Study Material on KYC, Internal Controls and Preventive Vigilance

Study Material on
-

KYC, Internal Control &
Preventive Vigilance
,

IT 1581

STAFF TRAINING COLLEGE
BANGALORE

Staff Training College
No.29, K.R. Road
BANGALORE : 560 004

V K Shukla
General Manager and Principal Dated: 02
nd
April 2012

FOREWORD

My dear colleagues,

Hearty welcome to this program on KYC, Internal Control and Preventive Vigilance.
The Banking Industry right from the commencement of its banking activities has witnessed a
transition phase often found to be vulnerable for attacks from criminal elements because of
technological advancements and instantaneous access to information. People have several
resources to plan to build up unhealthy banking activities with ill motives to deceive the Bank.
Hence in the present Banking scenario compliance to KYC norms and its effective
implementation before entertaining any request for opening of new accounts and sanction of
any loan / limits is treated as an essential factor which will go a long way in curtailing the
untoward incidences in the banking industry. It is therefore essential to have full knowledge
about the customers to safeguard the interest of the Bank. At the same time, it is also necessary
to have an apt attention on our Internal Control with special reference to Bank securities and
also maintenance of cordial working atmosphere at the place of work. Further there is also need
to be vigilant against such fraudulent attempt being made by criminal elements which should be
borne in mind from the preventive vigilance angle.
This comprehensive study material will give an insight into the whole gamut of the concept on
KYC, Internal Control and Preventive Vigilance and I am sure that the contents will benefit all
the readers.
Wish you all the best,

V K Shukla
General Manager and Principal

STAFF TRAINING COLLEGE, BANGALORE
1

CONTENTS

SL NO PARTICULARS PAGE NO.
1 KYC / AML 02
2 RTI ACT 2005 13
3 The Banking Ombudsman Scheme, 2006 15
4 Compliance 19
5 Internal Control and House Keeping 24
6 CASH Features of genuine Notes 36
7 Facility for Exchange of notes and coins 38
8 Detection and Impounding of Counterfeit Notes 41
9 Prevention of Frauds 44
10 Preventive Vigilance 48
11 Banking Codes and Standards Board of India 53
12 G L Concepts 74
13 CBS Reports 78
14 R B I A 87
15 Government Business 93

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CHAPTER - 1
Know Your Customer and Anti Money Laundering
KYC should be the core feature of Banks Risk Management and control procedure and be
complemented by regular compliance reviews, internal audit and IS audit. As the Customer is
the central theme to KYC norms, the guidelines are listed with the definition of Customer taking
precedence. The objective of KYC guidelines is to prevent Bank from being used, intentionally
or unintentionally, by criminal elements for money laundering activities.
CUSTOMER: Definition: For the purpose of KYC, a "Customer" may be defined as:
A person or entity that maintains an account
One on whose behalf the account is maintained (i.e. beneficial owner).
beneficiaries of transactions conducted by professional intermediaries, such as stock
brokers, chartered accountants, solicitors, etc. as permitted under the law
Any person or entity connected with a financial transaction which can pose significant
reputational or other risks to the Bank, say, a wire transfer or issue of a high value demand draft
or a single transaction. KYC norms are applicable for:
Deposit accounts (All time and demand deposits)
Borrowal clients (Individual and corporate) (Cir 286/2004, 282/2006, 82/2008)
Safe deposit lockers. (Cir 53 /2006)
Money changing transactions (ID Cir 22/2008)
Non resident investor making Foreign Direct Investment (Id 42/2008)
All importers / Exporters
RTGS / NEFT / Nepal remittance scheme
Banking correspondents & facilitators
Mobile Banking
Credit / debit / gift / smart cards and marketing agents thereof.

Risk Perception in respect of Customer: Low Risk Customers (Level 1 customers):
a) Salaried employees b) Government Departments
c) Regulatory and Statutory bodies, etc. d) Government owned companies
e) People belonging to lower economic strata of the society
Proper introduction, identification and verification of proof of address would suffice for KYC
requirements.
Medium Risk Customers (Level 2 customers): (a) High net worth individuals (b) Non-
Resident customers (c) Blind and Pardhanishin woman

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Higher due diligence is required which includes customers background, nature and location of
activity, country of origin, source of funds and his/her client profile, etc..
High Risk Customers (Level 3 customers):
a) Trusts, charities, NGOs and organizations
receiving donations
e) Companies having close family
shareholding or beneficial ownership
b) Politically exposed persons (PEPs) of
foreign origin
f) Accounts under Foreign Contribution
Regulation Act
c) Accounts of non-face-to-face customers, g) Those with dubious reputation as per
public information available
d) Firms with sleeping partners h) High Networth NR Accounts
i) Bullion Dealers (Including Sub-Dealers) &
Jewelers (Cir 6/2011)
Higher due diligence is required which includes customers background, nature and location of
activity, country of origin, source of funds and his client profile, etc.
The categorization of customers under risk perception is only illustrative and not exhaustive.
The branches to categorise according to the risk perceived by them. As per RBI guidelines
review of risk category should be carried out once in 6 months.
For further details regarding INDICATIVE LIST OF HIGH & MEDIUM Risk Customers/Product &
Services/ Geographies please refer Cir No. 333/2011.
MONEY LAUNDERING: Definition
Section 3 of The Prevention of Money Laundering Act, 2002 (PMLA) defined as "Whoever
acquires, owns, possesses or transfers any proceeds of crime; or knowingly enters into any
transaction which is related to proceeds of crime either directly or indirectly or conceals or aids
in the concealment of the proceeds or gains of crime within India or outside India commits the
offence of money laundering."
The essential ingredients are: a) a crime has been committed b) there are proceeds of or gains
from the crime; and c) There is a transaction in respect of the proceeds of the gains.
Punishment under PMLA: with rigorous imprisonment for a term not less than 3 years and may
extend to 7 years.
Punishment under Narcotic Drugs and Psychotropic Substance: upto 10 years instead of 7
years
Know Your Customer" Standards: The four main pillars on which the KYC norms of the
Bank rests are:

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a) Customer Acceptance Policy b) Customer Identification Procedures
c) Monitoring of Transactions d) Risk Management
1. Customer Acceptance Policy - Proper Introduction of accounts:
Proper introduction is to be ensured.
The introducer should have maintained a satisfactorily operated account at least for the past
12 months prior to the date of introducing the new account.
If an existing A/c holder intends to open another A/c with a different branch, care should be
exercised and the guidelines mentioned Manual of Instruction on CASA should be adhered
to.
Send Thanks Giving letter in NF.154 should to both the introducer and the new A/ct holder.
This is equally applicable in case of conversion of individual deposit account to joint
accounts also
Wherever Thanks giving letter in NF 154 sent is returned undelivered, branches should
immediately take appropriate action to safeguard the interest of the Bank. Branches can
mark High Severity memo in option CIM 13 (or) BA437 in CBS (Cir No 86/2012)
Opening a new A/c should be authorized only by the Manager.
In case of joint account, specimen signature card should be obtained separately and the
mode of operation should be noted in red ink on the top of the card and should be checked
and initialed by the Supervisor
Ensure while accepting the cheque for collection, the name mentioned in the challan and
name of the beneficiary of the instrument are same.
Prior permission from consortium is required for opening of Current A/c by non consortium
Bank.
Accounts under Foreign Contribution Regulation Act,1976 (FCRA): Certain categories of
individuals and organizations (such as an association having a definite cultural, economic,
educational, religious or social programme, Trust/NGO/CHARITIES/ (Cir No. 356/2009)) are
required to obtain prior permission from the Central Government (Secretary, Ministry of Home
Affairs, GOI, New Delhi) to receive "Foreign Contributions" or accept "Foreign Hospitality" and
such receipts/acceptance require reporting to the Government as per the Act.

Individuals/Organizations who cannot receive foreign contributions : candidate for
election , correspondent, columnist , cartoonist, editor, owner, printer or publisher of a registered
newspaper, judge, Government servant or employee of any corporation, member of any
legislature, political party or office bearer thereof.
2. Customer Identification Procedure
Need for photographs and address confirmation: Obtain Pass port size/stamp size
photograph of the depositors / NRI depositors.

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Obtain photographs of the authorised signatories in case of minors, joint accounts, partnership
accounts, accounts of societies, clubs, associations, public/private limited companies, HUF,
trusts, etc. In case of Letter of authority holders duly attested by the depositors.
In case of change in the authorised signatories, countersignature by the competent authorities
of the concerned institutions/ organizations on the photos of the new signatories to be obtained.
Documents that are normally relied upon as proof of customers address: A Xerox copy
of any of the following documents duly verified with originals should be obtained.
Accounts of individuals
a) Driving License
b) PAN / Voters identity card
c) Identity Card containing the address
issued by the employer
d) Original letter of introduction from the
existing Bank
e) Arms license issued by Government
authority with photograph of applicant
f) Pension book issued Government Of
India with photograph of applicant
containing name, address and validity
period
g) Freedom fighters pass issued by Home
Ministry of GOI with photograph of
applicant
h) Ration Card also (175/09)
i) AADHAR
j) Passport
k) Rent receipt
l) Telephone/Electricity Bills
m) Municipal/Assessment Order
n) Income Tax Assessment Order
o) Latest statement of account from a credit
card issuing company
p) Latest premium receipt from any life
insurance company
q) Current lease Agreement or leave and
license agreement for flat/house
r) Certificate from the ward officer maintaining
election roll, certifying the address of the
applicant
s) Latest certificate from the post office
confirming the address of the applicant
t) Any other document or proof to the
satisfaction of the Manager
u) NREG CARD (42/2011)

Accounts of companies:

a) Copy of Certificate of incorporation and
M / A and A / A
b) Resolution of the Board of Directors
c) Copy of PAN allotment letter
d) Address proof
e) Identification of the person who operate the
account
f) Power of Attorney granted to its managers,
officers or employees to transact business
on its behalf

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Accounts of Partnership firms

Registration certificate, if registered
Partnership deed
Identification all partners
Address proof of the firm
Power of Attorney granted to a partner
or an employee of the firm to transact
business on its behalf
Identification of POA Holder

Accounts of trusts and foundations
Certificate of registration, if registered
Power of Attorney to transact business on its behalf
Any officially valid document to identify the trustees, settlers, beneficiaries and those holding
Power of Attorney, founders/managers/directors and their addresses
Resolution of the managing body of the foundation/association
Telephone bill
Proprietary concern :

i) Proof of the name, address and activity of the concern, like registration certificate (in the
case of a registered concern), certificate / licence issued by the Municipal authorities under
Shop & Establishment Act, sales and income tax returns, CST / VAT certificate, certificate /
registration document issued by Sales Tax / Service Tax / Professional Tax authorities, Licence
issued by the Registering authority like Certificate of Practice issued by Institute of Chartered
Accountants of India, Institute of Cost Accountants of India, Institute of Company Secretaries of
India, Indian Medical Council, Food and Drug Control Authorities, etc.
ii) Any two of the cited documents would suffice. These documents should be in the name of
the proprietary concern.
The Bank shall treat the information collected from the customer for the purpose of
opening of account as confidential and not divulge any details thereof for cross selling
or any other purposes.
As per RBI guidelines banks should periodically update the customer identification data
(including photo) as below:
Once in 5 years for low risk category customers &
Once in 2 years for high & medium risk categories.
Where Bank finances clients for purchase of landed property or for purchase of flats from
individuals, it is advisable to carry out KYC procedures on such sellers of the property also, in
addition to the existing pre sanction guidelines relating to KYC. (Cir.153/11)

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3. Monitoring of Transactions
A close and intelligent watch over the newly opened accounts, especially during the first six
months is to be exercised in allowing operations therein, particularly, those involving huge
deposits and withdrawals.. Transactions disproportionately large to the occupation or line of
business of the account holder may be enquired from them.
DDs for Rs.50, 000/- & above should be issued only by debit to the customers account or
against cheques or other instruments tendered by the purchaser and not against cash payment.
Payment of DDs for Rs.50,000/- and above, should be made through banking channels and not
in cash.
Monitoring of cash withdrawal and deposits of Rs.10 lakhs and above in deposit
accounts, Cash Credit Account , OD account etc. :
To comply with RBI guidelines, all our branches are requested to record the Cash deposits and
cash withdrawals for Rs.10 lacs & above in deposit accounts and also in all other accounts like
overdraft, cash credit etc., in a register. A fortnightly statement furnishing the details of
transactions so recorded, to be submitted to ROs concerned.
While furnishing the information, branches are required to undertake due diligence in
respect of proper identification of customers as well as unusual transactions in the
accounts.
Monitoring Large Value Transactions
In addition to regular monitoring of operations in cash credit/overdraft accounts, a scrutiny of
each drawal of Rs.25 lacs and above is to be made in case of all large borrowal accounts and
ensure before allowing such drawal that the amount is drawn for purposes for which credit
facility has been sanctioned.
RBI has forwarded a copy of Ministry of External Affairs order dated November 4, 2011
published in the Gazette of India on implementation of United Nations Security Council
Resolution 1929(2010). RBI has advised that utmost care should be taken to ensure to cross
check all account opening applications and transactions carried out in the existing accounts with
the list of individuals/entities enlisted in the Gazette and report those accounts to Reserve Bank
of India and Financial Intelligence Unit- India which bear resemblance with the individuals /
entities listed therein. ( CIR 54/2012)
4. Risk Management
The inadequacy or absence of KYC may lead to reputational, operational, legal and
concentration risks and in turn may result in significant financial cost to the Bank as well as the

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need to divert considerable management time and energy to resolving problems that arise. It is
worth noting that all these risks are interrelated.
In case party does not co-operate for complying KYC guidelines, the account to be closed after
giving due notice. (175/09).
If existing account holder becomes a politically exposed person (PEP) on a later date, he / she
should be subjected to due diligence as per PMLA 2009 (21 OF 2009) WEF 01.06.2009
(328/09).
RBI has stipulated 100% KYC compliance for all accounts. Branches to examine KYC
compliance of all existing accounts and identify KYC non-compliant accounts.
The accounts which still remain KYC non-compliant because of the non submission of
documents by the customers have to be monitored and followed up for compliance at the time
of subsequent operations in the accounts, by maintaining remarks in the system
The risk categorisation of accounts are to be reviewed with enhanced due diligence measures
in case of high-risk category customers periodicity of not less than once in six months. To
comply with this instruction, following are advised:
Review risk categorisation of accounts once in SIX months as on 15
th
of May and November
at base branch.
Alert report generated by the system to be reviewed on daily basis.
In CBS modification of Risk Category to be done by Fast Path CIM50.
Threshold Limit: The customer has to mention the anticipated level (turnover) of
activity/threshold limit of transaction intended in his account. This will be the maximum limit for
each transaction. The threshold limit has to be incorporated in the account master. In CBS
environment Fast Path 8051 for new CASA account opened and for existing or for modification
in FP CH021.
The system will generate report of transactions that exceed threshold limits during the day end
process and the same is to be scrutinised by the branch-in charge.
List of terrorist Individuals and organizations updated consolidated list available in CANNET
(30/09):
Other Guidelines
Record keeping
Basel Committee on banking supervision requires that financial institutions should maintain, for
at least five years, all necessary records on transactions, both domestic and international, to
enable them to comply swiftly with information requests from the competent authorities. Such

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records must be sufficient to permit reconstruction of individual transactions so as to provide, if
necessary, evidence for prosecution of criminal behaviour.
Records of transactions to be maintained for at least ten years from the date of transaction,
instead of ten years from the date of cessation of transactions, and records pertaining to
identification of the customer and his address to be preserved for at least ten years after the
business relationship is ended.
In the event of an existing customer subsequently becoming a politically Exposed Person (PEP)
the decision to continue the business relationship has to be taken by branch head in branches
headed by Scale IV and above. For all other branches, the decision is to be taken by the
executive overseeing MIPD & PP Section of the respective Circle Office.
Maintenance of records of transactions (nature & value) (172/2010):
(1) The following types of record of transaction shall be maintained as per Rule 3 of PMLA
Rule:
(A) all cash transactions of the value of more than rupees ten lakhs or its equivalent in foreign
currency;
(B) all series of cash transactions integrally connected to each other which have been
valued below rupees ten lakhs or its equivalent in foreign currency where such series of
transactions have taken place within a month;
(BA) all transactions involving receipts by non-profit organisations of value more than
rupees ten lakh, or its equivalent in foreign currency;
(C) all cash transactions where forged or counterfeit currency notes or bank notes have
been used as genuine or where any forgery of a valuable security or a document has taken
place facilitating the transactions;
(D) all suspicious transactions whether or not made in cash and by way of
(i) deposits and credits, withdrawals into or from any accounts in any currency maintained by
way of : a) cheques including third party cheques, pay orders, demand drafts, cashiers cheques
or any other instrument of payment of money including electronic receipts or credits and
electronic payments or debits, or (b) travellers cheques, or (c) transfer from one account within
the same banking company, financial institution and intermediary, including from or to Nostro
and Vostro accounts, or (d) any other mode in whatsoever name it is referred to;
(ii) credits or debits into or from any non-monetary accounts such as d-mat account, security
account in any currency maintained;

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(iii) money transfer or remittances in favour of own clients or non-clients from India or abroad
and to third party beneficiaries in India or abroad including transactions on its own account in
any currency by any of the mode specified in Cir 172/2010
(iv) loans and advances including credit or loan substitutes, investments and contingent liability
by way of subscription to debt instruments such as commercial paper, certificate of deposits,
purchase and negotiation of bills, cheques and foreign exchange contracts, currency, interest
rate and commodity and other derivative instrument, LCt, standby LC, BF, comfort letters,
solvency certificates and any other instrument for settlement and/or credit support;
(v) Collection services in any currency by way of collection of bills, cheques, instruments or any
other mode of collection in whatsoever name it is referred to."
(vi) Attempted transactions by Customers are to be reported under Suspicious Transaction
Reports (STRs) even if the transactions are not completed by Customers irrespective of the
amount of the transaction (314/2011)

Not reporting the suspicious transactions is a serious offense and can land the bank and branch
in-charge into trouble. Non reporting of such suspicious transactions will be treated as a major
misconduct and will invite disciplinary action.
The Circle Heads and the Overseeing Executives should also randomly check / verify the cash
transactions / reporting of suspicious transactions by the branches during their periodical branch
visits and confirm that branches are adhering to the guidelines issued by the Bank in their
Branch Visit reports. (397/2009).

Vide Cir.16/2012 dt 12/01/12 existing system of processing of STR alerts has been modified wef
01/02/2012 as follows:
1. Circle Offices to centrally process the alerts pertaining to their branches and escalate
suspicious transactions, if any, to KYC Cell, Inspection Wing, HO for review and submission of
STRs to FIU-IND, Delhi.
2. The Managerin-charge of BS&IC Section at Circle would be the Anti Money Laundering
Officer (AMLO). The Executive overseeing BS&IC Section would be the Money laundering
Reporting Officer (MLRO)
3. KYC Cell, Inspection Wing, HO would review the alerts escalated by the Circles as suspicious
transactions and submit STRs wherever required to FIU-IND (as per existing guidelines)
Circle Office to ensure the followings:

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BS&IC Section, Circle Office, which is presently monitoring AML alerts, to start processing
STR alerts pertaining to their branches from 01/02/2012.
Circle Offices to nominate AMLO and Officer/s to form the AML team, to assist the
AMLO/MLRO (Overseeing Executive). The details of such persons nominated is to be
informed to KYC Cell, Inspection Wing, H.O.
BS&IC Section to place an Office Note/Report to the Circle Head before 5th of the
succeeding month, on the status of the alerts generated, dropped and escalated to H.O
during the previous month, for his review.
A report of dropped STRs and escalated STR alerts is to be preserved at Circle Office in
the System.
Circles to ensure that the alerts are attended / processed on daily basis and there shall not
be any pending position or backlog at any point of time at Circle level

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Financial Action Task Force (FATF)
(IO/17/2012)
I. The Financial Action Task Force (FATF) is the global standard setting body for anti-money
laundering and combating the financing terrorism (AML/CFT).
II. In order to protect the international financial system from Money Laundering (ML) /
Financing Terrorists (FT) risks and to encourage greater compliance with the Anti Money
Laundering (AML) / Counter Financing Terrorists (CFT) standards, the FATF identifies
countries / jurisdictions that have strategic deficiencies and works with them to address
those deficiencies that pose a risk to the international financial system.
III. The FATF reviews the countries /jurisdictions on the basis of their level of commitment in
combating money laundering /financing terrorist activities.
IV. The list of countries/jurisdictions are reviewed and updated periodically by FATF and
communicated to member countries.
V. FATF has classified countries /jurisdictions broadly under following three categories:
A. List of countries / jurisdictions in respect of which FATF member countries are called
upon to apply counter measures to protect international financial system,
B. Countries / jurisdictions with strategic AML/CFT deficiencies that have not made sufficient
progress in addressing the deficiencies or have not committed to an action plan developed with
the FATF to address the deficiencies. The FATF calls on its members to consider the risks
arising from the deficiencies associated with each jurisdiction in respect of following countries
and
C. Countries / jurisdictions which have strategic AML/CFT deficiencies for which they have
developed an action plan with the FATF. While the situations differ among each jurisdiction,
each jurisdiction has provided a written high-level political commitment to address the identified
deficiencies.
Branches/offices are advised not to allow any remittance directly or indirectly to the non co-
operative countries mentioned in para V (A), under the Liberalized Remittance Scheme made
available to resident individuals.
WE SHOULD EXERCISE MORE CAUTION WHILE HANDLING TRANSACTIONS
INVOLVING COUNTRIES LISTED BY FINANCIAL ACTION TASK FORCE (FATF) AND
TAKE INTO ACCOUNT RISKS ARISING FROM DEFICIENCIES IN AML/CFT REGIME OF
THESE COUNTRIES .

