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Published by: Rajesh Prince on Sep 02, 2013
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09/02/2013

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BANKING AWARENESS

BANKING OMBUDSMAN
Provides independent, expeditious and inexpensive forum to aggrieved bank customers. RBI introduced this scheme under powers granted under Banking Regulations Act 1949. Chief General Manager or General Manager of RBI will be appointed as Banking Ombudsman for a term not exceeding 3 years at a time. Banking Ombudsman takes care of the grievances of SERVICE DEFICIENCIES IN BANK INDUSTRY like in delayed collection of cheques, remittances, wrong debit/credit in deposit accounts and other ancillary/ advances area including fair practice code, credit card etc. and in loans- non- observance of RBI directives, delay in sanction or disbursement ,time schedules are included. The aggrieved customer can lodge his complaint in electronic mode also. Before lodging a complaint with Ombudsman the Customer should complain to the concerned bank first and wait for one month. The period within which a customer can lodge a complaint with Ombudsman is one year from the date of cause of action. The maximum award that will be given by Ombudsman is up to Rs.10lac. Any party can file appeal within 30 days on receiving award or the ombudsman rejecting his complaint to appeal authority. If the appeal is by the bank, it should be made with approval of CMD or ED or CEO only. One of the Deputy Governors will be appointed as Appellate Authority, in case the award given by the Ombudsman is not acceptable to the parties.

KNOW YOUR CUSTOMER (KYC)
KYC guidelines issued by RBI to check money laundering i.e. using of banking channel for conversion of illegal funds into legal funds and financial frauds. Suitable Guidelines were issued based on the recommendations of FINANCIAL ACTION TASK FORCE (FATF) on Anti money laundering (AML) standards and on combating financing of terrorism. Under KYC norms banks are expected to verify the identity proof and address proof like Passport, Pan CARD, Voter card, Driving license, Identity card to bank’s satisfaction, Letter from recognized public authority.

000 and Credit transactions should not exceed Rs 1. Hence all Bank branches shall individually apply for TAN. TAN means TAX DEDUCTION & COLLECTION ACCOUNT NUMBER. For One there is only One PAN.Liberalized KYC Norms: Simplified criteria of identification and introduction to be followed in small deposit accounts where the debits should not exceed Rs.00 lakhs and total transactions in a year does not exceed Rs. This number must be obtained by all the persons and organization those who are responsible for deducting Tax or collecting tax and remitting the same to the Income Tax department. Concept of Form 15G and Form 15H ? Form 15G & Form 15H. PAN number is being allotted to the Individuals by Income Tax Department. Concepts of PAN. a/c can be introduced by person having satisfactory accounts for 6months and self certification on address along with photograph. Tan number shall be quoted in all TDS/TCS returns. Even if any Government Office deducting TDS it also shall apply for TAN. GIR and TAN? PAN is Permanent Account Number. In case of interest paid/payable amounts are exceeded the Tax exempted limited then Form 15G and Form 15H shall not be accepted. Now it is mandatory to have PAN all the existing Income tax assesses and future assesses and those who enter into financial transactions on behalf of self or on behalf of any others. It is a TEN Digit Alphanumeric number.50. Form for applying PAN is Form 49A. All employers who deduct tax at source from employee’s salaries also must obtain TAN number. This is also a 10 Digit Alphanumeric number. . 2lac (credit transaction should not exceed Rs. The applicants have to submit Form 49B for allotment of TAN. if issued it is permanent even if the person changes his/her profession or even change of address.15H. GIR is GENERAL INDEX REGISTER number was earlier being allotted by the Income Tax department for assessees in olden days but ever since the PAN is in place GIR number system is now obsolete. In the same case if the Depositor is a Senior Citizen then he has to submit Form No.1lac) In these cases. If a Depositor is not a Senior Citizen and his Taxable Income is within the exempted limits then he has to submit Form 15G to the Bank for not deducting tax at source.

He is duty-bound to pass on the money to the legal heir. On death of a person. Club etc. Nomination is available for all types of deposit accounts irrespective of nomenclature. If a Depositor submitted Form 15G & 15H but PAN number not submitted the Bank has to deduct Tax at the rate applicable or at 20% whichever is higher. Nominee has to be an individual and hence a Firm.As per the budget pronouncements w. Nomination continues on renewal of term deposit unless it is cancelled or changed. Nomination is available in respect of both residents as well as nonresident accounts . Nomination is available only for deposit accounts and not for loan accounts. 04.. Club. Ltd company. Nomination is available for joint account of individuals. So the legal heir can claim money from the nominee. Company. Nomination facility is obligatory for banks. Nomination is available to a sole proprietor provided the sole proprietor is an individual. Trust etc cannot act a nominee. It can also be made available for old account. FEATURES OF NOMINATION ACT Nomination is available for a) Deposit accounts b) Safe custody articles and Lockers. This information is to be given within three months in case of locker account. Nomination is available for accounts which are in the name of individuals in their individual capacity. 2010 depositor must submit PAN number otherwise the rate of TDS will be at 20%. In nomination act the nominee is treated as an agent for receiving money. then he has to submit a declaration in Form 60. the bank has to inform the nominee about nomination in case of deposit account.e. it is not available for Partnerships.e. if six months lapse and no person turns up. i. But the bank on payment to nominee is fully discharged.f 01. Nomination can be made at any time during which the deposit is held with the bank. Need for Form 60 and Form 61 while opening accounts? While opening an account the prospective customer do not have PAN number. He is not the owner. Trust. and incase the prospective customer whose income comes from only Agriculture sources then he has to give a declaration in Form 61.

