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Case Studies/Situational analysis: (Each question carries 10 marks)

1. Mr Gautam Ghosh who guaranteed a Term Loan of Rs 25 lacs to Mr Vivekananda
Bannerjee expired about 12 years back. His son Mr Shantanu Ghosh received a notice from the
Bank demanding repayment of a sum of Rs 45 lacs with interest. Upon making a visit to the
branch with a copy of the advocate's notice, Mr Ghosh is denied the information on the grounds
that the matter is sub-judice. He files an application with the Branch Manager of the Branch
under the Right to Information Act seeking the total details of the loan and an explanation as to
why he has been made a party for a loan not availed by him. Explain who are the persons who
will deal with the application and what are the details which would be furnished to the application.
ANS: In the present circumstances, the Branch Manager is the designated Central Assistant
Public Information Officer as per the provisions of the RTI Act. He is therefore bound to receive
the application of Mr Shantanu Ghosh and acknowledge the same. It is also his duty to accept
fees and forward the same to the Regional Manager of his Region who is the designated Public
Information Officer as per the provisions of the RTI Act within 5 days of receipt of the application
(Section-6(3) RTI Act). The Regional Manager in turn will have to furnish a reply to Mr Ghosh
within 30 days. The Regional Manager may also utilize the services of such other officer as
required to enable him to furnish his reply to the application within the allotted time frame of 30
days. All the details of the Original Loan and the reasons for including him as a debtor would be
furnished to him.
2. As Branch Manager you notice that in the first week of the month your branch is crowded
with customers who want to withdraw money from their accounts (salary, pension etc). People
generally prefer coming to the branch even though most of them have ATM cards. These huge
crowds make your VIP customers vary of coming to branch for their work. Explain how you will
deal with this issue.
ANS: As Branch Manager, I would address this issue on the following lines:
l Crowd management in the First week would be given topmost priority. Attention would be
paid to seating and other arrangements. At the same time, I would also ensure that the
crowd is not blocking the entrance and movement of other customers in the banking hall.
l Secondly as a long term measure, I would ascertain the cause of ATM Card holders not
opting to use ATMs for withdrawals. This issue would be addressed by educating
customers about the convenience factor in ATM and by demonstrating how easy it is to
use an ATM Card.
l Confidence building in customers would be undertaken by speeding up and attending to
withdrawal related ATM complaints immediately.Further, the front line staffs would be asked
to persuade the customers to use GCC facility. Also, I will take up the matter with the controller/
Alternate channel depatment for installtion of GCC in all the Single window counters.
l Organise a staff meeting about how they can be benefitted by lesser crowds if they take
pains to educate customers about usage of ATM and other channels.
l The HNI customers would be provided with separate seating space and counter for
exclusivity and privacy of their transactions.
03. After several years, your bank has recruited Probationary Officers once again. The two
new recruits who have joined your semi-urban branch are young, smart and computer savvy.
Belonging to the bold new generation, they are not given to the usual mannerisms of docility and
obedience that you and your supervisory team expect. HO has already informed that these two
are to be absorbed permanently in your branch. You can sense mounting of tension in your
strong team of 20, which was hitherto a peaceful group. Your accountant who gives you excellent
support seems to have a problem with the young man while the young lady seems to be the
target of every staff member /customer's attention. You feel that the situation may go out of
control if the staff's attention continues to be focused on these youngsters. As a branch manager,
you are very keen to retain the youngsters and make full use of their knowledge and energy to bring
in new vitality. How would you propose to handle the situation?
ANS: My staff member's agitation over the issue of the newcomers half their age with
equivalent salary has to be necessarily viewed with empathy and sympathy. Similarly the
accountant's irritation with the youngsters is also understandable. Team work and group cohesion
is critical in branches like mine which are in remote areas and have to manage without much
support from other branches. Making the new members a part of the existing team therefore will
be a priority. Since the young officers are intelligent, I will focus on harmonization of their
academics / technical advantage with experience of senior staff. Suitable group activities may
be organized to promote better interaction with two new members.
l A meeting with the new staff members will be conducted in which they will be oriented
towards the existing organizational culture in brief, and exposed in details the set-up of the
branch, its working and the about the importance of senior staff.
l I would request a senior lady member of the staff to take the young lady under her fold.
Initially, I would post the lady to a department which is not associated with the public dealing.
l Similarly, the male PO will be placed with senior accountant with the understanding that he
will be a mentor to the PO. I would form a team for recovery of the bad loans and ask the
young man to assist my Accountant. Recovery work is not associated with computers and
also is an area of strength for my Accountant. This gives him an opportunity to project
himself as a useful team member and also would draw respect from the youngster when
he sees how his superior handles tough customers.
l I would arrange for a picnic / get together and invite the staff along with their family members.
Seeing the lady in the company of the family members would help my staff to realize her
identity and bring the correct perspective.
l I would also counsel the youngsters on dress and behavioral codes in as subtle a way
as possible.
l I would recommend to Head Office to arrange an orientation programme for the PO's at
the earliest. Moreover they should be subjected to Leadership Development/Management
Development training programmes.
l Design a fortnightly review of working of the arrangement and seek staff suggestion for
improvement in the same.
04. Your bank as a secured creditor of a manufacturing unit has issued 60 days notice, under
SARFAESI Act-2002 to the borrower who has defaulted in repayment. The borrower has failed
to discharge his liability within the period specified. In such a situation, what measures secured
creditor may take recourse to recover its dues?
ANS: After expiry of the 60 days notice period, bank will take the possession of the
securities charged with the bank and after giving the 30 days public notice, move to sell the
securities through auction.
In case of movable security, bank, after taking the possession, will make the inventory and
panchnama and thereafter will sell the goods. However, in case of immovable property, bank will
conduct the auction after expiry of public notice period and confirm the sale in favour of the
highest bidder. For participating in the bid, party will have to deposit 25% and remaining amount
will have to be paid within 15 days after confirmation of the sale by the secured creditor (bank).
Alternatively, bank can do securitization of the loan and sell the same to the securitization company.
05. Mr. "X" raised a loan of 20,000/- at your Branch against the pledge of gold ornament. On
his failing to honour commitment regarding payment, in spite of repeated reminders, the
ornaments were auctioned and after applying proceeds in satisfaction of the dues to the bank,
the balance was remitted to him by means of a banker's cheque / pay order. Mr. "X" now moves
to the court with a plea that the gold ornaments represented only a collateral security, the primary
security being the demand promissory note and the bank had no authority to dispose of the
ornaments in the manner it has done.
ANS: If the gold ornaments were auctioned after giving a reasonable notice to Mr. "X" as such
notice is mandatory, "X"s plea cannot be sustained. In this case, the contract Act. 1872, Sec.176
provides,"if the pawnor make default in payment of the debt , or performance at the stipulated time
of the promise, in respect of which the goods were pledged , the pawnee may bring a suit against
the pawnor upon the debt or promise and retain the goods pledged as a collateral security or he
may sell the things pledged on giving the pawnor reasonable notice of the sale".
Therefore the action of the bank is in order and the claim of Mr X is not tenable.
06. Mrs. Sudha Arora is maintaining a Savings Bank account with a Branch of Axis Bank;
however, she has a term deposit of Rs. 4, 00,000.00 with our Kolabar Branch. She has seen an
advertisement for investing in an IPO (Initial Public Offer) of a company and she wants to invest
in it. She also wants to invest in NFOs (New Fund Offer) of Mutual Fund. She doesn't want to
give a cheque and fill up the clumsy application form. She enquires about any facility provided
by our Bank or subsidiary. As a Branch Manager what would you suggest Mrs.Arora.
ANS: Point to be mentioned
a) Open SB Account using Online Account Application facility and given INB facility.
b) Open Dmat account.
c) Open Trading account with SBI Caps
d) Three in one (e-Ztrade) facility has to be given
e) Have to highlight the facility under e-invest (ASBA)- who is eligible need to be mentioned
f) Can be invested both IPO and NFO of MF need to be mentioned
g) ASBA process may be mentioned
07. Mr. Sinha maintains an account with us. A court attachment order for Rs.25000/- on the
account is received. How you will deal with the following situation as a Branch manager.
