Date of Issue: December 11, 2025
Reference: Press Release 2025-2026/1684
Subject: Rationalisation of Maintenance of Cash Credit, Current, and Overdraft Accounts
The Reserve Bank of India (RBI) has issued final Amendment Directions aimed at rationalising existing norms regarding the opening and operating of Cash Credit (CC), Current Accounts (CA), and Overdraft (OD) accounts. These amendments follow the draft directions issued on October 1, 2025, and incorporate stakeholder feedback to provide banks with greater operational flexibility.
1. Commercial Banks
Entity: Commercial Banks Impact: HighSpecific Changes Required
Reference: RBI (Commercial Banks – Credit Risk Management) Amendment Directions, 2025
- Exposure Threshold Relaxation: Banks are now permitted to open Current, CC, or OD accounts without restriction for borrowers where the aggregate exposure of the banking system is less than ₹10 Crore (increased flexibility compared to previous strictures).
- Lending Bank Requirement: For borrowers with exposure of ₹10 Crore or more, only banks having a minimum of 10% of the aggregate exposure of the banking system to that borrower can open CC/OD accounts.
- Collection Accounts: Non-lending banks or banks with <10% exposure are permitted to open "Collection Accounts" strictly for credit purposes. Funds from these accounts must be remitted to the main CC/OD account within two working days.
- Pass-Through Restrictions: Current accounts cannot be used as pass-through vehicles for third-party transactions unless specifically authorized.
Management Action Plan
- Policy Revision: Update the “Policy on Opening of Current & CC/OD Accounts” to reflect the new ₹10 Crore threshold freedom.
- System Configuration: Configure the Core Banking Solution (CBS) to automatically check the CERSAI/CRILC data for aggregate exposure before opening new accounts.
- Audit & Compliance: Identify existing collection accounts and ensure the “T+2” remittance logic is automated to prevent regulatory breaches.
2. Small Finance Banks (SFBs)
Entity: SFBs Impact: MediumSpecific Changes Required
Reference: RBI (Small Finance Banks – Credit Risk Management) Amendment Directions, 2025
- Alignment with Commercial Banks: SFBs are granted the same flexibility as Commercial Banks regarding the opening of transaction accounts for smaller borrowers (Exposure < ₹10 Cr).
- Escrow Mechanism: Specific instructions for handling escrow accounts for borrowers with multiple banking arrangements have been simplified to ensure smoother credit flow to micro and small enterprises.
Management Action Plan
- Staff Training: Train branch personnel on the simplified norms to expedite account opening for MSME customers (a key segment for SFBs).
- Customer Communication: Inform MSME borrowers that they no longer need NOCs from other lenders if their total exposure is under the ₹10 Cr threshold.
3. Payments Banks
Entity: Payments Banks Impact: HighSpecific Changes Required
Reference: RBI (Payments Banks – Miscellaneous) Amendment Directions, 2025
- Restricted to Collection: Since Payments Banks cannot lend, they are largely restricted to opening Current Accounts.
- Large Borrowers: For customers with aggregate credit exposure ≥ ₹10 Crore, Payments Banks can only open “Collection Accounts.” They are prohibited from opening operational current accounts that allow discretionary debits.
- Sweeping Mechanism: Mandatory sweeping of balances from Collection Accounts to the borrower’s CC/OD account with a lending bank at the end of the day (or max T+2).
Management Action Plan
- Tech Integration: Enhance API integrations with Scheduled Commercial Banks to facilitate automated sweeping of funds from collection accounts.
- KYC & Due Diligence: Strengthen the onboarding process to capture “Credit Exposure” details via declaration or credit bureau check to classify the account correctly (Operational vs. Collection).
4. Regional Rural Banks (RRBs)
Entity: RRBs Impact: MediumSpecific Changes Required
Reference: RBI (Regional Rural Banks – Credit Risk Management) Amendment Directions, 2025
- Agri-Credit Flexibility: Specific relaxations provided for opening accounts related to agricultural credit and KCC (Kisan Credit Card) facilities, ensuring these are not hampered by multiple banking restrictions.
- Consortium Discipline: For large corporate/agri-processing borrowers, RRBs must adhere to the 10% exposure rule for maintaining lead transaction accounts.
Management Action Plan
- Portfolio Review: Review the non-agri corporate loan portfolio to identify accounts where the bank has <10% exposure.
- Operational Guidelines: Issue circulars clarifying that KCC and small agri-loans are exempt from the rigorous “Multiple Banking Arrangement” restrictions.
5. Urban & Rural Co-operative Banks
Entity: UCBs, StCBs, DCCBs Impact: HighSpecific Changes Required
Reference: RBI (Urban/Rural Co-operative Banks – Credit Risk Management) Amendment Directions, 2025
- Unified Framework: These banks are now brought under a framework similar to Commercial Banks to prevent diversion of funds.
- Prohibition on Opening Current Accounts for Defaulters: Strict prohibition on opening current accounts for borrowers who have defaulted with other lenders, regardless of exposure size.
- Flexibility for Co-op Societies: Accounts of Primary Agricultural Credit Societies (PACS) maintained with DCCBs/StCBs are exempted from certain restrictions to ensure the flow of credit in the cooperative structure.
Management Action Plan
- NOC Procedure: While NOCs are largely removed for small borrowers, UCBs must strictly verify “No Default” status via CIBIL/CRILC before opening accounts.
- System Hardening: Implement “Debit Freeze” functionality for accounts flagged as Collection Accounts (for large borrowers) to ensure funds are only remitted to lenders.