RBI’s New ₹10 Crore Rule Is Quietly Reshaping Which Bank Can Hold Your Business Current Account — Are You Compliant?

If you run a business in India and maintain a current account at a bank that isn’t your primary lender, there is a regulatory shift happening right now that directly affects you. The Reserve Bank of India issued a landmark circular on December 11, 2025, overhauling the entire framework governing current accounts, overdraft (OD) facilities, and cash credit (CC) accounts — and the revised rules came into effect in April 2026. At the heart of this overhaul is a deceptively simple number: ₹10 crore. But the implications of that number ripple across millions of businesses, dozens of banks, and the very architecture of how working capital flows through the Indian economy. If your business hasn’t reviewed its banking structure yet, this is the moment to do it.

What the Old Rule Said

To understand why this change matters, you need to understand what preceded it. Under the earlier Chapter XI framework of the RBI’s Commercial Banks Credit Risk Management Directions, restrictions on opening and maintaining current accounts and OD accounts kicked in when a borrower’s aggregate banking system exposure reached ₹5 crore. In practical terms, this meant that if your business had loans, limits, or credit facilities totalling ₹5 crore or more across all banks combined, you were subject to tight rules about which bank could legally hold your operational current account. Non-lending banks — banks where you had no credit relationship — were generally not permitted to open current accounts for you if you had CC or OD facilities elsewhere. The lending bank with the single highest exposure was typically the only one that could open a current account in your name. For a growing business working across multiple banking relationships, this created genuine friction. Funds couldn’t flow freely. Operational banking was tied to credit banking in a way that penalised flexibility and sometimes forced businesses into suboptimal arrangements simply to stay compliant.

The New ₹10 Crore Threshold Explained

The revised framework, now housed under Chapter XIA of the RBI’s Commercial Banks Credit Risk Management Amendment Directions, 2025, makes one foundational change that cascades into everything else. The threshold at which restrictions apply has been doubled — from ₹5 crore to ₹10 crore. This means that if your business’s aggregate exposure across the entire banking system is below ₹10 crore, any bank in the country can freely open and maintain a current account or OD account for you, with no questions asked about lending relationships. You are, for regulatory purposes, unrestricted. This is genuinely significant for the vast majority of Indian MSMEs, small manufacturers, traders, and service businesses. A large swath of borrowers who were previously caught in the web of lending-bank restrictions are now liberated from that compliance burden entirely. The RBI’s stated objective was ease of doing business — and for sub-₹10 crore borrowers, that objective has been substantially delivered.

Where It Gets Complex: The ≥₹10 Crore Zone

For businesses with aggregate banking exposure of ₹10 crore or more, the rules remain — but they’ve also been meaningfully refined. A bank can maintain a current account or OD account for such a borrower only if it meets at least one of two qualifying conditions. First, it must hold a minimum 10% share in the banking system’s aggregate exposure to the borrower. Second — and this is new — it may alternatively qualify if it holds a minimum 10% share in the banking system’s aggregate fund-based exposure alone. This second criterion is the critical addition that wasn’t present in the old framework. Previously, a bank had to meet the 10% threshold in total exposure (fund-based plus non-fund-based). Now, a bank that has significant fund-based lending — term loans, working capital loans — even if its non-fund-based facilities are smaller, can still qualify to hold your current account. For banks that specialise in direct lending rather than guarantees or letter-of-credit facilities, this is a meaningful expansion of eligibility.

The Two-Bank Exception

The revised framework also addresses a scenario that commonly arose in practice: what happens when no bank, or only one bank, meets the 10% share criterion? Under the old rules, this situation was handled by allowing only the single lending bank with the highest exposure to open the current account. The revised guidelines are more practical. If no bank meets the 10% threshold, or only one bank does, then the two banks with the largest exposures to the borrower — regardless of whether they cross 10% — may maintain current accounts or OD accounts. This is a sensible acknowledgment of reality. In many syndicated lending arrangements or consortium banking structures, individual bank shares get diluted across many lenders. The old “winner takes all” approach forced businesses to consolidate operational banking in a single institution that may not have been well-suited for day-to-day transactional needs. The revised two-bank exception gives businesses meaningfully more operational breathing room.