(a) Mr. Sinha has tendered Rs.15000/-for purchase a Draft.
(b) Mr. Sinha also maintains a joint account with his wife with credit balance of Rs.5000/-
(c) A credit vouchers for Rs.7000/- being S.C realized has been released.
(d) A Draft for Rs.7,500/- presented in clearing for credit of current account has been paid
(e) Mr. Sinha has tendered a clearing cheque for Rs.2000/- which will be presented in the clearing.
(f) Mr. Sinha's Current account has been overdrawn by Rs.5000/-
(a) Not Attached: Only Debts 'owing and accruing due' to the judgment debtor at the hand of
the Bank are attached.
(b) Not attached: As the attachment order is in the sole name of Mr. Sinha, the joint account
not attached as it is not in same capacity and same right.
(c) Attached: if at the time of receipt of attachment, the Proceeds of the collection cheque
have been ralised.
(d) Attached: Same as (c)
(e) Not attached: future credit has not been attached
(f) Not attached: As no amount is owed to Mr. Sinha.
The Hon'ble court will be advised accordingly and also the customer.
8. A prospective customer for Cash Credit has approached with your Branch with the Balance
Sheet of his Firm, you have to workout the following on the basis of the Balance Sheet. (a)Debt
Equity Ratio (b) Net Working Capital (c) Tangible Net worth, (d) Quick Assets (e) Quick Ratio
(f) Current Ratio
Balance Sheet of M/S Singh & Singh
Liabilities '000 Assets '000
Networth 1500 Raw Material 1500
Sundry Creditors 1500 Finished Goods 700
Cash Credit 2000 Receivables 1500
Term Loan 2000 Fixed Assets 3000
Prepaid Expenses 300
7000 7000
(a) Debt / Equity = Term Liabilities/ Tangible Net worth= 2000/1500= 1.33
(b) Net working Capital = Current Asset - Current Liability
= (1500+700+1500+300) - (1500+2000)= 500
(c) Tangible Net worth =NW- Intangibles=1500
(d) Quick Assets =Cash + Bank Balance + Book Debts + Receivables= 1500
(e) Quick Ratio = Quick Assets / Current Liabilities = 1500 / 3500 = 0.43:1
(f) Current Ratio = Current Asset / Current Liability= 4000 / 3500 = 1.14:1

9. Ms. PQR reported to your branch that her husband is not traceable for the last 2 yrs and
she is facing hardship. There is a fixed deposit for Rs. 1 lac in the name of her husband in which
she is nominee. She wants to claim payment of the deposit. As Branch Manager how you will
help her?
ANS: The settlement of claims in respect of missing persons is governed by the provision
of Section 108 of the 'Indian Evidence Act, 1872'. As per the provisions of section 108 of the
Indian Evidence Act, presumption of death can be raised only after a lapse of seven years from
the date of his /her being reported missing. As such, the nominee /legal heirs have to raise an
express presumption of death of the missing person under section 108 of the Indian Evidence
Act before a competent court. If the court presumes that he/she is dead, then a certificate to that
effect is issued and the claim in respect of missing person can be settled as is done for any
other deceased accounts.
With a view to alleviate hardship to claimants in respect of Missing Persons, it has been
decided to entertain small value claims without a valid death certificate. In line with the RBI
instructions, it has been decided that the claims up to a threshold limit of Rs 100000/- (Rs one
Lac only) will be entertained without insisting for valid death certificate. All such claims in respect
of missing persons, reported missing for a minimum period of one year, shall be settled on
production of the following documents.
1) FIR, 2) Non-traceable report issued by the police authorities, 3) Indemnity from the
The AGM/RM of the respective region will be the authorized authority to settle such claims.
The claims in respect of missing person above Rs 100000/-- may be settled as per the existing
instructions i.e. after getting court order from the competent court.
10. Mr. Krishna, an Accounts Officer with BHEL, approaches your branch for taking a DD for
Rs.10,000/- favouring BITS,Pilani. He has been taking drafts for similar amounts quite frequently
in the last 6 months. What would you enquire with Sri Krishna, and what suggestions would you
make to him as an officer of the Bank?
ANS: I would:
l Ascertain if the remittance was for the studies of his ward in Pilani
l Enquire about arrangements made for financing the education of his ward, and whether
he needed any Student Loan, and would highlight the income tax benefit u/s 80E on the
interest paid towards education loan, Govt subsidy/relief etc whether his ward maintained
an SB account with our branch or the branch at Pilani. I would persuade him to open SB
Account using Online Application if not already having one.
l Highlight the facilities available through ATM Cards, Internet Banking,MBS,GRC, to make
transfer of funds easier and cost-effective for him, instead of taking DD
l Try to cross sell products of SBI Life such as Super Suraksha, or Edushield (in case he is
interested in Student Loan), etc.
l Persuade him to take a credit card with an add-on card for his ward
l On the whole, project an image of a customer-friendly Bank, keen to serve its
customers better
11. A loan account is irregular and the debit balance therein is Rs.86320/-. The borrower has
been requested to regularize the account. In spite of repeated reminders, he has not taken any
steps in this regard. Within the next month, the documents held on the account will get time
barred. In the meantime you have noticed that the Guarantor of the above loan account has a
current account at the branch which has a credit balance of Rs. 95,324/-. Can the Bank exercise
the right of set off by transferring sufficient amount from the current account of the guarantor to
the loan account of the borrower?
ANS: Bank will recall the advance and make a demand on the borrower and the guarantor.
Reasonable notice will be sent to the guarantor for exercising the right of set off. Thereafter,
bank will recover the money after debiting the guarantor's account. The liability of the guarantor
arises only after principal makes the default. Once the borrower makes the default and the
demand is made on the guarantor, both come on the same level and bank can recover the
money from anyone also Surety.s liability is co-extensive with that of the principal debtor, unless
provided otherwise Section 128 of Contract Act,1872. After recovery from the guarantor, certain
rights are available to him under the Contract Act and as per these rights; he is entitled to all the
securities of the borrower with the Bank.(right os Surrogation) Therefore, bank will hand over the
securities to the guarantor after taking proper acknowledgement and the borrower will be
intimated accordingly.
12. There is a fixed deposit of Rs.1 lac in the name of A & B payable to "Either or Survivor". How
will you deal?
a) When A has approached for payment of the TDR duly discharged by him only on due date.
b) When A has approached for premature payment of the TDR duly discharged by him only
stating that B expired and produced death certificate
c) When A has approached for premature payment of the TDR duly discharged by him only
and there is no mention of B
1) Bank can pay the amount to A on due date and his discharge alone on the TDR is enough
and the signature of B need not be obtained as the mandate is E or S
2) If the operating instruction is 'Either or Survivor' and one of the depositors expires before
the maturity, no pre-payment of the term deposit may be allowed without the concurrence
of the legal heirs of the deceased joint holder. This, however, would not stand in the way of
making payment to the survivor on maturity. As such A will be advised to obtain the
concurrence of legal heirs of B for making premature payment.
3) The signatures of both the depositors have to be obtained, in case the deposit is to be
paid before maturity.
If mandate from all the depositors is obtained in the modified mandate form that at any
time before maturity etiher party can close/premature payment etc , at the time of opening of
term deposit account or thereafter the branch can pay the deposit to any one of them even
before maturity.(e circular no 735 /2011-12 dt.19.11.2011).
13. Dagarapada farmer service cooperative society is maintaining their current account
with your branch. The Accountant of the society has submitted a cheque favouring K.Ramdas
for Rs.45000/- and crossed account payee and requested you to credit the proceeds to the
society's account.
On the reverse of the cheque the society has given endorsement that "Received payment.
