Yad bhavam tat bhavati

We become what we think

Banking -definition
Banking Regulation Act 1949 sec 5 defines Banking as
accepting , for the purpose of lending or investment, of
deposits of money from the public, repayable on demand
or otherwise, and withdrawable by cheque, draft or order
or otherwise.
Categories of Banks
1. Nationalised Banks

2. Old private banks

3. New generation Private Banks

4. Foreign Banks

5. Regional Rural Banks
6. Co-operative banks

Types of Deposit Accounts
a) Demand deposits


a) Time Deposits
Demand Deposits

1. Savings Bank deposits/ No frills account


2. Current Account Deposits/Flexi deposits


3. Call deposits


4. Margins held against letter of credit/guarantees
Time Deposits
1. Fixed deposits

2. Reinvestment plan deposits

3. Short term deposits

4.Senior citizens deposits

5. Overdue deposits

6. Recurring deposits



Classification of customers
1) Individuals_

Single

Joint(two or more severally or jointly, A &B or A,B & C)

Minors

Illiterates

Blind persons

Classification of customers
Married Women

Pardanashin Woman

Lunatics

Insolvent Persons

Insane Person

Intoxicated Person

Classification of customers


2) Executors and administrators

3) Liquidators and receivers

4) Sole proprietory concerns

5) Joint Hindu families ( HUF ) ( as per Hindu succession
act 1956 )

6) Partnership firms ( Indian partnership act 1932 )
Classification of customers
7) Limited companies, Pvt limited cos /Public limited cos (
companies act 1956 )

8) Trusts

9) non-corporate bodies like clubs, committees, associations etc

10) Schools and colleges

11) Societies

12) Govt/ semi govt bodies
Operation of joint accounts
a) Joint operation

b) Joint or survivor

c) Either or survivor

d) Former or survivor

e) Anyone or survivors or survivor

f) Power of attorney or mandate holders
Facility of nomination
As per The Banking laws( Amendment) Act, 1983
section 45ZA, in the Banking regulation Act, 1949,
nomination facility is accorded to depositors of banks.

A single depositor or joint depositors may nominate a
person to whom, in the event of the death of the
depositor, the deposit amount may be paid by the
banking company.

A nomination can be made in favour of individuals only
and not associations, societies, trusts etc.

The nominee does not become the absolute owner of
the amount received by him. The law of succession will
still prevail.
If you always do what youve always done,
You will always be where youve always
been.
Exercise
1. Mr and Mrs Mathew are having joint account with Yes Bank,
Chennai. Mode of operation F or S. Mrs Mathew forges Mr
Mathews signature and encashes Rs 50,000/-. Mr Mathew
was well aware of this forgery and deliberately kept quiet.
After Mrs Mathew deserts him, he complains to the Bank that
there was a forgery done on his account by his wife and claims
the amount from the Bank.
Examine the validity of Mr Mathews Claim on Yes Bank.
Exercise
2.Gupta, Patil and Roy are maintaining a joint Current account
with SBI, Pune. Gupta and Roy are authorised to operate the
account. They issues a cheque for Rs 100,000.00 in favour of a
charitable trust. Patil issues a letter to the Bank to stop
payment of the cheque.
Discuss whether the bank can comply with the request of patil.
Exercise
3. Gupta, Patil and Roy are maintaining a joint Current account
with SBI, Pune. Gupta and Roy are authorised to operate the
account. They issues a cheque for Rs 75000.00 in favour of
Income Tax Department on 2
nd
of Dec 2008. The instrument
has come to the bank for payment at 12.30 pm on 5/12/08, but
the bank receives information that Gupta passed away on that
day at 5 am.
Examine the situation and conclude the action to be taken by
the bank.
Exercise
4. Mr and Mrs Gandhi are having a joint SB account , operated
with the mandate of E or S with Bank of India, Mumbai. Mr
Gandhi issues a cheque for Rs 50000.00 , favouring Franklin
Mutual Fund. BOI informs Mrs Gandhi that since there is an
alteration in the payees name, they are unable to pass the
same without the authentication of the account holder.
Mrs Gandhi informs that she will be authenticating the same
since Mr Gandhi has gone abroad on business tour. Discuss
the bankers course of action.

Exercise
A,B,C are joint account holders in a current account with a
bank. C is authorised to operate the account. C, in turn,
authorises D to operate the account, since he is going abroad
for further studies.

In the above example, a cheque for Rs 50,000.00 is issued by
C. B issues a letter to the bank to stop payment of the cheque.

The amount in figures is written wrongly as Rs 5000.00.As C
is abroad, A&B are prepared to correct and authenticate.
Exercise
In a joint account, A and B are account holders, with E or S
mandate. The balance is Rs 50 lacs. A dies suddenly and the
son of A claims 50% of the amount.

In the above case, C forges As signature cleverly and
encashes Rs 5 lacs. A claims the amount from the bank. Bank
argues that the forgery was difficult to identify.

A issues a cheque for Rs 25000.00 to D or bearer. D endorses
the cheque to E, with remark pay only to E. Cheque is
presented for payment by F.

Exercise
A minor approaches his Bank, along with another minor to
open a savings bank account, jointly. Their ages are 14 and 12,
respectively. What should the Bank manager do?

As per Indian Contract Act, 1872, a contract entered with a
minor is void.
Exercise
A married woman opens a SB account with Cosmos bank,
Pune. An inadvertant overdraft is allowed in the account.The
lady argues that the amount was withdrawn to meet the
household expenses and hence should be recovered from the
husband, since she is a homemaker only. Discuss the remedy
available to the banker.