GENERAL BANKING

Banking Companies Act, 1991

Negotiable instruments Act, 1881
General Banking Issues

Developed & edited by:

S.M. Hafizur Rahman

SVP & Head of Training

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 Banking Companies Act, 1991
Banking, Banking Company and Scheduled Bank as per Section - 5:
p) "banking" means the accepting, for the purpose of lending or investment, of deposits of money
from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or
otherwise;
o) "banking company" means any company transacting the business of banking in Bangladesh, and
includes all new banks and special banks;
b) "company" means any company which may be wound up under the Companies Act;

f) "scheduled bank" has the same meaning as in the Bangladesh Bank Order ( P.O. NO. 127 of
1972) Article 2 (j); that is the Banks those are listed under Article 2 (j).
h) "new bank" means any bank denominated in the Bangladesh Banks (Nationalisation) Order, 1972
(P.O. No. 26 of 1972);
m) "special bank" means any bank established or formed by or under any Act in force for the time
being and includes such banks as the Government may, by notification in the official Gazette,
declare special banks for the purpose of this Act;

Comprehensive functions of a Banking Company:

Section 7: Business of Banking Companies: (1) In addition to the business of banking

("banking" means the accepting, for the purpose of lending or investment, of deposits of
money from the public, repayable on demand or otherwise, and withdrawable by cheque,
draft, order or otherwise;), a banking company may engage in all or any of the following forms
of business, namely:
a) the borrowing, raising or taking up of money;
b) the lending or advancing of money either upon or without security;
c) the drawing, making, accepting, discounting, buying, selling, collecting and dealing in bills of
exchange, hoondees, promissory notes, coupons, drafts, bills of lading, railway receipts, warrants,
debentures, certificates, participation term certificates, term finance certificates, musharika
certificates, modareka certificates, such other instruments as may be approved by the Bangladesh
Bank, and such other instruments and securities whether transferable or negotiable or not;
d) the granting and issuing of letters of credit, traveler’s checks, and circular notes;
e) the buying, selling and dealing in gold and silver coins and coins of other metals;
f) the buying and selling of foreign exchange including foreign bank notes;
g) the acquiring, holding, issuing on commission, underwriting and dealing in stocks, funds, shares,
debenture stock, obligations, participation term certificates, term finance certificates, musharika
certificates, modareka certificates and such other instruments and investments of any kind as may
be approved by the Bangladesh Bank;
h) the purchasing and selling of bonds, scripts or other forms of securities, participation term
certificates, term finance certificates, musharika certificates, modareka certificates and, on behalf of
the constituents of the Bangladesh Bank or others, such other instruments as may be approved by
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the Bangladesh Bank;
i) the negotiating of loans and advances;
j) the receiving of all kinds of bonds or other valuables on deposit or for safe custody or otherwise;
k) providing vaults for the safety of the deposits;
l) the collecting and transmitting of money against securities;
m) acting as agents for the Government, local authorities or any other person;
n) the carrying on of agency business of any description including the clearing and forwarding of
goods and acting as a law agent on behalf of customers, but excluding the business of a managing
agent or treasurer of a company;
o) contracting for public and private loans and negotiating and issuing the same;
p) the effecting, insuring and underwriting of shares, stocks, debentures, debenture stock of any
company, corporation or association and the lending of money for the purpose of any such issue;
q) the carrying on and transacting of every kind of guarantee and indemnity business;
r) the buying and acquiring of any kind of property including merchandise, patents, designs,
trademarks and copyrights, in addition to, at the normal business period of a bank, such or similar
transactions as-
1) repurchase by the seller, or
2) selling in the way called purchase on rent, or
3) repayment of outstanding rates, or
4) leases, or
5) sharing out of revenues, or
6) financing in any other way;
s) bringing into possession any property which may satisfy or partly satisfy any of the claims of the
banking company and the managing and borrowing of such property;
t) acquiring, holding and managing of any property or any right, title or interest in any such property
which may form the security or part of the security for any loans or advances or which may be
connected with any such security;
u) undertaking and executing trusts;
v) undertaking the administration of movable and immovable property as executor, trustee or
otherwise;
w) for the benefit of employees or ex-employees of the banking company or the dependants and
connections of such persons-
1) establishing and supporting, or aiding in the establishment and support of associations,
institutions, funds, trusts or any other establishment;
2) granting pensions and allowances;
3) making payments toward insurance;
4) subscribing to any exhibition or any object generally useful;
5) guaranteeing money for all these purposes.
x) the acquisition, construction, maintenance and alteration of any building or works necessary or
convenient for the purpose of the banking company;
y) selling, improving, managing, exchanging, leasing, mortgaging or otherwise transferring or
turning into account or otherwise disposing of all or any part of the property or rights of the banking
company;
z) acquiring and undertaking the whole or any part of the business of any person or company, when
such business is of a nature enumerated or described in this subsection;
aa) doing all such other things as are incidental or conducive to the promotion or advancement of
the business of the company;
ab) any other form of business which the Government may, by notification in the official Gazette,
specify as a form of business in which it is lawful for a banking company to engage.
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(2) No banking company shall engage in any form of business other than those referred to in
subsection (1).

How the Bank and Bank Staff is differentiated from other Financial
Institutions?

Section 8: Use of the Word "Bank" or any of its derivatives: Every company carrying on the
business of banking in Bangladesh shall use the word "bank" or any of its derivatives as part of its
name and no company other than a banking company shall use in its name any word calculated to
indicate that it is a banking company:

Section 9: Prohibition of certain forms of trading: No banking company shall directly or

indirectly deal in the buying, selling or bartering of goods, except in connection with the realisation
of security given to or held by it, or engage in any trade or buy, sell or barter goods for others
otherwise than in connection with bills of exchange received for collection or negotiation or with
such of its business as is approved under section 7.

Section 110: Chairmen, directors etc. of a banking company to be public servants: The
chairmen, directors, auditors, liquidators, managers and other officers and employees of a banking
company shall be deemed public servants in the sense this term is used in section 21 of the Penal
Code, 1860 (Act XLV of 1860).

Section 115: Restriction on acceptance of deposits withdrawable by cheque: No person other

than a banking company or the Bangladesh Bank or any banking institution, firm or other person
notified, after consultation with the Bangladesh Bank, by the Government in this behalf shall accept
deposits withdrawable by cheque:
Provided that nothing contained in this section shall apply to any savings bank scheme run by the
Government.

The procedures of issuing License by Bangladesh Bank. Circumstances when BB

can cancel the Banking License:
Section 31: Licensing of banking companies: (1) Save as hereinafter provided, no banking
company shall carry on banking business in Bangladesh without a license issued in this behalf by
the Bangladesh Bank.
(2) Whenever issuing a license under subsection (1), the Bangladesh Bank may impose any
condition it thinks fit.
(3) Every banking Company in existence on the commencement of this Ordinance, before the
expiry of six month from such commencement, and every other company before commencing
banking business in Bangladesh, shall apply in writing to the Bangladesh Bank for a license under
this section;
Provided that nothing in subsection (1) shall be deemed to prohibit a banking company in existence
on the commencement of this Act from carrying on banking business, if-

a) its application under this section is under consideration, or

b) it has not, by notice, been informed by the Bangladesh Bank that a license cannot be granted to it;

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Provided further that the Bangladesh Bank shall not give a notice as aforesaid to a banking
company in existence on the commencement of this Act before the expiry of the period of two years
in the case of banking companies incorporated in Bangladesh and of six month in the case of
banking companies incorporated outside Bangladesh referred to in subsection (1) of section 13 or of
such further period as the Bangladesh Bank may under the proviso to that subsection think fit to
allow.
(4) Before granting any license under this section, the Bangladesh Bank may require to be satisfied
by an inspection of the books of the banking company or otherwise that all or any of the following
conditions are fulfilled, namely:
a) that the company is or will be in a position to pay the claims of its present or future depositors in
full;
b) that the affairs of the company are not being or are not likely to be conducted in a manner
detrimental to the interests of its present or future depositors;
c) that, in the case of a banking company incorporated outside Bangladesh, the Government or law
of the country in which it is incorporated provides the same facilities to the company as the
Government or law of Bangladesh grants to companies incorporated in Bangladesh, and that the
company complies with all the provisions of this Act applicable to companies incorporated outside
Bangladesh.
(5) The Bangladesh Bank may cancel a license granted to a banking company under this section on
account of the following reasons, namely:-
a) if the company ceases to carry on banking business in Bangladesh;
b) if the company at any time fails to comply with any of the conditions imposed upon it under
subsection (1); or
c) if at any time that company fails to fulfill any of the conditions referred to in subsection (4):
Provided that before cancelling a license under clause b) and c) , the Bangladesh Bank, unless it is
of opinion that the delay will be prejudicial to the interests of the company's depositors or the
public, shall grant to the company on such terms as it may specify, an opportunity of taking the
necessary steps for complying with or fulfillment of the provisions of those clauses.
(6) Any banking company aggrieved by a decision cancelling a license under this section may,
within thirty days from the date on which the decision of the Bangladesh Bank is communicated to
it, appeal to the Government.
(7) The decision of the Government where an appeal has been preferred to it under subsection (6) or
of the Bangladesh Bank where no appeal has been preferred shall be final.