Payee's account will be credited on realization". Discuss whether the cheque under question can
be paid to the society's account. Is the position changes if the amount of the cheque is Rs.55000/
-? Discuss.
Ans: Banks are prohibited from crediting 'account payee' cheques to the account of any person
other than the payee named therein.
However, With a view to mitigate the difficulties faced by the members of co- operative
credit societies in collection of account payee cheques, relaxation was extended by RBI vide
their instructions, in terms of which, banks may consider collection of account payee cheques
drawn for an amount not exceeding Rs.50,000/- to the account of their customers who are
Crediting to Co-operative Credit Societies, if the payees of such cheques are the constituents
of such co-operative credit societies.
Hence in the instant case, the request of the society for crediting the proceeds of the cheque
of Rs. 45,000/ to their account can be acceded to provided the cheque is otherwise in order.
We can not collect and credit the cheque to the society's account, as the amount of the
cheque is Rs.55000/-
14. A newly confirmed Probationary Officer has been posted as an Asst. Manager (adv) in
your branch. In your branch, the post dated cheques for the loan repayment are there in heaps
without proper arrangement or plan. The new official is very new to advances and as a branch
manager how you will advise him to streamline the process for efficient follow up of these
Ans: The official will be advised to proceed as under to set thing in order.
a) To arrange the cheque in order, borrower wise and date wise so that cheques which are
overdue for presentation if any can be presented at once.
b) To verify and ensure that dates of PDC synchronise with salary credit, rent credit etc where
payment is linked to such credits. In other cases cheques should have been dated prior to 7th
of every month.
c) To verify that the number of cheques cover the full repayment period; in case of longer
period advances at least 48 cheques should have been obtained. It would also need to be
ensured by him that the cheques crossed with the bank's special crossing seal.
d) A diary note for obtaining of PDC from the period the cheques are not available for repayment.
e) As regards custody of the cheques, the following should be ensured.
i) PDC should not be kept with security document.
ii) PDC to be kept in joint custody of Asst. Manager/Deputy Manager / Manager (PBD/ DBD)
/ Accountant/ Cash officer in a fire proof safe.
15. You are the branch manager of a branch which is situated in an extremist area .your
accountant has received a letter threatening that he has to give Rs.10 lacs if not they will kill him.
He has feared and came to you and asks you for sanction him leave for a week. The local unit of
officers association also asks you for protection to the staff. Please discuss the situation and
what will you do?
Ans: It is a very serious situation which is affecting the bank's smooth functioning and safety of
the bank staff.
The matter will be reported to the AGM (Region) immediately over phone so that he will
take up the matter with the highest police authority in the state to provide protection to the branch
property and personnel. The Dist Supt. of police should be contacted without any loss of time
with a request to provide protection to the bank and its personnels, particularly the accountant.
We may also personally call on the Dist. Collector and acquaint him with the situation as it is a
matter affecting law and order. The accountant has to be assure his safety. We may also examine
providing private security as an extraordinary case, with the approval of the C.A. We have to
convince the accountant that his going on leave is no solution to the matter. The threat may be
repeated to the relief accountant. Privately arranged security guards have to be posted at the
branch with the approval of the CA. The suggestion and guidance of the chief security officer of
the bank will be obtained and strictly complied with.
The association has to be taken into confidence and appraised of the line of thinking and
action proposed to be taken. Our tight security measures would thwart the efforts of the extremists
and they may abandon and go away from the scene. The police will investigate and take appro-
priate follow up action. The branch manager and every staff members shall be vigilant without
allowing any slackness in our preparedness to meet any crisis.
16. Harihar had a locker in his sole name in our bank. He died in an accident last week. Today,
his son Ramnath comes to you with the locker keys and a Will in the handwriting of Harihar stating
that the contents of the locker be delivered to him. Simultaneously, Sunanda, daughter of Harihar
also gives a letter to the bank, stating that she has also a claim to the property. How will you deal
with these claims?
Ans: Discreet enquiry will be made to ascertain the incidence of death. As a matter of courtesy,
the bank will send a letter of condolence to the family members. The death certificate has to be
called for and carefully scrutinized. A Will has to be properly executed and witnessed; further, it
has to be probated. A Will without probate cannot be executed; further, there should not be any
counter-claim. The bank cannot deliver the contents of the locker to Ramnath in view of counter-
claim from his sister. The matter has to be explained to him suitably. He will be advised to get a
probate from the appropriate court. Sunanda,'s request also cannot be accepted. As the bank
knows that prima facie, there are two legal heirs, Probated Will or Letters of Administration
would be needed. It will not be advisable to deliver the contents under indemnity- cum-affidavit
basis as there is obvious disagreement between the claimants Sunanda,will be advised that a
suitable Court order is necessary for delivering the contents of the locker to her. . The matter has
to be reported to Controlling Authority for instructions.
17. Your branch is located in a busy business locality. There are huge number of small & medium
traders and service providers in the area who generate sizeable cash business. As the custom-
ers have to keep minimum Rs.10000/- balance in the current account, these businessmen did
not open any accounts with us. Though some business people can afford to keep huge funds in
their accounts, they feel our remittance charges are heavy. Your Bank is under core banking.
These traders are doing remittance business with other banks, where the remittance charges
are less. As a Relationship Manager (ME) working at the branch what type of accounts do you
propose to open?
Ans: In this case I will market for SME Sahaj Current Account for low value business people and
SME Power Gain and SME Power Pack for High Value Business Entrepreneurs. SME Sahaj is
a current account, meant for small entrepreneurs who cannot afford high balances in their current
accounts. It is almost a No-frill account for small entrepreneurs. Just with a minimum amount of
Rs.1,000/- they can open and operate the account. Every day they can remit a maximum of
Rs.10000/- in their accounts. But cash drawings are not permitted across the counter. Cheque
Books are issued.
SME Power Gain a current account scheme, available to the SME customers, who will
maintain a quarterly average balance of Rs.1,00,000/- in their accounts. We will offer concessional
rates for issue of drafts and for collection of cheques. They will be provided with Multi City Cheques.
We collect service charges, if the minimum balance requirement is not fulfilled. They can draw
cash upto Rs.40,000/ - per day through domestic ATM card.
SME Power Pack: It is also a current account similar to SME Power Gain, but the Minimum
Quarterly Average Balance to be maintained is Rs.5 lacs. The rates of concessions are higher
when compared to SME Power Gain. They can draw cash upto Rs.50,000/- per day through
International ATM-cum- Debit Card. Issue of MCCs is free.
18. Neerahalli, a village in your service area, has a bad record of recovery. You have decided
that you will stop granting any new loans to the village unless the recoveries are improved. One
day, a large group of villagers of Neerahalli, under the leadership of a local politician, gather in
front of your branch threatening to stage a dharna if you do not assure them that you will sanction
loans to people of their choice. How will you react to this situation?
Ans : I will call the Village Heads and Panchayat members to my room and tell them that the
Branch cannot accede to such a demand. Sanctioning of loans is the decision of the Banker
based on the merit of each case. I will make them understand that if there is no recovery from the
village then the reputation of the village is tarnished. The village will be blacklisted and further
loans cannot be given. Since Banks are dealing in public money, we are accountable to the
general public, RBI and to the Govt. I will show statistics to prove my point. I will seek the help of
the villagers in recovery and then assure them that if the recovery improves, I shall reconsider my
decision. I will show them the better recovery position in other villages compared to Neerahalli.
I will drive home the point that willful defaulters cannot be entertained.
19. Sukhram, a progressive farmer of your branch, having KCC limit of Rs. 1 lac with your
branch for the past 3 years, approaches you, for advice and help. He has 5 acres of perennially
irrigated land, and 5 acres of dry land in his name. He wants to provide drip irrigation for his dry
land at a cost of Rs.50,000/-. After drip irrigation is installed, he wants to raise lemon garden in
this land at a cost of Rs.2,50,000/- over a period of 5 years. As a milk route has been established
for his village, he wants to buy 10 milch animals, at a cost of Rs.2,50,000/- to start dairy activity.
