1

Know Your Customer

1. Know Your Customer (KYC) Guidelines
1.1. Know Your Customer (KYC) guidelines are
seen as important tools to ensure that the banking system is not used for laundering
proceeds of criminal activities. KYC norms/guidelines play a very important role in
preventing money laundering through banks.
1.2 In the context of the recommendations made by the Financial Action Task Force
(FATF) on Anti Money Laundering standards and on combating financing of terrorism,
RBI has specified certain standards based on which our Bank has formulated a policy on
identification and acceptance of customers to have a business relationship.

1.3 For the purpose of KYC policy, a 'Customer' is defined as
i. A person or entity that maintains an account and/or has a business relationship
with the bank
ii. one on whose behalf the account is maintained (i.e. the beneficial owner)
iii. beneficiaries of transactions conducted by professional intermediaries, such as
Stock Brokers, Chartered Accountants, Solicitors etc. as permitted under the law,
iv. any person or entity connected with a financial transaction which can
pose significant reputational or other risks to the bank.

1.4 Objectives of KYC Guidelines
1.4.1 The main objective of KYC guidelines is to prevent banks from being used,
intentionally
1.4.2 Know Your Customer is the principle on which the banking system operates to
avoid the pitfalls of operational, legal and reputation risks and consequential losses by
scrupulously adhering to the various procedures laid down for opening and conduct of
accounts.
1.4.3 While prudent procedures existed in the banking system for opening of an account
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with a bank, these measures have come into greater focus with increased cross border
transactions
2 . Customer Acceptance
2.1 Before commencing a business relationship with a prospective customer, the
branches have to ensure that such a relationship does not, in any way, go against the
Bank's Customer Acceptance Policy which is based on two principles namely
i. No account is opened in anonymous or fictitious/ benami name(s) and
ii. Customers are categorised based on risk perceptions in terms of the
nature business activity, location of customer and his clients, mode of
payments, volume of turnover, social and financial status, etc.

2.2 Risk Perception
2.2.1 The perception of the money laundering risk will primarily depend on the country
of domicile of the customer of the Bank. Countries that have the following indicative
characteristics will be treated as high risk countries.
i. Without adequate anti-money laundering standards and regulations or
ii. Where there is a politically unstable regime with high levels of public or private
sector corruption or
iii. That are known to be drug producing or drug transit countries; or
iv. That have been classified by Financial Action Task Force (FATF) as
Non Cooperative Countries and Territories (NCCT)

2.2.2 Deposits A list of these high risk countries is given in Annexure 1.1.







3

Annexure 1.1
Indicative list of High Risk Countries

S.No. Country
1 Tajikistan
2 Kyrgyzstan
3 Armenia
4 Belarus
5 Uzbekistan
6 Georgia
7 Kazakhstan
8 Moldova
9 Azerbaijan
10 Libya
11 Iraq
12 Cuba
13 Afghanistan
14 Zimbabwe
15 Angola
16 Russia
17 St Vincent & and Grenadines
18 Cook Islands
19 Guatemala
20 Ukraine
21 Turkmenistan
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22 Nigeria
23 Myanmar (Burma)

3. Customer Profile
3.1 Branches should prepare a profile for each new customer based on risk
categorization. A format of the Customer Profile is given in Annexure 1.3. The customer
profile contains information relating to customer's social/financial status, nature of
business activity, information about his clients' business and their location, etc


Annexure 1.3
......................................................Branch
Part B - Business Profile
(to be used for accounts of business entities including Sole Proprietor concerns)

Note: i. This is in addition to Customer Profile Part A
ii. To be verified/filled in by the Authorized Officer and signed by
Customer and Officer
.
Geographical location of the business

Nature/Activity of business /occupation

Estimated income from the business Rs................................... per annum
Any other source of income (indicate the source) Rs.
Total annual income Rs.
Approximate value of movable and immovable
Assets

Details of existing bank accounts, if any

Details of Credit Facilities, if any, availed (If space
provided is found insufficient, furnish in a separate
sheet)

Details of foreign countries, if any, visited during last
three years

5


Date: : .
Customer Authorized officer of Bank
(With Name and SS No.)



3.2 The nature and extent of due diligence will depend on the risk perceived by the
branch. However, while preparing customer profile, branches should take care to seek
only
such information from the customer which is relevant to the risk category and is not
intrusive.
The customer profile will be a confidential document and details contained therein shall
not be divulged for cross selling or for any other purposes.

4. Customer identification Procedures
4.1 Customer identification means identifying the customer and verifying his/her/its
identity by using reliable, independent source documents, data or information

4.2 Branches need to obtain sufficient information to their satisfaction, to establish the
identity of each new customer, whether regular or occasional and the purpose of the
intended nature of banking relationship. 'Being satisfied' means that the branch must be
able to satisfy the competent authorities that due diligence was observed based on the risk
profile of the customer in compliance with the extant guidelines in place.

4.3 Besides risk perception, the nature of information/documents required would also
depend on the type of customer (individual, firm, corporate etc.). For customers who are
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natural persons branches should obtain sufficient identification data to verify the identity
of the customer, his/her address, location and also his/her recent photograph.
4.4 For customers who are legal persons or entities, requiring an extra element of
caution, branches should apply intensive Customer Due Diligence and take reasonable
measures to identify the legal entity, beneficial owner(s) and verify his/her/their identity
to their satisfaction..





















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2. Classification of Customers

1. Introduction
1.1 The depositors, based on the constitution, may belong to any of the following
categories :
i. Individuals
a. Single
b. Two or more individuals severally or jointly
c. Minors
d. Illiterates
e. Blind Persons
ii. Sole-proprietorship concerns
iii . Joint Hindu Families
iv. Partnership Firms
v. Limited Companies
vi. Schools, Colleges
vii. Government/Semi-Government Bodies.


i. Individuals
a. Single
An account can be opened in the name of an individual (not being a minor, insolvent or
insane) operated upon by the account holder himself. The account holder can also
authorize another person to operate on his account by giving a mandate or executing a
power of attorney in favour of such person (See Para 9). Under normal circumstances,
branches should not open more than one account for the same person. In special cases
where more than one account is opened for the same person, the accounts should be
distinguished by using some suffix like No.I account, No.II account, etc.
b. Joint Accounts of individuals
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An account opened in the names of two or more individuals is known as a joint
account. At the time of opening a joint account, instructions as to the operations and
survivorship should be obtained from all the account holders. The operational and
payment instructions of a joint account can be in the following forms:
i. J oint (without survivorship clause).
The account is to be operated by and the balance in the account is payable to all the
account holders jointly. In the event of death of one of the account holders, operations
in the account should be stopped; the balance in the account is payable to the
survivor/survivors and the legal heir/heirs of the deceased.

ii. J oint or Survivor/s (with survivorship clause)
The account is to be operated by and the balance is payable to all the account holders
jointly. In the event of death of one of the account holders, the balance in the account
is payable to the survivor/survivors jointly. He/they can be allowed to continue the
account or withdraw the entire balance without reference to the legal heirs of the
deceased.

iii. Either or Survivor
The account is opened in the names of two persons to be operated by either of them.
In the event of death of one of them, the balance is payable to the survivor. The
survivor can be allowed to continue the account or withdraw the entire balance.

iv. Former or Survivor
The former, i.e. the first named person, has full control over the deposit amount and
its disposal. He may deal with the deposit as he likes during his life time. The survivor
will get the rights only after the death of the former.

v. Anyone or Survivors or Survivor
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The account is opened by more than two persons to be operated upon by any of them.
In the event of death of one of the account holders, the right to operate the account
and the entitlement to the balance vests with the survivors jointly. A fresh mandate

c. Minor
i Every person domiciled in India attains the age of majority on his completing the
age of 18 years and not before, including minor of whom a guardian for the person and
property is appointed by a court. In computing the age of any person, the day on which he
was born is to be included as a whole day and he shall be deemed to have attained
majority at the beginning of the eighteenth anniversary of that day.

ii Normally an account in the name of a minor should be opened and operated by his
natural guardian or by the guardian appointed by a Court. In the ledger the account may
be opened in the following form:






iii Savings Bank and Term Deposit accounts can also be opened by a minor to be
operated by himself provided he has completed the age of 14 and has powers of
understanding and discretion. The Savings Account should be operated by withdrawal
slips only and no cheque book should be issued. No current account can be opened by a
minor to be operated by himself. Current accounts in the name of minors to be operated
by the Guardians can be opened, only after obtaining the permission from the Circle
Head. (For further details regarding opening of current accounts for minors please refer
to Chapter 6 of this Manual)

iv Accounts can also be opened by the natural guardian jointly with the minor. In such
Avinash (Minor)
by Guardian
Aravind
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a case, only the guardian will be permitted to operate the account.

V While opening the account, a declaration on the date of birth of the minor, in whose
name it is opened, should be obtained in the account opening form and recorded in the
ledger. A separate register for recording the dates of birth of minors and the dates of their
attaining majority (Annexure 2.1) should be maintained at branches.

Annexu
re 2.1
Register of Date of Birth of minors

Sl.
No.
A/c No.
/
Receipt
No.
Date of
Opening
Nature
of A/c


Name
of the
Minor



Name of
the
Guardian



Date
of
birth
of
minor





Date of
attaining
majority
Remarks











11











Vi If a guardians is appointed by a Court, the court order appointing the guardian
should be obtained and registered in the Power of Attorney Register (Annexure 2.2) and
the fact should be noted in the respective folio of the ledger.


Annexur
2.2 Register of Power of Attorney
Date


Name of
A/c /
Account
No.
Grante
d By


In
favour
of
Particulla
rs


Date when
acknowledge
d to Grantor
Names of
Institutions,
if
any, where
the Power





Initials
of
Offices




12








Vii On the minor attaining majority, the right of the guardian to operate upon the
account automatically comes to an end. Any balance in the account should be deemed to
be the exclusive property of the erstwhile minor who alone has the right to deal with it. A
notice (Annexure 2.3) should be sent to the guardian well in advance asking him not to
operate on the account effective from the date on which his ward attains majority. A copy
of the notice should be sent to the minor also.

Notice to be given to the Guardian Annexure 2.3

Branch : ........................................ Date : .........................

To
..........................................................
.........................................................

Dear Sir,

Account opened by you on behalf of .......................... (Minor)

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According to the records of our bank
Mr/Ms................... the minor, attains majority on ..................... As from the date, he alone will be
entitled to operate on the account and you would cease to have any authority to operate on the
said account unless you are given a mandate on the banks prescribed form by him to do so.

We shall be glad to supply the mandate form on application.
Please note accordingly.
Yours faithfully,
Manager


Copy to: ...................... for information (State the name of the minor account holder)

Note: For the reference of branches, the mandate form is given as Annexure-2.4.

d . Illiterate Person

i. The rules of business have to be properly explained to the illiterate person in a
language which he can understand. He should be advised that for withdrawing money he
Should personally come to the bank with the pass book and that the account should be
Operated only by withdrawal slips. On no account should a cheque book be issued.

ii Left hand thumb impression of the depositor should be obtained in the specimen
signature card in the presence of the officer concerned. In case it is not possible to obtain
left hand thumb impression of the person, the right hand thumb impression may be
obtained.

iii As in other categories of depositors, the passport size photograph of the illiterate
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person should be obtained. The purpose of obtaining the photographs is for identification.
In case of illiterate persons three copies of photographs should be obtained instead of two
copies obtained in all other cases. The photograph should be pasted/stapled on the
account opening.
form/specimen signature card, ledger and pass book/term deposit receipt. The left/right
hand thumb impression of the depositor and the countersignature of the
Manager/Asst.Manager attesting the thumb impression and photograph should be affixed
in such a way that a portion of these extend on opening form/pass book/receipt.

Iv At the time of withdrawal/repayment of deposit amount and/or interest, the account
holder should affix his thumb impression in the presence of the passing officer who
should verify the identity of the person from the photograph attached to the specimen
signature card/account opening form prior to passing the instrument for payment.

V The opening form, specimen signature card and the relative ledger folio should carry
the notation that the account holder is an illiterate person.