Choice for the payment of deposited money and articles deposited in

lockers:
Section 103. Choice for the payment of deposited money: (1) Where an individual has, or several
persons have jointly deposited money with a banking company in his or in their name, that
individual depositor may separately or, as the case may be, the group of depositors may jointly, in
the way prescribed, choose a person to which, in the case of the death of the individual depositor or
of all of the joint depositors, the deposited money shall be given:
Provided that the said individual depositor or the said group of depositors may at any time cancel
their choice and choose, in the way prescribed, another person.
(2) The person chosen under sub-section (1) being a minor, the individual depositor or the joint
depositors may, in the prescribed way, direct who shall, in the case of the death of the individual
depositors or of the joint depositors, receive the money during the period of minority of the chosen
person.
(3) Notwithstanding anything contained in any Act for the time being in force or in any will or any
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kind of document regarding the allotment of properties, the person chosen under sub-section (1) or
directed under sub-section (2) shall, after the death of the individual depositor or as the case may be,
of all of the joint depositors, attain all the rights the individual depositor or the joint depositors had
on that deposit, and every other person shall be deprived of those rights.
(4) Where a banking company has made payments in accordance with this section, all its
obligations in respect of the deposit concerned shall be deemed fulfilled:
Provided that no right or claim that any person may have or make against the person to whom the
deposited money has been paid under this section shall be prejudicial to the provision of this
subsection.
Section 107. Giving back of articles deposited in lockers: (1) Where a person has separately
rented a locker in the safety vaults or in any other place of a banking company, the said company
shall, in the case of his death, permit the person chosen by him in advance to open, after his death,
as long as the locker is rented, the locker and to take the bonds back from it.
(2) Where two or more persons have rented a locker of a banking company jointly and where the
rent agreement contains a provision to the effect that the locker is to used by the joint signature of
two or more renters, those renters by the signature of whom the locker is to be used may, in the case
of the death of one or more renters, choose one or more persons so that the company may give
another person, in place of the deceased ones, the opportunity to open, together with the living
renters, the locker and to take back the articles deposited therein.

(3) The choices under sub-section (1) or (2) are to be made in the ways prescribed.
(4) Before giving back the articles deposited in a locker to any chosen person or, as the case may be,
to any jointly chosen person and the living renters, the banking company shall, in the way
prescribed from time to time by the Bangladesh Bank, prepare a list containing descriptions of the
articles deposited in the locker, take the signature of the said persons and send them a copy thereof.
(5) Where a banking company has in accordance with the provisions of this section given back
articles deposited in its lockers, all its obligations in respect of the deposited articles concerned shall
be deemed fulfilled:
Provided that no right or claim that any person may have or make against the person to whom any
article has been given back under this section shall be prejudicial to the provision of this subsection.
(6) No suit, complaint nor any other kind of legal proceeding shall be filed or commenced against a
banking company, if any article has been damaged, or appears to have been damaged by reason of
the banking company having consented in accordance with the provisions of sub-section (1) or sub-
section (2) the locker to be opened and the articles deposited therein to be taken out of it.

Restriction of using word Bank and Cheque, Bank Licensing, Status of Bank
Officials in Banking Companies Act, 1991:

8. Use of the Word "Bank" or any of its derivatives: Every company carrying on the business of
banking in Bangladesh shall use the word "bank" or any of its derivatives as part of its name and
no company other than a banking company shall use in its name any word calculated to indicate
that it is a banking company:

31. Licensing of banking companies: (1) Save as hereinafter provided, no banking company
shall carry on banking business in Bangladesh without a license issued in this behalf by the
Bangladesh Bank.
(2) Whenever issuing a license under subsection (1), the Bangladesh Bank may impose any
condition it thinks fit.
(3) Every banking Company in existence on the commencement of this Ordinance, before the
expiry of six month from such commencement, and every other company before commencing
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banking business in Bangladesh, shall apply in writing to the Bangladesh Bank for a license under
this section;

110. Chairmen, directors etc. of a banking company to be public servants: The chairmen,
directors, auditors, liquidators, managers and other officers and employees of a banking company
shall be deemed public servants in the sense this term is used in section 21 of the Penal Code,
1860 (Act XLV of 1860).
115. Restriction on acceptance of deposits withdrawable by cheque: No person other than a
banking company or the Bangladesh Bank or any banking institution, firm or other person notified,
after consultation with the Bangladesh Bank, by the Government in this behalf shall accept
deposits withdrawable by cheque:
Provided that nothing contained in this section shall apply to any savings bank scheme run by the
Government.

Bank, Banker and Banking defined as per Negotiable Instruments Act, 1881and
Banking Companies Act, 1991:
As per Negotiable Instruments Act, 1881

1 As per the Negotiable Instruments Act, 1881 Section 3 (b) " Banker means a person transacting the
business of accepting, for the purpose of lending or investment, of deposit of money from the public,
repayable on demand or otherwise and withdrawal by cheque, draft, order or otherwise, and includes any
Post Office Savings Bank."

In segregation:
 As per the Negotiable Instruments Act, 1881 "Banker means a person
 transacting the business of accepting, for the purpose of lending or investment, of deposit of money
 from the public,
 repayable on demand or otherwise
 and withdrawal by cheque, draft, order or otherwise
 and includes any Post Office Savings Bank."

As per Section - 5 of Banking Companies Act, 1991

p) "banking" means the accepting, for the purpose of lending or investment, of deposits of money from the
public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise;

o) "banking company" means any company transacting the business of banking in Bangladesh, and
includes all new banks and special banks.

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Functions of a modern Bank in Bangladesh:
i) Accepting of deposit from the public
ii) Allowing withdrawal by cheque, draft, order or otherwise
iii) Extending loan / credit
iv) Investing the fund
v) Remitting fund
vi) Undertaking foreign exchange business including opening of Letter of Credit, buying
and selling of foreign exchange
vii) Issuance of Letter of Guarantee
viii) Collecting of bills in customers' account
ix) Extending locker facilities
x) Online Banking
xi) Retail Banking
xii) SME Banking
xiii) Corporate Banking
xiv) Credit Card Operations
xv) Merchant Banking
xvi) Executing customer's instructions
xvii) Issuance of Sanchaya Patra, bonds etc.
xviii) Purchase and sale of Gold / silver bullion.
xix) Counseling service to the client in investments
xx) Miscellaneous.

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 Important issues of N.I. Act, 1881

1. “Bill of Exchange” (NI Act 1881, Sec - 5):

A "bill of exchange" is an instrument in writing, containing an unconditional order, signed by the
maker, directing a certain person to pay [on demand or at a fixed determinable future time] a
certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument .

The sum payable may be "certain", within the meaning of this section and section 4, although it
includes future interest or is payable at an indicated rate of exchange, or is according to the course
of exchange, and although the instrument provides that, on default of payment of an installment,
the balance unpaid shall become due.

The person to whom it is clear that the direction is given or that payment is to be made may be a
"certain person", within the meaning of this section and section 4, although he is miss-named or
designated by description only.

The specimen of an ordinary form of a Usance bill of exchange:

London, 1st January

£ 1,00,000 1901.
Three months after date pay to the order of Mr.
J. Jones the sum of one hundred pounds for
value received.
To Messrs. Smith &
Brown & Co.
Sons, Liverpool.

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2. Fundamentals of a “Bill of Exchange”:
a) A "bill of exchange" is an instrument in writing,
b) containing an unconditional order,
c) signed by the maker,
d) directing a certain person to pay
e) Payable on demand or at a fixed determinable future time
f) a certain sum of money in certain currency
g) only to, or to the order of, a certain person or to the bearer of the instrument
h) Payable at a certain Place.

Bills of Exchange are widely used in international trade; where the trade is facilitated by the Letter
of Credit. This is drawn by the Exporter / Beneficiary on the importer/ buyer or importer‟s Bank with
a claim to pay a certain sum of money. These Bills of Exchange may payable at sight (i.e. on
demand). Or payable after specified period; say 30 days, 60 days, 90 days, 180 days and so on,
these Bills of Exchange are called Usance Bill of Exchange. These Bills of Exchanges are required
to be accepted by the importer/ buyer or importer‟s Bank ; this is called “Acceptance” and payment
must be released by the buyer on maturity. These Bills of Exchange are internationally called
“Drafts”.

3. Cheque:
As per NI Act 1881, Sec – 6:
A "cheque" is a bill of exchange drawn on a specified banker and not expressed to be payable
otherwise than on demand. So all Cheques are Bill of Exchange but all Bill of Exchange are not
Cheque.

So a Cheque is a "bill of exchange" in writing, containing an unconditional order, signed by the

maker, directing a specified banker to pay a certain sum of money payable on demand only to,
or to the order of, a certain person or to the bearer of the instrument.

That means when a bill of exchange is drawn on a specified bank and only payable on demand
(not expressed to be payable otherwise) out of the credit balance of an Account Holder is called a
Cheque.

A Cheque Leaf will not be considered as a Cheque until it is signed by the Drawer. The Cheque
may be either fully filled in; wholly blank or having written thereon an incomplete negotiable
instrument, in order that it may be made, or completed into a negotiable instrument he thereby
gives prima facie authority to the person who receives that paper to make or complete. A wholly
blank, incomplete Cheque is a valid one but it must be properly filled in before presentation.

