The Reserve Bank of India (RBI) has set some new conditions for the banks to open new current accounts for large borrowers with a view to enhancing credit discipline.
These conditions are for customers who have availed cash credit or overdraft facilities.
Read on to find out more about the new conditions and the reason behind the move…
RBI’s Step Towards Secure Banking!
The RBI governor, Shaktikanta Das in a statement on Developmental and Regulatory Policies on August 6 said that multiple operating accounts used by large borrowers- both current and cash/overdraft accounts- have been observed to be prone to violate the credit discipline.
In a notification, the RBI said that rather than opening a new current account, all transactions should be made through a cash credit (CC) or overdraft (OD) account.
This move will avoid hoodwinking the system and reduce the blind spots thus protecting the depositor’s money, said the officials with knowledge in the matter.
The central bank also said that the revised norms will likely bring in the requisite discipline in collective actions by creditors for speedier resolution of stress in the accounts of borrowers.
It added, “Banks should not route withdrawal from term loans through current accounts. Since term loans are meant for specific purposes, the funds should be remitted directly to the supplier of goods and services. Expenses incurred by the borrower for day to day operations should be routed through CC/ OD account if the borrower has CC/ OD account, else through a current account.”
The Reason Behind This Move?
The RBI hasn’t stated the reason behind this move. However, it can be linked to the Rs 4000 crore PMC cooperative bank scam wherein multiple accounts were opened.
A customer can open multiple accounts there is no monitoring of funds. Also, the same customer can withdraw a huge amount from the same bank from different accounts, which can possibly lead to fraud cases and scams.
The customer can take part in a vicious circle, wherein he uses the money to pay the first credit facility which can lead to a wider concern.
The policy is surely a step towards preventing huge bank scams we have witnessed in the past years!
Instagram Down: Giving 5xx Server Error
Update 19 Mar 2021 23:38 IST: Instagram and other apps are now working fine.
Instagram is currently facing downtime and users from all around the world are reporting Instagram Server Down on Twitter. Some users are also facing downtime on WhatsApp and Facebook Messenger.
The Instagram app is showing “couldn’t refresh feed”. and the Instagram website is giving 5xx Server Error.
Earthquake in Nalanda, Patna – Bihar with 3.5 Magnitude
An earthquake of magnitude 3.5 was reported near Nalanda in Bihar on Monday night, according to India’s National Center for Seismology.
The epicenter of the earthquake was 20 km northwest (NW) of Nalanda, Bihar, India, the agency said. The earthquake struck at 9:23 PM IST at a depth of 5 km from the surface. Tremors were also felt in Gaya, Bhagalpur, Nalanda, Patna.
Uttarakhand Power Plant Damaged After The Glacier Burst
Uttarakhand: A glacial burst in Chamoli district, Uttarakhand triggered an avalanche and massive flooding of the Alaknanda and Dhauliganga rivers on Sunday morning, forcing the emergency evacuation of thousands from surrounding areas, and damaging houses and the nearby Rishiganga power project.
Disaster response and management teams have been deployed to conduct search-and-rescue and relief operations. Around 100 to 150 people may have been killed, Uttarakhand Chief Secretary Om Prakash told news agency ANI. Authorities fear hundreds more may still be stuck. Prime Minister Narendra Modi, who is in Assam to campaign for Assembly polls, tweeted: “India stands with Uttarakhand and the nation prays for everyone’s safety.”
Disaster management teams have been mobilized and hundreds of ITBP (Indo-Tibetan Border Police) have been rushed for rescue operations.
SN Pradhan, chief of the National Disaster Response Force (NDRF), said that teams from the relief force have been moved for search-and-rescue and relief operations in Uttarakhand where a glacial burst has triggered an avalanche. “The glacial burst has taken out a bridge constructed by the Border Road Organisation. Also in the higher reaches, the Rishiganga hydel project also has been damaged,” he said.