JAMMU, Aug 3: The Chamber of Commerce and Industry (CCI) has appealed to RBI to revisit its decision on revised guidelines pertaining to Current Accounts in banks.
In a letter forwarded Regional Director RBI Jammu, president CCI Arun Gupta expressed concerned over the new restrictions imposed on operation of Current Accounts in banks claiming that the change in procedure will lead to a precarious situation which can prove detrimental to the business community of Jammu region which is already reeling under much stress and strain due to corona pandemic and its impact on economy.
He said that recent RBI circular making it mandatory for Current Account holders who have availed cash credit or overdraft facilities to route all transactions through Cash Credit (CC) or Over Draft (OD) account will lead to numerous difficulties and operational issues for the business entities and industry.
“The banks have already started issuing notices to all customers availing Cash Credit or OD limit for closure of current accounts irrespective of the fact that tweaked guidelines are clear on the fact that the borrowers where exposure of the banking system is Rs 5 crore or more but less than Rs 50 crore, there is no restriction on opening of current account by the lending banks subject to the non- lending banks can open only collection accounts and there is no specific condition on opening of Current Accounts where the exposure of banking system is less than Rs 5 crore subject to obtaining of an undertaking from such customer for informing the bank when the credit facility becomes Rs. 5 crore or more”, he has written adding that for exposure of banking system with limit of Rs 50 crore or more an escrow mechanism is required to be put in place by the banks for operation of current accounts.
He rued that despite these clear guidelines banks are compelling all customers to close the current accounts which is unwarranted and should be deferred for the time being as already the business community are facing tumultuous times due to COVID and need Government support, not such difficult decisions which can further deteriorate the situation to sustain and survive.
“The business establishments have various current accounts with banks based on the location of their branches. Such banks may or may not have CC/OD facilities extended to such units. Now pursuant to the circular, these current accounts will need to be closed. The requirement to route all transactions through CC/OD Account, will mean that all amounts have to be routed through the CC/OD account. This is not practical in view of the wide geographical spread of business units”, he said adding that the decision will prove out to be disastrous for the business community and therefore it is advised to switch over to last year’s system till the present confusion is cleared.