Vi Current account should not be opened in the name of an illiterate person.

e Blind Person

i Utmost care should be exercised in opening accounts in the name of blind persons in
view of the following:

1. The blind persons are vulnerable to cheating as they necessarily depend on others
for all their transactions.
2. The terms and conditions of the account or the nature of the account might have
been misrepresented to them and signature obtained by someone else.
3. The signature may be disputed by them and ignorance may be pleaded on account of
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blindness.

ii In the case of literate blind persons, who could sign their names, in addition to their
signatures, thumb impression should also be taken on the specimen signature card, as the
signatures by such blind persons may not be consistent. It should be clearly noted in red
inkbin the account opening form and ledger folio that the account holder is blind. This
will enable the staff to exercise caution in respect of transactions in the account.

iii Cash payments to a blind person should always be made in the presence of a person
known to the bank who should also sign as a witness. While such witnesses should be
preferably customers of the bank, a bank official other than the paying cashier may also
sign as a witness.

iv Cash deposits by a blind person should be received in the presence of a witness (a
customer or any employee of the Bank other than the receiving cashier) and the amount
deposited should be confirmed to the blind depositor orally.

v All other precautions and procedures outlined for illiterates should be followed in
the case of blind persons also.

vi The visually impaired persons are eligible to avail cheque book, ATM and locker
facilities and the guidelines covering the above services are given in the respective
chapters.





II Sole-proprietary concerns
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i Where an individual is trading under trade name, the account should be opened in
the name of the proprietorship concern. The Account Opening Form may be signed in
either of the following ways:

Sujay or For Ajay Trading Company
Sole-Proprietor Sujay
Ajay Trading Company Sole-Proprietor

ii The law does not distinguish between the proprietor and the proprietary concern.
Therefore, accounts of proprietary concerns can be, for the purpose of operation, treated
as individual accounts.

iii The proprietor may authorise another person to operate on the concerns account by
giving a mandate or executing a power of attorney in favour of the latter.



III . Joint Hindu Family

i. It is also known as Hindu Undivided Family (HUF). Generally, a Joint Hindu Family
has some property jointly owned by all the members as ancestral property. According to
Hindu Law, the ownership of such property passes on to the members of the family,
known as co-parceners. According to Mitakshara School of Hindu Law, every male
member of a family acquires an interest in the joint property by birth, such right accruing
from the date of conception. After the enforcement of Hindu Succession Act 1956, the
share of the deceased co-parcener who was a member of the Joint Hindu Family is
divisible amongst his wife, daughters and other relatives as given in the Act.

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ii . The bank may open accounts in the name of Joint Hindu Families of respectability
and means. The joint family business is carried on by the senior most male member of the
family known as Karta or the Manager who acts on behalf of the joint Family. The
account can be opened in the name of the Karta or in the name of the family business.
The fact that the account is a Joint Hindu Family account should be noted on the top of
the ledger folio.

iii The photograph of Karta should be obtained.

Iv Joint Hindu Family Letter (Annexure 2.5) should be obtained duly signed by the
Karta, adult co-parceners and guardians of minor members on behalf of the minor. In any
case, the names of minor members and their dates of birth should be noted therein so that
the dates on which they attain majority may be diarised and a fresh Joint Hindu Family
Letter taken when any minor attains majority. All the places where the firm or joint
family business is established and the name under which they trade and the names of
other firms with whom they are associated should also be verified and recorded.













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Annexu
re 2.5
Joint Hindu Family Letter

Place ...............

Date ...............
To
The Manager
Indian Bank

Dear Sir,

We beg to notify to you that we are the only adult members of a Joint Hindu Family
carrying on business in .............. (place) under the name and style of ............

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We hereby engage that we shall be bound jointly and severally to repay all the debts
incurred to you either on bills, pronotes, or any other documents by anyone of us on
behalf of the family, until notice to the contrary is given to you and we further agree that
all transactions entered into by any of us whether under the signature of the family or
subscribed by the individual signatures of the persons entering upon the transactions may
be treated by you as entered into and on behalf of the family, unless intimation to the
contrary in writing is given to you previously at the time of any particular transaction to
the effect that it is not on behalf of the
family.
As each of us is individually liable to you to discharge all the obligations incurred to
you by any one of us on behalf of the family, we hereby agree that you will be at liberty
to recover all outstandings due not only from our joint family business assets but also
from our separate properties as well, as if we had also individually signed the documents;
and we shall not at any time dispute any transaction as not being for the benefit of the
family.

Yours faithfully,
1 . ........................................
2..............................................
3..............................................



To be signed by the karta and all other adult members of the family






Iv Partnership firms

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i Partnership is the relation between persons who have agreed to share the profits of a
business carried on by all or any one of them acting for all. Partners collectively are
called a firm. Thus, there are three essential requisites for a partnership:

a.There must be an agreement (written, verbal or implied) among the persons
concerned.
b. The agreement must be to share the profits/losses of a business.
c. The business must be carried on by all or anyone of the persons concerned acting
. Any person who is a major of sound mind and is not an undischarged insolvent
can enter into a partnership for a lawful purpose. A person may be natural or legal
person. i.e. Limited Company.]

ii . A partnership should not consist of more than 10 persons, if it is engaged in banking
business and 20 persons in any other class of business. Minors admitted to the benefit of
a partnership need not be taken in to account while computing the maximum number.

iii The Indian Partnership Act, 1932 provides for registration of partnership firms.
Non-registration under the Act debars a firm from suing, but it does not affect the rights
of third parties in suing the firm.

iv. A Hindu Undivided family directly or indirectly cannot become a partner of a firm
because firm is an association of individuals. Sec 4 of the Partner ship Act speaks of
"Persons who had entered into a partnership with one another which could only be by an
individual and not by a body of persons"

v. Under Section 30 of the Indian Partnership Act, 1932, a minor can, with the consent
of all the partners for the time being, be admitted to the benefits of a partnership.

vi. Care should be exercised in opening accounts of partnership firms where minors
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have been admitted to the benefits of a partnership. The date of birth of the minor should
be recorded in the books of the bank. The minor is not required to sign the set of account
opening forms. He cannot also be allowed to operate on the account. The minor does not
get the status of a partner of a firm until he attains majority. On attaining majority, if he
does not desire to become a partner in the firm he should give notice within six months of
his attaining majority of his intention of not becoming a partner in the firm. Otherwise, he
becomes liable from the date he was admitted to the benefits of partnership.


V . Limited companies

i. A Limited company is a legal entity and is regarded as a person in law with perpetual
succession and a common seal with the capacity to contract or undertake obligations or
perform transactions in its own name. The liability is limited to the extent of the share
capital and the liability of a shareholder is to contribute uncalled portion on shares.
ii. A Private company is a company which by its Articles (i) restricts the right to transfer
its shares, (ii) limits the number of its members to 50 (not including (1) persons who are
inthe employment of the company and (2) persons having been formerly in the
employment of the company were members of the company while in that employment
and have continued to be members after the employment has ceased) and (iii) prohibits
any invitation to the public to subscribe for any shares or debentures of the company (i.e.,
prohibits issue of prospectus). When two or more persons hold one or more shares in a
company jointly, they shall, for the purposes of this definition, be treated as a single
member.

iii. A Public Limited Company means a Company which is not a Private Company.
Every company registered under Section 25 of the Companies Act 1956 and every
company limited by guarantee and not having a share capital will be a Public Limited
Company where the number of persons is not limited to 50 and all the provisions of the
Companies Act, 1956, applicable to Private Companies will apply to them also.

iv. A Government Company is a company in which a minimum of 51% of the share
22

capital is held by the Central or State Government.

vi. Certificate of Incorporation is a certificate issued by the Registrar of Companies
when the company (newly formed) fulfils all the necessary requirements under the
Companies Act.

vii. A Public Limited Company is required to have a Certificate of Commencement of
Business before it commences business operations. This certificate is issued by the
Registrar of Companies, after the company complies with certain requirements of share
capital, etc. Without this certificate, a Public Limited Company cannot enter into any
contractual obligation.

viii. Memorandum of Association is the charter on which the company exists and within
which it operates. It sets forth the objects and powers of the company. A company cannot
undertake any operation which is not mentioned in the Objects clause of the
Memorandum of Association. Any act done or contract entered into by the company
which is outside the scope of these objects will be ultra vires (i.e. beyond the powers) of
the company and therefore not binding on it. Any such act or contract cannot be ratified
even by the general body of the share holders.

ix. Articles of Association contains the rules and regulations of the Company. The
Articles are subordinate to and controlled by the Memorandum. Articles of Association
cover such matters as the rights and powers of Directors, their share qualifications, the
mode and form in which the business of the Company is to be carried on, the proceedings
of and voting in a meeting, etc. Alterations in the Memorandum and Articles of
Association can only be done in accordance with the relevant provisions in the
Companies Act, 1956. The bank must satisfy itself that any alteration in these documents
is duly done before it acts on the altered provision.
is optional.

VI. Schools, Colleges etc.

23

i. The Schools or colleges may be run by trusts, societies, etc.

ii.The opening form should be signed by the President and countersigned by the Secretary
and the specimen signature shall be for and on behalf of the School or College with the
designation of the signatory added to his signature.

iii. The following documents should be obtained:
a. A certified copy of the rules and regulations of the institution.
b. A list of the names of the persons comprising the Governing Body. The
updated/revised list should be obtained every year.
c. A copy of the resolution of the Governing Body authorising opening and
operation of the account, duly certified by the Chairman of the meeting in
which it is passed.
d. The photographs of persons authorised to operate the account.

iv. The operation of the account shall be strictly in terms of the resolution.

v.Before opening accounts for Government schools, the branch should ensure whether
the school/college is authorised to open an account by the Education Department and the
usual terms and conditions on which such accounts are allowed to be opened should be
verified. The account opening form should be signed by the persons authorised to open
and operate the account as per the Government Order. The operations should be allowed
as per the terms and conditions/rules framed by the Education Department for this
purpose.

vi. In case of aided schools, the permission of Board of Secondary Education is
necessary. Before accepting an account in the name of an aided school, the Manager
should make sure that the Governing Body of the School has the permission.
24



VII . Government/Semi-Government Department, Taluk/District
Boards

.i. RBI guidelines for opening of accounts

a. Central Government Department: After the introduction of departmentalisation of
accounts in various Ministries/ Departments, public sector banks have been allocated to
different Ministries/Departments with whom the Ministries could bank. The
Ministries/Departments will have their banking transactions only with the designated
bank/branch.
b. Public Sector Undertakings: Public sector Undertakings would mean Corporations
and Companies wholly owned by the Government of India or in which more than 51% of
the capital is held by the Government of India.
1. A Public Sector Undertaking, existing or new, will be free to deal with any
of the public sector banks, subject however to any special provisions in any Act of
Parliament or of State Legislature in respect of Statutory Corporations
.
2. It would be open to a Public Sector Undertaking to deal with one public
sector bank, or a consortium of public sector banks, depending on the units operational
convenience and the extent of credit requirements.

3. If a Public Sector Undertaking wishes to transfer its entire account from one
public sector bank to another, it is open to it to settle the matter in consultation with the
banks concerned.
4 Statutory Authorities/Local Bodies etc., The guidelines will apply to Statutory
Authorities which derive the bulk of their income from Central Government cesses and
Local Bodies in centrally administered territories.

c. Local authorities such as Municipal Corporations: Panchayat Boards etc., are
25

created by specific Acts of the State Legislature or Parliament. Their Constitution,
functions and powers are, therefore circumscribed by the provisions of the Act. Any
transaction which is ultra-vires the provisions will place the bank in a very weak position.







Payment of Cheques

1. Introduction

Definition

As per Sec 6. of the Negotiable Instruments Act, "a cheque is a bill of
exchange drawn
on a specified banker and not expressed to be payable otherwise on demand and
includes the
electronic image of a truncated cheque and a cheque in the electronic form."

A cheque is a written order given by an account holder to the bank to pay
money
from his account. It is a statutory obligation on the bank to comply with the
requirement
provided:
i. the cheque is properly drawn;
ii. there is sufficient balance in the account; and
iii. there is no legal restraint on the banks duty to pay. The obligation arises
only in
respect of savings and current account holders and not for term deposits.