Further he has to send Rs.1,00,000/- after 6 months to his son, who is studying final year of
engineering, at a distant place. The market value of the land he owns is Rs.10,00,000/-.
What type of loan scheme do you suggest to Shri Sukhram and why?
Ans: I suggest Kisan Gold Card to Sri Sukhram.
Single Term Loan Limit is sanctioned to the Customer for his various investment needs
"Tractor" for which he wants to spend in a limited period.
The limit is sanctioned, based on the.5 times the annual farm income, or 50% of the value
of land mortgaged or Rs.10 lacs whichever is lower.
We have to ensure 10% margin on investment needs, and 30% on consumption needs.
In the normal cases, the repayment period is to a maximum period of 6 to 7 years. But in
deserving cases it can be extended upto 9 years.
In this case, we can sanction a maximum loan of Rs.5 lacs loan to the customer. The
customer can utilise Rs.70,000/- for remittance to his son. We also suggest him to stagger the
loan requirement for lemon garden for over 5 years so that the first year's requirement can be
cov- ered under KGC.
Though single document is taken for entire limit, separate accounts will be opened
(maximum of 5 accounts) at different times, for meeting the customer's requirements. -In the
above case we can open 4 accounts for (1) Drip irrigation, (2) Lemon garden, (3) Dairy and for
(4) Education expenses.
The limit sanctioned, will have a validity of 1 year and within this period, the borrower can
utilise the limit, at different dates for different purposes.
The repayment will be fixed independently for each loan, coinciding with the cash flow of
the farmer either in monthly/quarterly/half-yearly / yearly installments, subject to a maximum repay-
ment period of 9 years.
20. An old and incapacitated customer of your branch wants to withdraw a sum of Rs.5,000/-
from his SB account. However, he is unable to come to the branch and wishes it to be withdrawn
by a person known to him. How will you help him?
Ans. If thumb impression of the incapacitated person can be obtained, then this impression
would be identified by two independent witnesses known to the bank, one of whom should be a
bank officer. If even thumb impression can not be obtained, then body- mark can be obtained on
the Cheque/withdrawal form which should be witnessed as stated above. The person who will
actually withdraw money on behalf of the incapacitated customer will have to be identified by
two independent witnesses. This person (receiving the money) should also furnish his signature
to the bank.
21. You are the Branch Manager of Haripur Road Branch. Mr Ravishankar is your valued
customer. He complained you that one of his pass book entry shows cheque bearing no. 123456
has been debited to his account for an amount of Rs120000/-. The cheque is with him and he
disowns the issue of cheque. On enquiry in CBS it was revealed that the cheque has been paid
at Ramnagar Branch. The signature on the paid cheque resembles with the signature of Sri
Ravishankar to some extent. How you will proceed in this matter.
Ans. As the original cheque is with Sri Ravishankar, it appears that the cheque has been
fraudulently encashed at Ramnagar Branch. Ramnagar Branch has failed to apply due diligence.
They have not verified the multicity cheque features as per the Bank's extant instruction. The
features of paid cheque doesnot confirm to the CTS-2010 standards. The tests like fugitive ink/
water droplet test, Ultra-violet lamp test, void pantograph test etc could have been done to avoided

the fraudulent payment. Moreover as the amount of cheque is more than Rs1 lakh, it is mandatory
to make a call to the drawer of the cheque. In case the drawer does not attend the call, the home
branch could have been contacted or an e-mail could have been sent to the home branch asking
for the confirmation.
The signature of Sri Ravishankar has not been verified carefully. In case the signature
does not tally and there is an iota of doubt, the passing official could have consulted the Branch
Manager and could have taken extra precaution in passing the cheque. This was overlooked by
the Ramnagar Branch. The cheque with forged signature is null and void in the eye of law and
will be treated as if there is no mandate from the drawer. Therefore the banker is negligent in it's
duty and the payment is not payment in due course(as per section 10 of Negotiable Instruments
Act.) In this perspective bank will be held liable for wrongful conversion and should make good
the amount to Sri Ravishankar. The branch should take the permission of the controller for
restoring the amount into customer's account
22. The applicant of a demand draft was given a duplicate draft after completion of necessary
formalities. After 10 days of issue of the duplicate demand draft, the applicant calls on you and
asks for issue of a triplicate demand draft, giving the reason that he again lost the demand draft.
The amount of the draft was Rs.800/-. How will you proceed in the matter?
Ans. Before issuing a triplicate demand draft, the following precautions will be taken :
(i) Discreet enquiries will be made as to how the original as well as the duplicate draft was
lost, in order to ascertain precise reasons, (ii) The triplicate draft can now be issued without
obtaining Non-payment certificate from the drawee branch, provided there are no reasons to
doubt the bonafides of the applicant. (iii) An enquiry in CBS will reveal the status of the Draft and
it should be ensured that the draft has not been paid. (iv) Letter of indemnity will be obtained,
and, (v) Controlling authority will be advised about the transaction.
23. The account of a firm is overdrawn but each of the partners has a private account with a
credit balance. Under what circumstances could the bank set-off those balances against the
firm's debts?
Ans. Every partner in a partnership is liable, jointly and severally, for all acts of the firm done
while he is a partner. This liability is unlimited and extends even to the private property of the
partner concerned as per Section 25 of the Partnership Act, 1932
This does not give the banker, however, an automatic set-off between the overdrawn account
of the partnership and the credit balance(s) in the individual partner's account. If the banker
wishes to exercise such a right, the bank's usual letter of set-off should be got signed by the
partners in their personal capacities or individual letter of authority should be taken from each of
the partners authorizing the bank to transfer funds from their individual accounts to the account
of the partnership as and when it is overdrawn.
24. Discuss the bank's general lien in the following cases:
(1) X has deposited gold ornaments in safe custody and his current account has been overdrawn.
(2) A, B, & Co. with A and B as partners, have overdrawn their current account. A has a current
account in his personal name with a sufficient credit balance.
(3) P maintains a current account, which is overdrawn; P and Q have a joint current account
which shows a substantial credit balance.
(1) In the matter of gold ornaments in safe custody, the relationship between the bank and the
customer is that of a bailee and bailor; the bank cannot, therefore, exercise a lien on the
articles deposited in safe custody for an overdraft on his personal current account.
(2) The bank has no right of set-off as the two debts are not in the same rights and same
(3) The bank has a right of lien on the documents attached to the bills of exchange so
25. M/s Santa & Co has availed a cash credit loan for Rs. 10 lacs against security of stock.
The loan was guaranteed by Mr. Banta . The loan became NPA after some time. Bank has
given notice to both the borrower & guarantor. But they have not responded. Bank has recalled
the loan. Bank has sold the pledged goods for Rs. 6.00 lacs and initiated legal action. But the
guarantor contended that since the bank has sold the goods without his consent, he is not liable.
Discuss bank's action.
Ans: Guarantor's liability is co extensive with that of the principal borrower as per Section 128
of Contact Act which also being upheld by the Apex court in a recent judgment.
In the instant case, It is in order for the bank to sell the pledged goods and effect recovery
of Rs.6.00 lacs. As goods pledged to the bank form part of the primary security, obtaining of
guarantor's consent is not essential. Hence, the guarantor's liability does not get extinguished
and the contention made by him is not tenable.
Therefore the Bank is well within its rights to initiate legal action to recover the shortfall.
26. Smt. K.Padmini, who was maintaining Rs..2 lacs in the Savings Bank Account, died recently.
Today you have settled the account, by transferring the balance along with accrued interest
for credit of Shri K.Suresh, his son and also the nominee of the account. However you have received
an Income tax Attachment Order against Smt. K.Padmini for Rs.50,000/-. How do you deal with
the situation?