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CHAPTER 2

RIGHT TO INFORMATION ACT, 2005

1) The RTI Act has come into force from 15.06.2005
2) Public Information Officer means an Officer designated by the Bank under the Act to
provide information to the public.
3) All our Branch Heads are designated as Assistant Public Information Officers to
receive the RTI application and to forward the same to the Public information Officers of
the Circle as per Section 5 (2) of RTI Act, 2005 (HO cir 336/2010).
4) Information under the Act means any material in any form, including records, memos, e-
mail, opinions, advices, press release, circulars, orders, log books, contracts, reports,
papers, samples, models, data materials held in electronic format
5) Who are entitled to the Right to Information I under the RTI Act?

Any citizen of India to get the Right to Information
6) A person who desires to obtain any information under the Act, shall make a request in
writing or through electronic means accompanied by requisite fees (Rs. 10/- as per HO
Cir.336/2010). If oral request is given, reasonable assistance to be given to the person to
reduce the same in writing.
7) The applicant is not required to furnish any reasons for requesting the information.
8) If the information sought pertains to other Circle Office, same is to be transferred
concerned office immediately but not later than 5 days.
9) Time period of disposal of application: Expeditiously but not later than 30 days from the
date of receipt of such request. Otherwise it shall be deemed to be refused. Later such
information shall be given free of cost.
10) The aggrieved person may prefer an appeal within 30 days from the date of receipt of such
decision to the Chief Information Officer appointed at HO who will be Appellate Authority.
Second appeal may be preferred within 30 days of receipt of such decision from AA to
Central Information Commission.
11) The Public Information Officers at Circle Offices to dispose of the RTI applications received
at their office and by the branches coming under their jurisdiction at their level itself without
referring to PIO at RIA Section at Head Office for vetting the draft replies.
12) Penalty Rs. 250 /- per day max. of Rs. 25000/-
13) No suit, legal proceeding etc can be initiated against any person for anything done or
intended to be done in good faith under the RTI Act or any rules made there under.

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OTHER GUIDELINES (HO Cir 336/2010 dt. 24.09.2010)

All Canara Bank branch Heads are nominated as Assistant Public Information Officers
(APIO) to receive the RTI application.
The Application should be to forward to the PIO of the concerned CO within 2 days from
the date of receipt
Fee ofRs.10/- received may be credited to their Commission Misc account and the fact of
the receipt of the RTI application fee should be informed to the PIO in their forwarding
letter to the Circle Office.
Applicants belonging to BPL category are exempted from paying application fees. A copy of
the BPL/Antyodaya ration card issued by the competent authority may be insisted to waive
the application fee.
RTI reply should contain Clause (mandatory) relating to preferring an appeal before
Appellate Authority if the person is not satisfied with the reply
The reply to the applicant should be sent under the signature of the PIO duly mentioning
the name of the PIO and his / her designation.
If the party's request letter is in vernacular language of the region, the reply may be given in
that vernacular language. For RTI application in Hindi, reply should be in Hindi only.
Such of the applications wherein the information sought by the applicant relates to Policy
matter or held by the concerned Wing at Head Office and where PIO feels specific
guidance from H.O. is needed, may be sent to PIO, RIA Section, S P & D Wing, Head
Office, Bangalore within 7 days from the date receipt for getting the contents of the draft
reply and to reply to the applicant within the time frame under RTI Act. 2005.
If the applicant has not submitted the RTI application fee in the prescribed mode (Cash
against receipt/DD/PO/Indian Postal Order) such applications are to be retuned back to
the applicant requesting him / her to submit the RTI application afresh along with the fee in
the prescribed mode of payment.
Where the information sought for concerns the life or liberty of a person, the same shall be
provided within forty eight hours of the receipt of the request.
The intervening period between the dispatch of the said intimation and payment of fees
shall be excluded for the purpose of calculating the period of thirty days for furnishing the
information as referred to in the RTI Act, 2005.

PIOs should submit monthly statement and one Annual Statement of RTI applications received
and disposed and fee collected to RIA Section, SP&D Wing, Head Office, Bangalore in the
prescribed format to enable the Head Office to send a consolidated statement to the
Ministry of Finance, Government of India on or before 15th of every month

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CHAPTER 3

THE BANKING OMBUDSMAN SCHEME, 2006

Objects:

To enabling resolution of complaints relating to certain services rendered by banks and to
facilitate the satisfaction or settlement of such complaints.

The RBI to appoint Chief General Manager or General Manager to be known as Banking
Ombudsmen (BO) for a period of not more than 3 years and The RBI specify the territorial limits
to which the authority of each BO appointed shall extend.

The RBI to specify the location of the office of the BO. The BO may hold sittings at such places
within his area of jurisdiction as may be considered necessary and proper by him in respect of a
complaint or reference before him.

POWERS AND JURISDICTION The BO shall :

receive and consider complaints relating to the deficiencies in banking or other services
filed on the grounds mentioned hereunder and
facilitate their satisfaction or settlement by agreement or through conciliation and mediation
between the bank concerned and the aggrieved parties or by passing an Award in
accordance with the Scheme.

GROUNDS OF COMPLAINT

(1) Any person may file a complaint with the BO having jurisdiction on any one of the following
grounds alleging deficiency in banking including internet banking or other services.
(a) non-payment or inordinate delay in the payment or collection of cheques, drafts, bills
payment of inward remittances etc.;
(b) non-acceptance, without sufficient cause, of small denomination notes/coins tendered for
any purpose, and for charging of commission in respect thereof;
(c) failure to issue or delay in issue of drafts, pay orders or bankers cheques;
(d) non-adherence to prescribed working hours ;
(e) failure to provide or delay in providing a banking facility (other than loans and advances)
promised in writing by a bank or its direct selling agents;
(f) delays, non-credit of proceeds to parties' accounts, non-payment of deposit or non-
observance of the Reserve Bank directives, if any, applicable to rate of interest on deposits
in any savings, current or other account maintained with a bank ;

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(g) complaints from Non-Resident Indians having accounts in India in relation to their
remittances from abroad, deposits and other bank related matters;
(h) refusal to open deposit accounts without any valid reason for refusal;
(i) levying of charges without adequate prior notice to the customer;
(j) non-adherence by the bank or its subsidiaries to the instructions of Reserve Bank on
ATM/Debit card operations or credit card operations/ the provisions of the Code of BCSBI
and as adopted by the bank
(k) non-disbursement or delay in disbursement of pension (to the extent the grievance can be
attributed to the action on the part of the bank concerned, but not with regard to its
employees);
(l) refusal to accept or delay in accepting payment towards taxes, as required by Reserve
Bank/Government; or refusal to issue or delay in issuing, or failure to service or delay in
servicing or redemption of Government securities;
(m) forced closure of deposit accounts without due notice or without sufficient reason or refusal
to close or delay in closing the accounts;
(n) non-observance of Reserve Bank guidelines on engagement of recovery agents by banks;
(o) any other matter relating to the violation of the directives issued by the Reserve Bank in
relation to banking or other services.
(2) A complaint on any one of the following grounds alleging deficiency in banking service in
respect of loans and advances may be filed with the BO having jurisdiction:

(a) non-observance of RBI Directives on interest rates/ RBI guidelines on engagement of
recovery agents by Banks/ any other guidelines by RBI;
(b) delays in sanction, disbursement or non-observance of prescribed time schedule for disposal
of loan applications;
(c) non-acceptance of application for loans without furnishing valid reasons to the applicant; and
(d) non-adherence to the provisions of the fair practices code for lenders as adopted by the
bank or Code of Bank's Commitment to Customers, as the case may be;
(3) The BO may also deal with such other matter as may be specified by the RBI from time to
time in this behalf.

PROCEDURE FOR FILING COMPLAINT:

1. make a complaint in writing or through electronic mode (a printout shall be taken on the
record of the BO) by any aggrieved person or through his authorized representative (other
than an advocate), alongwith copies of documents to the BO comes under concerned
jurisdiction. The complaints received by GOI or RBI will also forwarded to BO for redressal.

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Complaints relating operations of credit cards and other types of services with centralized
operations, shall be filed before the BO within whose territorial jurisdiction the billing address
of the customer is located.

2. The complaint shall be in the prescribed form stating clearly:
a. the name and the address of the
complainant,
b) the name and address of the branch or
office of the bank against which the
complaint is made,
c) the facts giving rise to the complaint,
d) the nature and extent of the loss caused
to the complainant, and
e) the relief sought for.

3. No complaint to the BO shall lie unless:-
(a) (i) the complainant had made a written representation to the bank earlier and rejected
the same or
(ii) the any reply is received within a period of 1 month after the bank received his
representation or
(iii) the complainant is not satisfied with the reply given by the bank;
(b) the application is made withing one year from the date of receipt of reply or one year one
month from the date of representation to the Bank and no reply is received for the same.
(c) the complaint does not pertain to the same cause of action, for which any proceedings
before any court, tribunal or arbitrator or any of the forum is pending or a decree or Award or
order has been passed by any such court, tribunal, arbitrator or forum;
(d) the complaint is not frivolous or vexatious in nature; and
(e) the complaint is made before the expiry of the period of limitation for such claims.
SETTLEMENT OF COMPLAINT BY AGREEMENT:

Depending upon circumstances the BO shall send a copy of complaint to Bank and
endeavour to promote a settlement of the complaint by agreement between the complainant
and the bank through conciliation or mediation. The proceedings before the BO shall be
summary in nature.

AWARD BY THE BANKING OMBUDSMAN

1. If it is not settled by agreement within a period of 1 month from the date of receipt of the
complaint or such further period as the BO may, pass an Award or reject the complaint
2. The award contains the direction/s to the bank for specific performance of its obligations / the
amount, if any, to be paid by the bank by way of compensation for any loss.

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3. The BO shall not have the power to pass an award directing payment of an amount which is
more than the actual loss suffered by the complainant as a direct consequence of the act of
omission or commission of the bank, or Rs.10 lakhs whichever is lower.
4. In the case of complaints, arising out of credit card operations, the BO may also award
compensation not exceeding Rs. 1 lakh to the complainant, depending upon loss of time,
expenses, harassment and mental anguish suffered by the complainant.
5. An award shall lapse and be of no effect unless the complainant furnishes to the bank
concerned within a period of 30 days from the date of receipt of copy of the Award, a letter of
acceptance of the Award in full and final settlement of his claim.
6. The Bank shall, an appeal under is preferred within 1 month from the date of receipt by it of
the acceptance in writing of the Award by the complainant, comply with the Award and
intimate compliance to the BO.
REJECTION OF THE COMPLAINT : May reject a complaint on the following grounds

a) not on the grounds of complaint referred to above
b) beyond the pecuniary jurisdiction of the Banking Ombudsman prescribed above
c) requiring elaborate documentary and oral evidence and the proceedings before the BO and
not appropriate for adjudication of such complaint; or
d) without any sufficient cause; or
e) that it is not pursued by the complainant with reasonable diligence; or
f) in the opinion of the Banking Ombudsman there is no loss or damage or inconvenience
caused to the complainant.

APPEAL BEFORE THE APPELLATE AUTHORITY:

Within 30 days of the date of receipt of communication of Award or rejection of complaint, may
prefer an appeal before the Appellate Authority;

BANKS TO DISPLAY SALIENT FEATURES OF THE SCHEME FOR COMMON KNOWLEDGE
OF PUBLIC.

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CHAPTER 4

COMPLIANCE (270/2011)
I. INTRODUCTION

1.1. The environment in which banks operate requires familiarity with a growing number of
complexities of regulations, as well as increasing risk management. Banking has witnessed a
sea change worldwide during the last couple of decades. Some of the major changes witnessed
are:

a) Diversification of business lines within large groups as a consequence of partnerships and
expanding business geographies.

b) Multi-faceted expansion of activities of financial institutions necessitating adherence to
diverse legal / regulatory requirements.

c) Growth of complex banking products and new sophisticated instruments over recent years.
Also, increase in the number of structured finance deals, such as third party securitization
etc.

d) Increase in the range of products on offer for various categories of customers.

e) Widening of the geographical area in which banks are operating and accepting risks.

f) Increase in the number of economic agents with whom banks have to deal with and recent
trend towards outsourcing of banking activities.

g) Fierce competition amongst banks, resulting in further profitability constraints.

1.2. The overall outcome has been an increase in and diversification of the risks faced by
banks, against the background of continually evolving legislation. As a consequence, banks are
required to exercise a very high degree of vigilance, so as to ensure that their operations
comply with the relevant rules and standards.

1.3. The Basel Committee on Banking Supervision (BCBS) document on Compliance Function
(April 2005) essentially articulates that Compliance function in banks is one of the key elements
in the Banks' corporate governance structure. The compliance function in banks has to be
adequately enabled and made sufficiently independent.

1.4. Keeping the above aspects, RBI had issued the final guidelines on 20.04.2007 vide
DBS.CO.PP.BC.6/11.01.005/2006-07 dated 20.04.2007, advising the banks for its
implementation within a time frame of 6 months from the date of the circular.

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II. COMPLIANCE FUNCTION - DEFINITION

2.1. Reserve Bank of India defined Compliance Risk as:
"The risk of legal or regulatory sanctions, material financial loss or loss to reputation a bank may
suffer as a result of its failure to comply with laws, regulations, rules, related self-regulatory
organization standards and codes of conduct applicable to its banking activities".

Compliance risk can be broadly classified into Legal, Regulatory and Reputation Risks.

2.2. Legal Risk :

Legal Risk is the risk arising from failure to comply with statutory or regulatory obligations. Legal
Risk arises from uncertainty due to legal actions or uncertainty in the applicability or
interpretation of contracts, laws or regulations.

Legal Risk arises from the potential that unenforceable contracts, lawsuits or adverse judgments
can disrupt or otherwise negatively affect the operations or condition of a banking organization.
Legal Risk may expose the bank to fines penalties or punitive damages resulting from
regulatory actions, as well as private settlement.

2.3. Regulatory Risk:

Regulatory Risk refers to the potential consequences to the general public and the bank of non-
compliance with the regulation. Factors under this risk include financial harm to consumers;
legal, reputation and financial harm to a bank; new laws, regulations, or amendments thereof;
historical industry compliance; and the burden of corrective action, including potential civil and
financial liability. The risk inherent in the consumer protection laws and regulations fluctuates in
relation to changes in legislation, or market and public policy considerations. In establishing or
evaluating a compliance program, the regulation risk that accompanies theproducts is also
considered.

2.4. Reputation Risk:

Reputation Risk is the risk that gives negative publicity regarding bank's business practices,
which shall lead to a loss of business, revenue or involve the bank in litigation.

3 OBJECTIVE OF THE COMPLIANCE POLICIES:

3.1. The objectives of Compliance Policy are to help maintenance of Bank's reputation and thus
meet the expectations of its customers, the markets, other stakeholders and society as a whole.

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3.2. Objectives of Compliance Policy include the following:

Strict adherence to all statutory guidelines issued by various regulatory bodies and Bank's
internal policies and Fair Practices Code.
Observing proper standards of market conduct.
Managing conflicts of interest.
Treating customers fairly.
Ensuring the suitability of customer advice.
Prevention of money laundering and terrorist financing.
Meeting the provisions of tax laws.
Establish a proactive compliance risk management culture comprehensively to
cover the entire gamut of banking activities. Lay down and develop consistent
qualities in evolving policies, procedures and guidelines relating to identification,
measurement and management, monitoring, controlling and reviewing of Compliance Risk.
Establish an efficient monitoring mechanism by setting up standards to test compliance by
performing sufficient and representative compliance testing to ascertain the level of
compliance and to take measures to improve the same on an ongoing basis.
Review the Policy from time to time to keep pace with the changing standards prevailing
worldwide to keep the policy effective. To periodically monitor the compliance level so as
to ensure that the Bank's compliance is well met as regards guidelines / laws of RBI / other
regulatory / Bank's internal requirements.
The objective of Compliance Policy shall be to go even beyond legally binding necessities,
but to embrace standards of high integrity and ethical conduct.

4 COMPLIANCE FUNCTIONS

4.1. Compliance Function is defined as "an independent function that identifies, assesses,
advises, monitors and reports on the bank's compliance risk i.e., the risk of Legal or Regulatory
sanctions, financial loss or loss to reputation a bank may suffer as a result of its failure to
comply with all applicable laws, regulations, codes of conduct and standards of good practice".

Compliance Laws, Rules and Standards have various sources as below:
Primary legislation, rules and standards issued by State / Central Government authorities
where banking is involved.
Guidelines / instructions issued by Reserve Bank of India / other regulatory bodies.
Rules followed on account of market conventions including codes / practices promoted by
recognized State / Central Chambers of Commerce and Industries body.
Internal guidelines issued by the Bank from time to time, Best Practice Codes etc. Internal
Codes of conduct applicable to the staff members of the Bank.

Though it is difficult to measure or quantify the gains on account of compliance function, the
repercussions of ineffective compliance management or compliance errors will definitely expose
an organization to fines from monetary authority, civil money penalties through litigations faced
due to non-compliance and will ultimately lead an organization to diminished reputation before

22

the public, reduced shareholder value, limited business opportunities, reduced expansion
potential and lack of enforceability of contract against others.

4.2.The Compliance shall ensure strict adherence to all statutory, regulatory provisions
contained in various legislations such as:
Banking Regulation Act
Reserve Bank of India Act
Foreign Exchange Management Act
Prevention of Money Laundering Act
Right to Information Act (RTI)
Income Tax Act
Service Tax Act
Labour Act
Consumer Protection Act
Negotiable Instruments Act
Banking Ombudsman Scheme
Security & Exchange Board of India
(SEBI)
Indian Banks Association (IBA)
Foreign Exchange Dealers' Association of
India (FEDAI)
Fixed Income Money Market & Derivatives
Association of India (FIMMDA)
Insurance Regulatory Development
Authority (IRDA)
Central Vigilance Commission (CVC)
Banking Code & Standards Board of
India (BCSBI)
Goiporia Committee
Ghosh Committee
Institute of Chartered Accountants of
India (ICAI)
Stock Exchanges
Mandatory disclosures
Any other regulatory / statutory law, rule
or standards
The Compliance Function shall also include specific areas such as prevention of money
laundering and terrorist financing and may extend to tax laws that are relevant to the structuring
of banking products or customer advice.

Letters received in Hindi are to be replied in Hindi- Compliance of Rule 5 of O L Rules
1976 (Cir 250/2010)

Compliance Function also includes adhering to Internal guidelines / Norms such as:

Various internal policies and guidelines issued by the Bank from time to time.
Fair Practices Code
Time norms (customer service).
Compliance of redressal mechanism on customer complaints.
Compliance of redressal mechanism on shareholders' complaints.
Code of conduct for employees.
Good Banking Code.
Corporate Governance requirement.
Any other internal guidelines / norms requiring compliance.

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b. Compliance Officer Role & Responsibility: Responsible for meeting the compliance
areas of the business units and submission of various reports, as devised by the Compliance
Department of the Bank at HO for periodical monitoring of the compliance function.