1.1 Electronic cheque

Electronic cheque (E cheque) means a cheque which contains exact
mirror image of
26

a paper cheque and is generated, written and signed in a secure system ensuring
the
minimum safety standards with the use of digital signature (with or without bio-
metric signature)
and asymmetric crypto system.

E-cheque is valid and is deemed to have all the features of a real paper
cheque and
while making the payment the drawee bank is duty bound to honour the e-cheque
by opening
and verifying the digital signature of the drawer.

The following procedure may involve in generating an electronic cheque:

i. Mirror image of the blank paper cheque will be made available in a system.
ii. The customer has to enter the details like beneficiary, date, amount etc, in
the appropriate
spaces allocated.
iii. The customer has to add his digital signature in the space provided in the
image in
the system to make it secure under asymmetric crypto system ( by using
the private
key of the drawer).
iv. Addition of biometric signature is optional.
.
1.2 Truncated cheque

A truncated cheque means a cheque which is truncated during the course of
a clearing
cycle, either by the clearing house or by the bank whether paying or receiving
payment,
immediately on generation of an electronic image for transmission, substituting
the further
physical movement of a cheque in writing.
.
1.3 Features of a cheque
i. Any cheque presented for payment should be scrutinised in respect of the
following:
ii. Form of the cheque;
iii. Branch drawn on;
iv. Date of the cheque;
v. Payee;
vi. Whether order or bearer;
27

vii. Endorsements, if any;
viii. Amount;
ix. Crossing, if any;


2. Form of a Cheque

2.1 Current account rules of the Bank provide that cheques must be drawn on
Banks
printed cheque forms only, supplied by the bank. The Bank reserves the right to
refuse
payment of cheques drawn otherwise. For savings accounts, withdrawal slips
supplied by the
Bank may also be used for withdrawals.

2.2 In exceptional cases, written instructions from the customer to make
payment, in
the form of a letter, may be accepted. It is better in such cases to obtain a
confirmatory
cheque (in Banks form) from the customer and file it along with the relevant
vouchers.

2.3 Branches should discourage the practice of cheques containing extraneous
matters
like towards premium on policy No. .......... own life being issued and return
such cheques, if presented giving the reason cheque contains extraneous matter
.

2.4 Cheques should be written (filled in) in non-delible ink. Ball point pen may
also be
used for writing cheques. Customers should be discouraged from issuing typed
cheques, as
they can easily be altered. However special typewriter with pin point types are
available for
writing cheques which render alterations difficult.

3. Drawee Branch

3.1 Cheques should be presented for payment only at the branch where the
account
holder maintains the account. The bank has no obligation to pay cheques drawn
by a
28

customer and presented for payment at a branch other than the one where the
account is
maintained.

3.2 If payment at par facilities at selected branches have been sanctioned to a
customer,
then such cheques can be paid at the designated branches following the procedure
prescribed
for payment thereof. (e.g.. refund orders of the companies etc.). Usually such
payments are
made to the debit of BPFR account and reimbursement obtained from the branch
maintaining
the customers account.

3.3 Exclusive guidelines are available for payment of cheques at other branches
under
CBS environment.

4. Date of Cheque

4.1 Every cheque presented must bear a date of its issue.
4.2 A cheque presented may bear
i. the date of presentation;
ii. a date previous to the date of presentation; or
iii. a future date.

4.3 A cheque is antedated, if its ostensible date is previous to the date of its
issue. A
cheque is considered stale or out of date, if it bears a date at least six months prior
to the date
of presentation. In a post dated cheque, the ostensible date is subsequent to the
date of issue
or presentation. An antedated cheque can be paid, but not a stale or post dated
cheque.

4.4 A stale cheque can be revalidated by the drawer by writing the words
Revalidated on
.............. followed by his signature. Such a cheque will receive fresh lease of life
from that
date.

4.5 Payment of a post-dated cheque (before its ostensible date) is not in
accordance with
29

the instructions of the drawer. The bank may be compelled to refund the amount
of the
cheque to the drawer (i.e. recredit his account), in case its payment is stopped by
the drawer.

4.6 If the cheque bears a non-existent date, immediate preceding date can be taken
as the
ostensible date for payment. For instance, if the cheque is dated 31st November,
but is in
order in all other respects, it can be paid on 30th November.

4.7 A cheque written in Hindi and bearing a date in Hindi as per National
Calendar is
valid and ought to be accepted/honoured by the Banker, if otherwise in order.
Hence,
branches may pay cheques bearing a date as per National calendar, if otherwise in
order.

5. Payee

5.1 The name of the payee should be clearly and unambiguously mentioned in
the
cheque.

5.2 A cheque in favour of joint payees (e.g. Shri A and Shri B) should be paid
to both/all
of them jointly. Where the cheque is in favour of alternative payees (e.g. Shri X
or Shri Y)
payment can be made to either/anyone of them.

5.3 Cheques made payable to cash or order or made out to fictitious payees, e.g.
Lord
Krishna or Order should be treated as payable to the drawer or to his order.
Such cheques
should be paid, only if they are discharged by the drawer himself or the payment
is made to
the drawer or to his known agent.

5.4 Normally no cheque drawn in favour of a limited company should be paid to a
third
party because it is the usual practice for a limited company to lodge cheques
drawn in their
favour in their own bank account.
30


5.5 Use of words Pay to A only on cheques would affect the legal status of a
cheque as a
negotiable instrument, as use of such words restricts the transferability and
negotiability of
the instrument. Such drawings may also affect the legal protection available to the
Collecting
Banker under Section 131 of the Negotiable Instruments Act, 1881.

5.6 If a cheque made payable to A only is presented across the counter, it would
be
payable to A alone and to nobody else.

5.7 If such an instrument is presented through a banker, it would be the
responsibility
of the Collecting Banker to ensure that the proceeds of such cheque are collected
for the
account of A only.

5.8 In view of the reasons stated in 5.5 above, it would be desirable to discourage
the
drawing of cheques payable to A only and educate the customers to cross the
instruments
alternatively as follows:
A/c Payee Only
Not Negotiable

6. Order and Bearer Cheques

6.1 The cheque can be drawn payable to a particular person or his order or to a
particular
person or the bearer of the instrument.

6.2 The printed cheque form issued by the bank is a bearer instrument. Where
the word
bearer is cancelled with or without the word order written above it or where
the name of
the payee is written in such a way that it obliterates the word bearer printed on
the cheque,
the cheque will be treated as an order instrument.

6.3 In cases where the cheque bears the word or order but they are deleted and
31

replaced with the word bearer, the drawer should authenticate the same under
his full
signature.

7. Payment of Bearer Cheques

7.1 A bearer cheque can be paid to any person who presents it for payment.

7.2 In case of bearer cheques:
i. It is not necessary that it should bear the endorsement of the payee or a
transferee.
However, signature of the presentor for having received the amount should be
obtained on the reverse of the cheque.

ii. If there is any endorsement, it is not necessary for the bank to verify it.
Even if there is any irregular endorsement, it can be paid.

7.3 It is not necessary for the bank to verify whether the presentor of the cheque is
the
true owner of the cheque. However, cheques made payable as under and presented
for
payment in cash across the counter should be looked upon with suspicion, even
though they
are bearer cheques. The officers concerned should not pass them for cash
payment, unless
the persons presenting the cheques are known to the bank or are properly
identified.

i. The payee is a limited company;
ii. The payee is another bank;
iii. The payee is a firm which has got a current account with the bank and would
normally deposit the cheque for credit of their account;
iv. The payee is a well known firm who usually would never present cheques
drawn in
their favour for payment in cash;
v. Cheques in favour of institutions, associations, public bodies, statutory boards
etc.,
and
vi. Cheques in favour of individuals who are not ordinarily supposed to reside in
the
town.

32

7.4 In addition to the above, branches should ascertain the bonafides of the
presentor,
while making payment of bearer cheques. If the amount of the cheque is
Rs.20,000 or more,
payment should be effected by branches, only after obtaining the details such as
name,
address, reference, etc., on the reverse of the cheque, although it is desirable to
record such
details on all cheques irrespective of the amount. It is important to ensure that the
bonafide
presenters of bearer cheques are not put to unnecessary inconvenience, although
normal
care and caution will necessarily have to be observed at all levels in the branches.

8. Amount of cheque

8.1 Normally, there should not be any discrepancy in the amount expressed in
words
and figures. According to Section 18 of the Negotiable instruments Act, if the
amount of the
cheque is stated differently in figures and in words, the amounts stated in words
shall be the
amount ordered to be paid.

8.2 Cheques should not be dishonoured on the grounds of difference in amount
expressed in words and figures. In all cases of discrepancy, payment should be
made on the
basis of the amount written in words, in conformity with Section 18 of the
Negotiable Instruments Act. The following procedure should be followed in such
cases:

i. The amount written in figures in the cheque should be rounded off and
amount
debited to the account should be noted in red ink just above the amount written in
figures.
ii. In respect of such cheques received for collection, the following details
should be
noted in the realisation advice:
Amount written in figures Rs. ......................... differs with the amount
written inwords. Therefore the amount of Rs....... written in words is paid.

iii. In respect of such cheques received in clearing, the differential amount should
be
33

reimbursed to/claimed from the concerned branch of the collecting bank. This
may
be done in consultation with Clearing Section/Service Branch/Main Branch as the
case may be.

iv. In respect of cheques presented across the counter either by individuals or by
other
banks, if the amount written in words and figures is different, the same may be
brought to the notice of the presentor, informing him that the amount written in
words only is payable. If the presentor is not prepared to accept the amount
written
in words, he may have to take back the cheque
.
9. Crossing

9.1 Crossing is an indication appearing on the face of the cheque that it should be
paid
through a bank. It is generally done by drawing two parallel transverse lines
across the face
of the cheque. A crossed cheque cannot be paid across the counter.

9.2 The drawer or any holder can cross a cheque
.
9.3 Crossing is of two types:
(i) General Crossing
(ii) Special Crossing.
9.4 The essential requisite of general crossing is the drawing of two parallel
transverse
lines. The words & Co. or the words Not negotiable may accompany a general
crossing.

9.5 While Section 123 of Negotiable Instruments Act stipulates that the words
and
company or their abbreviation should, if added to a general crossing, be between
the two
parallel transverse lines, it is not so stipulated for the addition of the words Not
negotiable.

9.6 Where a cheque is crossed generally, the banker on whom it is drawn shall not
pay it
otherwise than to a banke

34

9.7 The essential requisite of a Special Crossing is the addition of the name of a
banker;
the two parallel transverse lines are not necessary for a special crossing so also the
words
and company or their abbreviation, since the special crossing itself specifies the
name of a
Banker
.
9.8 Crossing should be across the face of the cheque and not on the reverse
thereof.





10. Signature of drawer

10.1 The signature of the drawer appearing on the cheque should be verified with
the
specimen signature provided by the customer to the bank. The bank cannot debit
the account
of the customer with the amount of a cheque on which the signature of the drawer
is forged,
however clever the forgery may be, as the payment of a cheque where drawers
signature is
forged is not backed by customers mandate.

10.2 Signature forgeries which imitate the genuine signatures are produced in two
ways -
(i) by free hand simulation
(ii) by tracing.

10.3 The following points are given for the guidance of the branches to detect
forgeries in
signature:
i. Careful observation, if necessary with a magnifying glass, will often reveal
the
fraudulent nature of most of the forged signatures.
ii. The signature on a cheque should always be compared with the specimen on
record
by turning both of them upside down. In comparing signatures, by keeping
them
35

straight, there is a natural human tendency to read the signature letter for
letter,
rather than to compare it. In the process, vital differences in slope,
continuity, space,
.
iii. In comparing signatures, the following characteristics/guidelines should be
carefully observed:

10.4 Branches may come across instances where cheques and withdrawal slips
are signed
in a language other than that of the State in which the branch is situated and that
language
may not be known to banks officials. Special attention should be given while
passing such
cheques

11. Cancellation of Stop Payment Order

11.1 Instructions cancelling a stop payment notice should be in writing and signed
by the
drawer. Once the stop order is cancelled, banks duty and authority to pay are
revived.

11.2 Unless the stop payment instruction was issued by the person who drew the
cheque
in which case the instruction may be withdrawn by him, the cancellation
instructions must
be issued by all the parties in the case of joint accounts and accounts of firms and
by all the
authorised persons in the case of limited companies, clubs, associations, etc.