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 A Cheque Leaf

4. Fundamentals of a Cheque:
a) Cheque is a "bill of exchange"
b) an instrument in writing,
c) containing an unconditional order,
d) signed by the maker,
e) drawn on a certain Bank/ Banker to pay
f) payable not otherwise than on demand (i.e. only payable on demand)
g) a certain sum of money in certain currency
h) payable only to, or to the order of, a certain person or to the bearer of the instrument
i) payable at a certain Bank.

5. Difference between a Cheque and a “Bill of Exchange” (BE)?

a) All cheques are "bill of exchange"
b) All "bill of exchanges" are not cheque (BE only drawn on Banks are cheque).
c) Cheques are drawn in single copy but BE is generally issued in duplicate.
d) Cheque is drawn against credit balance of Bank Account; but BE is drawn by the Exporter
or Seller against value received by the Importer or buyer.
e) BE is payable on demand or at a fixed determinable future time; but Cheque is only payable
on demand.
f) BE may be issued at Sight or Usance; but Cheque is of Sight only.
g) In case of BE there is 3 days of grace for honouring payment but Cheque has no day of
grace rather payment is to be made on demand.
h) Considering the security reasons, the Cheques are designed and printed by the Bank under
Central Bank Guidelines but BE is drawn by the Exporter or Seller against credit sale.

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6. Different parties to a Cheque?
1 Drawer: Who draws, makes and signs. (Section -9)

2 Drawee: The Bank or person who is directed to pay.

3 Payee: Person named in the Instrument who is directed to be paid.
4 Bearer: Means the person in possession of an instrument which is payable to bearer.
5 Endorser: For the purpose of Negotiation, on the back or face thereof or on a slip of paper annexed
thereto, or signs for the same purpose a stamped paper intended to be completed as negotiable
instrument he is said to endorse the same and is called the endorser.
6 Endorsee: The person whose favour instrument is endorsed is called endorsee or payee.
7 Delivery: Means transfer of possession actual or constructive, from one person to another.
8 Issuer: “Issue” means the first delivery of a negotiable instrument by the Maker/Drawer to a person so
as to constitute him the holder thereof. Who issues, is called the issuer.
9 Holder: The holder of a negotiable instrument means any person entitled in his own name to the
possession thereof and to receive or recover the amount due thereon from the parties thereof.
10 Holder in due course: "Holder in due course" means any person who for consideration became the
possessor of a promissory note, bill of exchange or cheque if payable to bearer, or the payee or
indorsee thereof, if [payable to order,] before the amount mentioned in it became payable, and without
having sufficient cause to believe that any defect existed in the title of the person from whom he
derived his title.

7. Payment in due course of a Negotiable Instrument:

Payment in Due Course: (NI Act 1881, Sec - 10)

„Payment in due Course‟ means payment in accordance with the apparent tenor of the instrument
in good faith and without negligence to any person in possession thereof under circumstances
which do not afford a reasonable ground for believing that he is not entitled to receive
payment of the amount therein mentioned.

So Payment in Due course

Payment in accordance:
o with the apparent tenor of the instrument
o in good faith and without negligence
o to any person thereof who is entitled to get payment
o no reasonable ground or believing for non- payment.
o Payment must be made in money only.

It may also be said, according to what appears on the face of the instrument to be the intention of
the parties. A payment cannot be a „payment in due course‟ if it is made:

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 1. to a person not entitled to receive it
2. before the due date,
3. on a forged cheque,
4. even after countermanded by the drawer.

Apparent Tenor refers to the intention of the parties as it is evident from the face of the instrument
and all parts of the same are apparently all right.

A payment must be made by a person who has the right, authority and capacity to make it.
Payment means payment of money only, nothing else, Money means cash, or anything recognized
as legal tender, such as, currency notes.

The payer must act in good faith and without negligence. The words „good faith‟ and without
negligence„ are explained as under:

The word „good faith‟ is used in the sense of honesty. A payment may be honestly but still it may
be without care & caution. Inadequate „Care & Caution„ seems to be negligence on the part of the
payer.

8. Payment of crossed cheque out of due course:(Section 129 of NI Act 1881)

Any banker paying a cheque crossed generally otherwise than to a banker, or a cheque crossed
specially otherwise than to the banker to whom the same is crossed, or his agent for collection,
being a banker, shall be liable to the true owner of the cheque for any loss he may sustain owing to
the cheque having been so paid.

9. Steps to be followed in Payment in due course of a Negotiable Instrument?

In order to constitute Payment in due course of a Negotiable Instrument; the payment must be
made:

a) In accordance with the apparent tenor of the instrument.

b) In good faith and without negligence.
c) Ensuring that no reasonable ground for believing that the person in possession thereof is not
entitled to receive payment of the amount therein mentioned.
d) Payment must be made to the person, entitled to receive payment thereon.
e) Payment must be made in money.

10. Post-dated cheque. Risks in making payment of a post dated

cheque:
A cheque which bears a future date i.e. subsequent to the date of presentation is called post-
dated cheque. Example, a cheque dated 15.01.09 presented on 12.01.09. A bankers should refuse
to pay a cheque before the ostensible date and such refuse does not amount to dishonors of the
cheque, bank runs the following risks on honoring such cheque:
a) The Cheque may be countermanded by the drawer.
b) Drawer‟s A/c may run short of fund for honouring valid cheques.

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c) The drawer may die or become insolvent or insane before the ostensible date arrives.
d) The banker loses statutory protection, as the payment is not according to the apparent
tenor of the instrument.
e) The Bank acts against the intention of the Customer.
f) A Garnishee order of the court may not be executed on actual balance.

11. Stale Cheque. When a Cheque will be stale:

A cheque which bears a date earlier to the date on which the cheque is drawn/ presented is called
an ante- dated cheque. Example, a cheque drawn / presented on 8th January 2015 but baring the
date 1st January 2015 is an ante-dated cheque.

The banker can pay such cheques, but should be presented for payment within a reasonable time.
If the same is not presented within a reasonable time depends on banker‟s usage in the locality, is
said to be stale. As per practice in Indian sub-continent a cheque becomes stale after the expiry of
6(Six) months from the date of the cheque, if otherwise is not mentioned. Say, a cheque dated 1st
January 2015 is not considered valid for payment on 1st July 2015.

The Cheque issued by Account and Comptroller General of Bangladesh and Bangladesh Bank
Cheques will normally be stale after 3 months from the date of the cheque.

12. Negotiability and Negotiation; Indorsement; Negotiable

Instruments:
Negotiability: Unlike immovable property a bonafide transferee of a Cheque gets a good
title, even if the title of transferor is defective, such peculiar characteristics of a cheque is
called negotiability.

Negotiation: when a negotiable instrument (Promissory note, bills of exchange & cheque ) is
transferred to any person to make that person the holder thereof ,then the instrument is considered
to be negotiated (Section – 14).

Negotiation of Bearer Instruments: A promissory Note bill of exchange or cheque

payable to bearer is negotiated by delivery thereof provided the instruments are not
defective (As per sec.58 defective means possessing of any instrument through illegal &
unlawful consideration).

Negotiation of Order Instruments: In case of a promissory Note, bill of exchange or cheque

payable to order is negotiated by indorsement and delivery.

Who may negotiate:- Every sole maker, drawer, payee or endorsee or all of several joint
makers drawers, payees or endorsees, of a negotiable instrument may indorse and
negotiate, if the negotiability of such instrument has not been restricted.

Indorsement: When the maker or holder of a negotiable instrument signs the same, otherwise
than as such maker, for the purpose of negotiation, on the back or face thereof or on a slip of

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paper annexed thereto, or so signs for the same purpose a stamped paper intended to be
completed as a negotiable instrument, he is said to indorse the same, -and is called the "Indorser".
(Section – 15)

Negotiable Instruments: As per NI Act 1881, Section – 13: A "negotiable instrument" means a
promissory note, bill of exchange or cheque payable either to order or to bearer.

As per NI Act 1881, Section 85a of the NI Act 1881, the Draft is also treated as Negotiable Instrument.

The Payment Order, Dividend Warrant, Refund Warrant etc. are not Negotiable Instruments as per
NI Act 1881.

13. Material Alterations. What alterations called Material Alterations:

Any change in an instrument which changes the legal effect i.e. the legal identity or business
character of the instrument, either in its terms or in the legal relations of the parties thereto it is a
material change or a material alteration. The Material Alteration must be authenticated by the full
signature of the Drawer or Maker.

The stipulation in section in 87 of the negotiable instruments Act 1881, which reads as “Any
material alteration of a negotiable instrument renders the same void against anyone who is a party
thereto at the time of making such alteration and does not consent thereto, unless it was made in
order to carry out the common intention of the original parties; and any such alteration, if made by
an indorsee, discharges his indorser from all liability to him in respect of the consideration thereof”

A material alterations may be by change of (i) the date, (ii) the time of payment, (iii) the place of
payment, ( iv) the sum payable, (v) the number of parties, (vi) the relationship between parties or
(viii) the legal character of the instrument (ix) Making bearer instrument into order (x) Making
crossed instrument into open.