Implementation of compliance instructions.

Wherever the level of compliance is not achieved as per benchmark set by the Regulator /
Bank, steps shall be initiated for meeting the compliance level.

To maintain relationship with other risk management functions within the Bank and with the
internal audit / inspection function.

In cases where compliance responsibilities are to be carried out by staff in different
departments within the same business unit / administrative unit, the Compliance Officer shall
decide how these responsibilities are to be allocated among the departments.

Compliance Officers shall have access to information necessary to carry out his / her
responsibilities and it is the duty of the Bank's staff to co-operate in supplying this
information.
Compliance Officers shall be in a position to devote sufficient time for monitoring and
directing the Bank's compliance activities.

Due weightage shall be given during performance appraisal of staff for ensuring compliance
to various regulatory / internal guidelines issued by the Bank from time to time.
IV. IMPLEMENTATION REPORTING FRAME WORK: Certificate by the branches and other
operating units for compliance to various Regulatory / Internal guidelines is to be submitted on
monthly basis to CO / HO compliance department within 2 / 5 days of closure of month

It is to be noted that Non adherence to Regulatory/Statutory guidelines/ provisions would invite
levying of penalty/penal interest by the Regulators. Such instances of penalty need to be
disclosed in the Annual Report of the Bank and thus would lead to Reputation Risk for the Bank.

To ensure strict Compliance to various Regulatory/Statutory /Internal Laws, rules, guidelines
etc a check list on various aspects of Deposits/Advances/Foreign Exchange /KYC & AML
activities/ Tax Matters is evolved from Compliance Angle and the same is enclosed in Annexure
to this Circular421/2009 dated 04.12.2009. The check list is only illustrative but not exhaustive.

Due weightage is also given to Compliance in Risk Based Internal Audit.

The check list provided can also be used by the branches for self inspection on monthly basis.

Any Non Adherence to Regulatory/Statutory/ Internal Regulations/Guidelines would amount a
Compliance Breach and all major Compliance Breaches would be placed before the Top
Management/Board.

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CHAPTER 5

INTERNAL CONTROL AND HOUSE KEEPING

INTERNAL CONTROL
Internal control is the integration of the activities, plans, attitudes, policies and efforts of the
people of an organization working together to provide reasonable assurance that the
organization will achieve its objectives and mission.
Thus, Internal Control establishes that:
Affects every aspect of an organization : all its people, processes and infrastructure;
Is a basic element that permeates an organization, not a feature that is added on;
Incorporates the qualities of good management;
Is dependent upon people and will succeed or fail depending on the attention people give to
it;
Is effective when all of the people and the surrounding environment work together;
Provides a level of comfort regarding the likelihood of achieving organizational objectives;
and
Helps an organization achieve its mission.

PURPOSE OF INTERNAL CONTROL
While the overall purpose of internal control is to help an organization achieve its mission,
internal control also helps an organization to:
Promote orderly, economical, efficient and effective operations, and produce quality products
and services consistent with the organizations mission.
Safeguard resources against loss due to waste, abuse, mismanagement, errors and fraud
Promote adherence to laws, regulations, contracts and management directives.
Develop and maintain reliable financial and management data, and accurately present that data
in timely reports.
The internal Control Act provides that, the top executive is responsible for establishing the
organizations system of internal control, and is also responsible for
(1) Establishing a system of internal control review
(2) Making management policies and guidelines available to all employees, and
(3) Implementing education and training about internal control and internal control evaluations.
To the extent that the top executive authorizes other managers to perform certain activities,

25

those managers become responsible for those portions of the organizations system of internal
control.
The law further requires the head of the organization to designate an internal control officer who
reports to him or her. Drawing on knowledge and experience with internal control matters, the
internal control officer is critical member of the management team who :
Assists the agency head and other management officials by evaluating and improving the
effectiveness of the internal control system. While the internal control officer has
responsibility for both implementing and reviewing the organizations internal control efforts,
the organizations managers are still responsible for the appropriateness of the internal
control system in their areas of operation.
The internal control officer helps specific procedures and requirements; the effectiveness of
these procedures and requirements must be audited by someone who was not involved in
the process of putting them into place.
Evaluating the effectiveness of the system of internal control. This individual must be
independent of the activities that are audited. For this reason, in most instances, the
internal auditor cannot properly perform the role of internal control officer.
Internal control and housekeeping are the parameters used to judge the health of an
organization apart from others such as business level, NPA level etc. Any growth in
business should not be at the cost of quality.
Effective internal control and housekeeping ensures that quality is maintained. Keeping this
in view, due weightage is being given to internal control and house keeping aspects.

GENERAL :Importance to be given to the following areas

1. Ambience - Maintenance of premises - Banking hall, toilets, stock room, old record room,
branch vehicles.
2. Maintenance of Computers, Calculators, Alarms Maintenance of relevant service contracts
information.
3. Maintenance of cash cabins, counters, manager's cabins (from security angle and as a
facilitator of movement of slips, movement of staff).
4. Control over security items including balancing; for recording balancing of security items
Preserve Balancing book in Double lock/strong room.
5. No Irregularities in staff matters / LFC / TA / Medical Bills etc.
6. Watch over the financial overtones of staff members.
7. Review of everyday Day book slips.
8. Ensuring balancing on due dates/checking balancing at random and ensuring supervisor's
signature in the balancing books; Ensure preparation and submission of returns and
statements (practical aspect prioritization). .
9. Ensure NIL leakage of income.
10. Control over each item of expenditure. .

26

11. Keep a watch over tappal department (practical aspects - concentrate on high value items).
12. Maintain communication links - Management to branch level, Branch to staff level.
13. Maintain a system of circulation of circulars, memos and other important communications;
14. Implement HRD systems. Ensure Job rotation in time.
15. Ensure adherence to laid down systems, procedures while transacting items in
strong room, cash cabin, locker room etc, (particular reference to Gold Loan, Safe custody
etc.)
16. Handling of and maintenance of Nomination, Death claims and related registers.
17. Be Vigilant. Inculcate vigilance.
18. Certificate regarding control over security items
19. Given below are some of the points attracting Vigilance angle.

DEPOSITS AND OTHER ACCOUNTS:
Ensure:
1. KYC Compliance
2. Opening of accounts with proper introduction.
3. Ensure "Thanks Giving letters" is sent to the Account holder / introducer.
4. Adequate watch over transactions in newly opened accounts.
a) Marking "NEW ACCOUNTS" on cheque leaves and pass book/pass sheet for the first 6
months.
b) All SB debits of Rs. 25000/- and above and CA debits Rs. 1 lakh and above - to be
authorized by Manager/Branch in charge after confirming genuineness.
c) Supervisors to keep a close watch and any abnormalities in conduct of account are to be
brought to the notice of the manager including high value instruments tendered for credit of
new accounts.
d) Record all cash transactions where individual deposit/withdrawal is Rs. 10 lakhs and above.
Confirmation may be sought from depositor.
5. Issuing cheque books with authentic request.
6. Control and custody of documents/security items.
7. No drawings against cleared items.
8. Ensure proper care while handling transfer of accounts from one branch to another.
9. Follow the procedure in case Specimen Signature of depositors is to be changed.
10. In case requisitions for cheque book are tendered by III parties, the branch may get
confirmation.
11. Conversion to joint accounts guidelines regarding KYC / as per MOI on CASA to be
adhered.
12. Watch over Inoperative / dormant accounts at regular intervals.
a) Debits other than service charges/excess interest credited etc, are to be permitted only after
transferring the account to operative ledger. A letter from the party to that effect is to be
obtained and the account may be transferred to operative ledger after Manager's approval.
b) In case of cheque presented, in clearing or through third parties, a "thanks giving letter" is to

27

be sent to the account holder by Regd. AD., thanking him for reviving the account.
Acknowledgement received is to be kept safely.
13. correct reporting of inspection rectifications.
14. Attend on top priority to reconciliation of inter-branch/inter bank transactions and attending
to IBAR queries.

ADVANCES: Ensure the following:

1. Pre-sanction and post sanction inspection
2. Adequate follow up measures
3. Verification of hypothecated / pledged goods / control over godown keys at regular intervals
4. No Favourtism in granting loans
5. Sanction within delegated powers
6. Discount of bills with proper documents or movement of goods
7. Proper application of interest
8. Verification of original documents and obtention or photographs.
9. Obtention of proper documentation.
10. Follow up of Stock Statements etc., and Regulation of Drawing limits.
11. Gold Jewellery to be apprised in the branch premises by the appraiser and gold ornaments
are to be placed in the cloth bags under the supervision of the key holders.
12. Watch over the business dealings and also the operations in the account.
13. Follow up overdue Bills/Returned Bills.
14. Follow up for lien noting in case of vehicle loans and advances against shares.
15. Watch over share price movements regarding accounts where shares are taken as
securities. Scrutiny of Title Deeds and Land Records. Ownership of securities offered.
Valuation of securities by approved valuers.
16. Ensure availability/Renewal of Insurance of all the goods pledged or hypothecated to the
Bank.
17. Ensure noting of lien in case of loans against deposits. In case of big branches, where the
departments are handled by different persons, verify proper authorization.
18. A Register to be maintained to record the income leakage reported in RI/ C Audit/Income
Audit etc. The book to be got updated & held by Branch-incharge

DESTRUCTION OF OLD RECORDS :
Segregate and list the old record to be destructed inNB 29 during November every year.
Forward the list to premises section for their permission before 7th of December with a
certificate to the effect that records have completed retention period and obtain
permission. No records relating to disputed matters are to be included.

28

Arrangements are to be made for destruction through approved agents or merchants.
Amount received by disposal of records is to be credited to commission MR and a
certificate is to be sent to P & D Sec, CO
NB 29 register for 'Records inward and destroyed' should be preserved permanently.

ITEM PERIOD OF PRESERVATION

Register for Mortgages and Charges Permanent
Claim Appln on account of deceased A/c
holders
21 years

Records relating to disputes or litigations
pending in the court of law
20 years after the disputes are over.
All deposit account Opening forms/Cards 20 years from the date of closure of A/c
Sectional Circulars/Circulars 10 years
Memos 4 years
Deposit / Advances / Registers /Ledgers 20 years from the date of closure of last
account or last operation in last o/s a/c
Returns to a) External Agencies
b)Internal Returns Copies at branches
20 years
Control returns 3 years
Statistical returns 5 years

Cir 154/2008: In view of the changed scenario, branches/ offices are advised to revert back to
the earlier system of preservation of other records, viz.,

A period of 8 years prescribed for specified records and registers, where customers/third
party transactions are recorded.

A period of 5 years for specified records and registers, where the transactions are internal
in nature.

A period ranging upto 5/3/1 year/s for records and registers for which preservation period is
not prescribed by statute and the transactions can be tracked with the help of details
available in other records having longer period of preservation

SCRUTINY OF IMPORTANT STATEMENTS : Branch has to take the print out from the
system and scrutinize the PRR 5, 5A and 6:

PRR5&5A: PRR 5 & 5A - to Branch Adjustment Account. Due on the last day of the month.

o BARs pertaining to Cash remittances & Funds transfer outstanding beyond 7 are to be
reported.

29

o Initiate steps after a reasonable period of time for obtaining the IBA from the responding
branch. .
o Take the help of controlling office, if IBA is not received in time.
o Ensure that the entries do not outstand beyond 30 days.

PRR6: - Sundry Asset account. Due as on the last day of the month.

o All entries outstanding beyond 30 days, excluding the exempted items, are to be
reported.
o Entries such as premises/quarters rent advance, advance paid to electricity board etc.
are exempted from reporting.
o All others are of temporary nature and are to be wiped off periodically.
o Wherever permission is required from higher authority for adjustment, the same should
be taken up promptly.
o Ensure that entries are not remaining in the books beyond 90 days otherwise NPA
provision will attract.

PRR 14: Banker's account is maintained by the branches for both cash management and funds
management. Balancing is to be taken as on the last day of the month and it is to be
reconciled with the banker's statement.
Debits in the Bankers statement other than cheques issued should be adjusted
immediately. These can be in the nature of clearing house rent, charges for funds
transfer, etc.
Entries not pertaining to us must be taken up immediately with the banker and rectified.

PRR 18: Nil Balancing / inconsistency report to be ensured. The balancing reports of each head
must be preserved serially for verification by the inspecting officers. To be submitted
monthly as on last day to the controlling office.

PRR 18A: In order to avoid income leakage, interest checking is a must and the position of the
same is reflected in the monthly statement PRR 18A.

PRR43: Statement on SL and other liabilities. Due as on the last Friday of the month.
o Review of the entries regularly, especially those under' for want of particulars' and
ensure that they are wiped off within a reasonable time.
o All debits must be authorized by the branch head only.

STEPS TO BE TAKEN TO PREVENT INCOME LEAKAGE

The income leakage arises on account of short collection of interest, commission and other
legitimate income, non-collection of various service charges and excess payment of interest.
We have to ensure a system by which these calculations are found correct and no legitimate
income to the Bank is lost. Such a system has to take care of the following items. The list is not
exhaustive. Any item by which bank can earn legitimate income shall find a place.

30

1) Ensure maintenance of a Register for monitoring, calculation, application and checking of
interest on various deposits, loans and bills accounts.
2) Ensure checking of interest on deposits, loans and bills accounts.
3) Verify Accounts closed before maturity as regards interest payment.
4) Verify the interest rate quoted and maturity value calculations in deposit accounts.
5) Commission at appropriate rates as advised in circulars etc, to be collected on DDs, Fast
collection services etc. and also on ISCs, IBCs, guarantees.
6) Charges for solvency certificates, Rentals on Safe Deposit lockers, Safe Custody etc;
7) Verify commission paid to NNND agents.
8) Collection of Service Charges for return of cheques in operative accounts SB/ CA, OD etc.
9) Collection of service charges for closure of SB accounts before one year.
10) Collection of TOD interest in SB/CA.
11) Collection of service charges on standing instructions.
12) Collection of service charges for issue of duplicate DDs, duplicate / passbooks etc.
13) Verification of the Parcel Received Register and VPL. Register with reference to amounts
credited in the cash department.
14) Recover the cost of stamped Agreement from the borrower.
15) Verify collection of folio charges etc., - CA / OD Accounts.
16) Verify ISC/OSC Registers particularly with reference to commission and interest,
demurrage etc.
17) Collect cable charges, teleqrarn and telephone charges wherever applicable
18) Breaking open of lockers - collection of charges.
19) Verify debits in commission and interest paid accounts to ensure genuineness of entries
and arithmetical accuracy.
20) Ensure collection of Differential interest whenever Rate of interest changes in respect of
loans.
21) Ensure collection of penal interest on delayed submission/non-submission of stock
statements /QOS statements.
22) Ensure collection of correct service charges in respect of godown inspection.
23) Ensure collection of appropriate amount of processing charges.
24) Review the Guarantee Register with reference to Commission, Protective clause etc.
25) Interest at applicable rates for withdrawals permitted against cheques to be sent in clearing.
26) Ensure collection of interest on the short collections noticed till the date of actual realization.
27) Verify the plaints in suit filed accounts with reference to Ledgers and ensure whether
interest up to the date of filing suit is covered in plaint.
28) Verify fees paid to the advocate, Any other charges paid to the Advocate in . connection
with legal proceedings may also be seen.

31

29) Verify the recovery of differential amount where monthly interest was being paid on Fixed
Deposits and such deposits being closed before maturity.
30) Ensure proper application of Rate of interest.
31) Ensure proper aggregation of limits for arriving at proper Rate of interest Collection of
overdue interest, penal interest.
32) In computer system ensure change in parameters whenever there is change in ROI.
33) Do not pay interest on ineligible SB Accounts
34) Ensure that appropriate interest is collected on FCLR.
35) Ensure collection of commission and lead bank fees in case of consortium advances.
36) Ensure claiming turnover commission for Government transactions.
37) Preservation/Generation/verification of interest dumps.

SECURITY ITEMS

Cheques, DDs etc, and operation in Bankers Accounts.

1) Ensure proper assessment of requirements of security items and indent on Stationery
Sections. Security items cannot be borrowed from other branches.
2) Verify the inward stock of security items with reference to the invoices of the
supplier/stationery sections, as to the quantity and the branch name. Each and every leaf
has to be checked in loose quantities. In case of sealed packets, the serial number printed
on the labels should be verified.
3) Entries in the security items register NB 58 to be initialed by both the key holders.
4) Security items should not be kept open at the counter. They are to be kept in a single lock
box and items are taken out only at the time of use.
5) Request for small amounts of DDs a mini interview of the purchaser to be conducted.
6) Ensure punching of proper hole.
7) Ensure use of ultra violet lamp as per norms.
8) While making payment of DDs ensure proper contra transactions and verify the signature of
the concerned supervisors.
9) Ensure the "informatory Confirmation" is sent to the drawee branch/place where the
individual draft issued is Rs. 10 lakhs and above.
10) DDs for Rs. 1 lakh and above should be signed by two officers. Where two officers are not
available, issue of DD is restricted to less than Rs. 1 lakh.
11) DD/PO of Rs.20000/- and above are to be issued invariably with a/c payee crossing (Cir
No. 339/2011)

32

12) Bankers Accounts to be operated jointly by 2 PA holders where the withdrawal (including
cash) is above Rs. 50,000/-, If there is only one PA holder, then by the single PA holder
subject to prior approval of MIPD & PP Section. CO.
13) Security items which are required for the use at counters are to be kept in a box. The box is
to be kept in DL overnight
14) The Staff member who is dealing with security items should hand over them to the
supervisor/officer if he leaves the seat.
15) Supervisor while authorizing issue of cheque books should ensure that the serial order is
maintained.
16) While issuing cheque books against cheque requisition slip, genuineness of the signature of
the account holder to be ensured and also to be ensured that whether the requisition slip
is out of the cheque book issued to the account holder earlier or not.
17) Instruments whenever required are to be screened under Ultraviolet lamp. In case of
electricity failure/equipment going out of order, the same is not recorded in a note book
required to be maintained.
18) Cheque books against letter of request are not to be issued to third persons
19) Signatures on the instruments are to be verified/verified properly with the specimen lodged,
while passing for payment
Additional precautions for Term Deposit Receipts:
20) At the end of the day, all the unused deposit receipts are to be collected from the staff and
verified.
21) Ensure all used DRs are properly accounted for.
22) Supervisor of Deposit Section to verify leaf by leaf the DRs received in the morning and
ensure correctness
Precaution regarding DD items:
23) DD leaves of Rs.10 lacs and above are to be kept in DL only and required quantity to be
taken out as and when necessary recording in a separate register under authentication.
24) DDs of Rs. 1 lac and above and up to 10 lac are to be kept with the supervisor of the DD
department and Issued to clerks against relative challan noting the number on the challan.
25) Records are to be made in security item movement register in case of other DD leaves.
26) Particulars of DD received are to be acknowledged by the counter clerk after verification
and he has to hold it under lock and key when not in use, hand them over at the end of the
day against acknowledgement.

33

Balancing of Security Items:
21) As on the last day of Calendar Quarter
22) In case of DDs 1 lac and above, last day of every month
23) Term Deposit Receipts - monthly by verifying leaf by leaf
24) Balancing to be taken in NB 13 with numbers of existing stock.
25) A certificate in NB 13 signed by joint custodians to be given which is to be verified by
inspecting officers.
26) A certificate to that effect is to be given in PRR 18 every month
27) Security items pertaining to other branches should not be used.
System of verification of security items on receipt of stock:
28) Parcels are to be taken delivery from the transporters without delay.
29) Parcels should be opened immediately in presence of joint custodians of security items. '
30) Security items are to be bifurcated into:
a) High Risk Security items (HRS I).
DDs of 1 lakh and above (TL and OC series)
Branch advices
Foreign Currency Travelers cheques (FCTCs).
Foreign Currency Demand drafts.

b) Low Risk Security items (LR S I).
DDs less than 1 lakh
Cheques and Deposit receipts.

31) High Risk Security items are to be verified leaf by leaf and ensure accuracy before sending
acknowledqment.
32) In case of LRS I, number of books in the packets are to be verified without opening the
same before sending acknowledgement.
33) If any packet is found tampered such packet is to be verified leaf by leaf.
34) Otherwise, at the time of issue to the counter, the verification leaf by leaf is to be done.