Cash Credit Accounts: Now Fully Exempt

Perhaps the single most impactful technical change in the entire revised framework is the treatment of Cash Credit accounts. Under the old guidelines, CC facilities were lumped together with current accounts and OD accounts and subjected to the same exposure-based restrictions. The revised Chapter XIA categorically removes CC facilities from these restrictions entirely. Banks can now provide CC facilities without any restriction, regardless of the borrower’s aggregate banking system exposure. This reflects an important conceptual distinction that practitioners had long argued for: CC accounts are fundamentally working capital instruments, tied directly to current assets like inventory and receivables. They are not general-purpose transactional accounts. Treating them the same as current accounts created operational complications without adding meaningful regulatory protection. The RBI has now acknowledged that reality in its amended directions. For businesses that rely heavily on CC limits to manage their working capital cycle, this change removes a layer of compliance anxiety that previously existed every time a new lender was brought into the credit structure.

Collection Accounts: What Changes, What Doesn’t

Collection accounts — technically a form of current account or OD account used primarily to receive cash inflows — remain permitted even for banks that don’t qualify under the 10% exposure rule. This is an important carve-out for businesses that route receivables through multiple banking channels. A bank that cannot hold your primary operational current account because it doesn’t meet the 10% exposure threshold can still function as a collection bank, receiving payments and inflows on your behalf. However, these collection accounts come with conditions. Payments and cash outflows from collection accounts are restricted — they cannot function as fully operational transactional accounts in the way a primary current account does. For businesses with complex receivables structures — those in e-commerce, distribution, or multi-channel retail — understanding the distinction between a “collection account” and a fully operational current account is now more important than ever.

The Escrow Mechanism Is Gone

One significant simplification in the revised framework deserves explicit mention: the mandatory escrow mechanism that previously applied to borrowers with exposure of ₹50 crore or more who were not availing CC or OD facilities has been completely removed. Under the old rules, such borrowers had to route transactions through an escrow structure that added administrative complexity and cost. That requirement has been omitted from the revised guidelines entirely. For large borrowers — listed companies, large private firms, infrastructure project companies — who previously maintained complex escrow arrangements purely for regulatory compliance, this is a material simplification of banking infrastructure.

Compliance Monitoring: The Half-Year Obligation

The revised framework doesn’t just create new freedoms — it also formalises compliance obligations that every bank holding a business current account must now adhere to. All banks are required to monitor accounts for compliance at least once every half-year. This is not optional. A bank that holds a current account for a borrower must regularly check whether the borrower’s aggregate banking system exposure has crossed ₹10 crore, and whether the bank itself continues to hold the qualifying 10% share. If a bank becomes ineligible — either because the borrower’s exposure has grown above the threshold, or because the bank’s own share in that exposure has dropped below 10% — the bank must notify the customer within one month. The customer then has three months to either convert the account into a collection account or close it entirely. This creates a dynamic compliance environment that is fundamentally different from the static framework businesses were used to. Your compliance status isn’t fixed at account opening — it can change every six months based on your borrowing profile and your bank’s lending share.

What This Means for Your Business Right Now

If your business currently has aggregate banking exposure below ₹10 crore, your immediate takeaway is freedom. You can now bank with any institution that suits your operational needs — the one with the best digital platform, the most responsive relationship manager, or the most competitive transaction charges — without worrying about lending relationships. This is a genuine improvement in ease of doing business and should not be taken for granted. If your aggregate exposure is at or near ₹10 crore, you are at the boundary of the restriction zone, and you need to monitor your position carefully. Growth is good — but growth that pushes your total banking exposure above ₹10 crore without a corresponding review of your account structure could leave you in technical non-compliance, not because of anything you did wrong, but because your banking arrangements weren’t updated to reflect your new scale. If your aggregate exposure is already above ₹10 crore, the key question is whether your current bank qualifies under the 10% rule — on aggregate exposure or on fund-based exposure. If your primary transactional bank doesn’t hold at least 10% of your total banking system exposure in one of those two forms, it may not be eligible to hold your current account under the revised framework, and you need to act before the non-compliance window closes.