000 B. Approach Lok Adalat D. Reserve Bank of India B. Any of the above 3. Concerned State Govt. None of the above 4. Finance Minister E. Rs 2. Rs 1. where RBI office is located D. None of the above 2.Banker-Customer Relationship The relationship between banker and customer defers depending on the transaction. No such limitation period E. Within 2 year B. Transactions Acceptance of deposit Loan Collection of cherub/Sell of securities On behalf of customer Purchase of DD Payee of DD and issuing bank Safe custody of article Safe deposit of locker Agent Beneficiary Bailed Lesser Principal Trustee Baylor Lessee Banker Debtor Creditor Agent Customer Creditor Debtor Principal PRACTICE QUESTIONS 1. What is the maximum period within which the aggrieved customer can approach OMBUSAMAN? A.00. Can directly approach Banking Ombudsman E.00.000 . Within one month D. Banking Ombudsman is appointed by: A. Take up the matter with State Government B. Within 1 year C. Before approaching Ombudsman what should the complainant do? A. Government of India C. Take up the matter with concerned Bank Branch within 30 days of cause of action C. What is the maximum amount for which the Award Can be given by OMBUDSMAN A.

Anytime Money Laundering E. whereas AML. True C.000 D. Not necessary in all cases E. 7. Identity Proof B. True only in case of small amounts D. None of the above 6. Rs 5. Deputy Governor of RBI C. Savings Account C. Vehicle details of the customer E. Anti Monitory Limit B.Anti Money Laundering is to identify the Source of Income: A. Customer Profile D. None of the above 9. Term Deposit Account D. Anti Money Laundering C. Governor RBI I is an ex-officio Ombudsman D. Any of the above . No Frills Account E. Rs 10. Finance Secretary E. False B. Always money laundering D. The KYC does not include obtaining the following : A.00. KYC norms are liberalized in case of following accounts: A.00. AML Stands for A. Who will be appointed as Banking Ombudsman? A. No limit 5. CGM or GM of RBI B. KYC –Know Your Customer is to identify the Customer.000 E. None of the above 8. None of the above. Current Account B. Address Proof C.C.

to the Bank for not deducting tax at source A. . Form 15G B. He has to submit form 60 D. Nomination is available for A. None of the above 11. Saving Bank deposit D. Current deposit 15. Checking Account C. Term deposit B. In case the prospective customer whose income comes from only Agriculture sources then he has to give a declaration in Form 61. Partnership firms E. With reference to a cheque which of the following is the ‘drawee bank’? A. A. Nomination can be given only for: A. Limited Companies D. Lockers. If a Depositor is not a Senior Citizen and his Taxable Income is within the exempted limits then he has to submit ---------------. Safe custody articles C. Only A. Money deposited at a bank that cannot be withdrawn for at fixed period of time is known as a _____: A.10. No Frills Accounts E. Individuals B. None of the above 14. False C. Form 15 H C. Only A B C 13. Form 60 E. Form 61 D. and B E. No such requirement E. Deposit accounts B. True B. Joint Individuals C. The bank that collects cheque. None of the above 12. D.

An ECS transaction gets bounced and you are unable to recover your money from your customer. NBFC ATMs B. D. Base Rate is the rate below which no Bank can allow their lending to anyone. None of the above 19. The bank of the Drawer of the Cheque E. Cash Transaction system (in banks) B. Salaries etc. Third Party ATMs D. The endorsee’s bank. The payee’s bank. Negotiable Instrument Act C. None of the above 16. Ministry of Commerce C Ministry of Finance d) RBI e) Interest Rate Commission of India 17. C. Under which Act criminal action can be initiated? A. Payment and Settlement Act E. Cheque Transfer System . Who will fix this ‘Base Rate’ for Banks? A. Expand NPA A. Criminal Procedure Code D. What is CTS A. None of the above 18. Individuals Banks Board B. White Label ATMs E. Finance Ministry advised RBI to allow common ATMs to be owned and managed by Non Banking Institutions. Such ATMs are called: A. Non Performing Asset (An asset which ceases to generate income) C. 20. Non-Personal Accounts E.B. Indian Penal Code B. No Provision Account B. Indian Contract Act (Note: ECS used for Electronic Clearing of cheques– Debit ECS for Collection of loan installments) and Credit ECS for payments like Dividends. No Profit Account D. Off Site ATMs C.

Cheque Truncation System D. only scanned images will be sent. Cash Transfer System E. This system already started in many states of India.C. It is also called image based clearing. None of the above (CTS mean Cheque Truncation System – wherein instead of sending cheques physically to clearing house. This reduces the collection of cheques time considerably and is advantageous to the customers) ANSWERS 01 A 02 B 03 B 04 D 05 A 06 D 07 D 08 B 09 B 10 A 11 A 12 E 13 D 14 A 15 D 16 A 17 B 18 D 19 D 20 C .

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