Bank Letters Definition: Banking has been under the Banking Regulation Act 1949 as:“Accepting for the

purpose of banking or investment of deposits of money from the public and withdraw able by cheque, draft or otherwise.

Meaning: Bank is a financial institution which is run by the Government as well as private sector to assist the public in general to lend money to persons for doing business in order to better their living standards or for development purposes. It provides interest on funds deposited with it by the depositors and charges interest from the persons who borrow money from the Bank. Apart from lending and depositing money, bank renders a number of other services, which are known as subsidiary or ancillary services, such as working as remittance of funds from one place to another, providing safe deposit lockers, working as an agent for the customer etc.

Functions of a Bank:

There are some important functions of a Bank which they perform are:

1. 2. 3. 4. 5. 6. 7. 8. 9.

To accept deposit of money from the public. To grant loans and advances to traders, industrialists, professionals and other sections of society. Remittance of funds from one place to another. To collect and discount bills of exchange and other negotiable instruments. Acting as an agent on behalf of customers by honoring their standing instructions etc. To provide safe deposit lockers to customers for safety of their valuables. To supply credit, financial or status information of customers. To issue letter of credit, guarantee, travelers’ cheque, and gift vouchers etc. To act as an advisor and guide to customers

Types of Banking Correspondence: There can be classifications of all banking letters into four groups and they are as follows: 1. There are banking correspondence that relates to opening, closing and transfer of accounts of customers. 2. There are banking correspondence that relates to operations in accounts of customers – deposit, collection and payment of cheques, drafts, bills etc. 3. There are banking correspondence that relates to Loans and Advances including overdrafts, cashcredits, demand and term loans, discounting of bills, letters of credit, guarantees etc. 4. There are banking correspondence that relates to subsidiary or ancillary services like remittances, safe deposit lockers, agency services, supplying credit or status information and traveler’s cheques etc.

Specimen of Letter for Customer’s request for opening an Account GENERAL TRADERS 15. Types of Bank Account: . fixed/term deposit accounts or other deposit accounts. The bank account can also be closed anytime depending upon the rules of the concerned bank. In current account. no interest is paid on a current account of a customer but some charges are levied by bank in proportion to the pages of ledger filed in. The other deposit accounts are those where the transactions are less and more interest is allowed by the bank. Saving Bank Account works best for service class peoples as the number of transactions are few and irregular. . GTL/Bank/98/2314 10th May 1998 The Manager Bank of India Chandni Chowk Delhi Dear Sir. please let us know as to what formalities are to be fulfilled for this purpose. The bank offers some interest to the saving bank account holders on the credit balances maintained with the bank between the close of 12th day and the last day of each calendar month. Current account works best for traders and other business people so that they can freely operate upon the accounts by numerous transactions in a single day. We request you to. Customer’s Account: The relationship between customer and banker develops when a customer opens his account with the bank. There are different set of rules for different type of accounts in individual bank. saving bank accounts. There is also facility of transfer of accounts from one branch to branch or place in the bank.The customer’s accounts can be current accounts.They can be discussed in detail as under: - 1. The customer has to fill in the Account Opening Form for opening an account in the bank by supplying specimen signatures and giving introduction. All other services offered by banks are based on it. Kamla Market Delhi-110006 Ref. We would like to bring it to your kind notice that our company is a sole proprietor concern. The bank account may be introduced by anyone who is either already a customer of the bank or well known to the bank. Presently we are not dealing with any other nationalized bank anywhere in Delhi. We wish to open a current account in our company’s name with your esteemed branch.No.

O.O. Yours Faithfully. It will be advisable that you visit us during business hours along with A. We anticipate an early compliance in this matter. Chandni Chowk Delhi-110006 Ref.F) for opening a current account for sole proprietor firms or company’s. Delhi B. BOI/H/Gen/8965 15th May 1998 Dear Sir.No. GTL/Bank/98/2314 dated 10th May 1998. This letter is in reference to your letter No.O. Yours Faithfully. Ref. You are requested to sign in the form in our presence and the account has to be introduced by a person having an account with us. We are enclosing herewith the required Account Opening Form (A. Branch Manager . For GENERAL TRADERS Sole Proprietor Specimen of Bank’s Reply BANK OF INDIA Chandni Chowk Branch.F with the rubber stamp of your firm to be affixed on it.No.Please give us necessary account opening forms and also let us know the other formalities to be fulfilled for opening an account with you.

We would also like to request to you for sending us statement of our accounts regularly every month in the future. We want to bring it to your kind notice that we haven’t received the statement of account for the above mentioned current account. It would be difficult for us to tally our bank accounts in the absence of upto date bank entries so we request you to please send us the statement of our account with your bank with latest upto date entries. KBR/Accts/99/5612 20th April 1999 The Manager. New Delhi -110015 Ref. South Extension Part-2 New Delhi Dear Sir. Krishna International Bank. Kirti Nagar.No. Re: Our current A/c No. For KHANNA BROTHERS Proprietor . We have opened current account with your bank for more than three months and have a heavy turnover in the accounts.Enc: as above Specimen of Letter for Customer’s request for Pass Book or Statement of Account KHANNA BROTHERS 25. Yours Faithfully. 16723 with you.

