RBI/2004/200 DBOD.No.Leg.BC.84 /09.07.005/2003-04 May 15, 2004 All Scheduled Commercial Banks (Excluding RRBs)
Dear Sir,
Opening of Current Accounts by banks - Need for discipline
Please refer to our Circular DBOD.No.BC.136/09.08.001/99-2000
dated January 25, 2000 wherein we had advised banks that at the time of opening
of current accounts, they should insist on a declaration from the account-holder
to the effect that he is not enjoying any credit facility with any other bank
or obtain a declaration giving particulars of credit facilities enjoyed by the
intending customer with any other bank(s). Besides, in the latter case, the
concerned lending bank(s) were required to be duly informed so that suitable
precautionary measures, where necessary could be taken by them.
2. The above procedure which is considered essential
in the interests of overall credit discipline is reportedly not being adopted
by some banks and consequently facilitates diversion of funds by borrowers to
the detriment of the banking system. Banks are therefore once again instructed
to scrupulously ensure that their branches do not open current accounts of entities
which enjoy credit facilities (fund based or non-fund based) from the banking
system without specifically obtaining a No-Objection Certificate from the lending
bank(s). Banks are also advised to note that non-adherence to the above discipline
could be perceived to be abetting the siphoning of funds and such violations
which are either reported to RBI or noticed during our inspection would make
the concerned banks liable for penalty under Banking Regulation Act, 1949.
3. Please acknowledge receipt
Yours faithfully
(C.R.Muralidharan)
Chief General Manager-in-Charge
|