More Stories

Informist, Thursday, Dec. 11, 2025 

 

NEW DELHI – The Reserve Bank of India Thursday released a detailed statement summarising the feedback received on its draft Transaction Account Directions, 2025, issued on Oct. 1 to seven categories of regulated entities, including commercial banks, small finance banks, payments banks, local area banks, regional rural banks, and urban and rural cooperative banks.

 

The central bank has accepted some stakeholder suggestions and rejected several others, citing the need to preserve regulatory intent and operational discipline. A key area of feedback was related to transaction account rules for borrowers with INR 100 million or more of banking system exposure. Stakeholders had asked the RBI to revisit restrictions on cash credit accounts to avoid any impact on working capital availability. The RBI accepted this suggestion, deciding to remove restrictions on cash credit facilities, noting they differ operationally from current and overdraft accounts.

 

Banks had also sought relaxation of the proposed cap of two banks permitted to maintain transaction accounts for such borrowers. Responding to this, the RBI said it would allow any lending bank with more than 10% exposure to operate a current or overdraft account. If no bank, or only one, meets the criterion, the two lenders with the highest exposure may maintain these accounts. 

 

On the proposal requiring funds in collection accounts to be transferred to a designated transaction account within two working days, banks requested additional time. The RBI, however, rejected the request, stressing that timely transfer to the lending bank is a crucial requirement.

 

Stakeholders also sought exemptions from the requirement to convert or close a transaction account if a bank becomes ineligible to operate it—particularly in cases involving instructions from law enforcement agencies. The RBI declined this request, clarifying that all regulatory instructions operate without prejudice to any judicial orders, making a specific exemption unnecessary. 

 

Another area of concern involved the operational challenges of monitoring transaction accounts, especially ensuring that accounts are used only for authorised purposes and not as proxy channels for restricted activities. Banks argued that they would largely have to depend on customer declarations and suggested shared responsibility for compliance. They also sought more detailed guidance. The RBI did not accept these suggestions, stating that monitoring systems are an operational responsibility for banks and that they are expected to maintain adequate internal controls.

 

Various stakeholders also requested exemptions for particular borrower categories or additional relaxations. The RBI declined such proposals, emphasising that the guidelines are principle-based, simplified, and already offer sufficient flexibility.  End

 

Reported by Kabir Sharma

Edited by Tanima Banerjee

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2025. All rights reserved.