A Critical Step Most Businesses Are Skipping

What many businesses haven’t done — and urgently should — is conduct a structured audit of their banking relationships against the new framework. This means calculating their total aggregate exposure across all banks (loans, limits, CC facilities, OD limits, bank guarantees, letters of credit — everything), checking each current account-holding bank’s proportionate share, and then mapping that share against the two qualifying criteria. This is not complicated analysis, but it requires accurate, complete data about your banking relationships. Many finance teams maintain siloed records — one register for the term loan, another for the CC limit, another for the bank guarantees. The RBI framework requires you to aggregate all of this. The good news is that banks are now required to notify you if you become ineligible. The bad news is that waiting for your bank to tell you is a passive strategy. By the time the notification arrives, you have only three months to restructure your account relationships — and doing that cleanly, without disruption to vendor payments, payroll, and receivables, requires planning that cannot be compressed into 90 days.

The Bigger Picture: Why RBI Did This

The RBI’s revised framework reflects a maturing understanding of how credit and transactional banking interact in a modern economy. The original restrictions — introduced years ago — were designed to prevent “leakage” of funds, to ensure that banks extending credit could monitor the operational cash flows of their borrowers and detect early signs of financial stress. That rationale hasn’t disappeared. The 10% share rule for ≥₹10 crore borrowers still ensures that the banks most exposed to a borrower are the ones that see its cash flows. What has changed is the RBI’s calibration of that principle. Forcing a borrower with ₹6 crore in exposure — an entity that is, in the Indian context, a genuinely mid-sized business — to route all operational banking through a single lender was an overreach. Doubling the free-banking threshold to ₹10 crore, exempting CC accounts entirely, and removing the escrow requirement signals that the RBI is now more confident in banks’ real-time monitoring capabilities and more willing to reduce friction for growing businesses. The two-day fund transfer rule — the requirement that funds in collection accounts be transferred to primary CC or OD accounts within two days — was reportedly proposed for relaxation, but the RBI rejected that suggestion, retaining strict controls on fund flow discipline. That retention tells you something important: the RBI is easing the structural rules while tightening the operational ones.

Practical Steps to Ensure Compliance

Every business with any banking credit relationship should take four concrete steps immediately. First, compile a complete register of all banking facilities — every sanctioned limit, every fund-based facility, every non-fund-based facility, across every bank — and calculate the total aggregate. Second, identify which of your banks hold your current accounts and OD accounts, and calculate each bank’s share of your total aggregate exposure. Third, map those shares against the ₹10 crore threshold and the 10% qualifying rule to determine which of your banking arrangements are compliant under the revised Chapter XIA framework. Fourth, where gaps are identified, engage your relationship managers proactively — before the half-yearly monitoring cycle triggers a formal non-compliance notice. For businesses approaching the ₹10 crore threshold for the first time, building this review into your half-yearly financial calendar — aligned with RBI’s own monitoring cadence — is sound practice. The rule is new, enforcement is beginning now, and the window to self-correct is still open. Businesses that act first will avoid the operational disruption of having a current account abruptly converted to a collection account at an inconvenient time. The ₹10 crore rule is not a distant regulatory technicality — it is live, it applies to your business today, and the banks holding your current accounts are already running their compliance checks.

This article is for informational purposes only and does not constitute legal or financial advice. Businesses should consult a qualified banking or legal advisor for guidance specific to their situation.