Ref.Bank’s Reply KRISHNA INTERNATIONAL BANK South Extension Part-2. CA/Misc/99/8123 25th April 1999 M/s Khanna Brothers 25.After the opening of bank account. There are many types of correspondence that take place during this course of operation on accounts between the bank and customer. . 16723 With reference to the above mentioned details.No. cheques. bills etc in the account and withdrawing amount by issuing and drawing cheques or otherwise. Authorized Official Enc: as above 2. Please acknowledge receipt. New Delhi B. we are enclosing herewith upto date statement of your current account. KBR/Accts/99/5612 dated 20th April 1999 Reg. Current A/c No. Yours Faithfully. We have also taken notice of your request of sending statement regularly month-wise in the future. the customer operates it by way of depositing cash. Operations on Customer’s Accounts: . Kirti Nagar New Delhi -110015 Dear Sirs.O South Extension Part-2 New Delhi No.

After checking our Account Statement of 24th March 2007. Our Current Account No.Specimen of letter for customer notifying delay in collection of cheques. For MAX INDIA LTD. request you to kindly arrange for the early realization without any further delayo as we need the abovesaid amount for the clearance of our pending bills of the company. therefore. drafts. We. It is now past 14 days that the cheques have not been realized so far. While writing the letter to the bank regarding the stop payment of the cheque the following points should be kept in mind they are: . 456 with you This is to inform you that we deposited two cheques for Rs.: MIL/Accts/Bank/1002 24th March 2007 Dear Sir. We would like to know the reason for delay as they were local cheques and the normal course of realization is three to five days for local cheques. for credit to our above said account. bills etc deposited in account MAX INDIA LIMITED 12 floor Devika Towers Nehru Place New Delhi Ref. We hope you will do the needful as early as possible. 5000/. 7000/ respectively on 10th March 2007. we find that these amounts have not be credited to our account. Yours faithfully. Accounts Manager Stop Payment Instructions The instructions given by the customer to the bank regarding the stop payment of a particular cheque giving full details of the cheque and to exercise proper precaution in the matter.and Rs.

New Delhi. Stop Payment-Cheque No. Yours faithfully. rent or for any other purpose then they are called STANDING INSTRUCTIONS. There are some important pre-requisites for standing instructions and they are as follows: 1. Accounts Assistant STANDING INSTRUCTIONS: When any customer requests his bank in writing for making certain payments on regular basis for insurance premium. amount and name of payee. 2. The customer should specify the amount to be paid by the bank so that it could be easily remitted every month. For XYZ Ltd. Dear Sir. Mention the date and time of writing the letter to the bank on the letter.1. Ansari Road Delhi Ref. The bank should be given an authority to debit the customer’s account. The payment to be remitted or effected by the bank should be at regular intervals – weekly. In banks there are generally printed forms for carrying out standing instructions. 3. Explain the reason for the stop payment. Customer’s request for Stop Payment of a Cheque XYZ LTD. whether lost or misplaced or the payment to be withheld. 5. 456 with you. . 5000/. 5. 5.favouring M/s ABC Consulting Services issued in our current account No. Please acknowledge receipt. 450623 dated 21st March 2007 for Rs. etc. The customer should have account in the bank – current account or saving account in giving standard instructions. Give a firm request to stop its payment and for the proper precautions be taken to deal with this matter. date. Request the bank to acknowledge the receipt of your letter for future reference. 3. There has to be sufficient credit balance so as to enable Bank to debit the amount and remit. 5000/We request you to kindly stop the payment of our cheque no. Tilak Nagar Branch.:XYZ/bank/245 20th March 2007 The Manager. 4. Bank of India. 2. 450623 dated 21st March 2007 of Rs. It is not possible for the bank to remit the different amounts every month. 4. The exact particulars of the cheque must be given such as cheque number.

fortnightly. 3.5000/. Customer giving Standing Instructions for Payment of Shop Rent and School Fees Dated………… The Branch Manager. name of payee etc. Vijay of Class IV .On or before 15th of School Fees of Master Ram Nagar. Nehru Place. 23123 with your branch: Name of Payee Amount Date On A/c of 1. Union Bank of India. The customer should give his account number and put his signatures as on bank’s record so that the bank is authorized to debit account and effect remittance. 4.D School Rs. They are very useful in those cases where regular payments of the same amount are to be made through the bank. Ravi Kumar Rs. Principal – S. It may results in undesired complications and problems to the customer. Mr. Karol Bagh. It saves customer’s time and botheration of visiting bank and gi ving letters every time. period date of payment. N. Disadvantages of Standing Instructions: 1.Delhi 2. 1200/. 3. There are times when payments are delayed due to rush of work with the bank or due to their staff’s negligence. monthly or quarterly. Re: Standing Instructions Kindly arrange to pay the following amounts to debit of my saving bank account No.Delhi every month. The customer should assure the bank that he will maintain sufficient credit balance in his saving or current account on or before the due date. They ensures timely regular payment of amount and avoids any delay because the bank effects the payment on due date every time automatically. The customer should give complete details about the payments like policy number. They are of no use where sufficient or adequate credit balance cannot be arranged or maintained by the customer because in such case the standing instructions cannot be implied by the bank. Advantages of Standing Instructions: 1.On or before 10th of Rent for shop – every month. New Delhi Dear Sir. 2. 2. Essentials for drafting Standard Instructions: 1. specific amount. N. 2. The customer should request the bank for making payments on his behalf.

L. Please acknowledge receipt. Yours Faithfully. Please make the payments regularly through my account. (M. If there are any extra bank charges then they can also be debited from account.I assure you to maintain sufficient credit balance in my above mentioned account on or before the date’s of payment.MUNSHI) .