RBI Eases Banking Rules for NRIs in UAE
The Reserve Bank of India (RBI) has introduced revised banking rules that simplify how current accounts, overdrafts (OD) and cash credit (CC) facilities are operated. The updated framework aims to improve fund flow efficiency, reduce operational hurdles and give banks and borrowers greater flexibility.
For NRIs in the UAE who manage businesses, investments or family finances in India, these changes can significantly ease cross-border banking operations.
More Flexibility for Current and OD Accounts
Earlier RBI rules restricted which banks could operate current or overdraft accounts for borrowers with total exposure of ₹10 crore or more. This often caused delays for businesses working with multiple lenders.
Under the new rules, any bank with more than 10% exposure to a borrower’s total credit can operate a current or OD account. If only one bank—or none—meets this threshold, the two banks with the highest exposure are allowed to do so. This improves cash flow management and reduces coordination issues for UAE-based Indian entrepreneurs.
Cash Credit Accounts Fully Freed
RBI has removed all restrictions on cash credit accounts, acknowledging their role as a key working-capital tool. Businesses can now use CC facilities more freely to manage daily expenses, vendor payments and seasonal cash requirements—an important relief for NRIs overseeing operations in India from abroad.
Faster Transfer of Business Funds
RBI has retained the rule requiring banks to move funds from collection accounts to main transaction accounts within two working days. This ensures quicker access to money and smoother cash flow, particularly for businesses managed remotely.
Clear Rules if a Bank Becomes Ineligible
If a bank loses eligibility to maintain a transaction account, it must notify the customer within one month. The customer then has two months to close the account or convert it into a collection account, providing clarity and preventing sudden disruptions.
Monitoring and Compliance Remain Strict
Banks must continue closely monitoring transaction accounts to ensure they are used only for authorised purposes. Third-party or unauthorised payment activity is not permitted. While this may involve additional checks, it also improves transparency and reduces misuse.
Uniform Rules Across All Borrowers
RBI has confirmed that no special exemptions will be granted to specific sectors or borrowers. The principle-based framework applies uniformly, making the rules easier to understand and implement across the banking system.
