The Reserve Bank of India (RBI) has announced major changes to current account rules, which will come into effect from April 1, 2026.
These changes are aimed at better tracking the movement of funds between banks, reducing fraudulent or circular transactions, and improving overall credit discipline.
For companies that borrow from multiple banks, managing daily cash flows will become more regulated.
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Big Relief for Borrowers with Loans Below ₹10 Crore
The RBI has offered clear relief to small and medium businesses.
Companies with total bank borrowings of less than ₹10 crore will not face any new restrictions.
They can continue to open and operate current accounts with any bank, just like before.
There will be no additional monitoring, fund transfer deadlines, or compliance burden for such borrowers.
RBI has kept these businesses outside the new framework to avoid affecting their growth.
Stricter Rules for Borrowings of ₹10 Crore and Above
Companies with total loan exposure of ₹10 crore or more will now face stricter controls.
Only banks that hold at least 10 percent of a company’s total loan exposure will be allowed to operate a full current account.
Banks with less than 10 percent exposure can open only a collection account.
These accounts can receive money, but withdrawals will not be allowed.
Cheque books, debit cards, cash withdrawals, and online transfers will also not be permitted.
Any funds received in a collection account must be transferred to the company’s main current account or CC/OD account within two working days.
Monitoring, Exemptions, and Compliance Rules
The RBI has clarified that accounts required under FEMA or other government or legal directions will be exempt from these rules.
Banks that are not eligible to open full current accounts may still open limited-purpose accounts, but these will only be for receiving funds.
To ensure compliance, banks must review such accounts every six months.
If a violation is found, a notice must be issued within one month.
The account must then be closed or converted into a collection account within three months.
What This Means for Businesses
While these rules are stricter for large borrowers, they are expected to make the banking system more transparent, secure, and disciplined.
Businesses with multiple banking relationships will need to plan their cash management more carefully under the new RBI framework.