Ans: a) Income Tax Attachment Order is for the dues from Smt. K.Padmini to the Government
hence attachable irrespective of existence of the person. Since the Bank has already parted
with the fund and duly discharged hence absolved. The Inocme Tax Authority will be informed
the same by giving the details about Smt. K.Padmini, the nominee, so that they can proceed
27. A Bank has sanctioned a Cash Credit facility to a partnership firm for procuring the goods.
The goods have been hypothecated to the Bank. It had also given loans to the individual partners.
The goods hypothecated were destroyed by fire and the bank collected the insurance proceeds.
The Bank utilized the insurance money for wiping out the loans of individual partners. The firm
contended that it was not obliged to do so. Discuss.
Ans. It seems that the Bank in applying the insurance proceeds to wipe out the loans of individual
partners relied on the belief that partners individually and firm are no difference. This kind of
feeling does not seem to be correct. Under section 43 of the Indian contract Act, the liability of
joint borrowers is not only joint but several. Thus, individual partners may be held liable for the
debts of the firm. But, the firm represents partners in a particular relationship and hence the
reverse shall not be true, i.e. the firm shall not be held liable for the borrowings of the individual
partners. It was, therefore, uncalled for on the part of the bank to have applied the insurance
proceeds representing firm's security against debts of individual partners. The contention of the
firm that Bank should give credit for insurance proceeds seems to be justified.
28. A cheque for Rs 500/- is issued by the drawer leaving space before the amount in words
&figures. Payee of the cheque changed the amount to Rs 5500/-. Cheque is presented for
payment and honoured by you. Please justify your action.
Ans: In this case, the amount of the cheque has been changed which is a material alteration.
Therefore, it requires drawer authentication. It also appears from the case that the payee had
been to able to make such change due to negligence of the drawer in writing the cheque and
Under Sec 89 of NI act statutory protection is available to the paying banker in case of payment
of cheques which have been materially altered provided the alteration is not apparently clear
and payment is made in due course.
In the present case, both the conditions appear to be fulfilled as there is no ground to
believe that payment has not been made in due course. Therefore, paying banker can seek
protection under section 85 of the NI Act.
29. Y reports death of her husband X maintaining a SB A/c. She claims the money lying in
X'saccount (Rs 43000/-) as nominee. She submits an acknowledgement issued by bank
mentioning therein her name as nominee to the account. On scrutiny, however, it is observed
that nomination form was not signed by X. Smt. Y is mother of a 15 year old daughter only.How
will you help Y in such situation?
Nomination in favour of Y by X cannot be considered valid as the Nomination form has not
been signed by the depositor. The bank should apologize for the mistake and should facilitate
the settlement. They should also assure Smt. Y of all cooperation in smooth settlement of a sum
of Rs 43000/- held in her husband's account. She will be advised to submit the following
a) Death Certificate of Mr. X
b) Claim format signed by the Smt. X together with declaration from one independent person,
in respect of legal heirs of deceased Mr. X, known to the family of the deceased and
acceptable to bank
c) A stamped Letter of Disclaimer to be signed by Smt. Y on behalf of her minor daughter Ms Rekha
d) A stamped Letter of Indemnity to be signed by Smt. Y (Claimant)
In this case, No sureties are required as the claim amount is below Rs 50,000/-. Such type
of cases should be dealt with empathetically.
30. Sri Krishna Ballabh Sinha is a visually impaired/blind person. He can sign consistently. He
wants to open a self operated cheque facility Savings Bank A/c. What procedure you will adopt to
accede to his request? If, he would not have been able to sign uniformly do you envisage any
change in the procedure?
i) In terms of revised RBI/IBA guidelines in this respect Sri Sinha will be permitted to open
self operated cheque facility SB A/c.
ii) Sri Sinha needs to be informed/explained about his 'rights & liabilities' as account holder.
iii) Third party cash payment of self drawn cheques by visually impaired persons is now
iv) He is also not required to submit any undertaking
v) Since he is able to sign the cheques consistently, affixing his thumb impression at the time
of issuing cheque is not required
In case, he feels that his signature may not exhibit consistency does not mind branding
"CARE -Depositor Visually Impaired" stamp, in order to avoid the 'cheque being returned unpaid'
on account of 'difference in the signature', in such cases a written request for branding the cheques
may be obtained, cheques shall be branded and thumb impression shall also be obtained and
witnessed by the Bank Official under his signature and specimen signature number, along with
the Bank stamp.
31. Mahesh, a Single Window Operator, detects counterfeit notes while accepting cash from
a well known customer, Dr Binod Prasad Garg, of the Branch. Dr Garg says that his attendant
might have received these from some patient. He requests Mahesh to return the suspected
notes to him. You are Cash-in-Charge of the Branch and Mahesh approaches you for guidance.
Please, therefore, suggest him the necessary steps to be taken in such situations.
ANS: Mahesh will be advised to politely request Dr Garg to cooperate in this regard so
that compliance of RBI's guidelines may be ensured:
i) Counterfeit notes will be branded with stamp reading 'COUNTERFEIT BANKNOTE
ii) An acknowledgement receipt will also be issued mentioning therein Name and address of
Dr Garg, Sl No of notes, Denomination and parameter on which the notes are deemed as
iii) Receipt will be signed by Mahesh (Cashier). Dr Garg (tenderer) will also be requested to
countersign the receipt. Receipt will, however, be issued even on denial of Dr Garg to sign
the receipt.
iv) Each such impounded note shall be recorded in Forged Note Detection/Impounding
Register under authentication.
v) For cases of detection of counterfeit notes upto 4 pieces, in a single transaction, a
consolidated report should be sent by the Nodal Bank Officer Local Police Authorities or
the Nodal Police Station, along with suspected counterfeit notes at the end of month. For
cases of detection of counterfeit notes of 5 or more pieces, in a single transaction, the
counterfeit notes should be forwarded by the Nodal Bank Officer to the local police
authorities or the Nodal Police Station for investigation by filing FIR
vi) A copy of the monthly consolidated report/FIR shall be sent to the Forged Note Vigilance
Cell of the bank.
vii) Acknowledgement of Police authorities should be obtained for notes forwarded to them
both as consolidated monthly statement or FIR.
vii) By 7th of next month, a report on counterfeit notes detected will be submitted to
a) Concerned Issue Office of Reserve Bank and
b) Under section 3 of PMLA to the Director, FIU-IND Financial Intelligence Unit, India.
32. Mr. Rahul Sharma had purchased a draft for Rs35000/-. Now he has applied for issuing
a duplicate draft as the draft in case has reported lost-in-transit. Payee of the draft is not willing
to execute the letter of indemnity. Miss Surabhi, the newly posted Manager(Branch Operation)
did not receive the application from Mr Sharma. Mr Sharma approached you(The Branch
Manager). Please state how you will deal with such situation.
ANS: The application containing the request for issue of duplicate draft will be received
from Mr Sharma and he will be requested to wait before the formalities for issuance of duplicate
drafts as per extant systems and procedures are completed. You will call Miss Surabhi and
explain the procedures for issue of duplicate drafts which are as follows:
a) Status of the draft will be changed from 'issued' to 'lost' in CBS.
b) A duplicate draft can be issued either at the request of applicant or payee.
c) We have to apply due diligence (viz. A lost-in-transit certificate from the courier/postal
agency, a oral/written confirmation from the payee having not received the draft etc.) in
order to ensure that the draft is not available with the payee.
d) A duplicate draft can be issued after obtaining letter of indemnity from the purchaser/
applicant and surities(if necessary).
e) Production of sureties may not be insisted upon while obtaining indemnity for issuance of
a duplicate demand draft where the amount of draft is below Rs.1,00,000/- if the applicant
(purchaser) of a draft is considered good for the amount involved
the applicant / purchaser is maintaining satisfactory account complying KYC norms with
the issuing branch for a minimum period of six months as on the date of issue of the
original draft.
f) Where the applicant (purchaser) is not known to the Bank (not an account holder) or not
considered good for the amount, sureties may be obtained and reasons therefor recorded
on the request letter received from the applicant in this regard before entering in the 'Branch
Documents Register'.
g) The application, original draft application form and the letter of indemnity will be entered in
the Branch Documents Register and kept on Branch Record.
