New RBI rules for current accounts from April 1, 2026 — Key changes explained

RBI has announced new current account rules that will be enforced from April 1, 2026. The changes tighten how banks track fund flows, clamp down on circular transactions and push for better credit discipline. For companies, particularly those dealing with multiple banks - this will mean noticeable changes in day-to-day cash management and how they handle their banking ties.

No restrictions for borrowers with exposure below Rs 10 crore

Under the updated framework, the RBI has kept compliance light for smaller borrowers. Companies that have total borrowing of less than Rs 10 crore from the banking system can continue to open and operate current accounts freely with any bank, without additional checks or controls.

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Rs 10 crore-plus borrowers face stricter rules

The framework becomes significantly tighter for companies whose total loan exposure is Rs 10 crore or more. In such cases, only a bank with at least 10 per cent share of the total loan exposure can operate the customer’s Current Account or Cash Credit/Overdraft (CC/OD) facilities. This threshold, the RBI said, ensures that banks with meaningful exposure maintain oversight on large fund flows, reducing the risk of diversion.

If the 10% rule is not met: Only a collection account allowed

If a bank does not have the required 10 per cent share in the borrower’s exposure, it will be permitted to maintain only a Collection Account.

A collection account is restrictive by design:

• Funds can flow in, but not out
• No payments, transfers or withdrawals are allowed
• Chequebooks, debit cards and cash facilities are not permitted

All credits received in such an account must be transferred within two working days to the borrower’s designated main current account or CC/OD account held with an eligible bank.

Exemptions for FEMA-linked and regulatory accounts

The RBI has clarified that certain accounts - particularly those required under FEMA, statutory regulations, or government directions - will fall outside this framework. These may continue to operate normally regardless of exposure thresholds.

Some banking products may continue with restrictions

In limited cases, even a non-eligible bank may open accounts for specific products, but these accounts will remain highly restricted:

• No cash deposit/withdrawal
• No cheque book issuance
• No cards or online payment tools

Such accounts will be treated purely as receiving accounts for designated purposes.

Banks must review accounts every six months

To ensure compliance, all banks will be required to review every relevant borrower account twice a year. Any breach must trigger immediate supervisory action.

If any violation is found, banks will now have to issue a notice within a month, and the account must either be closed or shifted to a collection account within three months. Such accounts will also need to be clearly flagged in the bank’s core systems so they can be monitored more closely.

The RBI has also put a stop to routing third-party funds through borrower accounts unless it’s legally permitted. Banks have been told to keep a closer watch on ‘pass-through’ transactions - cases where money simply moves around to inflate turnover or mask liabilities. For term loans, lenders have been advised to release funds directly to vendors or end-beneficiaries to avoid misuse.