In addition the following alterations in respect of cheques are also material alterations:

I. Conversion of an endorsement in blank to and endorsement in full.

II. Crossing of a open cheque.
III. Canceling the word „bearer and making the cheque payable to „order‟
IV. Altering a general crossing into a special crossing, addition of the words „account payee‟ or
„not negotiable‟ to a crossing and where a cheque is crossed specially the banker to whom it
is crossed ,crossing it specially to another banker , his agent for collection.

Effect of Material Alteration

 Material Alteration of Negotiable Instrument renders the instrument void

 Any Material Alteration requires full signature of the Drawer ( Sec 3 & 125A)

Alterations which are not Material

 Filling the Blanks of the Instruments (Inchoate Instruments, Sec - 20),

 Conversion of Blank Endorsement in full,
16
  Crossing of an uncrossed Cheque,
 Altering a general Crossing into a Special Crossing,
 Canceling the word “ Bearer” and making the Cheque payable to “Order”,
 Alterations made with the Consent of the Parties.

14. Discharging the duties of a paying banker; When the Bank must refuse
payments:

The duty of paying banker to pay all cheques properly drawn on him by a customer, except under
certain circumstances or if the necessary funds are not available. A paying banker must discharge
his duties in good faith and without negligence ensuring Payment in due course of a Negotiable
Instrument.

Banker loses the right of statutory protection, if the payment is not made in due course ( payment
in due course defined earlier ). Example , even a payment other than outside banking hours is not
payment in due course.

A paying banker shall not make payment of cheques in case of the following:

1 When customer countermands payment

2 When customer has become insolvent
3 On receipt of notice of customer‟s death
4 On receipt of notice of customer‟s insanity
5 On receipt of Garnishee order
6 Word and figures of cheque differs
7 Drawer‟s signature differs
8 Drawer‟s signature incomplete
9 Cheque is post- dated
10 Cheque is out of date
11 Materially altered cheque without authentication by the drawer/ maker.

15. General and Special Crossing of a Cheque; Payment status of a Cheque

crossed more than once:
Cheque crossed generally: Where a cheque bears across its face an addition of the words "and
company" or any abbreviation thereof, between two parallel transverse lines, or of two parallel
transverse lines simply, either with or without the words "not negotiable," that addition shall be
deemed a crossing, and the cheque shall be deemed to be crossed generally (NI Act Section 123).

Cheque crossed specially: Where a cheque bears across its face an addition of the name of a
banker, either with or without the words "not negotiable," that addition shall be deemed a crossing,
and the cheque shall be deemed to be crossed specially, and to be crossed to that banker (NI Act
Section 124).

Payment of cheque crossed specially more than once: Where a cheque is crossed specially to
more than one banker, except when crossed to an agent for the purpose of collection, the banker
on whom it is drawn shall refuse payment thereof (NI Act Section 127).

17
16. Payment of an Account Payee Cheque:
Payment of Account Payee Cheques NI Act 1881, Section 123A:

(1) Where a cheque crossed generally bears across its face an addition of the words “account
payee” between the two parallel transverse lines, constituting the general crossing, the
cheque, besides being crossed generally, is said to be crossed “account payee”.
(2) When a cheque is crossed “account payee”:
a) it shall cease to be negotiable; and
b) it shall be the duty of the banker collecting the payment of the cheque to
credit the proceeds thereof only to the account of the payee named in the cheque.

17. Cheque bearing "not negotiable" (Section 130 of NI Act 1881)

A person taking a cheque crossed generally or specially, bearing in either case the words "not
negotiable" shall not have, and shall not be capable of giving, a better title to the cheque than
that which the person from whom he took it had.

18. The position of a Bank in receiving payment of an “Account Payee”

Cheque:
Non-liability of banker receiving payment of cheque (Section – 131):

Subject to the provisions of this Act relating to cheques crossed “account payee” where a banker in
good faith and without negligence receives payment for a customer of a cheque crossed generally
or specially to himself, and the customer has no title or defective title thereto, the banker shall not
incur any liability to the true owner of the cheque by reason only of having received such payment.
1[Explanation.-A banker receives payment of a crossed cheque for a customer within the meaning of
this section notwithstanding -that he credits his customer's account with the amount of the cheque
before receiving payment thereof.]

The provisions of this Chapter shall apply to any draft, as defined in section 85A, as if the draft
were a cheque. [Sec. 131A.]

17. Who may Cross a Cheque:

The Drawer or Account Holder may cross a Cheque before delivering to the payee. If the Drawer
does not cross a Cheque the following persons/ institutions may cross the cheque after being
issued by the Drawer:

Crossing after issue: (Section – 125)

 Where a cheque is uncrossed, the holder may cross it generally or specially.

 Where a cheque is crossed generally, the holder may cross it specially.
 Where a cheque is crossed generally or specially, the holder may add the words"' not
negotiable".
 Where a cheque is crossed specially, the banker to whom it is crossed may again cross
it specially to another banker his agent, for collection.

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18. Holder and Holder in due course:
Holder: The holder of a negotiable instrument means any person entitled in his own name
to the possession thereof and to receive or recover the amount due thereon from the
parties thereof.
Holder in due course: "Holder in due course" means any person who for consideration
became the possessor of a promissory note, bill of exchange or cheque if payable to
bearer, or the payee or indorsee thereof, if 2[payable to order,] before the amount
mentioned in it became payable, and without having sufficient cause to believe that any
defect existed in the title of the person from whom he derived his title.
19. Bank’s protection in crediting cheques crossed “account payee” (Sec -
131 B):
Where a cheque is delivered for collection to a banker which does not at the time of such delivery
appear to be crossed “ account payee” or to have had a crossing “ account payee” which has been
obliterated or altered, the banker, in good faith and without negligence collecting payment of the
cheque and crediting the proceeds thereof to a customer, shall not incur any liability by reason of
the cheque having been crossed “ account payee” or of such crossing having been obliterated or
altered, and of the proceeds of the cheque having been credited to a person who is not the payee
thereof.

In this case the Account Opening formalities will have to be observed properly; and the Bank has
to ensure that all necessary steps are undertaken to confirm the customer due diligence.

20. Different types of Cheques used in Banking Business:

1 Bearer Cheque and Order Cheque
2 Open Cheque and Crossed Cheque
3 1st Payee, second or third payee cheque
4 Specially Printed / designed Cheque for Scheme A/c and for valued Clients
5 Credit Card Cheques
6 Blank Cheque and Filled in Cheque
7 Loose Cheque and Cheque issued in the form of cheque book
8 Cheque Crossed generally:
i) Cheque Crossed having a transversed parallel line with or without the words “& Co. or any
other abbreviations
ii) Cheque Crossed “Account Payee”, “Account Payee only” or “A/c Payee” or “Payee’s A/c
only” or words of similar meaning.
iii) Cheque Crossed “Not negotiable” or “ Not Transferable”
9 Cheque Crossed Specially

19
 10 Cheque Crossed specially more than once
11 Undated, on-dated, anti-dated, stale, post dated cheque and cheque of impossible date
12 Cash, transfer, clearing cheque
13 Cancelled, paid, unpaid and returned cheque
14 Mutilated, soil, tampered, forged and stolen cheque
15 Cheque meant “Good for Payment”
16 Cheque against Effect
17 Under collection (OBC) Cheques
18 Purchased Cheque
19 Online cheque
20 Savings, Current, S.T.D., SOD and Foreign Currency Cheques
21 Cheques issued by Accounts and Comptroller General (AGB) and Bangladesh Bank
22 Banker’s Cheque or Draft (DD)
23 Travelers’ Cheque
24 Cashier’s Cheque
25 GIRO Bank Cheque (British Post Office Cheque)
26 Stop payment Cheque
27 MICR (Magnetic Ink Character Recognition) Cheque.
28 Instruction in lieu of Cheque

21. When the Bank must refuse payment of the cheques/ draft:
a) When the Customer countermands payments.
b) On receipt of garnishee order.
c) Receipt of notice of Customer's death.
d) Customer's insolvency.
e) Notice of assignment of credit balance as per section 130 of Transfer of Property Act, 1882.
f) Breach of Trust.
g) Defective title of the Party.

As per Section 122A of NI Act 1881 the Bank must refuse payments on the grounds:

1. Countermand of payment;
2. Notice of customer‟s death;
3. Notice of adjudication of the customer as an insolvent

22. Promissory Note:

Promissory note (NI Act 1881 Sec - 4):
20
A "promissory note" is an instrument in writing (not being a bank-note or a currency-note)
containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only
to, or to the order of, a certain person, or to the bearer of the instrument.

Only the acknowledgement of debt is not sufficient to be considered as a Promissory Note; it must
be accompanied by unconditional undertaking to pay. While getting loan from Bank the Borrowers
sign the Promissory Note as an acknowledgement of debt accompanied by unconditional
undertaking to pay. As the loan amount is payable back to the lending Bank on demand; the
Borrower promises to pay on demand that‟s why the same is called Demand Promissory Note; in
brief DP Note.

