NRIs in UAE: RBI overhauls account operating rules; more flexibility for borrowers, banks

Dubai: The Reserve Bank of India has rolled out updated rules that change how banks manage current accounts, overdrafts and cash credit (CC) facilities. These tweaks follow months of feedback from the banking industry, and they aim to remove friction, speed up money movement and give both banks and customers more flexibility.

For UAE-based Indian expats who manage businesses or finances back home, these changes could make everyday banking noticeably smoother.

One of the biggest pain points for Indian businesses was the older rule that restricted how many banks could maintain current or overdraft accounts for borrowers with exposure of ₹10 crore or more. Banks argued this made daily operations cumbersome, especially for companies with multiple lenders. RBI agreed and relaxed the rules.

Under the new system:

This means Indian entrepreneurs in the UAE, especially those managing multiple credit lines in India, will have a simpler flow of funds and fewer delays when coordinating payments or working capital.

Cash credit accounts are lifelines for many Indian businesses, but earlier RBI restrictions created operational hurdles. Banks pushed back, saying cash credit operates differently from current accounts and therefore shouldn't face the same limits. RBI accepted this argument.

This is a meaningful win for businesses that rely on CC facilities to manage daily expenses, pay vendors and smooth out seasonal cash flow. For UAE Indians overseeing manufacturing, trading or family enterprises in India, CC operations should now feel much more straightforward.

RBI kept one strict requirement unchanged — and this one affects how quickly businesses can access money.

For business owners abroad, this means fewer delays between receiving payments and being able to use them. Faster fund movement often translates into smoother cash flow, especially when managing operations remotely.

Banks sometimes lose eligibility to maintain certain transaction accounts, and this can disrupt business operations. RBI now requires banks to inform customers quickly so they can act without surprises.

• Banks must notify customers within one month of becoming ineligible.
• Customers get two months to either close the account or convert it into a collection account.

This gives clarity and predictability — important for expats managing finances from abroad. RBI also clarified that court or enforcement orders always override regulatory instructions.

Banks raised concerns about the level of monitoring RBI expects, from checking if accounts are used correctly to ensuring they’re not misused as unofficial payment channels. RBI reviewed the feedback but did not budge.

This means customers — especially businesses — may see tighter scrutiny or additional checks. But it also means higher transparency and reduced risk of account misuse.

Several institutions asked RBI to exempt certain borrowers or sectors from the new rules. RBI declined, saying the rules were deliberately simplified to allow broad compliance.

This keeps the system uniform across banks, making it easier to understand and manage.

For many UAE Indians, these rules affect the way they manage businesses, investments or family accounts in India. The updates bring some clear advantages:

For anyone juggling cross-border business responsibilities, these improvements can reduce friction and save time.

RBI’s new directions make Indian banking more flexible and operationally practical. The changes:

For UAE-based Indian expats, the result is a banking environment that is clearer, faster and easier to manage — particularly for those who depend on current accounts, CC facilities or multi-bank lending arrangements in India.