11.3 A remark should be made in the Stop Payment Register regarding the
removal of
stop order. Noting made in the ledger folio as to stop order should also be
cancelled with
suitable note under the initials of an Officer.

11.4 The receipt of the letter cancelling stop payment instruction should be
acknowledged
to the account holder.

11.5 Since removal of a stop payment order might create complications or lead to
36

mistake, the customer should be persuaded to issue a fresh cheque rather than
removing the
stop order.



12. Payment of cheques through clearing

12.1 While paying cheques received in clearing, the branches should note the
following
points with regard to endorsements .
12.1.1 Bearer Cheques received in clearing
i. If there is any endorsement on it, it is not necessary to verify it.
ii. If there is any irregular endorsement, still it can be paid.
iii. The cheques presented for payment through clearing at centres
where
MICR clearing.
















37









Opening and Maintenance of Accounts


1. Introduction

The primary function of a bank is accepting deposits from the public for the
purpose
of lending. Deposit mobilisation assumes paramount importance since it forms the
basis for
the other major function of lending. Different types of deposit schemes have been
formulated
to suit the differing requirements and conveniences of the customers. Efforts at
securing
deposits will be more fruitful, if the specific needs of a customer are understood
and the
details of the deposit schemes answering his requirements are offered to him"

2. Classification of deposits

The bank deposits are classified broadly into
(i) Demand Deposits
(ii) Term Deposits.

2.1 Demand Deposits
Demand deposit means a deposit received by the bank which is withdrawable on
demand. It is withdrawable by the depositor without any prior notice. Demand
deposits
include savings accounts, current accounts and call deposits. These deposits are
either low
38

interest bearing or non-interest bearing. Since these deposits are payable on
demand, they
constitute the demand liabilities of the bank.
2.2 Term Deposits
Term deposit or Time deposit means a deposit received by the bank for a fixed
period, which is withdrawable, only after the expiry of the said fixed period. Term
deposits
include deposits such as fixed deposits, recurring deposits, reinvestment deposits,
cash
certificates and so on. These deposits constitute the time liabilities of the bank.

3. Acceptance of interest-free deposits

3.1 Requests may be received from members of certain communities for placing
deposits
with the bank free of interest or for payment of compensation in lieu of interest
since receipt
of interest is forbidden as per their religious tenets. Acceptance of interest-free
deposits,
except the current account, is a violation of RBI directives, which are applicable
to all depositors
irrespective of caste, creed and religion. Except as current account, no deposit
should be
accepted interest free nor any compensation paid indirectly.

3.2 Branches should not accept any instructions from depositors to create any
Fund,
wherein interest accrued is credited, which shall be utilised for charitable
purposes.



4. Account opening form

4.1 A depositor desirous of opening an account with the Bank should complete
the
relative account opening form/card (Annexure 4.1) in all respects with full
name(s) and
specimen signature(s) at appropriate places. The prospective account holder
should normally
be required to fill in the account opening form in the presence of a banks official

4.2 Comprehensive Common account opening form for individuals
39

4.2.1 It is applicable for individuals (either singly or jointly) opening Savings
Bank,
Term Deposits (including RD) and Current Account
4.2.2 It contains columns for providing Mobile No., E Mail ID, PAN/GIR
No., of the
customer
4.2.3 It lists out the documents required for photo identification and address
proof of the
customer in addition to details of introduction by an existing customer.
4.2.4 It includes columns for fixing the threshold limit, noting the purpose of
opening the
account by the customer
4.2.5 It has column for incorporating additional details to categorise the
customer based
on risk perceptions
4.2.6 Separate columns for getting Date of Birth, Gender and Marital Status
of the
customer are available to meet CIBIL requirements
4.2.7 It enables the customer to exercise options for
i. Sending due date notice for matured deposits
ii. Standing Instructions
iii. Auto Renewal of Term Deposits
iv. SWAP facility
v. Nomination facility

4.3 As Reserve Bank of India attaches utmost importance to adherence of KYC
norms
and AML standards by Banks and non-adherence is viewed seriously, the Branch
Manager/Asst. Branch Manager should verify and ensure that no column of the
account
opening form is left blank. In the space for banks use, the officers concerned
have to affix
their signatures at the relevant places.

4.4 For all new accounts opened for individuals in TBC and CBS branches by
obtaining
the comprehensive common account opening form, there is no need to obtain
separate specimen
signature cards from the customers.

4.5 Scanning of Signatures and Linking to Account in TBC and CBS
branches

40

4.5.1 All TBC and CBS branches should scan the signatures of all account
holders and link
them to the respective accounts in the system on the day of the
opening of
account itself without fail. The officers in charge of the respective
sections are responsible for this. Branch Manager/ABM should
monitor
and ensur that there is no backlog in scanning of signatures.
This will ensure the availability of signatures for viewing/verification
in the
system at thetime of passing/ authorising payments, especially in the
case of Multi
City Cheques in CBSbranches.

4.6 Alignment with Core Banking Solutions

4.6.1 While designing the common account opening form for individuals,
care has been
taken to align the information and details for account opening as
required
in the account opening menu/screens in the Core Banking Solution
Software
, to the extent possible To note down the queue number and/or
reference/
journal numbers, separate space has been allotted at the bottom of
page
No.4 of the form. CBS branches should note down the queue/journal
/reference numbers only at the space provided so that the opening
form
5. Nomination

5.1 Under the Banking Laws (Amendment) Act of 1983, a provision has been
made for
providing Nomination facilities to banks customers in respect of Deposit
accounts
.
5.2 The salient features of the Nomination facility are given below:

5.2.1 A depositor or depositors jointly may
a. nominate a single person in Form - DA1 (Annexure 4.4) to receive
the
amount, in the case of death of the depositor or all the depositors as
the case
41

may be. A nominee cannot be an Association, Trust, Society or any
other
organisation or any office bearer thereof in his official capacity.

b. cancel the nomination already made - in Form - DA-2 (Annexure 4.5)
c. vary the nomination (cancellation of existing nomination and giving
fresh
nomination) - in Form - DA-3 (Annexure 4.6).

5.2.2 Nomination may be made only in respect of deposits which is held in
the individual
capacity or in the name of sole proprietary concerns. However, if there
is a
change in the constitution of the business concern (For example to
Partnership
or Limited Company) the nomination will stand cancelled. Nomination
should not be made in respect of a deposit which is held in any other
representative capacity as the holder of an office or otherwise.

5.2.3 If any of the Joint account holders dies without giving any nomination,
the surviving
depositor(s) can make a valid nomination.
5.2.4 In case of a deposit in the name of a minor, the nomination shall be
made by a person
lawfully entitled to act on behalf of the minor.

6. Pass Book


6.1 For all accounts with repetitive transactions (except Term deposits and
Current
Accounts) a pass book is issued for the use of the account holder. At the time of
opening the
account, pass book should be prepared by the ledger clerk.

6.2 The customers should be asked to present the pass books for updating at
frequent
intervals, e.g., for savings accounts at least once in a fortnight. Before entering in
the pass
book, the clerk should verify that he is copying from the correct account.

6.3 Custody of pass books overnight

42

6.3.1 Every attempt must be made to return the pass books duly completed to
the tenderer
immediately after the transaction. Resorting to keep the pass books overnight
should be made
only by exception, say, where the pass books are presented for making a large
number of
entries. Branches should observe the following procedure with regard to pass
books held by
them overnight.
i. A paper token (Annexure 4.13) indicating the date of receipt of pass book and
also
the date when it is to be collected may be given to the tenderer.

ii. All the pass books should be kept in a box locked by the officer-in-charge of
the
concerned section who alone should have access to it.

iii. Pass books, after being written up, should be delivered only to the depositor or
to the
authorised agent on proper identification and on his tendering the paper token.
His/Her signature should be obtained in the register recording therein the date of
delivery.

iv. Where the pass book remains with the branch for more than a week, the
depositor
should be called upon to take delivery of the pass book within a weeks time,
failing
which the branch should despatch the pass book by registered post with
acknowledgement
due, at the cost of the depositor.

v. The officer-in-charge should affix his/her initials in the register both in token of
having received the pass book and also for having delivered/despatched it.

6.3.2 The Officer-in-charge should peruse the register every morning and arrange
for
despatch of all such pass books that are not collected by the depositors.

6.4 Continuation Pass Book
When the original pass book is fully used up, a continuation pass book should be
issued to the account holder. The account number allotted to the particular
account should be
43

written in the continuation pass book and the number of pass book. i.e.
continuation pass
book No. I, II and so on should be written boldly on the top of the pass book. The
fact that a
continuation pass book has been issued should be written boldly on the ledger
folio with the
date of issue.

6.5 Issue of duplicate pass book

6.5.1 It should be ensured that duplicate pass books are issued only against
written requisitions
from account holders stating the reason for the request for a duplicate. If the pass
book has been mislaid/lost the customer should undertake to return the original
pass book,
when traced/found out later. The written requisition should be carefully preserved.

6.5.2 This is one of the areas prone to fraud. The officer issuing the duplicate pass
book
without verifying the signature on the written requisition is accountable for the
loss, if any,
caused to the bank in the event of a fraudulent withdrawal using the duplicate pass
book.

6.5.3 The account holder should present himself /herself in person for obtaining
the duplicate
pass book. If under special circumstances the account holder requires the
duplicate pass
book to be sent through a messenger, he/she should send a written authorisation to
this effect
with the messengers signature duly attested by him. The duplicate pass book
must be handed
over to the messenger, after proper identification and after obtaining his signature
which
should be verified with the attested specimen.

6.5.4 When a duplicate pass book is issued, it should be prominently marked
Duplicate
in red ink on the cover and on the first page. A note of the issue of the duplicate
pass book
with date should be made in the ledger heading which should be carried over to
subsequent
folios also.

44

6.5.5 Charges for issue of duplicate pass books as prescribed by Head Office
should be
recovered.


7. Procedure for issue of cheque books

7.1 When a customer presents the requisition slip, the clerk should see that
i. the requisition form is the one taken from the last cheque book issued to
the
constituent;
ii. the requisition is not from a cheque book lost entirely unused (OR) lost
with few
unused cheque leaves alongwith requisition slip;
iii. the old cheque book is nearly exhausted.

7..2 The requisition slip should be taken to the concerned officer by the ledger
clerk who
will issue one cheque book, after verifying the signature in the requisition slip
with the
signature on record. He should also note down the serial number of the cheques
issued on the
requisition slip and retain the slip with him.

7..3 The clerk should write the account number (preferably use rubber stamp) and
the
ledger number in all the cheque leaves, enter the first and last serial numbers of
the cheques
in the cheque books issued register (Annexure 4.14) and also in the relative
ledger folio.

7.4 He should also verify whether all the cheque leaves bear the name of the
branch.

14.5 The name and account number should be written on the wrapper of the
cheque book
and on the requisition slip attached to it.

14.6 The ledger clerk should get the acknowledgement of the customer or his
representative
(provided his signature is properly attested by the customer etc.) in the cheque
book
issued register and deliver the cheque book
45

.
14.7 At the close of business, the officer should call for the cheque book issued
register
and check the serial numbers of the cheque leaves issued with the requisition slips
in his
possession. He should then release the requisition slips.

14.8 The officer while checking the ledger should check and initial in the ledger
at the
appropriate place against the cheque numbers noted therein.


















Savings Accounts

46



1. Introduction

As per the definition of RBI, Savings Deposit is a form of demand deposit which
is
subject to the restrictions as to the number of withdrawals as also the amount of
withdrawals
permitted by a bank during any specified period. However, in our bank, there is
no restriction
on the amount of withdrawal from savings accounts.

Savings Bank Account is the most common type of account in a bank which
caters to
the needs of almost all sections of customers. The terms Savings Bank Account,
Savings
Deposit Accounts and Savings Accounts are used synonymously. Rules
governing savings
accounts are given in Annexure 5.1.

