The Reserve bank of India (RBI) has introduced stricter regulations for current accounts, aiming to improve banking discipline and ensure better management of corporate and business funds. These rules will come into effect from April 1, 2026, and are especially relevant for businesses, professionals, and entities that maintain current accounts.
📌 Key Changes to Current Account Regulations
1. Restrictions on Number of Current Accounts
o Businesses are now limited in the number of current accounts they can maintain.
o Firms must justify the need for multiple accounts to the bank, and banks may refuse opening additional accounts without valid reasons.
2. Stricter Monitoring of Inactivity
o Current accounts that remain inactive or overdrawn for extended periods may be closed by banks.
o Businesses must ensure regular transactions to avoid account suspension or closure.
3. Overdraft and Fund Management Guidelines
o Banks will monitor overdraft limits more strictly.
o Entities must maintain adequate justification for overdrawing to prevent misuse of credit facilities.
4. KYC and Documentation Compliance
o RBI emphasizes updated Know Your customer (KYC) documentation for all current account holders.
o Businesses will need to submit updated identity, address, and financial documents periodically.
5. Periodic Reviews by Banks
o Banks are required to review current accounts periodically to ensure compliance with RBI regulations.
o Non-compliant accounts may face restrictions, penalties, or closure.
💡 Why RBI Made These Changes
· Curb Misuse of Current Accounts: Some businesses and entities were using multiple accounts for unregulated fund flows or avoiding monitoring.
· Strengthen Financial Discipline: Ensures businesses maintain transparent and traceable transactions.
· Align With wallet PLATFORM' target='_blank' title='digital-Latest Updates, Photos, Videos are a click away, CLICK NOW'>digital banking Norms: Encourages better banking practices and easier regulatory oversight.
📈 Practical Tips for Businesses
1. Review Current Accounts: List all current accounts and justify their necessity.
2. Ensure Compliance: Keep KYC documents and financial statements updated and accurate.
3. Monitor Transactions: Avoid inactivity or overdrafts without justification.
4. Consult Your Bank: Discuss with your bank about compliance measures to prevent account closure or penalties.
📌 Final Thoughts
From April 1, 2026, businesses and professionals must comply with RBI’s updated current account rules. Non-compliance may lead to account closure, penalties, or restricted banking facilities. By reviewing accounts, updating documentation, and maintaining proper fund management, account holders can ensure a smooth transition under the new regulations.
Disclaimer:
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