Mumbai: The Reserve Bank of India on Thursday relaxed proposed curbs on cash credit facilities after stakeholders cautioned that the draft rules could hinder working capital access.
The RBI said restrictions applicable to current and overdraft accounts would no longer apply to cash credit accounts, as they function differently.
The October draft had proposed that only two lending banks chosen by the borrower—each holding at least 10 per cent of total system exposure or fund-based exposure for borrowers with over Rs 10 crore credit—could operate transaction accounts.
Feedback indicated this could constrain fund flows, prompting the RBI to revise the rule.
The central bank has now allowed any lending bank with more than 10 per cent exposure to open and maintain a current or overdraft account.
However, the Reserve Bank of India did not accept several other suggestions, particularly those related to monitoring transactions and compliance
requirements.