2. Who can open savings bank accounts

2.1 Savings Bank accounts can be opened by
i. a.person in his/her name;
b. two or more persons in their joint names in any one of the following
forms:

Accounts in the name of Mode of operation
A & B Either or Survivor
A & B Jointly or Survivor
A & B Former or Survivor
A, B & C Anyone or Survivors or Survivor.

ii. minors who can operate the account by themselves provided they have
completed
the age of 14 and have powers of understanding and discretion;

iii. the natural guardians (for accounts in the names of minors) either jointly with
the
minor or singly or guardians appointed by a competent court;
47


iv. illiterate persons/blind persons provided they are properly introduced and other
formalities for opening accounts of such persons are duly observed;

v. clubs, societies or associations, schools, temples, mosques, churches or other
religious
and charitable institutions of a like nature which are approved by the bank;

vi. trustees, in the name of trusts so long as the fact of the trust is made clear and
apparent
at the time of opening such account;
vii. partnership, Hindu joint families, Proprietary concerns of joint stock
companies for
certain special purposes but not for conducting their usual business. (The
eligibility
for interest is subject to directives of the Reserve Bank of India);

2.2 If a Hindu Undivided Family not engaged in trading/business activity is
allowed to
open Savings Account, it should be opened in the name of the Karta of HUF.

2.3 Savings accounts in the name of the employees provident fund/gratuity fund
of
Public/Private Limited Companies can be opened provided,

i. the fund is a recognised Provident/Gratuity Fund within the meaning of
chapter
IX-A of the Income Tax Act.
ii. entire income of the funds is exempt from payment of income tax and they
do not fall
within the prohibited categories as mentioned in Para 3 below.
2.4 Savings Bank Account can be opened for Organisations/agencies like

i. Primary Co-operative Credit Society which is being financed by the bank.
ii. Agricultural Produce Market Committees
iii. Khadi and Village Industries Boards
iv .Societies registered under the Societies Registration Act, 1860, or any
other corresponding law in force in a State or Union Territory.
V . Companies governed by the Companies Act, 1956 which have been
licensed by the
Central Government under Section-25 of the said Act, or under the
corresponding
48

provision in the Indian Companies Act, 1913 and permitted, not to add to
their names
the word Limited or the words Private Limited
vi Institutions other than those mentioned in clause (i) above and whose entire
income
is exempt from payment of income tax under the Income Tax Act, 1961.
vii. Govt. Departments / bodies / agencies in respect of grants / subsidies
released for
implementation of various programmes/schemes sponsored by Cental
Governments/state governments subject to production of an authorisation
from the
respective Central/state Government Departments to open Savings Bank
account.
viii. Development of Women and Children in Rural Areas. (DWACRA)
ix. Self Help Groups (SHGs) registered or unregistered, which are engaged in
promoting
savings habits among their members.
x. Nagar Panchayats, Nagar Palikas and municipal bodies in relation to funds
(central
assistance plus state share) given under Nehru Rozgar Yojana.
xi. Farmers Clubs - Vikas Voluntary Vahini (VVV).
xii. Member of Parliament Local Area Development Scheme (MPLADS) -
account in the
name of Collector / District Magistrate / District Commissioner.
xiii. Zilla Parishads/ Gram Panchayats in respect of funds released for
implementation of
various rural development / Welfare Programmes and / or subsidy / margin
money
linked programme sponsored by the State Governments and Government
of India.



Savings Bank
Eligibility
Individuals, Joint accounts, Clubs, associations, trusts, Govt.
Bodies, societies (including co-operatives), educational institutions,
associations and other non-trading organizations.
Benefits
ECS/RTGS/NEFT facilities are available
Two cheque books of 2x20 leaves free in a calendar year for
cheque operated SB accounts
49

Collection of local cheques free
Collection of Outstation cheques with the presecibed charges
No charges for Intra / Inter city transactions
ICOOC ( Local / Outstation) facility available
ATM / Debit card One year from the date of first use FREE
From Second year onwards chargeable Rs.50/- per year +
applicable taxes. **
** Not applicable for the Senior Citizen Debit Cards and Biometric
Cards
24 hrs ATM facility with arrangements with various banks for
sharing of their ATMs
Multicity cheque facility Intra city, intercity transactions,Internet/
mobile /phone banking facilities are available at all branches
Nomination facilities are available
50 withdrawals permitted free per half year . Rs.6/- will be levied
for each transaction beyond 50 transactions per half year
No TDS on interest earned on SB deposits
Min Amt
Minimum amount- Rs.250/- for non cheque operation
Minimum balance of Rs.500/- for cheque operation
Lesser minimum balance for pensioners and bonafide students
Non Maintenance of Minimum
Balance
A 30 per month for non maintenance of average monthly balance
Interest Rates In January and July on a daily product basis @4% p.a
Applications and Documents
Application
Specimen Signature Card
Form 60 or 61 (if customer does not have PAN card)
Photograph of depositor/s (2 copies)
Proof of address as per KYC norms
Any other related documents applicable to Students, Minor, HUF,
Trusts etc.


50

3. Prohibition against opening of SB accounts in the names of
certain
Bodies/Organisations

3.1 No bank shall open a savings account in the name of
i. Government departments/bodies depending upon budgetary allocations for
performance
of their functions.
ii. Municipal corporations or Municipal Committees.
iii. Panchayat Samitis
iv. State Housing Boards
v. Water and Sewerage/drainage Boards
vi. State text book publishing corporations/societies
vii. Metropolitan development authorities
viii. State/District level housing co-operative societies
ix. Any political party or
x. Any trading / business / professional concern whether such concern is a
proprietary
or partnership firm or a company or an association.

3.2 For this purpose, political party means an association or body of individual
citizens
of India, which is or is deemed to be registered with the Election Commission of
India, as a
political party under the Election Symbols (Reservation and Allotment) Order
1968, as in
force for the time being.

3.3 For this purpose, budgetary allocation shall mean the allocation of funds by
the
Government made through the budget, wherein all the Governments expenditure
is
reflected. Any institution, irrespective of the fact that it is a Government
Department, Semi-
Government or Quasi-Government Body, which receives grants, loans or
subsidies from the
Government is said to depend on budgetary allocation. Government grants to
institutions are
in the nature of budgetary allocation. Governments subscription to the share
capital of these
institutions also forms part of the budgetary allocation. Local bodies like
Municipal Corporations,
51

Zilla Parishads, Taluk Panchayats and Gram panchayats are given grants in the
nature
of compensation and assignments, which form part of budgetary allocation,
although taxes
collected by these bodies are not covered under the definition and scope of
budgetary allocation
of Central and State Governments.



4.Procedure for opening savings accounts

4.1 KYC procedures
The prospective account holder should be properly identified as per KYC norms.
For
detailed guidelines on Know Your Customer procedures, please refer Chapter 1.

4.2 Application and Specimen Signature Card
The application form (Refer Annexure 4.1) and specimen signature card should be
obtained duly signed by the prospective account holders. The details to be
obtained in the
application form are given in Chapter 4 and the instructions given therein should
be
followed. The opening of the account should be authorised by the Manager/Asst
Manager or
any officer permitted by HO for this purpose (Refer Para 12 of Chapter 1). Two
copies of
photographs of the depositors/persons authorised to operate the account should be
obtained
(Refer Para 10 of Chapter 1).

4.3 Initial Deposit
The initial deposit for opening an account should be in cash. Opening of an
account
by cheque should be avoided.

4.4 Minimum Balance
4.4.1 The following minimum balances are prescribed for SB accounts
4.4.2 In case of pensioners the minimum balance in SB accounts with cheque
facility is
Rs.250 and without cheque facility there is no need for maintenance of
Minimum balance.
52

4.4.3 In case of Students with bonafide certificate, the minimum balance will
be Rs. 250 for
accounts with cheque facility and Rs. 100 for accounts without cheque
facility .
4.4.4 Where the balance in SB accounts falls below the stipulated minimum, a
service
charge as prescribed by Head Office shall be levied on each occasion
irrespective of the
number of days for which the position continues. There is no service
charges
for pensioners for non-maintenance of minimum balance in SB accounts
without
cheque facility.
4.4.5 At the time of opening Savings Bank accounts, banks should inform their
customers
about the requirement of maintaining minimum balance and levying of
charges, if such
minimum balance is not maintained.
4.5 Opening of Accounts
After the initial deposit is paid, the account is opened in the ledger in the serial
order duly indexed and entries made in the Account Opened and Closed
Register. Detailed
instructions on opening of account is given in Chapter 4 of this Manual.








5 Operations in Savings Bank Accounts

5.1 Deposits into the accounts
The minimum amount which can be deposited by way of cash into any savings
account is Rs.5. Amounts received for the credit of a savings account should
ordinarily be
accompanied by pay-in-slips with counterfoils. Pay-in-slips should be made out
separately
for cash and cheques.

5.2 Withdrawals from the accounts

53

5.2.1 Withdrawals are permitted by withdrawal slips, in case of ordinary
accounts and by
cheques, in the case of cheque operated accounts. The withdrawal slips are
marked on the top
Pass Book must accompany this withdrawal slip. The intention is that, as far as
possible the
depositor himself must come to the branch to withdraw. If the depositor is unable
to be
present at the bank due to some inconvenience, he may authorise some other
person to
receive money on his behalf. The withdrawal form provides for authorisation (on
the reverse)
from the depositor to pay the amount to a named third party who brings the
withdrawal slip.
No withdrawal slip presented through clearing shall be paid; if presented it should
be
returned with the reason Pass Book must accompany the withdrawal slip.

5.2.2 The minimum amount which can be withdrawn from a savings account is
Rs.5. The
number of withdrawals in a savings bank account is limited to 50 for each half
year ending
September and March. If the account is opened in the middle of a year, the
number of permissible
withdrawals shall be allowed proportionately. When the number of withdrawals
exceeds
50, a service charge as stipulated by Head Office shall be levied for each
transaction in excess
of 50.

5.2.3 Cash withdrawal in a cheque operated SB account shall be allowed through
withdrawal slips, after observing the following conditions.

i. The facility should be extended, only when the customer comes in person
for the
transaction.
ii. He should bring his passbook.
iii. He should be properly identified by following the procedure for
verification of
customers signature and comparison of the photograph available in our
records.
iv. The issue of withdrawal slips should be made as per the instructions
contained in
paras 5.4 below.
54


5.2.4 The maximum amount that can be withdrawan from a Savings Bank account
using a
withdrawal slip is restricted to Rs. 10,000 for cash withdrawals and Rs. 20,000 for
transfer
transactions.

5.2.5 However, these terms may be relaxed by the Branch Manager provided he is
satisfied
with the genuineness of the transaction.


5.3 Payment of savings bank withdrawal form without production of pass
book
Occasionally, if a withdrawal slip is presented across the counter by the drawer
himself without production of the pass book, the Branch Manager/Officer-in-
charge of SB
section can pass it , after taking usual precautions. The branches should maintain
a register
in which full particulars of withdrawals in SB accounts by withdrawal slips
without production
of pass books are entered and orders of the Manager/Officer-in-charge of SB
section
under full signature for payment obtained. In addition, the withdrawal slip should
be superscribed,
Pay, pass book not produced and the Manager/Officer-in-charge of SB section
should
sign in full below this.

5.4 Issue of withdrawal slips

5.4.1 The withdrawal slips are serially numbered and supplied in a book form.
The
withdrawal slip book should invariably be given to a customer who maintains a
balance of
less than Rs.250 the first time, when the customer calls at the office for a
withdrawal from his
SB account. At the time of issue of the book, the customer may be requested to
use regularly
these forms, for subsequent withdrawals.

5.4.2 The supply of withdrawal slips in loose forms should be made only in
exceptional
circumstances. Depending on the requirements at the branch level, the Branch
55

Manager/Officer-in-charge of SB section will place with the SB clerk(s) sufficient
number of
SB withdrawal books, after entering them in the cheque book issued register to be
given as
loose leaves.

5.4.3 When a request is made for a withdrawal slip in loose form, the clerk in the
SB
department shall note down the account number in the withdrawal slip, after
verifying it
from the pass book and deliver it to the customer so that he can complete the
withdrawal
form and present it for payment.

5.5 Custody of withdrawal slip form

The withdrawal slips being numbered forms, should be held in the custody of an
officer. In order to avoid the public having direct access to them, no withdrawal
slip should
be left at the counter. The precautions to be observed in respect of other numbered
items
should be followed for withdrawal slips also.