23. “At Sight”, “On Presentment”, Days of Grace and Maturity; calculation of
the maturity of the “Bill of Exchange” or Note payable so many months
after date or sight:
In calculating the date at which a promissory note or bill of exchange, made payable a stated
number of months after date or after sight, or after a certain event, is at maturity, the period stated
shall be held to terminate on the day of the month which corresponds with the day on which the
instrument is dated, or presented for acceptance or sight, or noted for non-acceptance, or
protested for non-acceptance, or the event happens, or, where the instrument is a bill of
exchange made payable a stated number of months after sight and has been accepted for
honour, with the day on which it was so accepted. If the month in which the period would terminate
has no corresponding day, the period shall be held to terminate on the last day of such month,
Section - 23 of NI Act 1881.

"At sight" & "On presentment": In a promissory note or bill of exchange the expressions "at
sight" and "on presentment" mean on demand (Section – 21). A Cheque is always payable on
demand.

"Maturity": The maturity of a promissory note or bill of exchange is the date at which it falls due.

Days of grace: Every promissory note or bill of exchange which is not expressed to be payable on
demand, at sight or on presentment is at maturity on the third day after the day on which it is
expressed to be payable (Section – 22).

Illustrations:

a) A negotiable instrument, dated 29th January 1878, is made payable at one month after date.
The instrument is at maturity on the third day after the 28th February 1878.

b) A negotiable instrument, dated 30th August 1878, is made payable three months after date.
The instrument is at maturity on the 3rd December 1878.

c) A promissory note or bill of exchange, dated 31st August 1878, is made payable three months
after date. The instrument is at maturity on the 3rd December, 1878.

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24. Steps to be undertaken in case of dishonour of cheque for insufficiency,
etc. of funds in the account:
Section- 138 of NI Act 1881: Dishonour of cheque for insufficiency, etc. of funds in the
account

Where any cheque drawn by a person on an account maintained by him with a banker for payment
of any amount of money to another person from out of that account is returned by the bank
unpaid, either because of the amount of money standing to the credit of that account is
insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that
account by an agreement made with that bank, such person shall be deemed to have committed
an offence and shall, without prejudice to any other provision of this Act, be punished with
imprisonment for a term which may extend to one year, or with fine which may extend to
thrice the amount of the cheque, or with both:

Provided that nothing contained in this section shall apply unless-

a) The cheque has been presented to the bank within a period of six months from
the date on which it is drawn or within the period of its validity, whichever is
earlier;
b) The payee or the holder in due course of the cheque, as the case may be,
makes a demand for the payment of the said amount of money by giving a notice,
in writing, to the drawer of the cheque, within thirty days of the receipt of
information by him from the bank regarding the return of the cheque as unpaid, and
c) The drawer of such cheque fails to make the payment of the said amount of money
to the payee or, as the case may be, to the holder in due course of the cheque,
within thirty days of the receipt of the said notice.

Section: 138A. Restriction in respect of appeal

Notwithstanding anything contained in the Code of Criminal Procedure, 1898, no appeal against
any order of sentence under sub-section (1) of section 138 shall lie, unless an amount of not less
than fifty per cent of the amount of the dishonoured cheque is deposited before filing the appeal in
the court which awarded the sentence.

Section: 140. Offences of companies

1. If the person committing an offence under section 138 is a company, every person who,
at the time the offence was committed, was in charge of, and was responsible to, the
company for the conduct of the business of the company, as well as the company, shall
be deemed to be guilty of the offence and shall be liable to be proceeded against and
punished accordingly:

Provided that nothing contained in this sub-section shall render any person liable to punishment
if he proves that the offence was committed without his knowledge, or that he had exercised all
due diligence to prevent the commission of such offence.

2. Notwithstanding anything contained in sub-section (1), where any offence under this Act
has been committed by a company and it is proved that the offence has been committed

22
 with the consent or connivance of, or is attributable to, any neglect on the part of any
director, manager, secretary or other officer of the company, such director, manager,
secretary or other officer shall also be deemed to be guilty of that offence and shall be
liable to be proceeded against and punished accordingly.

Explanation - For the purposes of this section-

a) “company” means anybody corporate and includes a firm or other association of
individuals; and
b) “director” in relation to a firm, means a partner in the firm.

Section: 141. Cognizance of offences

Notwithstanding anything contained in the Code of Criminal Procedure, 1898 (Act V of 1898) -
(a) no court shall take cognizance of any offence punishable under section 138 except upon a
complaint, in writing, made by the payee or, as the case may be, the holder in due course of the
cheque;
(b) such complaint is made within one month of the date on which the cause of action arises under
clause (c) of the proviso to section 138;
(c) no court inferior to that of a Court of Sessions shall try any offence punishable under section
138.

25. Public Holiday: Government declares Public Holiday

The expression "public holiday" includes Fridays, Saturdays and the days declared by the Government, by
notification in the Official Gazette, to be public holidays.

As per Section - 25 of NI Act 1881 the Government of Bangladesh declares "public holiday" including
Fridays, Saturdays and the days declared by notification in the Official Gazette, to be considered public
holidays.

26. Definition of Banker or Bank:

As per Section 3 (b) of The Negotiable Instruments Act 1881, " Banker means a person transacting
the business of accepting, for the purpose of lending or investment, of deposit of money from the
public, repayable on demand or otherwise and withdrawal by cheque, draft, order or otherwise, and
includes any Post Office Savings Bank."

27. Different Types of Endorsements:

1. Indorsement in "blank" and "in full": Section - 16 1(1)

Endorsement in Bank: An endorsement is said to be in blank when the indorser merely signs
on the instrument without mentioning the name of the person in whose favour the instrument is
made. In such a position the instrument can be transferred by mere delivery as if it was payable
to bearer.

Endorsement in full: When the endorsement contains not only the signature of the Endorser,
but also the name of the person is whose favour the endorsement is made, then that
endorsement is said to be Endorsement in full. “Pay to Kamal or order”

2. Restrictive Endorsement: The endorsement which prohibits further Negotiation of the

instrument or which expresses that it is mere authority to deal with the instrument as hereby
directed and not to transfer of ownership thereof:

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 I. Pay to Rahim only

- Karim

II. Pay to Rahim for my use

- Karim

III. Pay to Rahim or order for the account or Mannan

- Karim.

3. Conditional endorsement: Endorsement depend upon the fulfillment of specified condition is

said to be conditional endorsement
IV Pay to Kamal on his marrying Amina
- Karim
4. When an endorsement is made to escape liability in the event of dishonour.

V Pay to Rahim or order sans recourse

- Karim
The words sans recourse mean without recourse.
5. Partial Endorsement: A partial endorsement is one which purports to transfer to endorsee
only a part of the amount .This endorsement is invalid as per section 56 of N.I Act – 1881.

VI Pay to Rahim Take 5000/- (Against a Cheque for Taka 10,000/-)

- Karim
6. Sans Frais Endorsement: When the endorser does not want any expense to be incurred on
his account on the Bill of Exchange or Cheque by way of commission /collection charge
/Stamp duty etc.

VII pay to Rahim sans frais

- Karim
7. Facultative Endorsement: When an endorser extends his own liability by stipulating in the
endorsement that he waives presentment of notice of his honour , it is known as facultative
endorsement:

VIII Pay to Rahim or order – Notice of Dishonor not required

- Karim.
Elements of valid endorsement:

i. It must be in writing and must be signed by the endorser on the front or back of instrument.
the simple signature of the endorser on the bill without additional words is in sufficient.
ii. Endorsement must be for the full value of the instrument.
iii. Where a bill payable to order of the payee or endorsee is wrongly designated or miss-spelt,
he should sign the same as designated / miss-spelt in the instrument, and may write the
correct one within brackets after his endorsement.
iv. Where a bill is payable to the order of two or more payees or endorsees all must endorse the
instrument.
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v. It must be completed by delivery of the instrument with the instruction of passing the property
in it.

28. Banker’s Endorsement:

25
 Collecting and Paying Bank

Collecting Banker

The Bank which collects the proceeds of cheques, drafts, Payment Orders, bills etc, deposited in
the account of a customer as his agent is called collecting banker. A collecting banker, will
however, in any case be liable to his customer for any loss or damage which may result from his
negligence or omission to use reasonable care and diligence ( careful hard work). A collecting
bank will also be liable to the true owner of the negotiable instruments collected by him unless he
cal claim statutory protection.

Statutory Protection given to Collecting Banker

Section131 of the Negotiable Instruments Act which governs the protection given to the collecting
banker runs as following:

“Non-Liability of baker receiving payment of cheque subject to the provisions of this Act- relating to
cheques crossed “account payee” where a banker in good faith fan without negligence receives
payment for a customer of a cheque crossed generally or specially to himself, and the customer
has no title or a defective title thereto the banker shall not incur any liability to the true owner of the
cheque by reason only of having received such payment.”

Payment of cheques involves risk to the paying banker because the latter duty is to pay the
amount of the cheque to the right person according to the instructions of his customer. If the
the makes payment to a wrong person he himself will bear the loss. The banker has to honour his
customer‟s cheques on demand and hence he cannot make detailed enquires about the title of the
person who presents the cheque for payment. To minimize possess likely to be suffered by the
paying banker, the Act provides him protection, provided he fulfills his obligations as laid down in
the Act.

(Explanation: A banker receives payment of a crossed cheque for a customer within the meaning of this
section notwithstanding -that he credits his customer's account with the amount of the cheque before
receiving payment thereof.)

