The Reserve Bank of India has issued the Commercial Banks – Credit Risk Management (Amendment) Directions, 2025, replacing Chapter XI of the earlier Directions with a new Chapter XIA on the maintenance of current accounts, cash credit (CC) accounts, and overdraft (OD) accounts. The revised framework strengthens credit discipline by restricting the opening and operation of current and OD accounts for borrowers with ₹10 crore or more exposure to the banking system. Only banks holding at least 10% share in the borrower’s aggregate exposure or aggregate fund-based exposure may maintain these accounts, while others may operate only collection accounts with strict controls on routing of funds. Cash credit accounts, however, remain unrestricted given their working capital nature.
The amendments also introduce clear rules for collection accounts, exemptions for accounts mandated under law or used by regulated entities, and safeguards against misuse of accounts for third-party transactions or unregulated deposit-taking. Banks must monitor eligibility at least half-yearly, flag such accounts in their CBS, and mandate conversion or closure of ineligible accounts within specified timelines. Further, banks must ensure that term loan disbursements are made directly to beneficiaries to prevent fund diversion. The amendments come into effect from April 1, 2026, with an option for banks to implement them earlier.
Link – https://rbidocs.rbi.org.in/rdocs/notification/PDFs/NT141155C925EB705406E90AAD6ED40993D79.PDF
