, and amounts credited must be remitted within two working days to a borrower-designated CC, current or OD account, subject to limited debits for statutory dues and dues to the collecting bank. The framework also sets exemptions (including FEMA-related accounts, statutorily or regulator-mandated accounts, and accounts of regulated entities for regulated activities), permits certain product-linked current accounts under a board-approved policy with tight transaction limits, and requires half-yearly compliance monitoring, core banking system flagging, and conversion or closure timelines where eligibility changes. The amendments take effect from 1 April 2026, with banks permitted to implement earlier.
Reserve Bank of India 2025-12-11
Reserve Bank of India amends credit risk rules for maintaining current and overdraft accounts with an INR 10 crore exposure threshold and collection account controls
The Reserve Bank of India has amended its Credit Risk Management Directions for Commercial Banks, introducing a new framework for cash credit, current, and overdraft accounts. It enhances credit discipline and monitoring with rules based on the banking system's aggregate exposure to a customer. Key provisions include unrestricted cash credit facilities, restrictions on current and overdraft accounts for exposures of INR 10 crore or more, and exemptions for certain accounts, effective from 1 April 2026.