33. Mrs. Asha Trivedi was issued a cheque for Rs 2.50 lakh by LIC of India against final
settlement of a policy on the death of her husband, Mr. Tribhuvan Trivedi. The cheque was
deposited in the drop box at your branch for credit to her A/c. After a lapse of one week, when
she enquired about the non credit of the cheque in her account, the cheque could not be traced.
She is in urgent need of money due marriage of her daughter. How you will handle the situation?
i) Drawee bank/bank will be advised the particulars of lost cheques for exercising caution
against payment
ii) Mrs. Trivedi will be assured of our all assistance in obtaining a duplicate instrument from
the drawer/ maker of the instrument (LIC of India)
iii) Actual charges of recording Stop Payment instructions levied by drawee bank will be borne
by the Bank
iv) Actual charges levied by the drawer/bank in issuing duplicate cheque/instrument will also
be reimbursed, subject to a maximum of Rs 250/-
v) Interest on the amount of the cheque for a further period of 30 days at Savings Bank rate
will also be provided for possible further delay in obtaining duplicate cheque
34. Mr. & Mrs. S C Gupta reports that last night robbery was held at their residence in which
key of their locker at your branch was also taken away. They are quite apprehensive that the key
may be misused to operate the locker. How will you help them?
ANS: We will assure them that due care and necessary precaution is exercised at the
branch in operation of the locker to prevent any unauthorized access to it. Before allowing the
access to the locker, the signature of the hirer is obtained and verified on the SD Locker Access
Register. Mandate for operation is also verified and access is allowed to the hirer(s) as per
mandate only. They will also be advised to report the loss of key in writing signed jointly by them.
Necessary remark regarding loss of key should be put in place in the locker which would act as
a caution.The date for breaking open the locker will be fixed with the manufacturer of the locker as
per Mr. & Mrs. Gupta's convenience. A service charge of Rs 750/- in addition to actual expenditure
incurred for breaking open the locker and changing the lock by manufacturers of lockers shall be
payable by them. The breaking open exercise of the locker will be performed in their presence
and suitable undertaking will be obtained and kept on record.
35. What actions you will take when rent is overdue in a locker?
ANS: Following Procedure will be followed in case of non-payment of rent of a locker
i) Reminder will be sent to the hirer (s) on due date i.e on 2nd April
ii) If the rent is paid in 1st Quarter, normal locker rent plus 10% of annual rent will be recovered
as locker rent overdue charge. If the rent is not paid, another reminder will be sent after 1st
iii) In case of payment by the hirer (s) normal locker rent plus overdue locker charge (25% of
Annual rent) will be recovered. Otherwise, Notice on COS 405 will be sent after lapse of 2nd
iv) Notice on COS 406 will be sent after 1 year. If rent is paid during the period (within 1 year)
appropriate overdue charge will also be recovered along with normal rent.
v) In case locker rent remains unpaid even after serving notice on COS 46, the recovery of
arrears of rent may be made by sale of contents of locker.
vi) Controlling authority's approval will be obtained before breaking open the locker
vii) After breaking open the locker inventory of contents shall be prepared in the presence of
two officers of the branch and two independent witnesses.
viii) Contents so found in locker will be valued by an approved Govt Valuer and kept on record.
ix) Arrear of rent may be realized by sale of the contents
x) Remaining contents will be kept as a Safe Custody item under joint custody of Joint

36. Mr. & Mrs. Sharma are having a locker to be operated by either of them or survivor. Mr.
Sharma requests you in writing that Mrs. Sharma should not be permitted to operate the locker.
Discuss the situation.
ANS: If the locker is in joint names, access to the hirers is allowed only after verification of
mandate for operation recorded with the bank. In the present case, mandate is available for
operation of the locker by either of them. However, the mandate can be revoked by any one of
the joint hirers. Here, Mr. Sharma (one of the hirer) has given the notice to revoke the earlier
mandate of operation (E or S). In such situation, only joint operation of the locker can be permitted.
Bank should also make effort to persuade them to surrender this locker and get separate lockers
allotted in their sole name to prevent any further complication or litigation.
37. 'A' & 'B' are having a jointly operated locker. 'A' has nominated 'X' and 'B' has nominated
'Y'. Both of them die in a accident.
ANS: In such eventuality, access of the locker will be given jointly to the nominees X and Y.
However, certain precautions will be exercised before handing over the contents to them. These are:
i) Genuineness of the death certificate will be ensured.
ii) Due care and caution will be exercised in establishing the identity of the nominees.
iii) Effort will be made to find out if there is any order from a competent court restraining the
branch from giving access to the locker of the deceased
iv) Nominees will be clearly explained that the access to the contents of locker has been
given to them as trustee of the legal heirs of the deceased and such access to them will not
affect the claim/rights of the legal heirs of the deceased.
38. What actions you will take in case a locker is not operated for more than a year even if the
rent is paid regularly and the locker hirer is classified under High Risk category? Have you
acted differently in case the locker hirer would have been classified under Medium Risk?
ANS: Where the locker has remained unoperated for more than 1 year for a higher risk
category, following actions will be taken:
i) Efforts will be made to immediately contact the locker hirer. He/she will be advised to
either operate the locker or surrender it.
ii) Locker hirer will be asked to give in writing, the reasons why he/she did not operate the
locker for such a long period.
iii) In case the locker hirer has some genuine reasons as in the case of NRIs or persons
who are out of town due to a transferable job etc., branch may allow the locker hirer to
continue with the locker.
iv) In case the locker hirer does not respond nor operate the locker, branch should consider
the opening of the locker after giving due notice to the locker hirer.
In case of medium risk category customer, the above mentioned actions will be initiated if
the locker has remained unoperated for more than 3 years.

39. Mr. Prabhat Kumar has recently been promoted to MMGS-III. He has been given assignment
of Manager (Branch Operation) of a District Head Quarter Branch. In his previous assignment,
he was handling Service Desk at ITS Department of his Circle. Few weeks after taking charge
of his new assignment, he finds that there are large number of accounts in which there is no
transaction for more than a year and balances are also more tha Rs 5000/-.
In many cases, balances are more than Rs 25000/- also. He is not aware of the guidelines
in this regard. If you are heading that Branch, what actions you will suggest to him?
i) A letter in prescribed format should be sent to the all such accountholders so that reason
for non operation can be ascertained.
ii) In case it is due to shifting of the locality, they may be asked to provide details of their new
accounts to which the balance in the existing account could be transferred.
iii) In case of inoperative accounts having balance more than Rs.25,000/- and the letter sent
to them is returned undelivered, they may immediately be put on enquiry to find out their
whereabouts or their legal heirs in case of deceased account.
iv) In case, they are not traceable, person(s) who has/have introduced the account holder
should be contacted.
v) Contacting the employer or any other person whose details are available with the Bank
may also be considered.
vi) Account holder may also be contacted telephonically if the telephone/cell number is available.
vii) In case of non-resident accounts, account holders may also be contacted through e-mail
and confirmations be obtained.
viii) The following three reports are being generated by the CDC Belapur for Branch use.
a) Report on accounts having nil transaction for over a period of one year - on 31st
b) 'Inoperative_Accounts.txt': Customer wise list of in-operative accounts - on 30th June and
31st December.
c) 'Intimation forAccountBecomeInoperative-depd0000' : intimation letters addressed to the
customers whose accounts are going to be marked "INOPRTV" on ensuing 31st March by the
We can make good use of these reports to persuade in-operative account holders
for timely resumption of operations.
40. Assume that you are the branch manager of an Industrial Estate branch. Mr. Ravi Kiran
CEO of M/s Good luck Industries with around 500 employees of various cadres is approaching
you with a request to open salary accounts at your branch for his employees.