Collection on behalf of customer

Protection can be claimed only for those cheques which the banker collects as an agent and on t
as holder for value or in which he acquires personal interest. Moreover a banker must collect
cheques on behalf of a customer.

Receiving of payment in good faith and without negligence:

It can be presumed that bankers always act in good faith. Only the question of negligence is very
important. A few instances of negligence are:

1. Opening of current account without suitable introduction.

2. Collection of cheques crossed as account payee only without due regard to this
implication.
3. Extent of care required is not exercised
4. Verification of endorsements- not done.

26
 5. Per pro Indorsement – implication ignored.
6. Disregard of warning on face of instrument.

Protection to Banker Crediting Cheque crossed “Account Payee” (Section

131B NI Act 1881)
“ Where a cheque is delivered for collection to a Banker which does not at the time of such delivery
appear to be crossed “ Account Payee “ or to have had a crossing “ Account Payee” which has
been obliterated or altered, the Banker in good faith and without negligence collecting payment of
the Cheque and crediting the Proceeds thereof to a Customer, shall not incur any liability by
reason of the Cheque having crossed “ Account Payee “or of such crossing having been
obliterated or altered, and of the proceeds of the cheque having been credited to a person who is
not the Payee thereof.”

Negligence - Factor

The collecting banker will not get protection under the N.I. Act unless he acts without negligence in
collecting the cheque. Negligence arises where there is a duty to take care.

The first test for negligence for a banker is:

“Whether the transaction of payment in any given cheque coupled with the circumstances
antecedent and present, was so out of the ordinary course that is ought to have aroused doubts in
the banker‟s mind and caused him to make inquiry‟‟

“The standard by which the absence or otherwise of negligence is to be determined must in my

opinion be ascertained by reference to the practices of reasonable man carrying on the business of
bankers and endeavoring to do so in such a manner as may calculated to protect themselves and
others against fraud.”

The facts of negligence of banks can, however, be classified under the three main headings:

1. Failure to attend to account opening formalities.

2. Failure to make enquiry in respect of cheques paid into an account where fiduciary
relationship exists between the account holder and the drawer or payee.
3. Failure to enquire into the surrounding circumstances where the unusual nature of
collection is obvious.

Paying Banker

„Paying banker‟s is a banker upon whom a cheque is drawn. He is responsible to customer and is
under a duty to make payment to the right persons in accordance with the instructions of the
drawer.

Responsibilities
The job of a paying banker in regard to the payment of cheque is highly risky. Section 31 of the
Negotiable Instruments Act, 1881 lays down that “ the drawee of a cheque having sufficient funds
of the drawer in his hands, properly applicable to the payment of such cheque, must pay the

27
cheque when duly required so to do, and in default of such payment , must compensate the drawer
for any loss or damage caused by such default . “

The paying banker is exposed to the risk of conversion to the true owner of the cheque on the one
hand and to the liability of damages for cheques wrongly debited or wrongful dishonor on the
other hand. In Rolin vs. Steward case, it was held that even though the default arose through
inadvertence, and in fact the cheque was subsequently paid, the court will not award merely
nominal damages, because credit of the customer was seriously affected. This would be the case
even if the customer‟s account was overdrawn but the banker had agreed to pay his cheques on
an overdraft within certain limits (Fleming vs. Bank of New Zealand).

However, this obligation of the paying banker to honour his customer‟s cheques is subject to the
following conditions: -

1. The paying banker is under on obligation to honour only those cheques which are drawn
against the account maintained at that branch of the bank where the cheques are
presented. This sanction grants protection to the paying banker if he makes payment of an
order cheque with forged endorsement on behalf of the payee. After the insertion of section
16(2), this protection is available in respect of other endorsements also, because the
banker is not expected to verify the signatures of each and every endorser. The main object
of this section is “to make the banker free of all responsibilities in respect of the
genuineness or the validity of the endorsement purporting to be that of the payee or his
authorized agent.” Two conditions must be fulfilled to avail of such protection.

2. Endorsements must be regular. Section 45(1) provides protection against the risk involved
in the payment of cheques, which bear endorsements. But is essential that the
endorsements are regular though not necessary genuine or valid . There is a difference
between the regularity of endorsement and its validity or genuineness. If a cheque payable
to a certain person is endorse under the signature bearing the same name and in the
spelling as that of the payee or the endorsee, the endorsement is said to be regular.
Apparently. it appears that the cheque has been endorsed by the person whose name
appears as the payee or the last endorsee. A Valid endorsement is that endorsement
which has been made by the person who is the true owner of the cheque
has the necessary authority to sign on behalf of the payee. To avail of the statutory
protection, the banker must ascertain that the endorsement is regular. He need not verify i.e
validity. For example, if a cheque payable, to Suresh Chandra‟ is endorsed with the
signature of the same name and in the same spelling , it is regular endorsement. But if the
endorser signs as „Suresh Chand‟ „ the endorsement will be irregular. The banker need not
concern himself with the identification of the person who signs on the cheque as the
endorser. If a cheque is payable to A and B jointly, if must be endorsed by both of them in
their own handwritings otherwise, it will be an irregular endorsement.

3. The paying banker is bound to pay only such cheques as are presented to him for within
reasonable time. Usually, the cheques presented after six months of their issue are
considered stale and hence are return by the banker for their confirmation by the drawers.
4. Cheques presented after baking hours have no legal effect and therefore banker cannot be
held liable for refusing payment on such cheques.
5. Funds must be sufficient and available.
6. Cheques which are not drawn in the proper form are refused by the paying banker.
Sections 5 and 6 of the negotiable Instruments Act provide that the banker should examine
the contents of the cheque to ensure that it is perfectly a valid instrument containing an
unconditional order to pay a certain sum of money.

28
Protection in Case of Order Cheque
In case of an order cheque, Section 85(1) provides statutory protection to the paying baker as
followings:
“Where a cheque payable to order purports to be endorsed by or on behalf of the payee, the
drawee is discharged by payment in due course”.

Protection in case of Bearer Cheque

Section 85(2) provides protection to the paying banker in aspect of bearer cheques as follows:
“Where a cheque is originally in due course to the bearer thereof notwithstanding any endorsement
whether in full or in blank appearing thereon, and notwithstanding that any such endorsement
purports to restrict or exclude further negotiation.”

Protection in Case of Crossed Cheque

As per Section – 128 of NI Act the Paying Banker is protected as under:
“Where the Banker on whom a crossed cheque is drawn has paid the same in due course, the
banker paying the cheque and the drawer thereof shall respectfully be entitled to the same rights
and be placed in the same position in all respects as they would respectively be entitled to and
placed in if the amount of the cheque had been paid to and received by the true owner thereof.”

Payment of Crossed Cheque out of due course

As per Section 129, the Protection under Section- 128 shall not be available if the paying Banker, if
he violates the same and pays the Crossed Cheque with:
1. Irregular Endorsements,
2. a material alteration without authenticated by the Drawer,
3. Forged signature of the Drawer.
4. And the payment made otherwise than to a Baker,
5. And the payment of a cheque crossed specially otherwise than to a banker to whom the same
is crossed, or his agent for collection.

Consequence of a wrongful dishonor by the Drawee / Paying Banker

If a Banker, without justification, dishonors his Customer‟s cheque, the Branch makes itself liable to
compensate the Customer for any loss or damage ( Section – 31). The loss or damage does not
only mean the pecuniary loss but also loss of Credit or Injury to reputation of the Customer in the
Society.

29
 Magnetic Ink Character Recognition Cheque

The bottom line on all checks printed using a special font called MICR (short for Magnetic Ink
Character Recognition). MICR is usually pronounced My-ker. The bottom line on a check must
always be printed in the MICR typeface using a special magnetic ink.
The MICR line on a check allows the check information to be automatically read by inexpensive
machines. This is the only way that huge numbers of checks can be processed each day.

Cheque Security Features:

 Size Standardization to Facilitate Cheque Clearing

 Proprietary CBS1 Watermark Paper
 MICR Encoding
 Mandatory Fields
 Surface Erasable Inks
 Invisible UV Inks
 Security Designs.

CBS1 paper & its specialty:

 CBS1stands for Clearing Bank Standard 1 or Clearing Banks Specification 1.

a) This is a worldwide standard.
 BB standards 95GSM CBS1 paper for Bangladeshi Banks.
 CBS1 paper will not reflect ultraviolet light.
 CBS1 paper is suitable for printing with ultraviolet inks and that they will show up easily
under UV light.
 It also has added chemical sensitize.

MICR Cheque in Bangladesh:

a) All MICR Cheques are of standard size of 7.5” -3.5”.
b) All MICR Cheques and Instruments are printed in CBS1 Paper.
c) Every MICR Cheque must carry water marks as designed by the Bank.

MICR Encoding has 31 numerical characters:

a) First Seven Characters denotes the Cheque Serial number.
b) Next nine digits denotes Routing number: 1st three digits are Bank‟s name, next two digits
area, next three digits Branch name; next one digit is parity.
c) Customer‟s thirteen digit Account number is mandatory.
d) And last two-digits character is Transaction code i.e. type of Account or nature of
Transaction.
e) Accounts Code: Savings A/c= 10; Current A/c =11, Payment Order= 19; Demand Draft= 15;
Dividend Warrant= 14; Refund Cheque/ Warrant= 18; Card Cheque= 20 and so on.
f) In case of genuine MICR Cheque; the paper colour can easily be erased out.