34

35) If any leaf/book is found missing, at any stage, the matter is to be reported
36) immediately to CO and stationery section HO for further action.
Missing of Security Items:
a. If branch finds any of the security Item missing, report to RO/CO giving full particulars.
b. In case of lost/missing of DDs before issue please furnish
1. Printed SI.No. 2. Account field Code No. 3. ALPHA Code No.
c. In case of loss/missing of DD after issue in addition to above
a) Date of DD b) Amount of DD c) Name of the Payee
d. In case of loss of Cancard report to Cancard Division, P & D Wing, HO.
e. Record the details In the note book
f. If items are retraced:
1. not to put into use again.
2. treat the same as cancelled security item and record in NB 58
3. A certificate to P & S Section, CO under copy to Stationery Section, HO to be sent for having
retraced and treated as cancelled security item.
4. All the guidelines applicable to cancel security item should be followed.

SURPRISE VERIFICATION OF CASH AND SECURITIES
- Applicable to all Branches other than VLBs
- Br.Manager to conduct once in a month at irregular intervals in branches and extension
counters
- If branch Manager is one of the key holder, verification to be done by an Officer from
CO/Other branch officials nominated by CO
- Where surprise inspection is by CO nominated officials, once in a quarter at irregular
intervals.
AT EXTENSION COUNTER : Manager in charqe of base branch to conduct verification in
Extension Counters. A record of verification to be noted in last few pages of Cash Register(NB
9). Books of accounts and control on cheque books also to be verified and a certificate
submitted.
In VLBs: Chief Managers should authorize any of the functional Managers who is not a key
holder. At least once in 6 months Chief Manager to verify branch and Extension Counter
attached.

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Transmission of Cash guidelines
o Great Care and caution to be exercised
o Strong Steel trunks of good quality with secure locking system to be used
o Public conveyance or private conveyance preferably closed vehicle to be made us for
remittance
o Branches can make use of 2/3 wheelers and or private vehicles. If places are with in walking
vicinity, physically also
o Approval of CO needed for engaging Taxi
o Person through whom cash is transmitted should be a confirmed employee who does not
have any physical infirmities
Cash up to Rs.5000/- through Sub-staff
Cash above Rs.5000/- up to 25000/- by a person of clerk and above Cadre
Above Rs.25000/- in addition to a person of clerical cadre above, one more employee to
accompany
Rs.20 lakh to 50 lakhs to be accompanied by at lease one armed guard
Above 50 lacs at least 2 armed guards, one with driver and another to sit with Cash.

SHORTAGE OF CASH
o In case of shortage of Cash - employee to reimburse and give an explanation
o If he/she is not in a position to make good, debit' SA-Cash Shortages" with his/her signature
on the back of debit slip
o Recovery as stipulated by DGM/GM of Circle with quarterly interest
o If shortage is Rs.l0000/- and above, investigation to be conducted invariably irrespective of
the fact of reimbursement
o If shortage is 2500/- and above but less than Rs.10000/- investigation at the discretion of the
DGM.
o As long as the shortage is recovered immediately and no malafide intention are attributed to
the concerned employee, the entrustment of cash duties to the same employee is left to the
discretion of the Branch Manager.
o The following cases where fraudulent intention is not suspected / proved at the time of
detection, the same will be treated as Fraud :
o a) Case of cash shortages more than Rs.10000/-
o b) Case of cash shortages more than Rs.5000/- if detected by Management/auditor /
Inspecting Officers and not reported on the same day of occurrence by the persons
handling cash.

36

CHAPTER 6
CASH
Features of genuine notes:

Water Mark : The Mahatma Gandhi Series of banknotes contain the Mahatma Gandhi
watermark with a light and shade effect and multi-directional lines in the watermark
window.

Security Thread: Rs.1000 notes contain a readable, windowed security thread alternately
visible on the obverse with the inscriptions Bharat (in Hindi), 1000 and RBI, but totally
embedded on the reverse.
- The Rs.500 and Rs,100 notes have a security thread with similar visible features and
inscription Bharat (in Hindi), and RBI. When held against the light, the security thread on
Rs.1000, Rs.500 and Rs.100 can be seen as one continuous line.
- The Rs.10, Rs.20 and Rs.50 notes contain a readable, fully embedded windowed security
thread. Notes issued prior to the introduction of the Mahatma Gandhi Series have a plain,
non-readable, fully embedded security thread.
Intaglio Printing: The portrait of Mahatma Gandhi, the bank seal, guarantee and
promise clause, Ashoka Pillar Emblem on the left, RBI Governor's signature are printed in
intaglio i.e. in raised prints, which can be felt by touch, in Rs.20, Rs.50, Rs.100, Rs.500
and Rs. 1000 notes.
Identification Mark: A special feature in intaglio has been introduced on the left of the
watermark window on all notes except Rs.10/- note. This feature is in different shapes
for various denominations ( Rs. 20 - Vertical Rectangle, Rs.50 - Square, Rs.100 -
Triangle, Rs.500 - Circle, Rs.1000-Diamond) and helps the visually impaired to identify the
denomination
See Through Register:See-through is a flower like design that renders additional security to
our notes. It is in the left side & above identification mark. The printing requires perfect
registration between front and back. Replication is difficult on commercial machines.

Micro-Lettering: This feature appears between the vertical band and Mahatma Gandhi
portrait. It contains the word RBI in Rs.10. The notes of Rs.20 and above also contain the
6) See Through Register
7) Micro-Lettering
8) Latent Image
9) Optical Fibres
10) Fluorescent Ink
1) Paper Quality
2) Water Mark
3) Security Thread
4) Intaglio Printing
5) Identification Mark

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denominational value of the notes in micro letters. This feature can be seen better under a
magnifying glass

Latent Image: On the obverse side of Rs.1000, Rs.500, Rs.100,Rs.50 And Rs.20 notes, a
vertical band on the right side of The Mahatma Gandhis portrait contains a latent
Image showing the respective denominational value In numeral. The latent image is visible
only when the Note is held horizontally at eye level.

Optical Fibres :This is a new security feature incorporated in the Rs.1000 and Rs.500
notes with revised colour scheme introduced during in November 2000. The numeral
1000 and 500 on the obverse of Rs.1000 and Rs.500 notes respectively is printed in
optically variable ink viz., a colour-shifting ink. The colour of the numeral 1000/500
appears green when the note is held flat but would change to blue when the note is held at
an angle.

Fluorescent Ink: Number panels of the notes are printed in fluorescent ink. The notes also
have optical fibres. Both can be seen when the notes are exposed to ultra-violet lamp
Rs.500/- Denomination Bank Note
Multidirectional Line
Antiscan lines
Window security thread
With clear text
Omron
Micro text
RBI & 100
Latent
Image
See
Through
Identification
Mark
Fluorescent Ink
Numbering Optically variable ink
Itaglio Printing

38

CHAPTER 7
I. Facility for exchange of notes and coins

1. At bank branches

(a) All branches of banks in all parts of the country should provide the following customer
services:

(i) Meeting the demands for fresh / good quality notes and coins of all denominations,
(ii) Exchanging soiled notes, and
(iii) Accepting coins and notes either for transactions or exchange.

(b) All the designated bank branches (PRESNELTY CURRENCY CHEST) should provide
facility for exchange of damaged / mutilated notes.

(c) All currency chest branches of scheduled commercial banks should provide facility of
exchange of cut / soiled / mutilated notes / issue of coins to public without any
discrimination on all working days.

(d) None of the bank branches / staff should refuse to accept small denomination notes and / or
coins tendered at their counters.

As per RBI Act, no person is entitled as a right to recover from the Government of India or RBI
the value of any lost, stolen, mutilated or imperfect currency note of the GOI or banknote.

2. Liberalised definition of Cut Notes : The following types of soiled and cut notes should be
freely exchanged by all bank branches.

I. Single numbered notes Re 1/-, Rs. 2/- & Rs. 5/- : (a) Note presented should not be in
more than two pieces. No essential feature of the note should be missing. Both the pieces
should be of the same note.

II. Double numbered notes Rs.10/-, Rs.20/-, Rs. 50/-, s.100/- Rs. 500/- & Rs.1000/- : (a)
The note presented should not be in more than two pieces. (b) No essential feature of the note
should be missing. (c)Both the pieces should be of the same note.

The above types of notes will be treated as soiled notes and be kept along with soiled
notes.
These unfit notes shall, in no case, be issued to the public as re-issuable notes but shall be
deposited in currency chests for onward transmission to RBI offices as chest remittances.

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3. Mutilated Notes Presentation and Passingn: - a portion is missing or which is composed
of more than two pieces.

Mutilated notes may be presented either at designated bank branches of commercial banks.
Mutilated notes so presented may be passed as per the Rules framed under Reserve Bank
of India (Note Refund) Rules 2009.

4. Extremely brittle, burnt, charred, stuck up Notes - shall not be accepted by the branches
for exchange.

Instead, the holders may be advised to tender these notes to the concerned Issue Office
where they will be adjudicated under a Special Procedure.

5. Notes bearing "PAY"/"PAID" "REJECT" stamps

Every Officer-in-charge of the branch, i.e. the Branch Manager and every Officer-in-charge of
Cash department shall act as 'Prescribed Officer' in each designated branch to adjudicate the
notes received at the branch for exchange in accordance with Reserve Bank of India (Note
Refund) Rules, 2009.

After adjudicating mutilated notes, the Prescribed Officer is required to record his order by
subscribing his initials to the dated 'PAY'/ 'PAID'/ 'REJECT' stamp. The 'PAY' & 'REJECT'
stamps should also carry the name of the bank and branch concerned.

Defective notes bearing 'PAY'/'PAID' (or 'REJECT') stamp of any RBI Issue Office or any bank
branch, if presented for payment again at any of the designated bank branches should be
rejected as per RBI (Note Refund) Rules, 2009 and the tenderer should be advised that the
value of such (defective) note/s cannot be paid since the same has already been paid as is
evident from the PAY / PAID stamps affixed on it / them.

All bank branches have instructions not to issue notes bearing PAY / PAID stamps to the public
even through oversight.

6. Notes bearing slogans / political messages, etc. - it ceases to be a legal tender and the
claim on such a note will be rejected as per RBI (Note Refund) Rules, 2009.

Similarly, notes which are disfigured may also be rejected under above rule.

7. Disposal of notes adjudicated at designated branches : The half value paid notes and
rejected notes, which are held by the designated bank branches (presently currency chest) in
its cash balance, may either be remitted separately packed together with the full value paid
notes or sent by registered and insured post as and when required.

40

The full value paid notes will be treated as chest remittance by the Issue Office while the half
value paid notes and rejected notes will be treated as notes tendered for adjudication and
processed accordingly.

All designated bank branches are required to submit to our Issue Offices a monthly statement
showing the number of notes adjudicated by them.

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CHAPTER 8

Detection and Impounding of Counterfeit Notes (CIR 238/2011)

Authority to Impound Counterfeit Notes

The Counterfeit Notes can be impounded by

(i) All branches of Public Sector Banks.
(ii) All branches of Private Sector Banks and Foreign Banks.
(iii) All branches of Co-operative Banks & Regional Rural Banks.
(iv) All Treasuries and Sub-Treasuries.
(v) Issue Offices of Reserve Bank of India

Stamping and Impounding of Counterfeit Notes

Each banknote, which, on examination of various security features / parameters, is determined
as a counterfeit one, shall be branded with a stamp "COUNTERFEIT BANKNOTE". For this
purpose, a stamp with a uniform size of 5 cm x 5 cm with the following inscription may be used.

COUNTERFEIT BANKNOTE IMPOUNDED

BANK / TREASURY/ SUB-TREASURY:
BRANCH:

SIGNATURE
DATE

Each such impounded note shall be recorded under authentication, in a separate register.

Issue of Receipt to the Tenderer : When a banknote tendered at the counter is found to be
counterfeit, an acknowledgement receipt should be issued to the tenderer, after stamping the
note as in Paragraph 2 ibid. The receipt, in running serial numbers, should be in duplicate and
should be authenticated by the cashier as well as by the tenderer.

Acknowledgement receipt should be issued even in cases where the tenderer is unwilling to
countersign the receipt.

A counterfeit note detected, across the counter shall be impounded in the presence of the
tenderer, in the manner detailed in Para 2 above. It shall be forwarded to the local police
authorities for investigation by filing an FIR or nodal police station, as applicable.

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For cases of detection of counterfeit notes up to 4 pieces, in a single transaction, a
consolidated report as per the format prescribed in the Annexure should be sent to the
Police Authorities at the end of the month.

For cases of detection of counterfeit notes of 5 or more pieces in a single transaction,
FIRs should be lodged with the Nodal Police Station / Police Authorities as per jurisdiction,
in terms of H.O Circular No. 238 / 2011 dated 02-08-2011.

A copy of the FIR shall be sent to the Forged Note Vigilance Cell constituted at the Head Office
of the bank (only in the case of banks).

FIR is required to be filed in respect of each case of detection of counterfeit note irrespective of
the number of pieces and bonafides of the tenderer.

Acknowledgement of the police authorities concerned has to be obtained for note/s forwarded to
them. If the counterfeit notes are sent to the police by insured post, acknowledgement of receipt
thereof by the police should be invariably obtained and kept on record.

A proper follow-up of receipt of acknowledgement from the police authorities is necessary. In
case, any difficulty is faced by the Offices / Branches due to reluctance of the police to file FIRs,
the matter may be sorted out in consultation with the Nodal Officer of the police authority
concerned or the Nodal Officers of the Central Bureau of Investigation designated to coordinate
matters relating to investigation of counterfeit banknotes cases.

In no case, the counterfeit notes should be returned to the tenderer or destroyed by the
bank branches / treasuries

Examination of the Banknotes Before Issuing over Counters, Feeding ATMs and
Remitting to Issue Offices of the Reserve Bank

All the banks should ensure that all notes in the denomination of Rs.100 and above are
processed through machines conforming to 'Note Authentication and Fitness Sorting
Parameters' prescribed by Reserve Bank from time to time, before issuing them over the
counters or through ATMs.

All bank branches having average daily cash receipts between Rs.50 lakh and above shall use
such machines.

In order to obviate complaints regarding receipt of counterfeit notes through ATMs, and to curb
circulation of counterfeits, it is imperative to put in place adequate safeguards/checks before
loading ATMs with notes.

Detection of counterfeits in chest remittances is also liable to be construed as willful involvement
of the chest branches concerned in circulating Counterfeit Notes and may attract special

43

investigation by police authorities, and other action like suspending the operation of the chest
concerned.

Reserve Bank may consider the option of levying higher penal interest/penalties for the amount
of forged notes detected in the chest remittances from the date of last removal of soiled notes
from the respective chests /during inspection.

44

CHAPTER 9
PREVENTION OF FRAUDS

FRAUDS and Forgeries were practically unheard of in the past. In recent years, frauds of one
kind or the other are happening almost regularly. Slackness in supervision, casual attitude and -
non-adherence to prescribed systems and procedure are some of the contributing factors.
FRAUDS are committed by
External forces,
Internal forces and
Collusion of both internal and external forces.

The role of the staff members should be one of prevention rather than detection, because
detection is only a postmortem operation by which time bank would have lost heavy amounts.
We discuss below some areas of prevention viz. Deposit Accounts, Advances, Security Items,
Collection Instruments and overall vigilance.
I. Opening of accounts in our Bank and encashment of the stolen cheques/DDs drawn
on other Banks/branches through such accounts.

1. Opening / monitoring of CASA A/c - Common lapses :
a) Introduction is obtained in a routine/casual manner , without enquiring with the introducer
about the prospective depositor whom he intends to introduce.
b) Non adhereing of guidelines mentioned in Manual of Instruction of CASA and KYC
guidelines including sending of thanks giving letter NF 154
c) Non Monitoring new accounts and not affixing the stamp "NEW ACCOUNTS" on cheque
leaves and pass book/pass sheet for the first 6 months.
d) No proper watch with regard to debits of Rs. 25000/- and above in case of SB and Rs. 1
lakh and above in case of C/A,
e) Record all transactions where individual deposit withdrawal is Rs. 10 lakhs and above.&
Confirmation from the depositor not sought.
f) No proper follow up for Inoperative accounts
g) In case of cheque presented, in clearing or through third parties, a "thanks giving letter" not
sent to the account holder by Regd. AD. thanking him for reviving the account.
Acknowledgement not kept safely.

45

h) Requests for transfer of accounts from one branch to another is not handled with proper
care and proceeds are not sent by means of a draft.
i) Balancing not taken on due dates and backlog if any, is not brought to the notice of the
officer/manager.
j) In case requisitions for cheque book tendered by III parties, confirmation from the account
holder not obtained.
k) Proper care not exercised where cheques/drafts for large amounts are lodged for collection
immediately after opening the accounts.
2. Fraudulent encashment of cheques/DDs etc.

a) Forgery : Cheques are either stolen from the cheque books issued to the account holders
concerned or fraudulently obtained on the strength of forged requisition slips/ letters. Later
the cheques are encashed by forging the signature of the account holders.

b) i) Cheques/DDs are cleverly/chemically altered as regards amount, payee name, branch
name, etc. and encashed across the counters/through clearing.
ii) Amount inflated after the cheque is passed for payment by the supervisor and encashed.
c) Drafts are fraudulently drawn using DD forms missing/stolen from branches.
d) DDs for smaller denomination obtained and characteristics of these details are printed in
fake drafts and fraudulently drawn for huge amounts are encashed.
e) Operation in the inoperative account by putting fictitious vouchers or by forging the
signature.
f) Making false/fictitious entry in the account/pass book
g) Misappropriation of the funds given for deposit by customer helping friends or associates by
accepting negotiation of cheques & cheques sent after delay.

Common lapses :
a) Safe custody of the cheque books and proper control over the cheque book issued register
not ensured.
b) Supervisors while authorizing issue of cheque books at the counter do not ensure that the
serial order is maintained.
c) While issuing cheque books against cheque requisition slip, genuineness of the signature of
the account holder not ensured and whether the requisition slip is out of the cheque book
issued to the account holder earlier or not is also not ensured.
d) Instruments wherever required are not screened under Ultraviolet lamp. In case of
electricity failure/equipment going out of order, the same is not recorded in a note book
required to be maintained.

46

e) Cheque books against letter of request are issued to third persons.
f) Signatures on the instruments are not verified/not verified properly with the specimen
lodged, while passing for payment.
g) Demand Draft leaves of book in use not counted before taking out and while keeping inside
safe custody.
ADVANCES

Pre-sanction:
1) Dishonesty on the part of borrowers occasionally accompanied by
negligence/collusion/involvement of insiders.
2) Manipulation of books of accounts.
3) Laxity in conducting presanction/market enquiry about borrower/project
4) Professionals such as Chartered Accountants, Advocates on whose opinion the Bank takes
commercial decisions were found to be facilitators of fraud by certifying false account giving
wrong opinion, etc.
5) Availing loans by producing fake documents and by impersonation
6) Casual approach in verifying the credit worthiness of the borrower
7) Too much reliance on financial statements and other documents submitted by the party
overlooking the actual worth/credit-worthiness.
8) Giving too much importance to the past dealings of the party overlooking the present
position of the business
9) Casual approach in conducing the market enquiry/not conducting market enquiry.
10) Decisions to sanction the limits are influenced by the value of the collateral security offered
without verifying the need for the loan
11) Overlooking the warning signals such as return of bills, cheques and continuing the credit
facilities to such parties.
12) Granting loan on the (false) promises of giving huge deposits
13) Availing loan against the deposit receipt left behind by the customers
14) Availing credit facility by offering collateral security of the third party on forged documents.
15) Availing Dual finance on the same stock by different banks
16) Submission of false financial statements
17) Pre sanction visists not made
During Sanction
a) Hypothecating spurious stocks in OCC accounts

47

b) Pledging of spurious gold jewellery
c) Pledging of fake security to obtain advance under OCC
d) Loans against forged KVP/IVP
e) Overlooking deficiencies while sanctioning the loans/adhoc limits/renewals.

Post Sanction
1. Diversion of funds
2. Ineffective post sanction follow up
3. No regular Post Sanction visits
4. Fake foreign bills drawn under Prime Bank LC
5. Inflated stock shown in the stock statement
6. Storing emplty cartons in the godowns
7. Storing goods pertaining to third party on the date of inspection.
8. Discounting BEs by fake LRs
9. Availing supply bills facility with forged letter of delivery.

