India central bank eases restrictions on cash credit accounts, eases current account norms

MUMBAI: The Reserve Bank of India (RBI) on Thursday removed all restrictions on banks opening and maintaining cash credit accounts under new transaction account rules.

“A cash credit account is operationally different from a current or overdraft account,” the central bank said, adding banks may now offer these facilities based on customer needs without restriction.

Cash credit acts as a short-term, flexible business loan for working capital. The regulator adopted the changes following industry feedback on draft rules issued October 1, 2025.

These amendments form part of the central bank’s updated transaction account rules.

The RBI also eased norms for opening and maintaining current and overdraft accounts.

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Banks may now maintain current accounts without restriction for customers with banking exposures under 100 million rupees.

For exposures exceeding 100 million rupees, banks holding at least 10% exposure to a borrower may provide current and overdraft facilities, the central bank said.

Current accounts serve businesses and individuals with high transaction volumes. The RBI classifies current, overdraft, and cash credit accounts collectively as “transaction accounts.”

The move is aimed at providing greater flexibility to banks, the RBI said.