5.6 Issue of cheque books

5.6.1 Detailed instructions with regard to issue and custody of cheque books are
given in
Para 14 of Chapter 4. The declaration from the customer to be obtained at the time
of issue of
first cheque book is given as Annexure 5.2.

5.6.2 Three cheque books of 20 leaves each shall be issued free of cost in a year.
For issue
of cheque books beyond the above limit, a charge of Rs.2 per leaf for MICR
cheque books and
Re.1 per leaf for non-MICR cheque books shall be levied. No charges shall be
levied for SB
cheque books issued at rural branches. Separate charges are applicable for
Multicity
cheques.

5.7 Collection of cheques/pensions

56

Cheques, Dividend Warrants and other instruments issued in favour of the
account
holder only can be accepted for collection/credit to the account. The bank also
undertakes
collection of pension of behalf of constituents.

5.8 Pass Book

All savings account holders are provided with a pass book. The detailed
instructions
with regard to issue of pass books, entries in the pass book etc., are given in Para
11 of
Chapter 4.

5.9 Standing Instructions
Standing instructions are accepted in savings account (See Para 10 of Chapter 4).

6. Payment of interest on Savings Bank Accounts

6.1 Interest is paid half-yearly to the SB depositors as per RBI directive.

6.2 Interest is calculated as on every 31st January and 31st July and credited on
any day
before 10th February and 10th August respectively. The six monthly products
eligible for
interest should be added up and the total products should be arrived at. Interest is
calculated
on monthly products on the minimum balance in the account between 10th and
last day of the
month. The interest so arrived should be rounded off to the nearest rupee. An
account is not
entitled to interest, unless it earns a minimum of Re.1 as interest per half year.

6.3 At new branches for SB accounts opened between the opening day and the
last day of
the month after 10th of any month, proportionate interest may be calculated for
the first
month on the basis of the minimum balance standing to the credit of the account
during the
period from the date of opening of the branch or the account which ever is later to
the last day
of that month.

57

6.4 Interest for the months of August and September and February and March be
provided for on 30th September and 31st March respectively by debiting
Depositors Interest
on Savings Bank Accounts and credited to Interest Accrued on Savings Bank
Deposits
Account at 2/6th of the total amount of interest paid for the previous six months.

6.5 As on 31st July and 31st January, interest should be added to individual
accounts in
the ledger and such interest should be taken down in the balance book, alongwith
balance in
individual accounts after adding interest, for preparation of consolidated voucher.
The
following vouchers should be passed:

Cr. Savings accounts
(for interest as in balance book)

Dr. Interest Accrued on Savings Bank Account
(for the balance in the account in General Ledger
Representing Provision previously made for 2 months)

Dr. Depositors Interest on Savings Bank Accounts
(for the difference between the above two vouchers)

7. Certificate of Interest Paid

7.1 Where the account holder requests the bank to issue a certificate of interest
paid
during the year, it should be issued as per Annexure 7.15.

8. Transfer of Accounts

8.1 Savings accounts are transferable from one branch to another at the request of
the
account holder. The procedure to be followed is given in Para 36 of Chapter 4.

9. Closing of Accounts

9.1 A letter of request for closing the account as per the Annexure 4.40 shall be
taken
from the account holder. In case of joint accounts, all the joint account holders
should sign
58

the letter of request to close the account. In case of joint accounts on E or S/A or
S basis,
where the account opening form contains specific mandate to that effect, the
account may be
closed at the request of any one of the account holders. Instructions to be followed
for closing
of accounts is given in Para 38 of Chapter 4.

10. Balancing of Ledgers

10.1 Savings accounts are to be balanced once in a month. For detailed
instructions on
Balancing of Ledgers refer Para 34 of Chapter 4.

11. Savings accounts of staff/retired staff members


11.1 Savings Bank accounts of employees and others listed in Para 24 of Chapter
7 of this
Manual individually or jointly with others are eligible for preferential rate of
interest at 1%
more than the standard rates provided the entire monies belong to the eligible
persons
.
11.2 While opening SB accounts in the above names, a declaration should be
obtained
from the depositor that the amount deposited and/or to be deposited in the account
is/will, be
owned by the depositor.

11.3 Staff accounts should be segregated and wherever the number of such
accounts
warrants separate ledger may be maintained for this purpose. To distinguish the
cheques of
employees from others all cheque leaves issued to employees should be affixed
with a rubber
stamp Staff. Pay-in-slips, credit vouchers, debit vouchers relating to accounts of
employees
must also bear the mark Staff.

11.4 In computerised branches, the software should enable identification of staff
accounts
59

and the facilities available in the software should be utilised by the Branch
Manager/Asst.
Branch Manager for the purpose of monitoring/scrutiny of staff accounts.

11.5 The operations put through the staff accounts should be subjected to regular
scrutiny by the Branch Manager/Asst. Branch Manager and it should be verified
that the
turnover and operations in the account are not disproportionate to the salary and
declared/known sources of income of the staff concerned. It should also be
ensured that
operations in the accounts are restricted to personal transactions only.

11.6 Branch Managers/Asst. Branch Managers should make it a part of their daily
discipline
to go through the vouchers relating to the previous days transactions in order to
identify any abnormal/fictitious transactions. Such scrutiny would include
verification of
vouchers relating to staff accounts, particularly of inward/outward remittances
made by way
of Mail Transfer/Demand Drafts/Telegraphic Transfer, large sums, credits other
than by way
of salary etc., so that the bonafides of these transactions are established without
doubt.

11.7 A staff member should not either post or pass credits/withdrawals in his own
account. Such transactions must be posted/passed by another staff/competent
officer.

11.8 Branches should report to their Circle Offices immediately
i. incidents of cheques returned for want of funds or payment stopped in
staff
accounts, as such returns would attract criminal proceedings under
Sec.138 of the
Negotiable Instruments Act

ii. any unusual transaction or any undue value/ volume of turnover noticed in
staff
accounts

12. Inoperative Savings accounts


60

12.1 For all inoperative SB accounts where the balance is Rs.100 or below, a
service
charge of Rs.20 per year should be levied in the month of January every year, at
the time of
calculation of interest on SB accounts.

12.2 If the balance is insufficient to levy such service charges, the available
balance may
be debited as service charges and consequently the account may be closed under
advice to the
customer.

13. `No-Frill Account' - Vikas Savings Khata

13.1 A No-frills Savings Bank Scheme has been introduced to cater to vast
sections of
population .The salient features of the scheme are given below:

13.2 Under this scheme, there is no need for the customer to deposit an initial
amount
while opening the account. Similarly, the scheme does not prescribe any
minimum balance
to be maintained. Therefore, the account holder may keep even zero balance in his
account.

13.3 The customer shall be subjected to the relaxed KYC procedures only as
given in Para
15 of Chapter 1 of this Manual. Withdrawals can be made, only by using the
withdrawal slips
and no cheque books shall be issued to this category of accounts.
13.4 The total number of transactions (both debit and credit put together) is
restricted to
10 per month. A transaction charge of Rs. 5/- ( plus service tax) shall be levied for
each transaction beyond the permitted limit.

13.5 The rules and regulations governing Savings Bank accounts like nomination,
service charges etc are applicable to this scheme also.

13.6 For availing the value added services offered to other SB accounts like ATM
cards,
cheque book facility, ICOOC, Insurance schemes, Internet banking , mobile
banking,
61

telebanking etc., the account holders of this scheme have to fulfil KYC
procedures and the
minimum balance requirements as applicable to other/regular SB customers.

13.7 One DD/BPO shall be issued free of commission in a month for these
accounts.

14. Customised Savings Bank Products

14.1 The following customised Savings Bank products have been introduced to
provide
value additions for customer retention. The salient features of the products are
given below

14.2 "SB Silver" (CBS Code - 2111-1581)

14.2.1 Under this scheme, the Savings Bank Account holder has to maintain a
minimum
balance of Rs.5000.

14.2.2 Special Benefits
i. Free Personal Accident Insurance cover for Rs. 1 Lakh (IB Chhatra)

ii. Free issue of 1 DD for a maximum amount of Rs. 5000- per year.

14.2.3 An onetime minimum balance charge of Rs.25 will be levied, if the
outstanding
balance goes below Rs.5000-
.
14.3 "SB Gold" (CBS Code - 2111-1591)

14.3.1 Under this scheme, the Savings Bank Account holder has to maintain a
minimum
balance of Rs.10000.

14.3.2 Special Benefits

i. Free Personal Accident Insurance cover for Rs. 1 Lakh (IB Chhatra)
ii. Free issue of a maximum of 2 DDs totalling Rs. 10000- during the year.

14.3.3 In this type of account also, an one-time minimum balance charge of Rs.25
will be
levied, if the outstanding balance goes below Rs.10, 000-.
62


14.4 "SB Platinum" (CBS Code - 2111-1601)

14.4.1 Under this scheme, the Savings Bank account holder has to maintain a
minimum
balance of Rs.25000

14.4.2 Special Benefits

i. Free Personal Accident Insurance cover for Rs. 1 Lakh (IB Chhatra)
ii. Free issue of a maximum of 4 DDs (one per quarter) totalling Rs. 25000-.

14.4.3 Free Life insurance cover for Rs. 1 Lakh (IB Jeevan Kalyan) is also
available for
those in the age group of 18 to 45 who open this SB account

14.4.4 Multi-city Banking facility shall also be extended to customers of this
account as per
extant guidelines and subject to recoveryof the prescribed charges.

14.4.5 An one-time minimum balance charge, equivalent to the Insurance
premium borne
by the Bank, shall be levied, if the outstanding balance goes below Rs.25000.

14.5 Payment of Insurance Premium

14.5.1 Branches shall debit the Expenditure Head 'Insurance (Others)' under (Sub-
GL code-
1181) for absorbing the premium payable on the Insurance cover extended to
these accounts.,

14.5.2 Branches should ensure that the premiums are promptly paid to the
respective
Insurance Company without any let up in the system.

14.6 Account Opening Forms

14.6.1 The comprehensive account opening form given in Annexure 4.1 shall be
used for
opening accounts under this categories also. An acknowledgement along with the
terms and
conditions covering the respective scheme should be given to the account holder
immediately
63

on opening the account.

14.6.2 Booklets for the above 3 schemes with relevant annexures are available in
all our
Circle Offices for the use of branches.


15. Reporting of High Value Cash Receipts in SB accounts

15.1 As per Sec. 285BA of the Income Tax Act, 1961, branches should submit an
annual
return (Annexure 5.3) relating to cash deposits aggregating to Rs. 10 lakhs or
more in a
financial year in a any savings bank account of a person maintained in our Bank.

15.2 This statement shall be submitted every year before 31st May (with data upto
31st
March) by all branches to the Circle Offices.
























64















6. Current Accounts

1. Introduction

1.1 Current Account is a form of demand deposit wherefrom withdrawals are
allowed
any number of times depending upon the balance in the account or upto a
particular agreed
amount. Current account especially caters to the needs of business people who
make extensive
use of the cheque facility and also receive cheques in their favour from others.
There is,
however, no restriction that only business people should open current accounts.
The current
account rules of the bank are given in Annexure 6.1.

2. Who can open

2.1 A current account may be opened by
i. a person in his/her own name;
ii. two or more persons in their joint names in any one of the following
forms:

Accounts in the name of Mode of operation
A & B Either or Survivor
A & B Jointly or Survivor
65

A & B Former or Survivor
A, B & C Anyone or Survivors or Survivor.

.
iii. Companies, Partnership Firms, Clubs, Associations, Religious, Educational,
Charitable
and other Institutions on production of the necessary documents, copies of
rules, bye-laws, etc., duly attested by authorised persons;

2.2 Current accounts of Minors to be operated by the natural/legal guardian can
be
opened, only after obtaining permission of the Circle Head. While referring such
cases to the
Circle Head, the branch should explain the necessity of opening current account
in the name
of a minor and also the deposits and other benefits that may accrue to the bank.
No overdrafts
will be allowed in such accounts. Before opening such accounts, the branch
should obtain
indemnity from the guardian protecting the bank from any claim of the minor in
future and
consequential loss to the bank. The format of indemnity is given in Annexure 6.2.
No current
account should be opened by a Minor to be operated by himself.