48

CHAPTER 10

PREVENTIVE VIGILANCE

Vigilance machinery is important in our country in the context of the fact that there are many
possibilities and opportunities for individuals to be attracted towards some material gains. It is
in this context that the vigilance machinery will have to cope up with the increasing irregularities
that are taking place.

ACTION PLAN :

Action plan in these three areas are as under :

1. Preventive vigilance :
a) Simplification of rules and procedures
b) Reducing the area of discretion and patronage
c) Curbing outside interference in administration and personnel management
d) Improving wages and service conditions of public servants.

2. Surveillance and Detection :
a) Greater surveillance and intelligence in corruption prone areas, particularly at public contact
points by strengthening the vigilance machinery, wherever necessary.
b) Traps and raids to be organized, wherever necessary
c) Closer watch on officials of doubtful integrity by Vigilance machinery.
d) On a selective basis, moveable/immovable assets of persons of doubtful integrity to be
checked and verified periodically.

3. Deterrent Punitive Action :
a) Investigation of cases to be speeded up according to a time bound schedule.
b) Close monitoring of all anti-corruption measures
c) Procedure for disciplinary action to be improved and provision for deterrent punishment.
d) Wide publicity of punishment awarded to guilty persons.

EMPHASIS ON PREVENTION :

Greater emphasis is being laid on preventive vigilance as admittedly prevention is better than
cure.

The existing rules, procedures and practices are being reviewed by each department in order to
see that ambiguities are removed and unnecessary paper requirements are done away with.

49

Wherever possible, procedures and practices are to be simplified and due publicity given for the
benefit of the people in general.

Procedures like audit, inspection, ensuring transfers, keeping a watch on the personal integrity
and character of a person would fail to have any impact if they are not followed properly.

There must be a constant watch and vigilance in all the public sector organizations to
streamline their functioning and make them more productive and service oriented.

Vigilance should distinguish between malafide and bonafide lapses and in no case it should
prove to be a stumbling block.

Thus, to be effective, the Vigilance Organisation should understand the undertaking in its
totality, have to clear idea of its procedures and programmes and know the persons working in it
fully.

BANK FRAUDS - ROLE OF PROFESSIONALS PREVENTIVE MEASURES

A study of reported frauds reveal that, of late, instances of frauds under loans/credit limit,
are on an increase. Following are few cases:
.

Fabrication of documents and misrepresentation about the financial status of the
Companies in the balance sheets and profit and loss accounts by Accountants/financial
consultants.

Some of the firms/financial consultants are also acting as brokers in arranging FCNR
deposits from abroad and receiving huge Commissions, a portion of which appears
shared with the Bank officials. There are some instances were they have not revealed
the identity of the borrowers who have offered the depositsresulting in opening of
fictitious deposit accounts.

Offering properties as prime/collateral security which do not exist at all in their names or
depositing fake title deeds.

Creating fresh mortgages on the properties on which prior mortgages have already existed
in favour of other lenders.
legal opinion, valuation report and OPL from other Bankers submitted by the borrowers
were forged and fabricated or the Advocates/valuers have colluded with the borrowers to
cheat the Bank.

Hence there is urgent need to be vigilant against such fraudulent attempt being made by
some borrowers in collusion with such professionals or otherwise. In this regard, among
others, the following points may be borne in mind from the preventive vigilance angle.

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1. Independent verification with advocate, valuers and government Agencies before accepting
the documents for creating equitable mortgage.

2. Never get carried away by promise of persons to bring huge deposits for the Bank.

3. Never be overawed by the ostentatious living styles of the persons visiting the branch
with a request for loans. Due diligence exercise may be carried out to establish the
genuineness of the party.

4. Exercise of due diligence in case of new accounts may be meticulously carried
out/followed without any deviations.

5. Cautious approach while canvassing for business through consultants /chartered
accountants by solely relying on them. Independent assessment will prevent such
criminal/fraudulent attempts by the unscrupulous elements.

Above all effective implementation of KYC theory - Know Your Customer - before
entertaining any request for opening of new accounts and sanction of any loan/limits will also
go a long way in curtailing the incidence of frauds in the banking industry.

WHISTLE BLOWING - THE NEED OF THE HOUR

Every citizen is a policeman in civil dress - so goes a saying.

Each day, we hear about some fraud, misappropriation or other nefarious activities challenging
the safety and security of the Organisation. While the Organisation adequately meets
everybody's needs, the greed is insatiable. This gives rise to corrupt activities by people. While
frauds etc., by outsiders surface with delay, mostly after the crime is over, the activities of
insiders leading to frauds give us scope for curbing the same in time and prevent the fraud from
taking place as well as bringing the culprit to book in time. In achieving this whistle blowing by
the other employees, who observe the undesirable activities of the culprit, plays a very vital role.
Here in this article an attempt is made to deal with the process of "Whistle Blowing" and analyse
the reasons as to why it does not happen though it is made out to be a simple process and a
remedy to nip the frauds in the bud.
What is whistle blowing?
In an Organisation, when some one indulges in corrupt activities or attempts to perpetrate a
fraud for pecuniary benefits, surely atleast a few of his/her colleagues came to know of this.
They need not be doing any policing job for this, but they come to know of this in the normal
course while they are discharging their duties. Most of the time, people ignore this and mind
their own business as if nothing is happening. But as loyal employees of the Organisation, they
have a duty to prevent these undesirable activities by bringing these to the notice of the higher
authorities, immediately, so that the undesirable activities could be curbed and the Organisation

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is saved from any loss, financial or otherwise. This process of alerting the Organisation in time,
is called "Whistle Blowing".
Why whistle blowing?
As an employee everyone is duty bound to be loyal/faithful to the Organisation by performing his
own duties diligently. Apart from this, every one is expected to protect the Organisation and its
interests by doing whatever is needed. Whistle Blowing is one such process by which the
Organisation gets protected/saved.
Why does it not happen?
Though it is a simple process, people more often shun away from the process of Whistle
Blowing. So frauds/corrupt practices go on unabated in the Organisation.
The reason is the difficulties in choosing between conviction and camaraderie or courage and
cowardice.
Employees do not expose their own colleagues because he is a friend/comrade. They forget for
a moment that loyality primarily should be for the Organisation that provides them the livelihood
rather than to a colleague.
Secondly, they are afraid to face the subsequent developments. Once the culprit is exposed by
their alerting the Organisation, the culprit is booked and punished. The culprit and other
colleagues may look at the whistle blower as a Black Sheep who exposed their own colleague.
Whistle blowing suffers a set back only due to this dilemma of choosing between the loyalties to
the Organisation and a colleague, besides the fear of getting isolated. There should be no
hesitation in doing one's duty as Whistle Blower in the interests of the Organisation. Definitely,
the organisation shall protect the Whistle Blower by keeping his name and the information given
by him as "Strictly Confidential". No one would ever know as to who have the information to the
Organisation. This way the whistle blower can be rest assured from the fear of getting
exposed.
In today's context more importance need to be given to whistle blowing by reiterating the need
for it, in all forums like staff meetings, interfaces etc. Care is also to be taken that people do not
resort to the activity of "Whistle Blowing" to settle personal scores against one another. It
should also be made clear that such false alarms due to vested interests shall be dealt with
firmly.
Whistle blowing is not limited to staff and even customers could do this, because they are also
part of the organisation and avail the services. They also have a duty to protect the
Organisation. Whenever they encounter any corrupt practices, they should alert the
Organisation about the same and nip the corruption in the bud.
Whistle blowing thus assumes great significance in averting frauds/corrupt practices which are
unfortunately increasing day by day. Each one of us should go by the teachings of the "Geeta"
which asks us to do our duty without fear or favour and without hesitating to face the
consequences.

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Everyone around should know that his/her actions do not go unnoticed and there are people
who would alert/help the Organisation to catch him/her by blowing the whistle. Thus the person
attempting a fraud should think twice before going ahead. This atmosphere should be created
by all of us.
It is never the activity of rascals that destroys a society, but always the inactivity of the good
people does it.

********

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CHAPTER 11

BANKING CODES AND STANDARDS BOARD OF INDIA
In November 2003, RBI constituted the Committee on Procedures and Performance Audit of
Public Services under the Chairmanship of Shri S.S.Tarapore (former Deputy Governor) to
address the issues relating to availability of adequate Banking Services to common man.
The Banking Codes and Standards Board of India has been registered as a separate society
under the Societies Registration Act, 1860. Therefore, it would function as an independent
and autonomous body.
The Banking Codes and Standards Board of India is not a Department of the RBI.

INTRODUCTION

This is a voluntary Code, which sets minimum standards of banking practices for banks to follow
when they are dealing with individual customers. It provides protection to you and explains how
banks are expected to deal with you for your day-to-day operations.

The Code does not replace or supersede regulatory or supervisory instructions of the Reserve
Bank of India (RBI) and we will comply with such instructions/ directions issued by RBI from
time to time.

In the Code, you denotes the customer and we, the bank the customer deals with. The
following are important codes:

1.1 Objectives of the Code

The Code has been developed to:
a. promote good and fair banking practices
b. increase transparency
c. encourage market forces, through competition
d. promote a fair and cordial relationship between you and your bank
e. foster confidence in the banking system.

1.2 Application of the Code: applies to all the products and services listed below, whether
they are provided by branches or subsidiaries, agents acting on our behalf, across the counter,
over the phone, by post, through interactive electronic devices, on the internet or by any other
method. However, all products discussed here may or may not be offered by us.

a. Current accounts, savings accounts, term deposits, recurring deposits, PPF accounts and all
other deposit accounts

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b. Payment services such as pension, payment orders, remittances by way of Demand Drafts,
wire transfers and all electronic transactions e.g. RTGS, EFT, NEFT
c. Banking services related to Government transactions
d. Demat accounts, equity, Government bonds
e. Indian currency notes exchange facility
f. Collection of cheques, safe custody services, safe deposit locker facility
g. Loans, overdrafts and guarantees
h. Foreign exchange services including money changing
i. Third party insurance and investment products sold through our branches
j. Card products including credit cards, debits cards, ATM cards, smart cards and services
(including credit cards offered by our subsidiaries/companies promoted by us).

2. KEY COMMITMENTS

2.1.1 To Act Fairly And Reasonably In All Our Dealings With customers by: (a) Providing
minimum banking facilities of receipt and payment of cash/ cheques at the banks counter, (b)
meeting the commitments and standards in this Code, for the products and services we offer
and in the procedures and practices we follow, (c) making sure our products and services meet
relevant laws and regulations in letter and spirit, (d) ensuring that our dealings with you rest on
ethical principles of integrity and transparency, operating secure and reliable banking and
payment systems.

2.1.2 To Help you To Understand How Our Financial Products And Services Work By: (a).
Giving you information about them in any one or more of the following languages Hindi,
English or the appropriate local language (b) Ensuring that our advertising and promotional
literature is clear and not misleading (c) ensuring that you are given clear information about our
products and services, the terms and conditions and the interest rates/service charges, which
apply to them (d) Giving you information on what are the benefits to you, how you can avail of
the benefits, what are their financial implications and whom you can contact for addressing your
queries and how.

2.1.3 To Help You Use Your Account Or Service By: (a) Providing you regular appropriate
updates (b) Keeping you informed about changes in the interest rates, charges or terms and
conditions (c) Displaying in our branches, for your information

i. Services we provide
ii. Minimum balance requirement for Savings Bank accounts and No Frills accounts and
charges for non-maintenance thereof
iii. Name of the official at the branch whom you may approach if you have a grievance

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iv. Name and address of the Zonal/ Regional Manager whom you can approach if your
grievance is not redressed at the branch
v. Name and contact details of the Banking Ombudsman under whose jurisdiction the branch
falls
vi. Information available in booklet form.
d. Displaying on our website our policies on

i. Cheque collection
ii. Grievance Redressal
iii. Compensation
iv. Collection of Dues and Security Repossession.

2.1.4 To Deal Quickly And Sympathetically With Things That Go Wrong By: (a) Correcting
mistakes promptly and cancelling any bank charges that we apply due to our mistake (b)
Handling your complaints promptly (c)Telling you how to take your complaint forward if you are
still not satisfied (see para No. 7) (d) Providing suitable alternative avenues to alleviate
problems arising out of technological failures.

2.1.5 To Treat All Your Personal Information As Private And Confidential subject to matters
mentioned in para No. 5 below.

2.1.6 To Publicise The Code We Will: provide you with a copy of the Code, on request, over
the counter or by electronic communication or mail or when you open your account and on our
website and ensure that our staff are trained to provide relevant information about the Code and
to put the Code into practice.

2.1.7 To Adopt And Practice A Non - Discrimination Policy: We will not discriminate on the
basis of age, race, gender, marital status, religion or disability.

3. INFORMATION TRANSPARENCY

You can get information on interest rates, common fees and charges through any one or more
of the following:

a. Looking at the Notice Board in our branches
b. Phoning our branches or help-lines
c. Looking on our website
d. Asking our designated staff/help desk
e. Referring to the service guide/Tariff Schedule.

3.1 General (about services / products): We will give you clear information (a) explaining the
key features of any services and products which we offer and you are interested in / suits your
need including applicable interest rates, fees and charges (b) on your rights and responsibilities
especially regarding availing of nomination facility offered on all deposit accounts, articles in

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safe custody and safe deposit vaults and (c) tell you if we offer products and services in more
than one way [for example, through ATMs, on the Internet, over the phone, in branches and so
on] and tell you how to find out more about them and what information we need from you to
prove your identity and address, for us to comply with legal, regulatory and internal policy
requirements

3.2 Do Not Call Service : When you become our customer we will automatically register your
name under our Do Not Call Service. We will not inform/extend to you through telephone
calls/SMS/e-mails any new product /service unless and until you inform us in writing that you
consent to avail of this information/ service.

3.3 Interest Rates : We will give you information on the interest rates which apply to your
deposit and loan accounts ; at fixed ROI or floating ; details of reset clause or linking to which
referred Rate like BPLR/BASE rate; any option to convert fixed to floating vice versa and
charges for conversion ; the interest you pay or interest we charge; interest we pay on deposits;
how we calculate interest on deposits / loans

3.3.1 Changes in interest rates : We will inform you of changes in interest rates and changes
in the reference rate to which the floating rate of interest is linked through any one or more of
the following means:

Notice at the branches ; Annexure to the statement of account; Letters ; e-mail ; SMS; Website;
Newspaper

3.4 Tariff Schedule

3.4.1 Fees & Charges: We will display in our branches a notice about the Tariff Schedule and
that you can ask to see this free of cost and will give you details of any charges applicable to the
products and services chosen by you and also provide you information about the penalties
leviable in case of non-observance/violation of any of the terms and conditions governing the
product/ services chosen by you.

3.4.2 Changes in Fees & Charges: If we increase any of these charges or introduce a new
charge, it will be notified one month prior to the revised charges being levied / becoming
effective.

3.5 Terms and Conditions : We will advise you the relevant terms and conditions for the
service you have asked us to provide and all terms and conditions will be fair and will set out
respective rights especially with regard to nomination facility and liabilities and obligations
clearly and as far as possible in plain and simple language.

3.5.1 Changes to Terms and Conditions :We will tell you of changes to terms and conditions
through any one or more of the following channels:

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Account statements/ Pass book ; ATMs; Notice Board at each branch; Internet, including e-mail
and website; Newspaper; SMS.

Normally, changes will be made with prospective effect giving notice of one month. If we have
made any change without notice, we will notify the change within 30 days. If such change is to
your disadvantage, you may within 60 days and without notice, close your account or switch it
without having to pay any extra charges or interest. Any changes in the terms and conditions
will be notified in website. We will give you, on request, a copy of the new terms and conditions
or a summary of the changes.

4. ADVERTISING, MARKETING AND SALES

a. We will make sure that all advertising and promotional material is clear, and not misleading.
b. In any advertising in any media and promotional literature that draws attention to a banking
service or product and includes a reference to an interest rate, we will also indicate whether
other fees and charges will apply and that full details of the relevant terms and conditions are
available on request.
c. If we avail of the services of third parties for providing support services, we will require that
such third parties handle your personal information (if available to such third parties) with the
same degree of confidentiality and security as we would.
d. We may, from time to time, communicate to you various features of our products availed by
you. Information about our other products or promotional offers in respect of our
products/services, will be conveyed to you only if you have given your consent to receive such
information/ service either by mail or by registering for the same on our website or on our phone
banking/customer service number.
e. We have prescribed a code of conduct for our Direct Selling Agencies (DSAs) whose services
we may avail to market our products/ services which amongst other matters requires them to
identify themselves when they approach you for selling our products personally or through
phone. We will ensure that any third party or agent acting on our behalf or selling our product
complies with the Code in respect of all products and services covered by the Code.
f. In the event of receipt of any complaint from you that our representative/courier or agent has
engaged in any improper conduct or acted in violation of this Code, we shall take appropriate
steps to investigate and to handle the complaint and to make good the loss as per our
compensation policy.

5. PRIVACY AND CONFIDENTIALITY :

We will treat all your personal information as private and confidential and shall be guided by the
following principles and policies. Under following exceptional cases we will reveal information or
data:

a. If we have to give the information by law.

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b. If there is a duty towards the public to reveal the information.
c. If our interests require us to give the information (for example, to prevent fraud) but we will not
use this as a reason for giving information about you or your accounts [including your name and
address] to anyone else, including other companies in our group, for marketing purposes.
d. If you ask us to reveal the information, or if we have your permission, in writing.
e. If we are asked to give a bankers reference about you, we will need your written permission
before we give it We, will explain to you the extent of your rights under the existing legal
framework for accessing the personal records that we hold about you.

We will not use your personal information for marketing purposes by anyone including ourselves
unless you specifically authorize us to do so.

5.1 Credit Reference Agencies :

We will explain to you the role of Credit Reference Agencies (CRA) as also the checks we may
make with them and the effect the information they provide can have on your ability to get credit.
Information reported to CRA will also include personal debts you owe us even when:

i. You have fallen behind with your payments
ii. The amount owed is in dispute
iii. You have made proposals which we are not satisfied with.

If your loan account has been in default, and thereafter regularised, we will take steps to update
this information with the CRA in the next monthly report. When you apply for credit facility from
us, we will on request, and on payment of prescribed fee, furnish you a copy of the credit
information obtained by us from the CRA.

6. COLLECTION OF DUES:

Whenever we give loans, we will explain to you the repayment process by way of amount,
tenure and periodicity of repayment. Failing which, a defined process in accordance with the
laws of the land will be followed for recovery of dues including sending reminders to you or by
making personal visits and/ or repossession of security, if any.

Our collection policy is built on courtesy, fair treatment and persuasion. We believe in fostering
customer confidence and longterm relationship.

We will post details of the recovery agency firms / companies engaged by us on our website
and make available on request the details of the recovery agency firms/companies at our
branches. Our staff or any person authorized to represent us in collection of dues or/and
security repossession will identify himself/herself and display the authority letter issued by us
and upon request display(ing) to you his/ her identity card issued by the bank or under authority
of the bank. We will provide you with all the information regarding dues and will endeavour to
give sufficient notice for payment of dues. We will have a system of checks before passing on a

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default case to collection agencies so that you are not harassed on account of lapses on our
part. We will write to you when we initiate recovery proceedings against you.

All the members of the staff or any person authorised to represent our bank in collection or/and
security repossession would follow the guidelines set out below:

You would be contacted ordinarily at the place of your choice and in the absence of any
specified place at the place of your residence and if unavailable at your residence, at the place
of business/occupation. Identity and authority to represent would be made known to you. Your
privacy would be respected. Interaction with you would be in a civil manner. Normally our
representatives will contact you between 0700 hrs and 1900 hrs, unless the special
circumstances of your business or occupation require otherwise. Your requests to avoid calls at
a particular time or at a particular place would be honoured as far as possible. Time and number
of calls and contents of conversation would be documented. All assistance would be given to
resolve disputes or differences regarding dues in a mutually acceptable and in an orderly
manner. During visits to your place for dues collection, decency and decorum would be
maintained. Inappropriate occasions such as bereavement in the family or such other
calamitous occasions would be avoided for making calls/visits to collect dues. We will
investigate any complaint from you about unfair practices by collection agents.

6.1 Security Repossession Policy : We will follow a security repossession policy in
consonance with the law. A copy of the policy will be made available on request.

7. COMPLAINTS, GRIEVANCES AND FEEDBACK

7.1 Internal Procedures : If you want to make a complaint, we will tell you:

How to do this; Where a complaint can be made; How a complaint should be made; When to
expect a reply; Whom to approach for redressal; What to do if you are not happy about the
outcome.