30
 g) When place in UV Light the Cheque colour will remain unchanged.

Security Design:
a) No change of Colour on UV LIGHT
b) The colour is easily erasable.
c) There is micro text printed in the straight lines on the cheque.
d) All MICR Cheques are printed with MICR ink.

Security Measures by Banks

 Tellers and Branch Managers should aware original cheque leaf design template.
 Tellers and Branch Managers should aware cheque security features.
 Tellers and Branch Managers should have:

•UV Light
•Magnifying glass
•MICR Reader etc.

 Teller have to be more cautious before disbursement of the “cash” cheques.

 For “cash” cheque, over one lac, he/she has to bring identification National ID Card or a
authorization letter and Bank will keep a copy or if possible get a confirmation.
 They must collect a copy of the names / all information from the authority so they can type
in the ID number and check instantly if that person is genuine or not.
 If required take pictures / Video through web camera / CCTV.

Security Measures by Customers/ Users:

 Keep the cheque under lock and key.
 Write all cheques in ink & confirm alternations by signing in full.
 Do not give blank cheques any one even in exchange for cash.
 Do not fold the cheque (Even when mailing).
 To prevent unauthorized insertions, write the payee‟s name, amount (words & Figures) as
close to the left hand margin as possible.
 Please count the cheques before using any.
 The cheque number appears at the top of each counterfoil/stub part.

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 Account Opening Formalities

Opening of Accounts

1 Procedural Step at the time of opening the Account

Inform customer of the essential conditions / rules under which the account will be operated
(e.g. charges, minimum balance, etc).

a) Receive completed appropriate account opening form and other required documentation
including two recent photographs for each signatory. The desk officer, if required, may guide
the client to fill up the form.
b) Obtain identification of client, verify signature of Introducer.
c) Have all documentation approved / initialed and cancel blank spaces on Signature Card (s).
d) Take approval of General Banking In-charge / Manager.
e) Allocate account number and have initial deposit slip prepared and deliver to cashier.

Information and Documentation required to establish Customer’s Identity:

Personal Account:
 True name and/or names used
 Parent‟s names
 Present and permanent address
 Date of birth
 Nationality
 National I D
 TIN Certificate
 Passport or employer certificates, certificates from Ward Commissioner or Union Council
Chairman

 Photograph of the Account holder / nominee(s).

 Details of occupation/employment and sources of wealth or income

Corporate or Business Firm Account:

 Sole Proprietorship Account: requirement is same as of Personal Account plus Trade License
 Partnership Account: requirement is same as of Personal Account plus Trade License and
Partnership Deed.

32
Limited Company:

a. Certificate of Incorporation
b. Memorandum and Articles of Association
c. Resolution of the Board of Directors
d. Information as of Personal Account of Directors and Account operators
e. Certified copies of the returns submitted to the Registrar of Joint Stock Companies
f. Attestation by Embassies/ High Commissions in the respective countries if the Company is
incorporated outside Bangladesh.

Accounts of other Organizations:

 Club / Societies: Particulars of the Office bearers, Constitutions or By-Laws, resolution for
opening of Account, registration number or Govt. authorization if registered.
 Co-operative Society / Limited Society: By-laws authenticated by Co-operative Officers,
Particulars of the Office bearers, resolution for opening of Account, Certificate of Registration
etc.
 Private School, College and Madrasha: Particulars of the Members of the Governing Body or
Managing Committee, resolution for opening of Account.
 Trustee Board: Certified copy of the Deed of Trust, particulars of the Members of the Trustee
Board, resolution for opening of Account.
 In all cases photograph of the Account Operator must be taken.
 File copies of supporting evidence should be retained. The relevant details should be
recorded on the applicant's file.

In case of request for remittance and other banking services made by the person who is not maintaining
an account with the Bank; full name, address and other particulars shall have to be preserved.

The date of birth is important as an identifier in support of the name, and is helpful to assist law
enforcement. Although there is no obligation to verify the date of birth, this provides an additional
safeguard.

Identification documents:

1. Current valid passport;

2. Valid driving license;
3. Voter ID Card;
4. Armed Forces ID card;
5. A Bangladeshi employer ID card bearing the photograph and signature of the applicant; or
6. A certificate from any local government organs such as Union Council chairman, Ward
Commissioner, etc. or any respectable person acceptable to the institution.
7. Identification documents which do not bear photographs or signatures, or are easy to obtain, are
normally not appropriate as sole evidence of identity, e.g. birth certificate, credit cards, non-
Bangladeshi driving license.

In case of opening of Individual and joint Accounts all the spaces for personal details must be properly
filled in. In case of Partnership, Company, Clubs Associations all the personal details of the operators
shall be written in appropriate spaces. The Branch must be careful about the Transaction Profile (TP),
the information provided thereon must be realistic so that all his future transactions comes within the
limit. In case the Client‟s business shifts and his activities increase the revised TP shall be taken by the
Branch.

33
On the basis of the TP and information provided by the Client, the Branch shall prepare a KYC and find
the risk factor. All the documents relating to Account Opening shall be preserved at least 5 years from
the date of closing of any account.

The Branch must obtain the necessary information from the client, preserve the documents properly, be
confirmed about the sources of income of the client and shall monitor and check that no money earned
from predicate crimes as defined in Anti-Money Laundering Ordinance, 2009 can be brought to the
Bank counter for whitening the same. Any report of money laundering or suspicious transactions
(STR) shall immediately be brought to the notice of the Branch Manager for necessary action upto the
appropriate level. All the AOF and relevant documents shall be properly preserved for inspection of
Bangladesh Bank and other appropriate authorities.

Guideline for completing the Account Opening Form

1 Specific Account Opening Form is used for opening personal account i.e., for individual and Joint
Accounts, Limited Company, Partnership, Proprietorship / Club / Society / Association etc. Different
types of Account Opening Forms are used for opening accounts of various natures - namely
Current Deposits, Savings, Term Deposit, Short Term Deposit etc. The types of account should be
specified by means of a tick.
2 Although the Account Opening Forms (AOF) are self explanatory, the notes that follow provide
guidelines for the Account Opening Officers in the execution of their responsibility in this important
area.
3 If the customer is already banking with another branch the account number and any other details
given by him should be verified and a report obtained from the concerned branch. Incase it is verbal
/ phone report, a note should be made and kept in the Account Folder. This initial report /
verification does not meet with the requirement of Introduction / References.

Opening of Accounts for the Branch and for online

1 A duly authorized member of the staff called the USER in branches will receive the Account
Opening Form from the Manager / Authorized Officer. He will then input details, such as full name /
title of the account, address and complete KYC, TP etc. from the Account Opening Form into the
Computer records and put a POSTED seal on the AOF which will be signed by an Authorized
Officer. The photographs of the Account Holder or the persons who will operate the Account Shall
be obtained.
2 In the computer record there should be a provision to link all the related accounts opened by a
branch in the name of one account holder. In the branch has one or more Accounts previously
opened in the new account name, all these accounts should be linked as per the procedure given
in the Computer Manuals.
3 The name of the account holder should be spelled and styled exactly as given by the account
holder on the Account Opening Form. If there is more than one account holder to the account the
name of the first named account holder should be written followed by the words " joint with". The
names of other account holders should be written in subsequent lines.
4 The first and last serial number of the cheque book issued to an account holder should be entered
into the Computer.

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Scanning of Signature for online

After putting all the information and subsequent authorization the Account fit for online operations. As
the requirement of online operation the Specimen Signature is scanned and added with the Account for
the use of account operations.

Scrutiny of the new Account opened

1 The Authorized Officer will check particulars of the new account record from the Customer's
Account Opening Form and the Account file in the Computer and will sign on AOF in token of
having checked the accuracy of details. In case of any discrepancy the necessary amendments will
be made. The Account Opening Form will be filed in chronological order. Authorized Officer will
check the details of cheque book (s) issued and recorded in the computer records. Details of
checking procedures have been given in Pc Bank / M.
2 Authorized Officer should meticulously adhere to the instruction given in the Pc.
3 Authorized Officers checking the details of a new account should ensure that all relevant details
have been correctly recorded, the proper introduction has been obtained, the minimum amount has
been deposited, and other related documents have been obtained. He should also ensure that the
names and business activities of all Companies / Entities that are either wholly or partly under the
same ownership have been obtained.
4 Enter account in " Accounts Opened and Closed Register".
5 Prepare and dispatch letter of thanks to the Introducer, unless waived or introduction has been
signed in the presence of the officer approving the opening of the account.
6 Hold signature card(s), Account Opening Form and other documentation pending confirmation of
introduction.
7 If letters addressed to customers, introducers or referees are returned undelivered or are not
satisfactorily responded. "CAUTION" should be marked on the account and no service should be
provided to the customer unless specifically approved by the Branch Manager.

Filing of Documents
The Account Opening Form and other related documents should be filed in the Account File. The
A.O.F. will be pasted in Lots, say 50, 75 or 100 in a single lot. Specimen Signature Cards should
be attached to the relative pocket in the Card Cabinet, in account number order.

