Allow MSMEs to open multiple current accounts in same bank: KCCI President

The Kanara Chamber of Commerce and Industry (KCCI) has asked the Indian Banks’ Association (IBA) to inform its member banks to permit the MSMEs (micro, small and medium enterprises) to open multiple current accounts with the same bank and to permit opening the collection account with other banks as per RBI’s notification.

In a letter to the Chief Executive of IBA, the President of KCCI, Isaac Vas, said that RBI had imposed certain restrictions for creating bank accounts with multiple banks in order to prevent diversion of funds, via a notification dated August 6, 2020.

Stating that the RBI’s move was in the broader interest of the nation, he said that various banks have gone beyond the RBI’s order and imposed multiple restrictions. “These restrictions are widely felt unwarranted and against the spirit of providing quality service to the business community and hampering the smooth conduct of business operations. Some banks are closing the current account abruptly without giving any notice of intimation,” he said.

Listing out the grievances received from the KCCI members, he said that some banks are not allowing businesses to have a current account and overdraft account in the same branch. Many businesses have established separate current accounts to collect funds from their customers, he said, adding that the banks are mandating to close either of their accounts.

He also said that some business units have branches in multiple locations and maintain separate current accounts in their branch locations. Vas said the banks are not permitting them to have multiple current accounts in different cities.

Alleging unfair trade practices

Vas quoted the RBI’s notification as saying that if the sanctioned amount of loan is less than ₹50 crore, holders can open collection accounts in other banks. “In a few instances, we have observed that the loan sanction limits have been reduced to less than ₹50 crore, only to accommodate this requirement,” he said, adding the banks have retained sanction limit above ₹50 crore, thereby adopting an unfair trade practice.

Vas added that it is customary for MSMEs to maintain a separate current account for online payments to ensure the security and prevent misuse of the funds. Therefore, a separate current account must be permitted for MSMEs who cannot maintain a centralized single overdraft account, he said.

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