Our staff will help you with any questions you have and tell you where to find details of our
procedure for handling complaints fairly and quickly.

If your complaint has been received in writing, we will endeavour to send you an
acknowledgement/ a response within a week. If your complaint is relayed over phone at our
designated telephone helpdesk or customer service number, we shall provide you a complaint
reference number and keep you informed of the progress within a reasonable period of time.

After examining the matter, we will send you our final response or explain why we need more
time to respond and shall endeavour to do so within 30 days of receipt of your complaint and will
tell you how to take your complaint further if you are still not satisfied.

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7.2 Banking Ombudsman Scheme (BO): We will display the BO Scheme on our website.
Copy will be made available on request at a nominal charge. We will display at our branches the
name and contact details of the BO under whose jurisdiction the branch falls and the name of
the official at the branch whom you may approach if you have a grievance. If your complaint is
unresolved at the branch level, you may approach our Regional / Zonal Manager at the address
displayed at the branch. Within 30 days of lodging a complaint with us, if you do not get a
satisfactory response from us and you wish to pursue other avenues for redressal of
grievances, you may approach BO appointed by Reserve Bank of India under Banking
Ombudsman Scheme. Our staff would explain the procedure in this regard.

8. PRODUCTS AND SERVICES

8.1 Deposit Accounts

a. You may open different types of accounts with us such as, savings accounts, term deposits,
current accounts including No Frills Account etc. with us. You may open such accounts in the
following styles:

Single; Joint ; Joint (Either or Survivor); Joint (Former or Survivor);Joint (Latter or Survivor); or
in any other style

b. The above may be opened by you with or without nomination facility. We will explain the
implications of the foregoing accounts as also the nomination facilities at the time of opening of
the account.
c. We will acknowledge the receipt of your nomination details and record the fact of nomination
on the passbook/Account Statement/FDRs at your request.
d. We will also inform you about liquid deposit facility, sweep account and similar types of
products offered by us and their implications and procedures involved, at the time of opening of
account.

Account Opening and Operation of Deposit Accounts

Before opening any deposit account, we will:

carry out due diligence as required under Know Your Customer (KYC) guidelines of the bank;
ask you to submit or provide necessary documents or proofs to do so; obtain only such
information to meet with our KYC ,Anti Money Laundering or any other statutory requirements .
In case any additional information is asked for, it will be sought separately and we will specify
the objective of obtaining such additional information. Providing such information will be
voluntary; provide the account opening forms and other material to you. ;

explain the procedural formalities and provide necessary clarifications sought by you while
opening a deposit account; at the time of opening of the account, make available to you the
details of the insurance cover in force under the insurance scheme, subject to certain limits and
conditions offered by the Deposit Insurance and Credit Guarantee Corporation of India (DICGC)

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Changing your account; If you are not happy about your choice of current / savings account,
within 14 days of making your first payment into the account; we will help you switch to another
of our accounts or we will give your money back with any interest it may have earned. We will
ignore any notice period and any extra charges.;

If you decide to close your current/savings account we will close your account within three
working days of receiving your instructions; If you want to transfer your account to another
branch of our bank we will do so. Your account at the new branch will be operationalised within
two weeks of receiving your request, subject to your complying with the required KYC
formalities at the new branch. We will intimate you as soon as the account is operationalised.
The new branch will be provided with information on your standing instructions/direct debits, if
any; We will cancel any bank charges you would have to pay as a result of any mistake or
unnecessary delay by us when you transfer your current / savings account to or from us.

8.1.1 Savings/Current Accounts: When you open a Deposit Account, we will:

inform you about number of transactions, cash withdrawals, etc. that can be done free of charge
within a given period; inform you about the kind of charges, if any, in case of exceeding such
limits;inform you of the rate at which interest is paid on your savings deposits, how it is
calculated and its periodicity.

Minimum balance: The minimum balance to be maintained in the Savings Bank account will be
displayed in our branches. For deposit products like Savings Bank Account and Current
Account or any other type of Deposit Account, we will inform you about minimum balance to be
maintained as part of terms and conditions governing operation of such accounts failing which,
the details of charged levied. Any change in minimum balance, the same is to be maintained 30
days in advance. During this notice period, we will not charge you for nonmaintenance of higher
minimum balance prescribed.

Charges: Specific charges for issue of cheque books, additional/duplicate statement of
accounts, duplicate pass book, copies of paid cheques, folio charges, debit card, ATM card,
verification of signature, return of cheque for insufficient balance, change in mandate or style of
account, closure of Savings Bank / Current accounts etc., will be included in our Tariff Schedule.
Concessions or relief given (such as perpetual waiver of renewal fee on lifetime credit cards) will
not be withdrawn during the original validity period of the concession/relief.

Statements

a. To help you manage your account and check entries in it, we will provide you with a monthly
statement of account unless you have opted for a pass book.
b. You can ask us to provide you with account statements more often than is normally available
on your type of account, at a charge. This charge will be indicated in the Tariff Schedule.
c. You will be able to see your last few transactions at the counter. You will also be able to see
the transactions on ATM, internet as also through phone and mobile banking wherever such
facilities are available with us and also send you by e-mail, or through our secure Internet

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banking service, if you so desire, provided we have such facility with us. We will ensure that
entries are brief and intelligible.

8.1.2 Term Depositb : When you place a term deposit with us we will:

obtain instructions from you for disposal of your deposits at maturity in the application form;
inform you the procedure for withdrawal of term deposit before maturity alongwith details of
interest rates applicable and charges for premature withdrawal of term deposit; tell you the
terms and conditions and interest rate applicable in case you renew the deposits after the date
of maturity, at the time of acceptance of the deposit; inform you of provisions of I.T. Act
applicable to the interest income accruing to you on your deposits, our obligations under the act
and provisions available to you for seeking exemptions from Tax Deduction at Source;obtain
Form 15 H / 15 G from you at the time of application if you are not liable to pay tax on your
interest income; issue the requisite certificate if we deduct tax from interest accrued on your
deposits.

Advances against Deposits: We will explain facility of loan/overdraft available against term
deposits.

8.1.3 No Frills Account : We will make available a basic banking No Frills Account either
with nil or very low minimum balance. The nature and number of transactions in such accounts
may be restricted, which will be made known to you at the time of opening of the account in a
transparent manner.

8.1.4 Accounts of Minors : We will tell you, if enquired, how a minor can open a Deposit
Account and how it can be operated.

8.1.5 Special Accounts: We will make our best efforts to make it easy and convenient for our
special customers like senior citizens, physically challenged persons and illiterate persons to
bank with us. This will include making convenient policies, products and services for such
applicants and customers. We will inform the procedure for opening of the account and other
terms and conditions provided he/she calls on the bank personally along with a witness who is
known to both such person and the bank as the case may be.
8.1.6 Dormant/ Inoperative Accounts: We will:

tell you when you open your account, what period of inoperation of the account would render
your account being classified as dormant/ inoperative account. You will also be informed three
months before your account is classified as dormant / inoperative or treated as unclaimed
account and the consequences thereof and notify the joint holder/s also before an account is
classified as inoperative / dormant; tell you the procedure to be followed if you want to activate
the account; not charge you for activation of the inoperative account.

8.1.7 Closing Your Account: Under normal circumstances, we will not close your account
without giving you at least 30 days notice. Examples of circumstances, which are not normal,
include improper conduct of account etc. In all such cases, you will be required to make

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alternate arrangements for cheques already issued by you and desist from issuing any fresh
cheques on such account.

8.2 Clearing Cycle / Collection Services: We will:

tell you about the clearing cycle for local instruments and the outstation instruments including
details such as when you can withdraw money after lodging collection instruments and when
you will be entitled to earn delayed interest as per our Cheque Collection Policy; pay you
compensation, as per our Cheque Collection / Compensation Policy for any delay in collection
of instruments, without waiting for a demand from you; provide details, if we offer immediate
credit for outstation cheques, including the applicable terms and conditions, such as the limit up
to which instruments tendered by you can be credited, operating accounts satisfactorily, etc.;
proceed as per our Cheque Collection Policy and provide all assistance for you to obtain a
duplicate cheque/instrument in case a cheque/instrument tendered by you is lost in transit; give
the above information when you open your account and whenever you ask us. If there is any
change in our policy, the revised policy will be displayed on our website and at all our branches.

8.3 Cash Transactions: We will:

accept cheques / cash and dispense cash at any of our branches under core banking
subject to any restrictions on type of transaction or charges, if any, applicable to such
transactions; exchange soiled/mutilated notes and/ or small coins at such of our branches as
per RBI Directives; reimburse amounts wrongly debited in failed ATM transactions within a
maximum period of 12 working days from the date of receipt of your complaint

For transactions above a specified amount we may require you to furnish your PAN.

8.3.1 Direct debits and standing instructions: We will:

at the time of opening the account tell you how direct debits/standing instructions work and how
you may record/cancel them and the charges connected with them; act upon mandates given by
you for direct debits [say Electronic Clearing Service (ECS)] and other standing instructions. In
case of any delay or failure in executing the mandate resulting in financial loss or additional
cost, we will compensate as per the compensation policy of the bank. If the mandate cannot be
executed due to insufficient balance in your account, we will levy charges as per the Tariff
Schedule as amended from time to time; . refund your account with interest as soon as it is
determined that it is unauthorisedly/erroneously debited from your account under a direct debit
and compensate you as per the Compensation Policy of the bank.

8.4 Stop Payment Facility: We will:

accept stop payment instruction from you in respect of cheques issued by you. Immediately on
receipt of your instructions we will give acknowledgement and take action provided these
cheques have not already been cleared by us; levy charges, if any, and the same will be
included in the Tariff Schedule as amended from time to time; in case a cheque has been paid

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after stop payment instructions are acknowledged, reimburse and compensate you as per the
Compensation Policy of the bank.

8.5 Cheques / Debit Instructions Issued By You: We will:

keep original cheques/debit instructions paid from your account or copies or images of the
same, for such periods as required by law ; give you the cheque /debit instruction or a copy
thereof as evidence as long as records are available with us. If there is a dispute about a
cheque paid/debit instructions from your account, in case the request is made within a period of
one year, no charge will be levied and beyond a period of one year charges will be levied as per
the Tariff Schedule; tell you how we will deal with unpaid cheques and out-of-date [stale]
cheques. The details of charges to be levied will be included in the Tariff Schedule as amended
from time to time.

8.6 Branch Closure/ Shifting: If we plan to close our branch or if we move our branch, we will
give you:

notice of three months if there is no other branch of any bank functioning at your centre and
inform you how we will continue to provide banking services to you ; notice of two months, if
there is a branch of any other bank functioning at your centre.

8.7 Settlement Of Claims In Respect Of Deceased Account Holders

8.7.1 We will follow a simplified procedure for settlement of accounts of deceased account
holders.

a. Accounts with survivor/nominee clause

In case of a deposit account of a deceased depositor where the depositor had utilized the
nomination facility and made a valid nomination or where the account was opened with the
survivorship clause (either or survivor or anyone or survivor or former or survivor or latter
or survivor), the payment of the balance in the deposit account to the survivor(s)/nominee of a
deceased deposit account holder will be made provided:

i. the identity of the survivor(s)/nominee(s) and the fact of the death of the account holder, is
established through appropriate documentary evidence
ii. there is no order from the competent court restraining the bank from making the payment
from the account of the deceased
iii. it has been made clear to the survivor(s) / nominee that he would be receiving the payment
from the bank as a trustee of the legal heirs of the deceased depositor, i.e., such payment to
him shall not affect the right or claim which any person may have against the survivor(s) /
nominee to whom the payment is made.

The payment made to the survivor(s) / nominee, subject to the foregoing conditions, would
constitute a full discharge of the banks liability. In such cases, payment to the survivor(s) /

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nominee of the deceased depositors will be made without insisting on production of succession
certificate, letter of administration or probate, etc. or obtaining any bond of indemnity or surety
from the survivor(s)/nominee, irrespective of the amount standing to the credit of the deceased
account holder.

a. Accounts without the survivor/nominee clause

In case where the deceased depositor had not made any nomination or for the accounts other
than those styled as either or survivor (such as single or jointly operated accounts), we will
adopt a simplified procedure for repayment to legal heir(s) of the depositor keeping in view the
imperative need to avoid inconvenience and undue hardship to the common person.

Keeping in view our risk management systems, we will fix a minimum threshold limit, for the
balance in the account of the deceased depositors, up to which claims in respect of the
deceased depositors could be settled without insisting on production of any documentation
other than a letter of indemnity.

b. Premature termination of term deposit accounts

In the case of term deposits, we will incorporate a clause in the account opening form itself to
the effect that in the event of the death of the depositor, premature termination of term deposits
would be allowed. The conditions subject to which such premature withdrawal would be
permitted would also be specified in the account opening form. Such premature withdrawal
would not attract any penal charge.

c. Treatment of flows in the name of the deceased depositor

In order to avoid hardship to the survivor(s) / nominee of a deposit account, we will obtain
appropriate agreement / authorization from the survivor(s) / nominee with regard to the
treatment of pipeline flows in the name of the deceased account holder. In this regard, we will
consider adopting either of the following two approaches:

i. We could be authorized by the survivor(s) / nominee of a deceased account holder to open an
account styled as Estate of Shri ________________, the Deceased where all the pipeline
flows in the name of the deceased account holder could be allowed to be credited, provided no
withdrawals are made.

OR

ii. We could be authorized by the survivor(s) / nominee to return the pipeline flows to the remitter
with the remark Account holder deceased and to intimate the survivor(s) / nominee
accordingly. The survivor(s) / nominee / legal heir(s) could then approach the remitter to effect
payment through a negotiable instrument or through electronic transfer in the name of the
appropriate beneficiary.

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8.7.2 Time limit for settlement of claims : We will settle the claims in respect of deceased
depositors and release payments to survivor(s) / nominee(s) within a period not exceeding 15
days from the date of receipt of the claim subject to the production of proof of death of the
depositor and suitable identification of the claim(s), to the banks satisfaction.

8.8 Safe Deposit Lockers: We will give you the complete details of the rules and the
procedures applicable for the safe deposit lockers and also safe deposit of valuables, in case
we offer the service.

8.9 Foreign Exchange Services:
a. When you buy or sell foreign exchange, we will give you information on the services, details
of the exchange rate and other charges which apply to foreign exchange transactions. If this is
not possible, we will tell you how these will be worked out.
b. If you want to transfer money abroad, we will tell you how to do this and will give you:
a description of the services and how to use them; details of when the money you have sent
abroad should get there and the reasons for delays, if any; the exchange rate applied when
converting to the foreign currency (if this is not possible at the time of the transaction, we will let
you know later what the rate is); details of any commission or charges, which you will have to
pay and a warning that the person receiving the money may also, have to pay the foreign banks
charges.
c. We will tell you if the information provided by you for making a payment abroad is adequate
or not. In case of any discrepancies or incomplete documentation, we will advise you
immediately and assist you to rectify/complete the same.
d. If money is transferred to your bank account from abroad, we will tell you the original amount
received and charges if any levied. If the sender has agreed to pay all charges, we will not take
any charges when we pay the money into your account.
e. We will guide you about regulatory requirements or conditions relating to foreign exchange
services offered by us as and when requested by you.
f. In case of delay beyond the day when the amount is due for credit, you will be compensated
(a) for any loss on account of interest for due period beyond the due date and (b) also for
adverse movement of forex rate as per the Compensation Policy of the bank.
g. All certificates required to be issued under regulatory/statutory instructions will be issued free
of charge.

8.10 Remittances Within India: If you want to remit money within India we will inform you how
to effect it and will:

give description of services and how to use them; suggest to you the best way to send the
money to suit your needs; disclose the details of all charges including commission that you will
have to pay for the service as per the Tariff Schedule as amended from time to time.

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In case of any delay we will compensate you for the delay and any loss/ additional expense
incurred by you.

8.11 Lending

Before we lend you any money or increase your overdraft, credit card limit or other borrowing,
we will assess whether you will be able to repay it. If we cannot help you, we will communicate
in writing the reason(s) for rejection of the loan application. If you want us to accept a guarantee
or other security from someone for your liabilities, we may ask you for your permission to give
confidential information about your finances to the person giving the guarantee or other security,
or to their legal adviser.

We will also encourage them to take independent legal advice to make sure that they
understand their commitment and the possible consequences of their decision( where
appropriate, the documents we ask them to sign will contain this recommendation as a clear
and obvious notice); tell them that by giving the guarantee or other security they may become
liable instead of, or as well as, you tell them what their liability will be .

8.11.1 Loan Products

Applications for loans and their processing

a. At the time of sourcing a loan product, we will provide as part of the loan application form,
information about the interest rates applicable whether floating rate or fixed rate, as also the
fees/charges payable for processing, the amount of such fees refundable if loan amount is not
sanctioned / disbursed, pre-payment options and charges, if any, penal rate of interest for
delayed repayments, if any, conversion charges for switching your loan from fixed to floating
rates or viceversa, existence of any interest reset clause and any other matter which affects the
interest of the borrower, so that a meaningful comparison with those of other banks can be
made and informed decision can be taken by you.
b. We shall invariably provide you with an acknowledgement of your loan application. We shall
make every endeavour to indicate on your application the period within which you can expect to
receive a decision on your request for loan.
c. We will give you the Most Important Terms and Conditions (MITC) governing the loan / credit
facility you have availed. (See para 3.3 Interest rates and para 8.15 Insurance)
d. Normally all particulars required for processing the loan application will be collected by us at
the time of application. In case we need any additional information we will contact you
immediately.
e. We will provide you the sanction letter detailing particulars of amount sanctioned, terms and
conditions (refer para 3.5), your responsibilities as well as the banks, etc.
f. We will provide you an amortisation schedule (schedule of repayment of principal and interest
for the duration of the loan).

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g. We will also inform you whether you have an option to let equated monthly instalments stay
constant and increase tenure or vice-versa when the interest rate changes.
h. We will supply authenticated copies of all the loan documents executed by you at our cost
along with a copy each of all enclosures quoted in the loan document.
i. We will give written receipt for all documents to title taken as security/ collateral for any loan
as well as for dated/undated cheques received from you.
j. We will return the unpaid cheques / post dated cheques given by you on receipt of full amount
representing the EMI / entire debt.
k. We will return to you all the securities / documents/title deeds to mortgaged property within 15
days of the repayment of all dues agreed to or contracted. If any right to set off is to be
exercised for any other claim, we will give due notice with full particulars about the other claims
and retain the securities/documents/title to mortgaged property till the relevant claim is
settled/paid.
l. We will compensate you for any delay in return of securities / documents / title deeds to
mortgaged property beyond 15 days of the repayment of all dues agreed to or contracted.
m. We will not discriminate on grounds of sex, caste and religion in the matter of lending.
However, this does not preclude us from instituting or participating in schemes framed for
different sections of the society.
n. We will process request for transfer of borrowal account, either from the borrower or from a
bank/financial institution, in the normal course and convey our concurrence or otherwise within
21 days of receipt of request.

8.12 Guarantee

a. When you are considering to be a guarantor to a loan, we will tell you about:

your liability as guarantor; the amount of liability you will be committing yourself to the bank;
circumstances in which we will call on you to pay up your liability; whether we have recourse to
your other monies in the bank if you fail to pay up as a guarantor; whether your liabilities as a
guarantor are limited to a specific quantum or they are unlimited; time and circumstances in
which your liabilities as a guarantor will be discharged as also the manner in which we will notify
you about this.

b. We will keep you informed of any material adverse change/s in the financial position of the
borrower to whom you stand as a guarantor.
c. We will return to you all the securities / documents/title deeds to mortgaged property within 15
days of the repayment of all dues agreed to or contracted.
d. We will compensate you for any delay in return of securities / documents / title deeds to
mortgaged property beyond 15 days of the repayment of all dues agreed to or contracted.

