RBI Relaxes Rules for Current A/C, OD & Cash Credit — Key Points
- All three accounts (Current, OD, CC) treated as transaction accounts.
- Exposure limit doubled: If banking system exposure < ₹10 crore, customers can open Current/OD/CC accounts freely.
(Earlier limit: ₹5 crore) - Up to two banks may maintain such transaction accounts for one customer.
- Effective from April 2026.
- For exposure ≥ ₹10 crore:
- Bank must have ≥10% share in total banking system exposure, OR
- ≥10% share in fund-based exposure.
- If no bank meets 10% rule, the top two banks with highest exposure may maintain Current/OD accounts.
- Cash Credit (CC): Banks may provide CC freely as per customer requirement — no restrictions now.
- CC vs Current/OD: CC is tied to working capital & current assets → operationally different from Current/OD.
Why RBI Relaxed These Rules (Reason)
- To make day-to-day business banking more flexible.
- To reduce operational friction for MSMEs & corporates.
- To simplify rules that earlier caused confusion between banks & borrowers.
- To ensure working capital flows smoothly without unnecessary restrictions.
- To balance convenience with risk control for large borrowers.
Pros (Benefits)
- Easier for SMEs: Borrowers under ₹10 crore exposure can open any account type without documentation hurdles.
- Improved cash-flow management for businesses via CC/OD flexibility.
- Simpler for banks — unified rule for transaction accounts.
- Faster working capital access → less dependence on multiple approvals.
- Reduced confusion across banks due to one standardized rule.
Cons (Limitations)
- For large borrowers (≥ ₹10 crore): Still restricted — only banks with ≥10% exposure can maintain Current/OD.
- Small banks may lose customers if they don’t meet the 10% exposure threshold.
- Needs careful monitoring to avoid misuse of transaction accounts.
- Exposure calculation complexity remains for consortium/ multiple-bank borrowers.
Source: Economic Times newspaper, “RBI Relaxes Rules for Current A/C, OD”, dated 12th December 2025.