RBI Tightens Current Account Rules for Payments Banks

RBI/2025-26/143 DOR.SOG(SPE).REC.349/13-04-001/2025-26 December 11, 2025 Reserve Bank of India (Payments Banks – Miscellaneous) – Amendment Directions, 2025 Please refer to Reserve Bank of India (Payments Banks – Miscellaneous) Directions, 2025 dated November 28, 2025 (hereinafter referred to as ‘the Directions’). 2. On a review, in exercise of the powers conferred by the Section 35A of the Banking Regulation Act, 1949 and all other provisions / laws enabling the Reserve Bank of India (hereinafter called the Reserve Bank) in this regard, the Reserve Bank being satisfied that it is necessary and expedient in the public interest so to do, hereby issues the Amendment Directions hereinafter specified. 3. The Amendment Directions modifies the Directions as under: (1) In paragraph 4, after sub-para (1), the following sub-para shall be inserted namely: (1A) ’Current Account’ shall mean a form of demand deposit account wherefrom withdrawals are allowed any number of times depending upon the balance in the account or up to a particular agreed amount and shall also be deemed to include other deposit accounts which are neither Savings nor Term deposit account. (2) In Chapter VI, Section B shall be renamed as “Maintenance of Current Accounts” (3) After paragraph 55, within Section B, the following paragraphs shall be inserted: 55A. With a view to strengthening credit discipline and facilitating better monitoring of transactions and utilisation of funds, this Section provides a framework for maintaining current accounts by banks. C.1 Current Accounts 55B. A bank may maintain current account without any restriction in case of customers where the aggregate exposure of the banking system to the customer is less than ₹10 crore. Explanation (1): ‘Banking System’ for the purpose of this Chapter shall include Commercial Banks (including Small Finance Banks, Local Area Banks, and Regional Rural Banks, but excluding Payments Banks), Urban Co-operative Banks and Rural Co-operative Banks (State Co-operative Banks and Central Co-operative Banks). Explanation (2): ‘Exposure’ for the purpose of this Chapter means the sum of all sanctioned fund-based credit facilities and non-fund-based facilities availed by the borrower from the banking system. 55C. A bank may maintain only collection accounts in case of customers to whom the exposure of the banking system is ₹10 crore or more. Explanation: ‘Collection Account’ for the purpose of this Section means a current account used primarily for receipts of cash inflows of the accountholder. Restricted payments / cash outflows from such account shall be subject to the conditions outlined in paragraph 55D of these Directions. C.2. Collection Accounts 55D. Funds credited into a collection account shall be remitted within two working days of receipt of such funds to a Cash Credit Account (CC), current account, or Overdraft Account (OD) maintained with any bank in the banking system and designated by the borrower for this purpose (hereinafter referred to as ‘designated account’ in this Chapter). Provided that statutory dues such as taxes, and dues, if any, to the bank maintaining the collection account may be debited before remitting the funds. C.3. Exemptions 55E. The restrictions placed in terms of paragraph 55C of these Directions shall not be applicable to the accounts mentioned below: (1) Accounts opened as per the provisions of Foreign Exchange Management Act, 1999 (FEMA) and notifications issued thereunder, including accounts mandated for ensuring compliance under the FEMA framework. (2) Specific accounts or transactions which are stipulated under a statute or a specific instruction of a financial sector regulator, or the Central Government or a State Government. Explanation: ‘Financial sector regulator’ for the purpose of this Chapter refers to the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI), the Insurance Regulatory and Development Authority of India (IRDAI) and the Pension Fund Regulatory and Development Authority (PFRDA). (3) Accounts of entities regulated by a financial sector regulator, used for the purpose of carrying out their regulated activities. Provided that banks operating the above-mentioned exempted accounts shall ensure that transactions in such accounts are used only for the permitted / specified purposes. Surplus funds, if any, in such accounts shall be remitted to the designated account. C.4. Compliance Monitoring 55F. For the purpose of ensuring ongoing compliance with this Chapter, all banks shall monitor accounts maintained with them on a regular basis, and in any case at least once every half-year. 55G. In case it is observed that a bank is no longer eligible to maintain a current account opened in terms of paragraph 55B due to increase in exposure of banking system to the borrower up to or beyond the specified threshold of ₹10 crore, then the bank shall notify the customer(s) concerned promptly, and in any case within one month from the date of observing such ineligibility, that the account must either be converted to a collection account or closed. The conversion or closure process, as the case may be, shall be completed within three months of observing such ineligibility. 55H. Accounts opened in terms of these Directions shall be appropriately flagged in the bank’s core banking solution (CBS) to ensure clear identification and to facilitate effective monitoring. Banks maintaining multiple accounts for a borrower shall ensure that such accounts and transactions and cashflows therein are monitored at the borrower level as also at the account level. C.5. Other Provisions 55I. A bank shall ensure that an accountholder utilise their account solely for transactions related to their authorised business or activities. These accounts shall not, under any circumstances, be used as pass-through channels for facilitating third-party transactions. Provided that entities expressly licensed or authorised by a financial sector regulator to facilitate third-party transactions may continue to do so. However, such activities shall strictly be limited to the specific transactions they are authorised to do and shall not extend beyond that scope. Any account that has been permitted to carry out such third-party transactions shall be appropriately flagged in the bank’s CBS to ensure clear identification and to facilitate effective monitoring. 55J. A bank shall ensure that an accountholder, who is not licensed or authorised by the Reserve Bank to accept deposits or to provide payment services, do not engage in such activities through accounts maintained with them. 55K. Robust monitoring systems shall be implemented to detect the above prohibited usage, including mechanisms to flag accounts exhibiting unusually high transaction volumes, frequent pass-through activities, or inconsistencies between the accountholder’s stated line of business and transactions carried out through the account. 4. The above amendments shall come into force from April 1, 2026. Banks may however decide to implement the amendments in entirety from an earlier date. Vaibhav Chaturvedi (Chief General Manager)

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2025-26/143 · issued 11 Dec 2025. The plain-English explanation above is BankPulse’s own independent summary.

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