3. Procedure for Opening Accounts

3.1 Application form
3.1.1 Separate opening forms have been prescribed for the following types of
accounts:
i. Sole-proprietorship concerns (Annexure 6.3);
ii. Partnership Firms (Annexure 6.4);
iii. Joint Hindu Families (Annexure 6.5);
iv. Limited Companies (Annexure 6.6);
v. Non-trading associations such as Clubs, Societies and Schools (Annexure
6.7);
vi. Trusts (Annexure 6.8).
vii. Government Accounts (Annexure 6.9)

3.1.2 The prospective account holder should be required to fill up and sign the
prescribed
66

application form. Additional documents wherever necessary should be obtained.
For
instance, partnership letter should be obtained, in addition to account opening
form, for
opening accounts for partnership firms. Specimen signature of the depositor(s)
should be
obtained in the specimen signature card(s). Two copies of photographs of the
depositors/persons authorised to operate the accounts should be obtained.

3.1.3 At the time of opening of current accounts, the branch should insist on a
declaration
from the account holder to the effect that he is not enjoying any credit facility
with any other
bank or branch of our Bank or obtain a declaration giving particulars of credit
facilities
enjoyed by the intending customers with any other bank(s)/branches. In the latter
case, the
lending bank(s)/branches concerned shall to be duly informed so that suitable
precautionary
measures, wherever considered necessary, could be taken by them

3.1.4 Where due diligence is carried out on the request of a prospective
customer who is a
corporate or large borrower enjoying credit facilities from more than one bank,
the banks
may inform the consortium leader, if the account is under consortium arrangement
and the
banks concerned , if it is under multiple banking arrangements.

3.1.5 Banks may open current accounts of prospective customers, in case no
response is
received from the existing bankers, after a minimum waiting period of a fortnight.
If a
response is received within a fortnight, banks should assess the situation with
reference to
information provided on the prospective customer by the bank concerned and are
not
required to solicit a formal `No-objection certificate' consistent with the true
freedom to the
customers of banks as well as needed due diligence on the customer by the bank.

3.2 Adherance to KYC Norms

67

3.2.1 Branches should adhere to the prescribed KYC norms as detailed in Chapter
1. The
documents required to be obtained based on the constitution of the applicant as
also the risk
perception envisaged should necessarily be obtained and kept on records.

3.2.2 The accounts should be properly introduced. The details of introduction
must be
recorded in the account opening form.

3.2.3 All the forms obtained from the prospective depositor should be checked to
ensure
that they are complete in all respects and the Asst. Manager/Manager/Senior
Manager/
Chief Manager who is authorised to open deposit accounts should authorise
opening of the
account.
3.3 Initial Deposit
The initial deposit for opening accounts should be in cash. Opening of an account
by
cheque should be avoided.

3.4 Opening the account in the ledger
After the initial deposit is paid, the account shall be opened in the ledger, duly
indexed and entries made in the accounts opened and closed Register. (For
detailed instructions
on opening of accounts refer Chapter 4).

4. Operations in Current Accounts

4.1 Minimum Balance

4.1.1 The account holders should maintain the minimum balance norms as under

4.1.2 The quarter for this purpose will be reckoned from January to March, April
to June,
July to September, and October to December in a calendar year.

4.1.3 The quarterly average balance shall be arrived at as under:
Step 1 Calculate the number of days for the relevant quarter
Step 2 Arrive at the total of daily products in the account at the end of the
quarter
68

Step 3 Divide the amount arrived at in Step 2 by the number of days as
calculated in Step 1
Step 4 The resultant amount shall be the quarterly average balance maintained.

4.1.4 If the amount arrived at as per Step 4 is less than Rs.5000 or Rs.1000, as the
case may
be, penalty shall be levied as per rates prescribed and the same should be
recovered immediately
from the account.
Note: At present Rs. 300 and Rs. 100 respectively are levied per quarter in
defaulted cases.

4.2 Deposits in Current Accounts

4.2.1 Subsequent to opening, a depositor may remit any amount in his account.
All deposits
to current accounts should ordinarily be accompanied by pay-in-slips. Separate
pay-inslips
should be used for deposit of cash and instruments for clearing, transfer,
collection etc.

4.2.2 The pay-in-slip has to be completed in all respects and signed by the person
making
the remittance. The counterfoil of the pay-in-slips is to be handed over to the
remitter, after it
is entered in the scroll and signed by the scroll officer. For cheques deposited for
collection
(both local and outstation), the counterfoil portion has to be handed over to the
depositor with
the initials of the officer as token of having received such instrument for
collection. For
deposits of Rs.1,000 and below the clerk concerned may release the counterfoil
without the
signature of an officer.



4.3 Withdrawals from Current Accounts
Withdrawals are permitted only by cheques supplied by the bank. There are
norestrictions as to the number of withdrawals.
4.4 Interest
No interest is paid on Current Accounts.

69

4.5 Passing of cheques, posting, checking of ledgers
For detailed instructions refer Chapter 4 of this Manual.

4.6 Issue of cheque books
For detailed instructions on issue of cheque books and payment of cheques refer
Chapters 3 and 4.

4.7 Standing Instructions
Standing Instructions from constituents are accepted in current account. For
detailed instructions refer para 10 of Chapter 4.

4.8 Inoperative Accounts
The current accounts which are not operated for 2 years and above should be
treated
as inoperative account and the same should be segregated and kept in a separate
binder/ledger. A service charge as prescribed by Head Office shall be levied for
all

5. Statement of Account

5.1 A statement of account should be furnished periodically to every constituent
of
current and cash credit accounts. The statements shall be forwarded to
constituents once a
month or more frequently, if they so desire within five days from the due date.
The total
number of current accounts in the branch should be divided into groups and each
group
should be indicated a definite date on which the statements of account will
become due for
despatch. These dates should be marked in the relative ledger folios and
statements should be
prepared sufficiently early and despatched to customers on due date.

5.2 The statements of accounts should be kept in a separate file and in a place of
security. The statement must be neatly and legibly written up from each days
vouchers,
after these have been checked by the checking officials with the ledger. The
periodical statements
including those generated by computers (in case of current accounts maintained
in
TBC/CBS branches) should be handed over only to the account holders concerned
or any
70

other person authorised by him. Care should be taken not to keep them in open
trays allowing
free access to others. On each statement the name of the account should be written
at the
top, the ledger folio, account number in the space provided for the purpose and
the name and
full postal address of the constituent along the left margin. In the case of joint
accounts, only
the first name and the address thereof need be written in the space provided; but
all the
names should be invariably written at the top of every statement form.

5.3 Names of payees of cheques need not be entered in the statements except in
cases in
which constituents specially request for such information to be furnished; but
cheque
numbers should be legibly stated and brief particulars of other debit entries and of
all credit
entries should be invariably furnished. Debit balances of accounts should be
entered in red
ink.

5.4 Statement should be ended with closing debit and credit summations and a
closing
balance. If statement runs into number of pages, each page should be totalled
independently
and verified with closing balance and tallied with summations in the ledger. This
will
prevent possible omission of any entry through oversight.

5.5 All statement of accounts will be authenticated by the clerks themselves
without
further authentication by the officer concerned.

5.6 Despatch of Statements
Statement of accounts should be promptly despatched on the due dates. Where the
number of current accounts is large the statements may be sent to the account
holders in a
phased manner spread over different dates in a month, in order to avoid difficulty
in preparation
of too many statements at a time. In case of machine operated accounts the
statement

.
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6. Transfer of Accounts
6.1 Current Accounts may be transferred from one branch to another at the
request of
the account holder. The procedure to be followed in given in para 36 of Chapter 4.

6. Closing of Accounts

7.1 A letter of request for closing the account should be taken from the account
holder.
In case of joint accounts, all the joint account holders should sign the letter of
request to close
the account. In the case of joint accounts operated on E or S/A or S basis, where
the account
opening form contains a specific mandate to that effect, the account can be closed
on the
request of any one of the account holders. In the case of partnership firm, all the
partners
should sign the letter. For closing an account of a Joint Stock Company, all the
directors
should sign the letter of request or a resolution of the Board should be passed
resolving to
close the account and a copy thereof duly certified by the Secretary should be
obtained. For
other instructions refer para 38 of Chapter 4.

8. Service Charges

8.1 In order to cover the incidental expenses in maintaining the account, service
charges are levied. The rates of charges are communicated by Head Office from
time to time.

9. Balancing of Ledgers

9.1 Current accounts are to be balanced as on Friday of every week. The detailed
instructions with regard to Balancing of Accounts is given in para 34 of Chapter
4.
10. Return of Paid Cheques to Account Holders

10.1 As per Section 45Z of the Banking Regulation Act, if any bank is required
by a
customer to return a paid instrument to him before the expiry of the period
prescribed of its
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preservation, it should be given to him/her after taking a true copy thereof by a
mechanical
or some other process at the cost of the customer. Branches are required to
preserve the paid
instruments for a period of not less than 20 years, the period of retention being
calculated
from the close of the year to which the instrument pertains.

10.2 In case of Central and State Governments, Life Insurance Corporation of
India and
other Government Bodies, paid cheques are required for audit and income tax
purposes. In
case of others, paid cheques are required on account of the introduction of Section
40 A(3) in
the Income Tax Act, 1961. According to this Section, any payment exceeding the
prescribed
limit made in respect of any expenditure otherwise than by crossed cheque or a
crossed bank
draft would not be allowed to the assessees as a deduction in the computation of
income. The
assessees will be required to prove to the satisfaction of the Income Tax
Authorities that the
payments exceeding the prescribed limit were, in each case, made by a crossed
cheque.

10.3 Permission from HO: Customer Service Cell should be obtained as regards
returning
of paid cheques drawn by all the parties/constituents other than Government
Department/Goverment undertakings/LIC.

10.4 The facility of returning paid cheques should be recommended to Head
Office in case
of parties of good repute. Before returning paid cheques to parties/constituents,
branches
should see that the precautions/conditions stipulated below are meticulously
complied with:

i. Branches should obtain an undertaking letter as per Annexure 6.10.
ii. On obtaining the undertaking letter, branches should ensure that it is
signed by an
authorised person and the signature is genuine. The undertaking letter
should be
kept along with the account opening form.
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iii. Whenever there is a change in the constitution of the firm having this
facility, a
fresh letter of undertaking duly signed by the authorised persons should
be taken.
iv. Customers cheques paid by the branch during a calendar month may be
returned to
the customer during the following month in one instalment.
v. All paid cheques to be returned are to be listed in duplicate giving
particulars of
cheque number, date, name of payee, amount, mode of payment etc. One
copy of the
list duly signed by the customer or his authorised agent in token of having
received
the cheques should be kept on records.

vi. Confirmation of balance as on the last day of the month for which the paid
cheques
are returned should be obtained. The confirmation of balance should read as
under:





11. Temporary Overdrafts

11.1 A temporary overdraft can be given to exceptionally good parties on their
written
request, in cases when a cheque is presented and it is found that the balance in the
account is
not sufficient to pass the cheque. Granting of TODs is at the sole discretion of the
Branch
Managers and should be exercised within the discretionary powers granted to
them.

11.2 The facility of permitting an account to be temporarily overdrawn should be
given
on a very restrictive/selective basis. The occasions to grant temporary overdrafts
should be
few and far between in any account. The extent of temporary overdraft permitted
should bear
a reasonable proportion to the average balance in the account and the means of the
account
74

holder(s). TODs should not normally be allowed to remain outstanding for more
than 90 days.

11.3 Where the account holder requires the facility of drawing in excess of
balance at
frequent intervals, it is advisable to consider a regular OD limit for which a proper
proposal
should be submitted for sanction at appropriate leve
l
11.4 For legal aspects and documentation for TODs, please refer Manuals on
Conventional
Advances and Documentation.

12. Overdraft and Cash Credit Accounts

12.1 Instructions in regard to obtaining of account opening forms, constitution
letters,
procedure for opening an account, issue of pass book/Statement of Account and
cheque
books, passing of cheques and such other common matters given in this Manual
are applicable
to Overdraft and Cash Credit Accounts also.

12.2 Other instructions governing overdrafts (including temporary overdrawing)
and
cash credits are given in the Manual on Conventional Advances.

