NBFCs move court against RBI’s current account opening rules

Nearly 14 non-banking financial companies have moved various high courts against the RBI norms on current account opening, requesting anonymity.

These NBFCs, including Manappuraam Finance, Muthoot Fincorp, YogaKshemam, Chemmanur Credits and Investments, and Kosamattam Finance have filed several cases since January, 2020 against their banks, requesting clarification on the new current account norms.

Kerala high court, one of the courts hearing the multiple pleas, directed RBI to reconsider the policy. RBI, in its reply, urged that the policy cannot be reversed. The court has neither put a stay nor come out with a final ruling on the matter. Instead, it has directed the NBFCs to take it up with the respective lending banks.

According to the head of a small Kerala-based NBFC, operationalization of these norms is a challenge. Banks such as SBI do not have the technology solution for daily reconciliation when the money is remitted from different branches to a single current account at the end of the day, said the banker, one of the people mentioned above.

“Private sector banks have technological solutions, but their branch network is limited and therefore the surplus money in NBFC branches will have to be physically transferred to the nearest bank branch with the current account. We are therefore in a quandary. For new branches, we haven’t opened a current account with any bank and continue to keep the surplus money in the branch itself,” he remarked.