The employee profile of the company is as under:
l 100 employees are of executive cadre drawing monthly salary of Rs.50000/- and above.
l 100 employees are of supervisory cadre drawing monthly salary of Rs.25000/- to Rs.35000/-

l Remaining are regular employees earning monthly salary of Rs.7000/- to Rs.10000/-. The
current account of M/s Good luck Industries is already maintained at your branch. Some of
the low salaried employees are not in favour of opening SB accounts. How will you help
the customer and what are the various alternatives available before you?
ANS: Employees of supervisory cadre & executive cadre should be offered Silver & Diamond
variant of Corporate Salary Package respectively. A host of value added features are available
under these variants of CSP such as VISA/Master Gold Card, Free Inter core transfer
transactions, Free Unlimited SB Cheques, Free Multi City Cheques, etc. Mr. Ravi Kiran, CEO
should be offered Platinum variant of CSP. He should be accorded status of 'Vishesh' customer.
SBI Platinum Card should also be issued. Employees who are not willing to open SB Accounts
should be issued e-Z pay card subject to fulfillment of the following conditions:
i) Limit per card for loading / reloading not to exceed Rs. 50,000/- per month
ii) An undertaking and indemnity to be obtained from the company to the effect that the cards
are for genuine payments to the employees / agents etc., and will be delivered to them
against their acknowledgement.
iii) Complete KYC requirements of individual card holders are to be obtained and kept on
record by the company.
iv) Acknowledgment from the card holder to be obtained and submitted to branch to be kept
in record. All the account will be opened thru online application opening mode.
41. Shri Ramesh Kumar, an SB account customer of your branch approaches you with an
ATM related issue. He says that he purchased jewels from a famous jewelry shop using his ATM
card. His account was twice debited for the amount of purchase. The POS machine used by the
shop belongs to some other Bank. The vendor said that his account was credited only once. Now
the customer wants refund of the amount debited erroneously. How will you deal with the situation?
ANS: Shri Ramesh Kumar will be asked to provide his ATM Card No or A/c No. His complaint
will be lodged in centralized Complaint Management System (CMS) application (URL https:// A ticket number will be generated acknowledgement of complaint will
be sent to the customer by e-mail / SMS. Since the complaint relates to erroneous debit at POS,
it will be handled by ATM Switch Centre and the customer's Account will be credited directly In
case of delay in settlement of complaint beyond 7 days, Shri Arvind Kumar will be compensated
with Rs 100/- per day from 7th Day.
42. A valued customer of your branch reports that he has forgotten the PIN number of his ATM.
How will you help him?
ANS: From 01.07.10, requests for generation of duplicate PIN can be registered in CMS
by the current branch of the customer or any other branch. Customers can also lodge requests
for duplicate PIN through CMS via Contact Centre. A ticket number will be generated in CMS. It
will always start from "AT99999". Current branch of the customer can track the Re-PIN request
anytime in CMS or ATM WEB. If request is lodged by another branch, they too can track it in
ATM WEB. Acknowledgement is sent to the customer when their mobile number /email id are
entered. Regenerated PIN will be dispatched to the current branch only after dispatch of PIN, the
details are sent to customers, where mobile number is available at Core data, through SMS.
The stipulated Service charge will also be recovered.
Moreover a facility for enabling retail internet banking users to generate ATM PIN online
either by using OTP or profile password has been rolled out. Retail INB users having transaction
accounts with single mode of operation can avail this facility by logging-in to retail INB. The
facility is available under e-services module.
43. The hirer of a locker operated the locker but forgot to lock it after the operation. The locker
official observed the same at the end of the day. What steps are to be taken to protect the bank's
Ans: An inventory of the contents should be taken; it is to be witnessed by two officers of the
bank preferably joint custodians; it is preferable to have it witnessed by a valued customer of the
bank. The contents may be kept in a sealed packet as a safe deposit item in the custody of BM/
Acct. The customer has to be contacted for taking delivery. The matter should be explained to
the locker holder in detail as also put on record; the contents have to be delivered against his
unconditional acknowledgement of the entire contents. The customer would be requested to be
cautious in operating the locker in future. The Controlling Authority should be advised.
44. Mr. "X" raised a loan of 20,000/- at your Branch against the pledge of gold ornament. On
his failing to honour commitment regarding payment, in spite of repeated reminders, the
ornaments were auctioned and after applying proceeds in satisfaction of the dues to the bank,
the balance was remitted to him by means of a banker's cheque / pay order. Mr. "X" now moves
to the court with a plea that the gold ornaments represented only a collateral security, the primary
security being the demand promissory note and the bank had no authority to dispose of the
ornaments in the manner it has done.
Ans: If the gold ornaments were auctioned after giving a reasonable time to Mr. "X" for such a
notice is mandatory, "X"s plea cannot be sustained. In this case, the contract Act. 1872, Sec.176
provides, "if the pawnor make default in payment of the debt , or performance at the stipulated
time of the promise , in respect of which the goods were pledged , the pawnee may bring a suit
against the pawn or upon the debt or promise and retain the goods pledged as a collateral
security or he may sell the things pledged on giving the pawnor reasonable notice of the sale".
45. Sri Khetri is Banks's valued customer holding deposits to the tune of Rs.25 lacs . A cheque
for Rs.10,000/ issued by him was returned for the reason "insufficient funds" . The customer
brings to the notice of the bank that there has been a wrong debit of Rs.300 towards charges.
Also, the payee has also been charged Rs.300 by his bank. The errenous debit act has resulted
in shortfall of requisite balance. He informs the bank that his reputation has been affected
arising out of such negligence.
a) What is the position of the bank?
b) What action has to be initiated by the bank to set right the position?
Ans: The bank would be liable for the unauthorized debit and losses sustained by the customer.
a) The bank has to immediately verify whether the debit in question is raised in the customer's
account is erroneous. As bank has no authority to raise debit in the customer's account.
b) The bank should arrange for the reversal of such wrong entry and afford credit of all ineligible
recovery made earlier without further delay.
The Bank official should meet the customer preferably at his place and regret for the incident
and also extend assurance against recurrence in future. The employee involved in the process
must be counselled and also be cautioned and suggested to go for enhancing job knowledge
preferably through e-learning
46. A person, Mr shyambabu want to keep a small sum of amount by opening a savings bank
account. He is a running a very small business in his village. He is not having any ID proof with
him. The CRO Mr. Ranbir has refused to open any savings bank account without having ID
proof. As a Branch Head how can you help poor man? Discus.
Ans : The liberalised KYC guidelines provide for opening of small deposit accounts for those
person who intend to hold balances not exceeding Rs. 50,000/ in all their account taken together
and total credit in all accounts do not exceed Rs. 1 lac in a year.
In such cases, if the person is not able to produce KYC documents the bank can accede to
his request :
a) the person will produce a self attested photograph and must sign /put thumb impression in
front of the bank official.
b) Further, the bank can provide ATM card/ Cheque book depending upon the customer
profile. The customer is allowed to have 4 withdrawals including ATM withdrawals in a
month. The account will be reviewed after one year if the account holder produces valid ID
proof the same will be upgraded. Else another 12 month will be allowed.
The CRO Mr Ranbir will be advised to go through the liberalised KYC guide line and relevant
circular for opening of small deposit account also a staff meeting will be convened to spread
awareness and to ease the hardship to such category of persons, which will help financial
inclusion initiative.
47. The Bank has erroneously credited Rs. 10,000/ relating to A's Account to B's A/c .
Subsequently B closed the account and has drawn the entire amount available in the account
including the wrongly credited one. A has now claimed the amount. Discuss the situation.
Ans: Any credit afforded wrongly must be returned along with interest as this leads to UNJUST
enrichment as per Section 72 of Contract Act,1872.
In the cited case the relative vouchers/records etc has to be scrutinized and the bank will
make good the amount to A's account without delay and demur.
However, the bank can legally proceed against B to recover the dues . The staff concerned
must be made accountable for such act.
48. A valued customer has approached you and informs that a cheque received by him for
repayment of debt by his client MR Chatur has returned with remark "Drawer's signature differs".