12.3 Drawings against uncleared effects
Sometimes, constituents may request the branch to allow drawings against
uncleared effects. The Safeguards to be followed are given in the Manual of
Instructions on
Conventional Advances.

13. Payment of Interest on certain accounts

13.1 Accounts of deceased depositors

In case of balances lying in a current account standing in the name of a deceased
individual depositor/ sole proprietorship concern, interest should be paid from
01.05.1983 or
from the date of death of the depositor whichever is later, till the date of
repayment to the
75

claimant/s at the rate of interest applicable to savings deposit as on the date of
payment.
Similarly, balances lying in the cash credit/ current account etc of sole-
proprietorship firms,
when the sole-proprietor dies, would also be eligible for payment of interest at SB
rates. These
provisions would not however, apply to overdue term deposits, joint accounts,
accounts in
the names of partnership firms, HUF , etc.

13.2 Current account maintained by Regional Rural Banks
Interest on current account balances of Regional Rural Banks may be paid at the
rates informed by Head Office from time to time.
13.3 No interest should be paid on Margin Money held in current accounts.

14. Call Deposits against Balance in Current Accounts

Branches may, as a special case, issue Deposit at Call Receipts to the tenderers
(contractors) for amounts earmarked against the earnest money held in their
current account
with them, for submission to Government Departments with tender papers
relating to any
contract as per the tender requirements.













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7. Term Deposits

1. Introduction

1.1 Term Deposit is a deposit received by the Bank for a fixed period which is
withdrawable only after the expiry of the said fixed period and shall also include
deposits
such as recurring, reinvestment, cash certificates and so on.

2. Account Holders

2.1 All persons listed under Para 1.1 of Chapter 2 are eligible to open term
deposits.
Detailed guidelines with respect to opening of accounts for each of these persons
are given in
Chapter 2 of this Manual. Special points to be observed in opening and
conducting term
deposits for some of these account holders are detailed below.

2.2 Minor

2.2.1 In the single name of a Minor alone, repayable to the Minor
Branches may open term deposit accounts in the single name of a minor alone
(14 years and above) repayable to him. Such term deposit represents a debt due to
the minor
by the Bank. Discharge given by the minor to the Bank on repayment of the
deposit to him is
a valid and effective discharge in law, in respect of an obligation fulfilled towards
him. Even
repayment of such a deposit before the due date would not ordinarily involve any
risk, if the
discharge of the minor is properly obtained.
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2.2.2 In the single name of a minor alone, repayable to the guardian
Repayment made to the guardian on maturity of the deposit (the maturity date
falling before the date of attaining majority by the minor) gives a valid discharge
to the Bank.
Repayment on maturity cannot be challenged by the minor either during his
minority or
after he has attained majority on the ground that the funds were not utilised for the
minors
benefit. On the other hand, if such deposit is repaid before maturity of the deposit,
the minor
can challenge such repayment particularly, if the guardian misuses the funds. If,
as per
terms of the deposit, it is repayable to the minor after his attaining majority, the
repayment
should be made to the minor himself, after his majority and not to the guardian
either before
or after the minor attaining majority.

2.2.3 In the name of a Minor jointly with a Guardian repayable to them jointly
Branches may open fixed deposit accounts in the joint names of a minor and his
guardian. In such cases the account opening form should be signed by both joint
account
holders. Such accounts are considered safe, since the signatures of both the minor
and the
guardian or of the guardian in his dual capacity are available. Foreclosure of such
deposits
does not involve much risk.

2.2.4 In the name of a Minor jointly with a Guardian, repayable to Either or
Survivor
Branches may open fixed deposit accounts in the names of the minor and the
guardian with Either or Survivor clause. There is no risk involved in making
repayment of the
term deposit on maturity to either or survivor of the two. A receipt by anyone of
them at
maturity gives a valid discharge to the Bank. However, it is necessary to take both
signatures
or the signature of the guardian in dual capacity, in the event of foreclosure of the
deposit.

2.3 Joint Account

2.3.1 Either or Survivor or Anyone or Survivor(s)
78


I . In case of Term Deposit accounts opened in the style of Either or Survivor
or Anyone
or Survivor(s)', no request from the survivors for loan/foreclosure or change of
names
by way of addition/deletion/substitution shall be entertained, in the event of the
death of one of the joint account holders, during the currency of the deposit
without
the consent of all the legal heirs of the deceased depositor, unless the contract of
deposit contains such an option. With a view to remove such disability on the part
of
the surviving depositors, the following enabling clause is included in the account
opening form:

ii. The above clause shall include accounts opened in the style of F or S also.
Branches

2.3.2 Former or Survivor

2.4 Partnership

2.4.1 Applications for deposits on behalf of a partnership firm should be signed
by all the
partners and the instructions should be obtained as to who among them is/are
authorised to
receive interest and payment on maturity. However, where the firm is already
maintaining a
current account, it is sufficient that the opening form is signed by one or more
persons singly
or jointly. It is advisable to obtain the Partnership Letter (D-5) signed by all the
partners in
their individual capacity. But where the firm already maintains a current account
this
formality need not be insisted upon.

2.5 Financial Institutions - Government / Semi-Government Bodies and
Limited Companies

2.5.1 Obtaining the application in the prescribed form may be waived in the
case of Public
Limited Companies, Government/Semi-Government Bodies, Corporations, etc.,
when the
79

request is made in the letterhead for investing the funds, provided the letter
contains all the
important terms and conditions contained in the prescribed application form, such
as, name
of the account, amount, period of deposit, name of the person authorised to
discharge the
deposit receipt, etc.

2.5.2 The branch, before accepting a deposit from financial institutions, should
clearly
mention the rate of interest, validity of the offer, foreclosure norms, etc., to the
institutions.

2.5.3 In case of Limited Companies and other Associations, copy of the resolution
authorising
investing of funds with our Bank may be obtained, if possible and attached to the
application
letter. In case any difficulty is experienced in obtaining the resolution, it need
not be
insisted upon.

2.5.4 When a request for payment of interest/repayment of the deposit is made,
the principal
amount along with the interest should be paid by way of a bankers payment
order/demand draft crossed Account Payee or to the credit of the account.

2.5.5 Cash payment should not be made under any circumstances.

3. Rate of Interest

3.1 The rates of interest payable on Term Deposits is governed by HO guidelines
issued
from time to time. The interest rates on Term Deposits prevailed at different
periods since
26.10.1982 are given in Annexure 7.1. As per RBI directive, no bank shall pay
interest on
deposits up to 6 days, for other term deposits of less than Rs.15 lakhs and for
preferential
deposits of Rs.15 lakhs and above without the prior approval of RBI.

3.2 The interest on Term Deposits is payable at quarterly intervals. The interest
may be
80

paid monthly also, at a discount, if required by the depositor. Branches should
arrange to
display the posters regarding rates of interest on deposits for varying terms. They
should
take prompt action for making necessary correction in the notice displayed, as and
when any
change in the rates of interest takes place.

4. Period of Deposits

4.1 Term deposits can normally be opened for a maximum period of 120 months.
Opening of accounts for period exceeding 120 months is permitted only in the
following cases:

i. In the names of minors where the interest of the minor is involved,
provided the
Bank is convinced that it is necessary to do so. Such a deposit should
mature for
payment as soon as or immediately after the minor attains majority. In
case the
period of the deposit calculated from the date of opening of the account till
the date
when the minor attains majority involves a broken year, the term of the
deposit may
be extended upto the next year.

ii. Deposits can also be opened for more than 120 months in the name of Staff
Members
jointly with their minor children.

iii. The period of deposit may be extended upto a maximum of 20 years in the
case of
institutions, Government Undertakings, corporate bodies to meet their
special needs
like creation of sinking fund, amortisation fund etc. or for individuals for
any of
their special needs. However, for Special Recurring Deposits the period is
restricted
to 5 years.

iv. In case of others, under orders from a competent Court. However, under
special RD
scheme in our Bank, the period of deposit is restricted to 5 years
81

4.2 Recurring deposits, deposits under reinvestment plan and any other type of
deposit
where the compounding of interest is to be done on quarterly basis, shall be
accepted for
periods in multiples of three months only, subject to a minimum period of 6
months. That is
to say, the above deposits will be for periods of 6 months, 9 months, 12 months,
15 months, 21
months. This restriction does not apply to fixed deposits which is at present
accepted for 7
days and above.

5. Procedure for Opening the Accounts

5.1 Branches should explain to the depositors at the time of opening accounts, the
salient features of different term deposit schemes (FD, CC, RIP etc.) and ascertain
from them
the scheme under which they desire the accounts to be opened and arrange to fill
up the
opening forms properly so as to avoid ambiguity as to the nature of Term Deposit
preferred.
Any request to convert Fixed deposit accounts into RIP Deposits and vice versa
should not be
considered at a later date.

5.2 The Depositor should be required to fill up the common Account Opening
Form

i. for depositors other than individuals - Annexure 7.2
ii. for deposits in the name(s) of individuals - Annexure 4.1.

5.3 It should be ensured that

i. the account opening form has been correctly and properly filled in and
signed by the
depositor(s) at appropriate places;

ii. the depositor(s) submit(s) the documents required as per KYC norms.

iii. full name and address of the account holder is given. In the case of joint
accounts,
the names of all depositors are given;

82

iv. the amount of deposit/monthly instalment and the period is given (Even
though the
period of deposit has to be decided by the customer, the officer
concerned can
suggest and help the customer to select the best period by taking into
account the
various factors peculiar to the depositor);

v. the correct rate of interest is mentioned;

vi. in case of joint accounts, the instructions about the payment of interest,
disposal of
maturity proceeds such as payable to either or survivor, former or
survivor are
clearly given.

vii. Whether disposal instructions (for disposal of the proceeds on the due
date) are
correctly filled in under the signature of the depositor(s).

.
6. Sending Due Date Notice

6.1 In case of fixed deposits, reinvestment plan and cash certificate accounts, a
due date
notice (Annexure 7.3) on the basis of the Due Date Register (Annexure 7.4)
should be sent to
the depositor at least 15 days before the date of maturity. It shall be the
responsibility of the
Manager/officer-in-charge of the Term deposit section to maintain Term Deposit
Due Date
Register and issue due date notices in advance. Due date notice should not be sent
in cases
where the depositor(s) has/have given specific instructions not to send it.

6.2 Intimating of impending due date of the deposit in advance to Customers /
Depositors

7. Payment on Due Date

7.1 The depositor shall be required to discharge the term deposit receipt/pass
book. If
83

the depositor wants payment in cash, the discharge should be on an appropriate
revenue
stamp on the reverse of the FD receipt (for payments above Rs.500) in the
following form,
subject to the instructions contained in Para 26 of this chapter by geting
declaration in
Annexure 7.21.

7.2 If the depositor instructs the bank to pay by crediting his account, the
discharge
should be in the following form and the signature need not be on a revenue stamp.
Credit my Current/Savings Bank Account No.
Received Payment
.......................................................
( Signature)

7.3 If the term deposit account is in joint names payable to either or survivor, it
can be
discharged by either of them. If it is payable jointly, then all the joint depositors
should
discharge it; and where cash payment is required, a letter should be obtained duly
signed by
all the depositors authorising one of them to receive payment (Annexure 7.5)

7.4 Payment to a third party

7.4.1 Term deposit receipt/Passbook is not a negotiable instrument. The depositor
cannot
endorse it in favour of another person. The payment must be obtained by the
depositor
himself or by his bankers. In case the depositor wants the payment to be made to
one of his
agents/employees, the term deposit receipt/pass book should be discharged by the
depositor
himself and a request should be made by him in a covering letter to the Bank to
make the
payment to such agent/employee. The signature of the agent/employee should be
appended to
the letter and verified/attested by the depositor.

7.4.2 In case of joint accounts, the authority and discharge of the deposit receipts
must be
84

according to instructions given. When payment of a term deposit is to be effected
to an
authorised person in the manner described above, utmost vigil should be exercised
to ensure
that the signature(s) of the depositor(s) on the receipt/passbook discharged
thereof, is / are
genuine by careful verification with the specimen signatures and that proper and
satisfactory
identification of the person receiving the payment is made.