Get 3 Yrs of CCI Pro Membership at Greater Value. Subscribe Now!

Credit facility

232 views

Save Share

akshay mohite

70 Points Posted on 14 January 2021

If a person have a Current account in bank A With Cash Credit Facility, As per Rbi Rule if he wants to open Current account with Bank B he want to give NOC of bank A to Bank B for account opening.
That rule prepared by Rbi to stop The fund diversions,
But if the person recieves the money ( cash flow ) in cash and hoards it how can a bank prevent the person to defraud him ??

Replies (5)

Quick Summary

This discussion clarifies the process of opening a new current account with a credit facility when one already exists with another bank. It highlights the Reserve Bank of India (RBI) rule requiring a No Objection Certificate (NOC) from the existing bank to prevent fund diversion. The conversation also touches upon how banks monitor credit limits and the potential implications under the Income Tax Act for large cash transactions.

CA. Sourav Sarkar

Chartered Accountant

16188 Points Posted on 14 January 2021

Bank A shall regularly required stock statements quarterly regarding cc limit to ascertain the position of the borrower also banks in their loan deed attach collateral security of borrower.
Also if such borrower receives money in cash in bulk mode then he gets attracted under IT Act u/s 269ST if receives 200000 rupees in a single transaction and penalty will be imposed u/s 271D.
The borrower shall might gets imprisoned also

akshay mohite

70 Points Posted on 14 January 2021

Ok but How income tax will come to know whether the person has received how much amount if he dealts in cash only as a current account holder he has not received the interest on current account balance ?