Banking Systems: RBI new instructions regarding bank accounts and deposits, know the full details about transactions

The RBI said in its master circular that banks may open/close rupee accounts (non-interest bearing) in the name of their overseas branches or correspondents without informing the central bank.

Bank Account Rules: Reserve Bank of India (RBI) said that banks can open/close rupee accounts (interest-free) in the name of their overseas branches or correspondents without informing the central bank. However, RBI said in the ‘Master’ direction issued on deposits and accounts that opening rupee accounts in the name of branches of Pakistani banks operating outside Pakistan will require special approval of the Reserve Bank. It said that depositing in a non-resident bank account is an approved mode of payment to non-residents and, therefore, it is subject to the rules applicable to transfer in foreign currency.

RBI said that withdrawal from a non-resident bank account is actually a remittance of foreign currency. On funding of non-resident bank accounts, RBI said that banks can freely purchase foreign currency at current market rates from their overseas correspondents/branches for keeping funds in their accounts to meet their actual needs in India.

Need to monitor transactions

However, transactions in accounts should be monitored closely to ensure that foreign banks do not adopt a speculative approach against the Indian rupee. Any such case should be reported to the Reserve Bank.

Earlier, the Reserve Bank of India had made an important statement about strengthening the country’s banking system. RBI said that a buffer capital i.e. CCYB has been maintained to deal with emergency situations and difficulties. However, it will be used according to the circumstances.

RBI said on Tuesday that the ‘countercyclical’ capital buffer (CCyB) designed to deal with recessionary situations will not be used at present as we believe that it is not needed in the current situation.

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