What changed
The Patna High Court, in a public interest case, ordered RBI to direct all banks to not allow money transactions for companies declared as defaulted. RBI has now mandated that banks comply and report compliance.
What it means for you
Banks must ensure no money transactions (credits or debits) are processed for accounts of the listed defaulted companies. This is a strict directive requiring immediate branch-level action and reporting to RBI.
What you must do
- Identify all accounts of companies listed in the enclosed defaulted companies list from the Patna High Court order.
- Ensure no money transactions are allowed in these accounts.
- Advise all branches immediately.
- Report compliance to RBI.
Who it affects
All banks, Branches dealing with accounts of listed defaulted companies, Compliance and operations teams
What does 'no money transaction' mean for these accounts?
It means no deposits, withdrawals, transfers, or any other financial activity can be processed in these accounts until further court or regulatory orders.
What if we have no accounts of these defaulted companies?
The circular does not specify, but you should still verify the list and ensure no such accounts exist. The directive requires reporting compliance.
Is there a deadline for compliance reporting?
The circular does not specify a deadline, but it says 'immediately' and to 'report to the Bank about the compliance of the order.' Prompt action is expected.