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8.13 General Information: We will:

a. give you information explaining the key features of our loan and credit card products including
applicable fees and charges while communicating the sanction of the loan/credit card
b. give you the Most Important Terms and Conditions (MITC) governing the loan / credit facility
you have availed
c. advise you what information/documentation we need from you to enable you to apply. We
will also advise you what documentation we need from you with respect to your identity,
address, employment etc., and any other document that may be stipulated by statutory
authorities (e.g. PAN details), in order to comply with legal and regulatory requirements.
d. verify the details mentioned by you in the loan / credit card application by contacting you at
your residence and / or on business telephone numbers and / or physically visiting your
residence and/or business addresses through agencies appointed by us for this purpose, if
deemed necessary by us
e. if we offer you an overdraft, or an increase in your existing overdraft limit, tell you if your
overdraft is repayable on demand or otherwise. We will, if required also advise about the
method of calculation of overdrawn amount thereof and also the computation of interest on
overdue loan amount
f. not offer any unsolicited pre-approved credit facility in any form, including enhancement of
credit card limit and top up of personal loan limits, etc.
g. in case we offer/approve a credit facility over the telephone credit your account with the
amount sanctioned only after receiving your acceptance in writing
h. in case we do so without your consent / bill you for the card for which you have not given
your consent, we will not only reverse the charges forthwith but will also pay a penalty
amounting to twice the value of the charges reversed.

8.14 Credit Card

8.14.1 General information

a. When you apply for card, we will explain the relevant terms and conditions such as fees and
interest charges, billing and payment, method of computation of overdues, renewal and
termination procedures, and any other information that you may require to operate the card.
b. We will give you a copy of the Most Important Terms and Conditions (MITC) at the time of
application.
c. We will advise you of our targeted turn around time while you are availing / applying for a
product / service.
d. We will send a service guide/member booklet giving detailed terms and conditions, losses on
your account that you may be liable if your card is lost / misused and other relevant information
with respect to usage of your card along with your first card.
e. We will provide Online Alerts to you for all card not present transactions of the value of
Rs.5000/- and above.

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f. If you do not recognize a transaction, which appears on your card statement, we will give you
more details if you ask us. In cases, where we do not accept your contention we will give you
evidence that you had authorized the transaction, in question.

8.14.2 Issuance of Credit Card / PIN

a. We will dispatch your credit card /PIN only to the mailing address mentioned by you or to the
alternate address provided by you (if we are unable to deliver at the mailing address) through
courier / post. Alternatively, if you desire we shall deliver your credit card/PIN at our branches
after due identification.
b. We may also issue deactivated (not ready to use) credit card if we consider your profile
appropriate for issuing credit card and such deactivated card will become active only after you
take steps for activation as required and subject to such other conditions as may be specified.
c. In case we activate the card without your consent / bill you for the card for which you have not
given your consent, we will not only reverse the charges forthwith but will also pay a penalty
amounting to twice the value of the charges reversed.
d. We will extend a loan/credit facility/enhance credit limit on your card only with your consent in
writing.
e. If the limit on your credit card is reduced, we will inform you immediately by SMS / e-mail
followed by a confirmation in writing.
f. PIN (Personal Identification Number) whenever allotted, will be sent to you separately at your
mailing address.

8.14.3 Credit card statements

a. To help you manage your credit card account and check details of purchases/cash drawings
using the credit card, we will offer you free of cost a facility to receive credit card transaction
details either via monthly mail and, if you so desire, also through the internet. Credit card
statement will be dispatched on a predetermined date of every month free of cost at your
mailing address.
b. In the event of non-receipt of this information, we expect you to get in touch with us so that
we can arrange to resend the details to enable you to make the payment and highlight
exception, if any, in a timely manner.
c. We will let you know / notify changes in schedule of fees and charges and terms and
conditions. Normally, changes (other than interest rates and those which are a result of
regulatory requirements) will be made with prospective effect giving notice of at least one
month.

The changes will be notified along with the monthly statement of account or copy thereof.

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8.15 Insurance :We will

inform you if we, as agents of any insurance company, offer any type of insurance on
deposits and credit cards; ensure that we have your written consent to avail these insurance
products; not insist on your obtaining insurance cover from any particular providerin case of
securities lodged with us for loans availed by you.

8.16 Mobile Banking: If you opt for mobile banking services we will, prior to your
registration,for the service inform you of:

the security procedure adopted by us for user authentication and the legal risk, if any,
associated with the same; the applicability or otherwise of stop payment instructions and the
terms and conditions for the acceptance, if any, for the same.

8.17 Credit Counselling Facility: We will endeavour to provide credit counselling facility.

8.18 Getting Records: We will, on request, make available to you, at a cost, records pertaining
to your transactions provided this is within the prescribed preservation period of such record.

9. PROTECTING YOUR ACCOUNTS

9.1 Secure And Reliable Banking And Payment Systems: We will co-operate as an industry
so that you enjoy secure and reliable banking and payment systems you can trust. We will
install CCTV for close surveillance as part of security arrangements.

9.2 Keeping Us Up To Date: Please make sure you let us know as soon as possible when you
change your (a) Name (b) Address (c) Phone number (d) E-mail address (if this is how we
communicate with you).

9.3 Checking Your Account: (a) We recommend that you check your statement or passbook
regularly. If there is an entry, which seems to be wrong, you should tell us as soon as possible
so that we can investigate the same. Regular checks on direct debits and standing orders will
help you be sure the money is going where you want it to. (b) If we need to investigate a
transaction on your account, you should co-operate with us and with the police/ other
investigative agencies if we need to involve them.

9.4 Taking Care: The care of your cheques, passbook, cards, PINs and other security
information by you, is essential to help prevent fraud and protect your accounts. Please make
sure that you follow the advice given below:

a. Do not: i. . keep your cheque book and cards together
ii. keep the blank cheque leaves signed
iii. allow anyone else to use your card, PIN, password or other security information

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iv. write down or record your PIN, password or other security information
v. give your account details, password or other security information to anyone.
b. Always: i. write clearly the name of the person you are paying the cheque to, if you send
cheque through the post, it will help to prevent fraud. We will recommend that you write such
cheques for instance with carbon paper on the reverse to avoid chemical alterations
ii. choose your new PIN carefully ,if you change your PIN
iii. memorize your PIN, password and other security information, and destroy the written
communication if any of the same as soon as you receive it
iv. take reasonable steps to keep your card safe in your personal custody and your PIN,
password and other security information secret at all times
v. keep your card receipts safe and dispose them off carefully
vi. write on the cheque the name of the account holder [ABC Bank Account - XYZ], if you are
paying a cheque into a bank account. You should draw a line through unused space on the
cheque so unauthorized person cannot add extra numbers or names.

c. We will advise you what you can do to protect your card/ cheque book from misuse.
d. In the event your cheque book, passbook or ATM/Debit card has been lost or stolen, or that
someone else knows your PIN or other security information, we will, on your notifying us, take
immediate steps to try to prevent these from being misused.
e. It is essential that you tell us as soon as you can if you suspect or discover that your cheque
book, passbook, card has been lost or stolen or someone else knows your PIN, password or
other security information.
f. You could tell us about the loss by phone at our 24 hour toll free number given to you and
send us a written confirmation to that effect immediately. Alternatively, you may advise us by e-
mail to the address we have given you for this purpose.
g. You may be liable for misuses until the time that we have been notified.
9.5 Internet Banking: Online banking is safe and convenient as long as you take a number of
simple precautions. Please make sure you follow the advice given below:
a. Visit our Internet banking site directly. Avoid accessing the site through a link from another
site or an e-mail and verify the domain name displayed to avoid spoof websites.
b. Ignore any e-mail asking for your password or PIN and inform us of the same for us to
investigate the same. Neither the police nor we will ever contact you to ask you to reveal your
online banking or payment card PINs, or your password information.
c. We advise you not to use cyber cafs /shared PCs to access our Internet banking site.
d. We advise you to update your PC with latest anti-virus and spy ware software regularly. You
may install security programmes to protect against hackers, virus attacks or malicious Trojan
Horse programmes. A suitable firewall installed in a computer to protect your PC and its
contents from outsiders on the Internet is recommended.
e. Disable the File and Printing Sharing feature on your operating system.
f. Log off your PC when not in use.
g. Do not store your ID/PIN in the Internet Explorer Browser.

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h. Check your account and transaction history regularly.
i. Follow our advice - our websites are usually a good place to get help and guidance on how to
stay safe online.
9.6 Cancelling Payments: If you want to cancel a payment or series of payments you have
authorised, you should do the following:

a. To stop payment of a cheque or cancel standing instruction given, or a direct debit you must
tell us in writing.
b. To cancel a direct debit, you must inform us. We recommend that you inform the originator of
the direct debit also.
c. It may not be possible to cancel payments if you do not give notice of your decision to cancel.
d. Cancellation of credit card payments will be subject to other terms and conditions as may be
stipulated.
9.7 Liability for Losses: a. If you act fraudulently, you will be responsible for all losses on your
account. If you act without reasonable care, and this causes losses, you may be responsible for
them.
b. Unless you have acted fraudulently or without reasonable care, your liability for the misuse of
your card will be limited to the amount stipulated in the terms and conditions governing the issue
of the card.
c. You may be liable for misuses on account of loss of your PIN or compromise of your
password or of other secured information until the time that we have been notified and we have
taken steps to prevent misuse.

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CHAPTER-12
GL Concept

GL codes are broadly classified into Direct and Indirect GL. All direct GLs are available for
direct posting by the branches. The under mentioned options are useful to the branches for
direct posting on GLs. All Indirect GLs are accessed by the system internally through
respective modules of FCC and FCR and not available for direct posting by the branches.
Further the direct GLs are classified into Implemented GLs and Non-implemented GLs.
Implemented GL:
Implemented GL is nothing but Pointing type GL. For example Liability GLs (like SL, SD
etc) are made as implemented GLs with the characteristic of allowing first entry as credit entry
whereas Assets GLs (like SA, BAA etc) are made as implemented GLs with the characteristic of
allowing first entry as Debit entry. An implemented GL is parameterized by defining the GL as
offset on exact matching or multiple matching types.
If a liability / asset GL is made as implemented GL, then the first entry (Credit for Liability
GL and Debit for Asset GL) should have some Reference number (9 Digits - Alpha numeric).
While offsetting the original transaction, the reference number should be given / selected from
pick list by the user so that system will match the reference number and reconcile the
outstanding entries in implemented type GLs.
Every reference number will have recon serial number(s) which is 3 digits numeric. All exact
matching implemented GLs will have recon serial number as zero under single reference
number whereas the recon serial number for multiple matching implemented GLs may have
maximum of 999 starting from 001. i.e. Under single reference number, up to 999 recon serial
number can be created in multiple matching implemented GLs.
The basic advantage of making a GL as implemented GL is that we can get outstanding
entries based on reference / recon serial number.

Non-implemented GL:
A Non-implemented GL is nothing but a non-pointing type GL. Here system will allow
debiting or crediting the GL without any restrictions/control over existing balance in the GL.
Hence branches should debit liability type GL only after ensuring the availability of
existing/outstanding credit balance in that GL.
Similarly, branches should credit the asset type non-implemented GL, only after ensuring
the availability of existing/outstanding debit balance in that GL. Otherwise, if proper care is not
exercised during making transaction in non-implemented GLs, system will allow the liability GLs
into debit balance and asset GLs into credit balance.

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Options for GL Transactions:

1. Miscellaneous GL debit against Cash (1060)
2. Miscellaneous GL credit against Cash(1460)
3. Miscellaneous GL Transfer (1005)
4. Miscellaneous Customer debit (1008)
5. Miscellaneous Customer credit (1408)
6. Miscellaneous Loan debit (9540)
7. GL Voucher entry (GLM01)

Reports & Inquiry for GL Transactions:
8. GL Transactions and movement inquiry (GLM04)
9. GL Reports
10.List of Fast paths in GL module
11.List of items to be handled procedurally

Reference number: This field will be enabled only when the selected GL is implemented type.
User can type unique reference number (9 digit Alpha numeric) while making originating entry
in the exact matching implemented GL. (i.e. First debit in Asset GLs). User can also give/ select
existing reference number from pick list (9 digits Alpha numeric) while making originating entry
in the multiple matching implemented GL.
While offsetting the outstanding entries in implemented GL, user can insert the existing
reference number or even select existing reference number from the pick list.

Recon serial number: This field will be enabled only when the selected GL is implemented
type. System will automatically create recon serial number (i.e. numeric) under the given
reference number during originating entries on GL. For exact matching GLs, the recon serial
number will always be zero whereas for multiple Matching Implemented GLs, the system will
allow the user to input multiple originating entries under single reference number by creating
recon serial number automatically under that reference number (i.e. maximum of 999) starting
from 001. At the time of offsetting the entries on GL, this field will be disabled when the GL is
exact matching implemented GL whereas the field will be enabled when the GL is multiple
matching implemented type and allows the user to select recon serial number from the pick list.

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GL TRANSACTION AND MOVEMENT INQUIRY
Navigation: FP: GLM04
Transaction processing -> GL Transactions -> Inquiries -> Transaction and movement
inquiry
GL Account No.: Type or Select GL Account from pick list
Branch: Select Branch name from drop down box
Currency: Select currency from drop down box. Default currency will be INR
Inquiry type: Select inquiry type from drop down box
The inquiry types are
a) Transactions
b) Movement
c) Reconciliation

From Date/ Date upto: Select appropriate date
To Date: Select to date
From Amount: Give appropriate value
To Amount: Give appropriate Value
Transaction Type: Select from drop down box. It contains Credit, Debit Both
Transaction id; Give transaction id if known
User id : Give user_id if known
Authorizer id: Give Authorizer id if known
After selecting all required values, click on OK button to view all the transactions posted in
the GL account based on selection criteria.
If the inquiry type is selected as Transactions, system will populate all the transactions
pertaining to that period. If the inquiry type is selected as Movement, system will populate
date wise overall debit and credit balance along with closing balances for that period.
If the inquiry type is selected as Reconciliation, system will populate all the transactions
having reference number and recon serial numbers. I.e. reference / recon serial numbers of
all the outstanding transactions of implemented GLs can be viewed through this mode.
This facility may be used for identifying the reference number / Bar number of outstanding
transactions made on implemented GLs

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GL REPORTS
Navigation: FP: 7775
Transaction processing -> Internal transactions -> Inquiry -> Report Request
Click on Adhoc Reports and General ledger tab.
Click on General ledger EOD reports
User can generate the following GL related reports along with other reports:
1. GL008 GL-Statement
2. GL210 GL voucher transaction summary
3. GL211 GL voucher batches not closed report
4. GL215 Reconcile the account report
5. GL600 Transfer waste report
6. GL601 - GL recon report
7. GL602 Implemented GL list
8. GL603 List of GLs
9. GL604 GL alert report
10. GL611 GL voucher details
11. GL 616 GL Negative Balance alert report

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Chapter 13
CBS REPORTS
CBS (FCR / FCC) Reports are of three types:
01. Native Reports
a) Adhoc Reports or Online Reports

b) Batch Reports

02. Business Object Reports

03. Published Reports

01. Native Reports :
Adhoc and Batch Reports which are generated from FCR Module (FP 7775/7778) are also
known as Native Reports.
Adhoc Reports are being generated directly from Production database hence also known as
Online Reports.
Batch reports are generated by the system itself during EOD/BOD process and being
pushed to all Circles

02.Business Objects (BO Reports):

Business Objects Reports are generated from separate database called Flexcube Reports
Server (FRS) database.

These reports are being generated through http://cbsreports :500 Business Objects
[BOXI R3]
OR
http://172.16.38.139:8080/InfoViewApp/logon.jsp
http://businessobjects:8080/InfoViewApp/logon.jsp

The FRS database is built / created by extracting and formatting the data from Production
Database and appending the same to FRS database on a day to day basis and only after
FRS upload is over, branch will get previous day reports.

Various types of BO Reports are :

79

Daily Reports.
Balancing Reports
Consistency Check Reports
MIS Reports / Statements
FCR and FCC Module Reports
Balance Sheet Statements and Reports.

03. Published Reports:

In order to facilitate branches with reporting, we are pre-generating reports centrally and
publishing under cbsreports website. (http://cbsreports:500/) under sub heads: Reports, EOD
Reports, Extracts, Interface Data, FAQ and Contacts. Again under Reports following sub heads
are available:

*Adhoc Reports

* Interest Dump & Balance Sheet

*PSR, PRR, STR & Other MIS Reports (Day Book, SWL/WAR, NPA Lists etc. are available)

Branches need not generate these reports from BO. These can be directly downloaded /
printed.

Due to the space constraints these reports will be available only for a period of 3 months.

These reports have to be downloaded and saved in the branch local PC for their future use / IS
audit purpose.

Concept of Mandatory Reports
The requirement of Mandatory Reports in CBS is framed basing on business and
statutory requirements among others.

(Regarding list of Mandatory Reports for FCR/ FCC and for other reports, please refer our HO
Circular 122/2010 dated 05.04.2010), which is available under the link :
http://cbsreports:500/Downloads/HO_Cir_122-2010.PDF
I. Business Requirements :
Daily / Periodic requirement of individual Departments / Sections in Branches / Offices /
The Branch Manager / Branch-in-charge
Administrative Requirements / Controls.

Audit Requirements

80

Nature of Transactions

a) Inter Branch Transactions

b) Inter Bank Transactions
i. NEFT ii. RTGS
c) Delivery Channels

i. ATMs ii. IMB
d) New Processes & Products

i. Sweep-in and Sweep-out facility
ii. Draw Down Facility (for RDs and Loans/Advances)
iii. Transactions with value date concept
iv. On Line Trading
v. Govt Business Module (GBM)

II. Statutory Requirements:
Reports are required consequent upon statutory requirements such as
Tax related matter
AIR (Annual Information Return)
Service Tax Reports
CTR and STR Reports
KYC Norms Related reports and others

Reports to be seen by Branch-in-charge :
GL616-GL Negative Balance Alert Report- To ensure Zero /Credit/Debit Balance in the
specified GL Heads before Branch Batch Closure.
CH704-Signature Not Captured
BA001 - Unauthorized Non financial transactions
BA121-NEFT Txn. Report (unauthorised 8335 txns.)