He smells some mischief has been played by Mr Chatur while the later handed over the cheque.
As a Branch Manager you advise suitably to your customer including legal remedy if any.
Ans : When a cheque is given in discharge of a debt or other liability is returned by the bank
either for the reason 'insufficient fund, A/c closed, Stop payment of cheque, SIGNATURE
MISMATCH etc then it is deemed as a criminal offence under Section 138 of NI Act,1881 on
the part of the drawer of the cheque. The customer will be advised as: 1)To contact Mr Chatur to
settle amicably the liability and take return of the cheque in question. 2) if the above act is proven
to be futile then the payee should make a demand for the payment of the said amount, in writing,
to the drawer within 30 days of receipt of information regarding the return of the cheque. If the
drawer fails to honor the payment of the amount to the payee within 15 days of the receipt of the
notice, the cause of action arises for the payee to file a case U/s 138 of NI Act in the appropriate
court by appointing a lawyer.
49. A customer of your branch approaches you and narrates the loss of ATM card along
with her purse in the market. She fears that the PIN of the card might have been written in
the cover. She urges to stop operation of the account and the card. As a branch Manager
what is action.
Ans: The genuineness of the claim and identity of the the lady will be established if found
satisfactory, then a written request would be asked for. The account will be hold and the card
can be blocked through INB branch interface. Also the customer will be educated not to record
the PIN in the card envelope etc but to memorize the same. Further, other means to blocked the
card viz: through contact centre, sending SMS to 567676 from the registered mobile of the
customer etc will be explained to her. She may be asked to apply for new card. The suitable
charges to the above effect will be recovered.
50. Your branch is a currency chest branch and situated in the heart of the town. There is
acute shortage of coin and small denominations notes in the locality. The local news paper
also gives adverse publicity against all the bank branch as they are not issuing coins, notes of
small denominations and fresh notes. Your controller has received a communication from the
head office to this effect and ask for compliance. As a Branch Head what are your action
points, discuss ?
Ans: Any adverse publicity will affect the image of our Bank as well as RBI since Currency chest
is there. Therefore following action point would be taken in consultation with RBO:
a. I will arrange a meeting with the local chamber of commerce and invite their suggestion
for distribution of coin/notes etc.
b. A coin and soiled note exchange mela will be arranged on the weekly market and necessary
permission will be accorded from RBI and controller. Soiled note remittance will be sent to
RBI with a request for adequate supply of coin. The customer meeting will be arranged at
regular intervals, the local reporters, office bearers of the Chamber of Commerce, Senior
Citizens, eminent personality will be invited. Also , one demo session of alternative payment
mode i.e POS-MAB,MBS,INB will be arranged in the meeting and the USPs will be
explained by inviting resource persons/Trainers from the SBLC. I will involve all the staff
members in the above process and will act for the image building of the Bank. The
controllers will be intimated of all the developments.
51. Mr Raj (37 years of age), is a good farmer Dompeta. He is a widower. Last year his wife
passed away. His family consists of his son(12 years) and mother(57years).
He had availed a power tiller loan from Dompeta Branch and repaid the loan in due time(the
last installment was paid on January 2015). He cultivates his own land of 3 acres besides 1

acre as share cropper. Moreover he posseses four milch cows and a small poultry firm. From
the allied agricultural activities he earns Rs15000/- per month. His fiscal prudence is good and
he has saved a good amount (approximately 3 lakhs) in form of STDR with us and in form of
NSC in post office.
With the increasing firming activity he wants to upgrade from the power tiller to a tractor.
He has decided to purchase a tractor and trailer. His concern is interest rate and he wants to
avail a tractor loan with the minimum interest rate. He is in a hurry as the harvesting season is
on. The branch head of HDFC bank has visited him and said that a tractor loan will be sanctioned
to him within 2 days. You are the Branch Manager of Sompetta Branch. How you will help and
retain your customer as well as increase business.
Ans. : From the profile of the prospective borrower it appears that he can be financed a tractor
under Stree Shakti Tractor Loan scheme. The eligibility criteria of the SSTL is as follows.
a) The loan shall be sanctioned with women as co-borrowers.
b) Minimum agriculture land holding of 2 acres in the name of borrower(s).
c) Minimum net annual income of the borrower(s) is Rs.1.50 lacs from farm activity /custom
hiring / other sources.
d) Income of the co-borrower(s) may be reckoned for arriving at Net Annual Income.
e) EMI / NMI shall not exceed 60%.
In order to alleviate his concern for high interest rate he may be offered the SSTL with
collateral security. The interest rate for the loan is 1.50% above Base Rate p.a. i.e.10.80 at present.
The major benefits of the SSTL without collateral are - a) Minimum margin stipulated is
10%. b) Mortgage of immovable properties is not envisaged. c) Security of gold ornaments,
NSC, Time Deposits (advance value of gold ornaments, time deposits, NSC) to the extent of a
minimum 30% is obtained for loans sanctioned under 'SSTL with Collateral'. d) 48 EMIs for
repayment of the loan. e) Lower interest of 1.5% above Base Rate.
In this perspective the SSTL with Collateral will be offered to him in which his mother will
stand as co-borrower for the loan. As he possesses three acres of land in his own name he
satisfies the criteria of minimum land holding(i.e.2 acres) in the name of the borrower. There is
no need to mortgage the agricultural land and the loan will be sanctioned quickly (The TAT
stipulated is 3 days). His annual income from agricultural as well as other sources comes to
Rs1.80 lac which is more than the stipulated Rs1.50lac. He is having STDRs and NSCs worth
Rs3 lac which can be taken as collateral security.
52. Mr. Uttar and Dakhin, sons of Surya, on the demise of their father approached the bank to
release the land documents mortgaged to bank due to guarantee of loan to the tune of Rs 40
lakh (CC and TL) availed by Sri Chandra. What are the procedures to be followed?
Ans. : Death of Guarantor: Procedure to be followed:-
The following guidelines are to be observed while handling the issues involving death of
a) Any proposal seeking release / substitution of personal guarantees shall invariably contain
the specific details of alternate guarantee / security proposed to be offered to protect
Bank's interest.
b) In the event of death of a guarantor, the question of releasing the personal guarantee does
not arise. In accordance with law, unless the legal heirs do not get released, the Bank has
every right to proceed against them. The legal heirs of the guarantor are however, liable
only to the extent of the estate inherited by them form the deceased guarantor and unless
they undertake personal obligation in their personal capacities by executing a separate
deed of guarantee or agreement, they cannot be made personally liable.
c) In case we need to bind the legal heirs personally into the guarantee fresh Deed of Guarantee
should be obtained from the Legal Heirs of the deceased guarantor on the Bank's specified
standard formats with the following clause duly incorporated :-
'And whereas Bank has agreed to continue the credit facilities now being enjoyed by the
borrower at our request and subject to execution of a guarantee by us.'
d) In case legal heirs do not execute guarantee and do not undertake personal obligations as
a guar-antor, they would still continue to remain liable to the Bank only to the extent of the
estate inherited by them from the deceased guarantor.
e) In case where the legal heirs of the deceased guarantor are unwilling to execute guarantee
for the loan/s, the borrower shall be advised immediately for substitution of such guarantee/
mortgaged property without any dilution in the existing value of the security.
f) In respect of NPA accounts and suit filed accounts, the operating units should immediately
implead the legal heirs in the pending proceedings within 90 days from the death of the
guarantor or the date on which Bank becomes aware of the death of the guarantor. Where
death happens before the initia-tion of legal proceedings, legal heirs shall also be impleaded
as defendants in the suit or DRT proceedings as the case may be.
g) In case of running accounts, immediately after the operating unit becomes aware of the
death of a guarantor, a quick decision needs to be taken as to whether their guarantee
should be substituted or legal heirs should create separate guarantee, to avoid a possible
invocation of limitation being raised by the legal heirs of the deceased guarantor.