MUMBAI: With a view to enhance credit score self-discipline, the Reserve Financial institution on Thursday barred banks from opening present accounts for patrons who’ve availed money credit score or overdraft services, stressing that there’s a “want for self-discipline” on this […]
In a notification, the central financial institution mentioned that relatively than opening a brand new present account, all transactions needs to be routed by way of money credit score (CC) or overdraft (OD) account.
Nevertheless, the RBI didn’t specify the precise causes for initiating such a transfer. It may be famous that in latest situations of fraud just like the over Rs 4,000 crore PMC co-operative Financial institution rip-off, it was found that a number of accounts had been opened.
Officers within the know mentioned the transfer will keep away from hoodwinking of the system and cut back the blind spots, which can finally result in safety of depositors’ cash.
On Thursday, RBI governor Shaktikanta Das mentioned it’s “essential to take acceptable measures for strengthening credit score self-discipline” and mentioned there are considerations emanating from the usage of a number of accounts by debtors which requires the necessity for safeguards for opening of such accounts by debtors availing credit score services from a number of banks.
Stating that there’s a “want for self-discipline” by the banks in opening present accounts, the RBI mentioned, “no financial institution shall open present accounts for patrons who’ve availed credit score services within the type of money credit score (CC)/ overdraft (OD) from the banking system and all transactions shall be routed by way of the CC/ OD account”.
“Banks mustn’t route drawal from time period loans by way of present accounts. Since time period loans are meant for particular functions, the funds needs to be remitted on to the provider of products and companies. Bills incurred by the borrower for daily operations needs to be routed by way of CC/ OD account, if the borrower has a CC/ OD account, else by way of a present account,” it added.
It will also be famous that there’s a undertaking to have a single buyer ID for each entity’s banking wants which can assist in the monitoring, however the identical is just not absolutely in place.
If a buyer opens a number of accounts and there’s no monitoring of finish use of funds, there’s a chance that the identical buyer might bask in maleficence by drawing down cash from the identical financial institution by way of a distinct account. There’s additionally a chance that the cash could possibly be used to repay the primary credit score facility and maintain utilizing the identical modus operandi which may probably result in a wider concern.