81

BO: 124921-Report on cash receipts over Rs. One Lac received in CA-OD-CC Accounts
CH621 - SB TOD A/cs.
CH658 - TODs granted today
CH602 - Overdrawn OD/OCC/KCC Accounts
CH632 - List of limits Expired/expiring as on date
ST635 Transaction in Staff Accounts
TP602 Cash Withdrawal 10 lacs and above
FC605 - FCNR / RFC Interest Payment Details
AT607 ATM50 transactions
SM6009 Users logged in other than Home Branch
SM6006 Users logged in from same terminal
TP5029 Teller Inter branch transaction report
BUSINESS OBJECTS REPORTS
CATEGORY REP ID PARTICULARS OF REPORT
BO 170004 Branch wise consolidated data SB/CA above
certain amount
BO 170008 Cash transactions equal and above
BO 220001 Amountwise transaction details
BO 170019 Deposits above certain amount
BO 170080 Single Deposit of Rs.1 crore on any day
BO 170062 Min Bal requirement in CASA accounts
BO 170067 Sweep in and Sweep out Details
BO 170084 CASA Sweep in and Sweep out
BO 430001 Signatures not scanned Report
BO 160007 List of accounts where Debit cards to be
issued
BO 170071 Nominee Register

82

BO 170037 Lr to customer requesting for PAN No
BO 280039 TODs granted between dates
EXCEPTIONAL
REPORTS
35001
35002
35002
Exceptional Reports of various categories like
Inactive / Dormant accounts / Loan accounts
with Credit balances / Inactive or Dormant
accounts reactivated ; TOD allowed beyond
sanction period
BO 235 List of Limits Expired / Expiring
BO 280024 Limits Expired / Unexpired
BO 170013 Credit Balance in OD accounts
BO 280056 ODCC Folio charges report
BO 280013 Interest dump for ODCC accounts
BO 170053 TD Accounts opened
BO 170002 Agewise Overdue deposit
BO 170066 TDS Certificate Form 16A
BO 124810 Today's Parking GL balances Report
BO 220009 Parking GL debit above 50000
BO 124812 GL008 in Excel format
BO 120018 Minor Subsidiary balancing
BO 124915 List of instruments maintained but not
responded
BO 124920 List of pending IBAs payable upto 21062011
BO 280037 Sectorwise Balancing Report on Advances
BO 280007 Daily Disbursement Register
BO AT607 ATM50 transaction for archival period
BO 110008 List of users created / modified in FCR
BO 162 Daybook Report
BO 162 Provisional Daybook (Trial Balance)

83

BO 193801 Expired Guarantees Report
BO 294 Maturing Forward Contracts
BO 300 List of matured Forward Contracts
BO 308 List of Expired LC
BO 110007 List of users in FCC

IMPORTANT BATCH REPORTS (GENERATED BY SYSTEM)
Batch CH105 SB/CA/OD/OCC Large balance movement for
the day
Batch CH106 Large transactions for the day
Batch CH107 Dormant Account Activity Report
Batch CH126 Accounts opened today
Batch CH127 Accounts closed today
Batch CH304 Casa account classified as NPA today
Batch CH324 Casa debit interest frozen accounts
Batch CI999 Customers name comparison with Terrorist
Groups
Batch LN160 Loan payments from other branches
Batch LN163 Loan accounts closed today

ADHOC REPORTS (TO BE GENERATED BY USER)
Adhoc BA001 Unauthorized Non financial transactions
Adhoc CH220 CASA Statement of Account - Pass sheet
Adhoc CI025 Customer dormant status report
Adhoc TP602 Cash withdrawal 10 lacs and above

84

Adhoc ST613 A/cs opened closed for the day
Adhoc AT607 ATM50 transactions
Adhoc ST635 Transactions in Staff Accounts
Adhoc CH621 SB TOD accounts
Adhoc CH658 TOD granted today
Adhoc CH632 Limits expired/expiring as on date
Adhoc TD220 Term Deposit Statement of Account
Adhoc TP5021 Closing cash position
Adhoc ST660 Customer wise outstanding CDB/FCDB
Adhoc ST661 Consolidation of returned cheques - can be
used as any funds register
Adhoc LN604 Loan statement of Account
Adhoc SM6000 List of login users for the day
Adhoc SM6009 Users logged in other than Home Branch
Adhoc SM5008 Users sign in / sign off report
Adhoc SM6006 Users logged in from same terminal
Adhoc TP5029 Teller Inter branch transaction report

Reports to be generated for preparation of slips(Cir. 363 /2011)

Sl Report ID Area Option Description of the report
No
1 TP5021 Cash 7775 Cash position of the Branch
2 TP5049 7775 Cash transaction position
3 TP6007 7775 Auto reversal of transactions
4 TP6009 7775
Teller A Txn.Report cash Receipt,
Payments & Transfer

4 GL604 GL 7775 GL Alert Report
5 GL616 7775 Negative Balances Alert Report

85

6 124810 BO Todays Parking GL balances Report

7 BA110 GEFU 7775
Successful transctions done thr
GEFU
8 BA111 7775 Rejected transactions done thr GEFU

10 ST038 Clearing 7775 Outward Clearing Extract
11 ST639 7775 Inward Clearing Activity / Summary
12 ST661 7775
Consolidation of Returned
Instruments

13 TP6002 Transfer 7775 Transfer Extract
14 ST651 7775
Productwise transactions done during the
day
15 GL008 7775
Details of transactions done for a
given GL
16 GL611 7775 GL-Voucher Details
17 ST644 7775 Teller Productwise total of days Dr & Cr
under cash
18 ST645 7775
Teller Productwise total of Clearing Dr and
Cr
19 ST649 7775 Teller Prodcutwise total of Transfer
Transactions

20 194306 FCC BO FCC-Daily Transactions Report
21 194305 BO FCC-Daily Transactions Exceptions
22 220005 BO FCC& FCR-GLwise Transaction List

Branches/Offices are requested to refer our HO Cir 437/2009 dated 17/12/2009,CBS
guideline 7/2006 dated 04/07/2006 and Special Communication 94/2010 dated 17/12/2010
apart from Cir 363/2011 dated 12/12/2011 on Daily Slip Preparation and Preservation in
CBS environments.

VERY IMPORTANT:
Other Mandatory Reports (FCR) as per Annexure II (A) & FCC reports as per Annexure II
(B) of HO Cir.122/2010 dated 05/04/2010 are required to be generated on day to day basis
and print,verify,authenticated by signing and preserve the same for future reference.Due
to archival and purging of data, generation of reports at later date may not be possible
DO's & DON'Ts
DO's

86

Generate the reports during non peak Business Hours
Fill up all the fields with appropriate value & Save the Reports once generated
Opt for shorter period say for a day /week only
Note down the important reports and it periodicity of generation
Generate all required mandatory reports guided in HO Cir 122/2010 dated 05.04.2010
without fail on the same day
Access EOD reports pushed to your circle from the link http://cbsreports/ EOD Reports
Ensure the MIS classification in BAM83, CIM09, BA020 is up-to-date so as to get accurate
Report. Please use http://cbsreports/ MIS Enrichment portal to identify the
BAM83/CIM09 accounts/customers which requires MIS enrichment.
Input the standard date format as DD-MON-YYYY while generating Business Objects
Reports
Input the standard date format as DD/MM/YYYY while generating 7775 reports
DON'Ts
Do not generate the report for longer period, as the same will impact performance issues ;

Do not generate non customer related reports during peak Business hours

Do not generate the reports / statements which are pre generated at DIT and made
available

Do not forget to take daily mandatory reports specified in HO Cir 122/2010 dated
05.04.2010

Do not forget to cross check daily transactions which are made using your Staff No.

Do not provide the scope for misplacing the generated TDS remittance reports, unclaimed
transfer etc.

Do not allow the Business Objects login to be idle, when the same is not Used.

Do not forget to review the mandatory reports & EOD generated reports daily.

87

Chapter 14
Risk based Internal Audit(RBIA):
For General Category branches.

During Annual Financial Inspection (AFI) 2007, Reserve Bank of India had suggested a few
modifications to the existing format. Accordingly the Risk Profile cum Risk Rating Chart for
General category branches has been redesigned now.
The redesigned format comes into effect from 01 04 2008.
Major changes to the existing format:
Total scores for Business Risk increased to 1000 from 250.
Total scores for Control Risk increased to 1000 from 250.
There is no change in the areas assessed under Business Risk.
Under Control Risk, areas and assessment are grouped as under: Credit Risk Controls;
Operational Risk Controls; Management Risk; Compliance Risk
Revised Risk Matrix:
Level of Risk
Scores assessed for major components under
Business Risk Control Risk
High Risk >80% >60%
Medium Risk From 50% to 80% From 40% to 60%
Low Risk Less than 50% Less than 40%
Status Report (i.e., Statistical portion) has been modified to suit the requirements of
redesigned RBIA format.
Branches should send the 1
st
reply to CO within 15 days and the 2
nd
reply within 30 days
from the date of receipt of the report by the branch. The Circle Office shall ensure that they
generate and send a questionnaire on pending items to the concerned branch/unit by 40th
day. It shall be the endeavour of the branch and Circle to close the report well within the
stipulated time.
On receipt of the Risk Rating of branches/units from the Zonal Inspectorate, Circle Office
shall draw a Monitorable Action Plan (MAP) towards mitigation of identified risks and
convey the same to the branch within 10 days with instructions to the branch/unit to act
upon.
Branches / Units to act upon MAP in such a way that the remarks do not recur during next
RBIA which would enable them to secure better risk rating in the subsequent RBIA.
Progress in MAP and the Action Taken Report (ATR) will be discussed in the quarterly
Regional Audit Committee (RAC) meetings.
As per RBI guidelines, risk profiles of all branches / units should be updated annually.
Hence off-site risk assessment of branches will be done annually by ZI by collecting critical

88

data of branches on qualitative and quantitative parameters. Wherever serious adverse
features/adverse movement of risk rating are noticed, the Circle Office should initiate
necessary corrective action.
All the RBIA formats are uploaded in CANNET at the following site: CANNET>SITE
MAP>INSPECTION WING>STATISTICS>RBIA FORMATS.
RISK BASED INTERNAL AUDIT (RBIA) - APPEAL AGAINST THE COMPOSITE RISK RATING
AWARDED TO BRANCHES/UNITS.
Cir.34/2008
Appeals, if any, against the composite risk rating of any branch / unit, should be preferred by
the Circle Office within 30 days from the date of receipt of communication from Zonal
Inspectorate.
Appeals should be specific. i.e., the Circle should refer to specific parameters / areas giving
reasons for seeking revision of risk rating.
Circles should avoid making appeals, which are general in nature.
Appeal against the composite risk rating should be submitted directly to the General
Manager, Follow-up Section, Inspection Wing, Head Office with the recommendations of the
Circle Head with specific rationale to each parameter on which the rating is
contested/disagreed. It is reiterated that no generality shall be entertained.
Risk Profile cum Risk Rating chart - General Category branches Risk Rating Chart
Consolidation
Major Components Scores
Allotted BY IO
BY ZI
Marks
Awarded
Level of
Risk Marks
Awarded
Level
of
risk
Direction
Previous
Assessment
* Current
Assessment

Prev.

Curr.
A. Business Risk
1. Credit risk
40

2. Liability risk 15

3.Operational risk 30

4.Earning risk 15

Sub Total 100

B. Control Risk
1. Credit risk controls
35

2. Operational risk controls 20

3. Management risk 30

4. Compliance risk 15

Sub Total 100

89

Composite Risk Rating as per current assessment (on five
scale matrix)
MEDIUM

BRANCH ADMN: AREAS REQUIRING MORE ATTENTION
(To avoid slippage from Low Risk Rating) (Cir 273/2009)
Credit portfolio management:
Non obtention of relevant application forms and financial papers like Salary Certificate,
ITAO, STAO etc. while considering loans / limits.
Non verification/absence of analysis of financial papers.
Discussing more about the past history of the borrower and failure to pick up early warning
signals in the accounts and bringing it in the credit reports.
Non obtention of OPLs from other banks.
Non preparation of Credit Investigation Report in NF 588.
Non judicious use of delegated powers be it in credit sanction or in expenditure.
Failure to report adhoc credit facilities, TODs etc sanctioned beyond branch powers to
appropriate authorities.
Failure to conduct pre sanction, post sanction and follow up visits.
Failure to conduct godown inspection/security verification.
Failure to maintain Godown inspection registers and non recording of inspection conducted.
Non obtention of stock statements.
Non availability of loan papers.
Blank loan documents.
Documentation deficiencies.
Non compliance to loan disbursement guidelines in all types of loans (e.g. obtention of bills,
vouchers etc) and ensuring enduse.
Failure to prepare stock inspection report.
Not updating DP register and incorrect calculation of Drawing Power etc.
Break in insurance, under insurance, non insurance, non maintenance of insurance diary;
failure to report to higher authorities, wherever required.
Non submission of periodical review reports like CMF, MTR etc.
Non availability of LSR checklists, periodical valuation reports for prime and collateral
securities.
Failure to register our charges with ROC in time.

90

Non availability of tax paid receipts, RC copies for vehicles.
Non submission of PRR 12 in time and non obtention of AODs well before the due dates.
AODs not made available for verification.
Non availability of EMT papers, not updating the EMT register non obtention of EC / further
ECs. Failure of branches in not obtaining all documents as stipulated in LSR.
Delay in renewal of credit limits, non extension of limits, wherever required, allowing
operations in expired credit limits without proper sanction.
Failure in submission of PRR 139, 140, 179, copies of credit reports, wherever required to
RO/CO on due dates.
Delay in attending/ not replying to review letters received from RO/CO promptly.
LCs/Guarantees getting devolved and delay in recovery.
Failure to conduct Risk Rating exercise for all borrowal accounts at the time of sanction.
NPA portfolio management :
Increasing number and amount under SWL accounts.
Non adherence to IRAC norms.
Failure to send loan notices, failure in follow up visits to parties for recovery etc.
Liability portfolio management :
Achieving deposit targets by concentrating on Bulk Deposit.
No proper plan for a proper mix of deposits. Good Core deposits and Low Cost deposits
will reduce the risk score.
Gaps in adherence to KYC/AML norms.
Scanning of specimen signature cards kept pending.
Internal Control :
Delay in submission of internal control returns and with incorrect data.
No records for proper follow up of outstanding entries under BAA, SA, SL, SD, LCCR, and
ATM difference etc., branches to ensure that all overdue entries are adjusted promptly.
Avoid difference in books of accounts (inconsistency in balancing), Negative balances
under various GLs etc.
Non maintenance of and non updation of registers for recording of interest updations,
interest checking etc.
Huge income leakage.
Absence of collective efforts for spot rectification of inspection remarks.

91

Common deficiencies observed during RBIA : (Cir 3/2011)
DEPOSITS :
Non adherence to KYC/AML norms.
Guidelines for "NEW ACCOUNT" not followed.
Abnormal operations in new accounts, SB a/cs operated for commercial purposes.
Zero balance accounts not reviewed.
Tax at applicable rates not deducted from interest paid on term deposits and not remitted
before the due date.
Excess interest paid in the case of deposits with preferential ROI closed before maturity
leading to income leakage.
Payment of deposit proceeds above Rs. 20,000/- by cash.
Non achievement of Targets
Non adherence of Anti Money Laundering Act on STR and CTR transactions and
maintenance of records thereon.

ADVANCES:
Documentation deficiencies / Blank loan documents / Non availability of loan papers.
Non obtention of relevant loan application forms and other papers like Salary Certificate,
ITAO, STAO etc. while considering credit limits.
Failure to pick up early warning signals in the accounts and bringing it in the C R
Non obtention of NOC / OPLs from other banks.
Non judicious use of delegated powers in credit sanctions.
Failure to report appropriate authorities regarding adhoc credit facilities /TODs permitted
beyond branch powers.
Failure to conduct pre sanction, post sanction and follow up visits.
Failure to conduct godown inspection / security verification.
Failure to maintain godown inspection registers. Failure to prepare stock inspection report.
Non compliance to loan disbursement guidelines e.g. obtention of bills, vouchers etc. and
ensuring end use.
Break in insurance, under insurance, non insurance, non maintenance of insurance diary;
failure to report to higher authorities, wherever required.
Non submission of periodical review reports like CMF, MTR etc.
Non availability of LSR checklists, periodical valuation reports for prime and collateral
securities.
Non obtention of collaterals stipulated by sanctioning authority.
Non obtention of next higher authority permission in case of third party property obtained as
collateral security.
Failure to register our charges with ROC in time.
Non availability of tax paid receipts, RC copies for vehicles.
Non submission of PRR 12 in time and non obtention of AODs/LORs well before the due
dates.
Non availability of EMT/further EMT papers. Non updation of EMT register, non obtention of
EC / further ECs. Not obtaining all documents as stipulated in LSR checklist.
Loans sanctioned against fake title deeds

92

Delay in renewal of credit limits/non extension of limits, wherever required,
Allowing operations in expired credit limits without proper sanction.
Failure in submission of PRR 20 series, NB 179 and copies of credit reports on due dates
to Circle Office.
LCs/Guarantees getting devolved and delay in recovery.
Failure to conduct Risk Rating exercise for borrowal accounts at the time of sanction.
Increase in number and amount under SWL accounts.
Non adherence to IRAC norms.
Non adherence to stipulated terms and conditions of sanction leading to quick mortality of
loans.
Non coverage of loans under ECGC / CGTSME, not preferring claims with ECGC /
Insurance.
Resorting to indiscriminate lending / granting of advances without verification of the place of
work, security etc.
Non follow up of mortgage documents from other banks / financial institutions upon take
over of accounts.
GR forms, Bill of entries outstanding in huge numbers not being followed up.

INTERNAL CONTROL:
Non follow up of outstanding entries under BAA, SA, SL, SD, LCCR, ATM difference.
Negative balances under GLs etc.
Poor spot rectification of Inspection remarks.
Mandatory reports and other reports not generated/reviewed
Huge income leakage detected. Recovery not ensured.
Undelivered ATM cards and PIN mailers are not kept in DL.
Penalties imposed by RBI / Consumer forum etc.
Fraudulent activities by insiders.

TECHNOLOGY MANAGEMENT:
Not maintaining password secrecy resulting in frauds / customer complaints.
Non deletion of profiles of employees on long leave and transferred employees
Non availability of AMC for hardware and UPS, Licenses for software

93

Chapter 15

GOVERNMENT BUSINESS

Canara e-Tax

Purpose
Direct Taxes (e-payment: pay direct taxes online)
Excise and Service Tax (e-payment: pay indirect taxes online)
Customs payment through internet
E-payment of Commercial Taxes-Tamil Nadu
E-payment of Sales Taxes-Maharashtra
E-payment of Commercial Taxes-Karnataka
E-payment of Trade & Taxes for the State of Delhi

Other Features

Available on 24 x 7 basis for internet Banking customers.
Instant cyber receipts for payment made.
Ease of operation & convenience
No paper challan to be filled up.VERNMENT BUSINESS PRODUCTS

Handling of Departmentalized Ministerial Accounts (DMA)
Features
We are the Accredited Bankers for :
Ministry of HRD
UIDAI (Unique Identification Authority of India)
Developed Web Portal for MHRD to track SSA funds flow upto District level.
Currency Chest Management
Purpose
Implementation of RBI Clean Note policy in letter & spirit.
Ensuring chests to operate within the Chest Balance Limit prescribed by RBI.
To ensure that currency chests are sorting the notes on day-today basis.
Chests to issue only machine processed notes to branches.
Impressing upon the circles / chests to remit soiled notes to RBI
We have established 97 Currency chests across the country.

94

Focussed approach on Currency Management Operations -Strategic Plan for 2011-14
formulated by the Bank
Handling Central Civil/Defence/Railways/Telecoms/State Pension
Purpose
Pension disbursement
Generation of monthly pension payment scrolls
Crediting monthly pension to pensioners accounts
Maintenance/storage of Pension Payment Orders and related papers
Seeking reimbursement of pension claims from pension reimbursing authorities without
delay
Features

Formed Central Pension Processing Centre (CPPC) at H.O to generate scroll centrally
Covering pension disbursement in 9 States (Karnataka, Kerala, Tamil Nadu, Andhra
Pradesh, Goa, Maharashtra, Uttar Pradesh, Delhi and Kolkata city in West Bengal)
25 Circle Offices are coming under the above states.
1708 Branches
2,02,000 PPOs

Collection/Handling PPF/SCSS/ RBI Relief Bonds/ Postal /Stamping/ Treasury
Transactions

POSTAL TRANSACTIONS:
Postal accounts maintained in the States of Karnataka (53) and Kerala (47) through 100
authorized branches.
PPF / SCSS:
Collection of Public Provident Fund(PPF) and Senior Citizens Savings Scheme(SCSS)
through 23 branches in Karnataka, Kerala & Goa.
RBI BONDS- RELIEF / SAVINGS:
Collection of RBI Bonds through 49 branches
Treasury transactions:
Handling Treasury transactions through (14) branches in Karnataka, Orissa, Tamilnadu &
New Delhi.
e- Stamping:
PAN India Agreement with Stock Holding Corporation of India LTD(SHCIL) for e-stamping
e-stamping has been implemented in (5) branches under Bangalore(Metro) and is
extended to (26) branches in District Head quarters in Karnataka.

95

Electronic Accounting System for e-Receipts in Customs (EASeR-C)
Facilitation and Convenience of Online payment
Anytime anywhere
Simplified Procedure for Customers
Logical Tax Collection data In electronic format
Faster remittance of tax revenue and speedy Accounting & Reporting.
Paperless transactions
E-payment solution integrated with ICEGATE as per the procedure laid
down by CBEC
A Single E-FPB for all commissionerates /EDI
E-FPB will scroll the e-Receipts Major head wise for e-PAO
E-FPB will send the digitally signed electronic file(CR11,CR12 and
CR13) to e-PAO
E-FPB will remit the Funds to RBI through Link Cell, Nagpur
Instant cyber receipt generation after the payment
Confirmation Message to ICEGATE for each payment
Verify option for handling failure of transactions
Unique Transaction ID generated for each transaction
Message exchange between Bank and ICEGATE is through secured
POST method
E-payment site is a SSL secured site
Re-generation option for cyber receipt

Central Excise and Service Taxes(EASIEST)

Remittance of Indirect Tax
154 authorized branches.
6 Focal Point Branches in the States of Karnataka (2), Tamilnadu (1),Maharashtra(2) and
Andhra Pradesh(1).
Two exclusive focal branches for e-payment of indirect taxes viz. Abhirampuram, Chennai
(Excise) & Matunga East (Service Tax). R K Puram Branch,Delhi is the Nodal branch for e-
payment of Customs

Your views and suggestions can be sent to us
@
feedback2stc@canarabank.com

Staff Training College
Dwarakanath Bhavan
29 K R Road Basavanagudi
Bengaluru 560 004

(FOR INTERNAL CIRCULATION ONLY)

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