RBI Issues Final Guidelines On Transaction Accounts, Effective April 2026

(MENAFN- KNN India) New Delhi, Dec 12 (KNN) The Reserve Bank of India (RBI) on Thursday released the final set of guidelines governing transaction accounts across banks and regulated entities, following extensive stakeholder feedback on the draft directions issued on October 1, 2025.

The seven draft directions-covering commercial banks, small finance banks, payments banks, local area banks, regional rural banks, urban co-operative banks and rural co-operative banks-had proposed a rationalised, principle-based framework for opening and operating cash credit (CC), current and overdraft accounts.

Following review of industry comments, the RBI has incorporated several modifications and issued corresponding amendment directions for each category of regulated entity.

The revised transaction account directions will take effect from April 1, 2026, although banks may adopt them earlier.

Key Relaxations in the Final Guidelines

One of the most significant changes is the removal of restrictions on cash credit accounts. Banks had warned that treating CC accounts on par with current and overdraft accounts could constrain working capital flows. Acknowledging the distinct nature of CC facilities, the RBI has excluded them from the transaction account restrictions.

The earlier proposal limiting borrowers with banking exposure of Rs 10 crore or more to not more than two operative transaction accounts has also been eased.

Under the revised norms, any lending bank with more than 10 per cent exposure may open a current or overdraft account. Where this criterion is not met by at least two lenders, the two banks with the highest exposure may operate such accounts. The change is expected to enhance borrower flexibility while preserving credit-linked monitoring.

Regulatory Requirements Retained

Despite multiple industry representations, the RBI has maintained several provisions from the October draft.

The requirement to transfer funds from collection accounts to designated transaction accounts within two working days remains unchanged, with the regulator emphasising that timely fund flow is essential for credit discipline.

Similarly, requests to relax mandatory timelines for account closure or conversion-particularly in cases involving law enforcement instructions-were not accepted. The RBI clarified that its directions operate without prejudice to judicial or investigative orders, making further exemptions unnecessary.

Banks had also sought relief from monitoring obligations relating to third-party payments and misuse of accounts as unauthorised payment channels. The RBI declined to dilute these responsibilities, stating that regulated entities must strengthen internal controls to ensure compliance.

Broader appeals for borrower-specific or exposure-specific exemptions were also turned down, with the central bank noting that the simplified framework already provides adequate flexibility without compromising systemic safeguards.

(KNN Bureau)

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