Frequency of the Statement of Account

This section must be completed by all the Current Account Customers. As far as possible, the
frequency should be kept to a minimum. Also, indication for no-correspondence accounts should
be given here as well.

Title of the Account

Title of account must show the full expanded names (not just the initials) of the account holder; in
the case of joint accounts the full expanded names of all account holders; in the case of business
accounts the name by which the business is registered.

Operating Instructions:
1 Clear instructions should be obtained regarding operations of the account and for repayment of
the balance in the event of the death of any of the joint account holders.

35
2 Operational instructions such as Either or Survivor, Jointly, Any one to operate, Secretary to sign
with any / one of the Directors etc. should be clearly stated, preferably in red ink at the top of:

 The specimen signature card and on the online scanned display

 In the Account Opening Form and in
 The Computer

3 After writing the instructions in full all the signatories must sign on S.S. card below the line
“Special Instructions”.

Introduction to an Account:
1. It is essential to make enquiry about the respectability of a prospective customer and to check
unknown to the Bank with his or her bankers. The Bank has an obligation to act “in good faith
and without negligence” at all time and in all its activities. Any carelessness in obtaining a
proper introduction constitutes “negligence” and can lead to a host of complications with
Regulators and in a court of law.
2. Another purpose of obtaining an introduction or reference is, of course, to ensure that a new
customer is a suitable person to be entrusted with a cheque book which may not be issued
before all formalities have been satisfactorily completed.
3. Staff member should be made fully aware of their responsibility in acting as an introducer.
4. An introduction from a member of staff should not be accepted unless the manager is fully
satisfied that it is based on a proper knowledge of the account holder and not based on a
casual acquaintanceship.
5. Introduction from Savings Bank account holders for Current Deposit Account shall not normally
be allowed.
6. Over and above the normal introduction the customer should be properly identified through his
passport or laminated driving license or other official identity. These sorts of identity should be
tactfully obtained from the client. And it should be kept in mind that these may not be required
in all cases.
7. The signature of the introducer /referee should be verified on the spot by the authorized officer
under his signature written across the rubber stamp “Signature Verified” affixed in close
proximity to the introducer‟s signature.
8. When a new account is opened the introducer should preferably be present in person. A letter
of thanks should be sent to the introducer‟s address. A copy of the letter should be retained in
the Account File.
9. Branches are required to note that a passport / driving license etc. are only means of
identification and does not constitute a reference; the procedures described on references must
be followed even if these have been examined and copies taken.
10. Branches should take care to ensure that in the process of making inquiries, they do not
discourage genuine customers or genuine business from being booked. Discretion, therefore,
is of utmost importance along with vigilance.

Address of Account Holder:

1 All correspondence from the bank is to be addressed to the first named account holder
appearing in the title of the account.
2 For individual accounts the corresponding address shall be the address where the person
resides. His permanent address shall also be recorded.
3 The Client's telephone / fax / internet / telex number of both residence and office shall be with
the Bank so that they may be contacted in case of need.
4 For business account, the business address will be the correspondence address.

36
5 An address consisting of only P.O. Box number should not be accepted.
6 The Branch must check the genuineness of the address of the client and keep record how the
same was verified.

Signature of the Account Holder

1 In the case of individual account, the account holder should sign Account Opening form and
Specimen Signature card in his individual capacity. Where as in case of Sole Proprietorship
concerns, Firms, Companies etc., Specimen Signature card shall be signed by the Proprietor,
Partners and Directors respectively in their official capacity over the rubber stamp of the
business.
2 Before obtaining customer‟s signature on the form, the Account Opening Officer must explain
the clauses of the agreement / undertaking wherever he feels that such clauses may not have
been understood.
3 The signature of the account holder shall be admitted by the Manager / Authorized officer. A
rubber stamp “Signature Admitted” will be affixed on the Account Opening Form and Specimen
Signature card and the officer admitting the signature will sign in close proximity of the stamp.
4 Each Specimen Signature on the account opening form and the Specimen Signature card shall
be initialed in red ink.
5 Blank space (if any) on the account opening form and specimen signature card(s) shall be
ruled off to prevent subsequent unauthorized insertions.
6 Whenever a distinct change in the account holder‟s signatures is noticed, a fresh specimen
signature should be obtained on a new specimen signature card; after satisfactory identification
of the account holder, with an application regarding acceptance of the changed signature. The
date on which the fresh signature is obtained shall be noted and the signature should be
admitted as usual.
7 On the other hand when the account holder decides to change his Specimen Signature a
written application under his signature will be obtained. A fresh Specimen Signature will be
obtained and admitted as per the above procedure. The application should be filed in the
customer‟s Account Opening file and photocopy of the same shall be attached with the S.S.
Card for ready reference.
8 An account holder if signs in a language other than English or Vernacular an Indemnity Bond
form should be obtained and attached to the Account Opening Form. The Indemnity Form
should confirm that the nature and contents of the documents concerned have been explained
to the account holder in their own language and that they have signed the documents after
having understood the contents therein.
9 Where the account is opened on the basis of Power of Attorney, the Attorney Registration
number , and the date of issue , should be entered on the following, and a copy of the power of
attorney should be retained with the account opening form and Specimen Signature Card.
10 As per our online Banking platform the Specimen Signatures of the clients are scanned and
preserved in computer; instead of traditional hard copy , the signatures on the cheques are
verified from the screen.

Branch Manager’s approval:

Any new accounts opened during the day should be reviewed by the Manager even if formalities
remain incomplete. He should sign the Account Opening Form and the Register only after
completion of all formalities. However, no current account shall be opened without the prior
approval of the Manager.

37
Initial Deposit by the Account Holder
Till the AOF is complete in all respects a new account can be opened by the Bank. The Branch
Manager as per existing practice prescribes a minimum amount as an initial deposit for opening
various types of accounts.

Issuance of Cheque Book to Account Holder

Upon receipt of satisfactory reference and the initial deposit, an Account Holder may be issued a
cheque book, in accordance with the procedures for issuance of the same.

Specimen Signature Card

Specimen Signature cards should be retained in Card cabinet arranged in account number order.
The key of the cabinet should be held by an authorized officer who should ensure that cabinets
are securely locked and placed inside the Strong Room overnight. To facilitate Online transactions
the Specimen Signature Card shall be scanned and uploaded in the Flexcube system.

Allocation of Account Number

1 The Computer will generate account numbers for each type of account, the next available
number should be used from the computer printout.
2 The particulars of new accounts should be entered in the Account Opened and Closed Register
in serial order, and initialed by the authorized officer and the Manager.
3 Separate Account Opened and Closed Register will be maintained for account opened under
each category viz Current deposit, Savings bank and Term deposits etc.
4 The account number allotted to a new account will be written on the account opening form,
specimen signature card and cheque book requisition slip.

Documents to be obtained for various types of Accounts

1 Individual /Joint Accounts/ Sole Proprietorship Concerns

a) Account Opening Form

b) Specimen Signature Card
c) Photo of Account holder and Nominee
d) NID or similar Photo identity of Account holder and Nominee
e) Mandate Form if applicable
f) Trade License

2 Partnership Firms
a) Account Opening Form
b) Specimen Signature Card
c) Photo of Account Operators
d) NID or similar Photo identity of Account Operators
e) Partnership Letter Form
f) Mandate Form if applicable
g) Trade License

3 Limited Companies

a) Account Opening Form

b) Photo of Account Operators
c) NID or similar Photo identity of Account Operators
d) Specimen Signature Card
38
 e) Memorandum and Articles of Association
f) Certified true copy of the Resolution of the Board of Directors authorizing opening of the
account.
g) Certificate of Incorporation/ Decree from the ruler, Original may be returned after inspection and
a Certified true copy retained.
h) Certificate of commencement of Business (applicable only in case of Public Limited
Companies); Original may be returned after inspection and a certified true copy retained.
i) Certified true copy of the resolution
j) Trade License
k) Copies of the latest Audited Balance Sheet and Profit and Loss Account.

4 Trusts

a) Account Opening Form

b) Specimen Signature Card
c) Photo of Account Operators
d) NID or similar Photo identity of Account Operators
e) Copy of the Trust deed
f) A certified true copy of Registration of the Public Trust.
g) A certified true copy of the resolution of Board of Trustees for opening and operation of the trust
account with the Bank.

5 Societies, Associations, Clubs etc.

a) Account opening form

b) Specimen Signature Card
c) Photo of Account Operators
d) NID or similar Photo identity of Account Operators
e) Certified true copy of the by-laws / rules and regulations
f) Certified true copy of the Resolution by the Society / Association / Clubs authorizing
opening an operation of the trust account.
g) List of members of the Executive / managing committee

6 Local Authorities, Municipal Corporations etc .

a) Account Opening Form
b) Specimen Signature Card
c) Photo of Account Operators
d) NID or similar Photo identity of Account Operators
e) Certified true copy of the statute under which the body was created and governed
f) Mandate which will authorize the persons who would operate the account.

7 The following persons (i.e. individuals or legal entities) must also be identified where
applicable:
 All of the directors who will be responsible for the operation of the account / transaction.
 All the authorized signatories for the account/transaction.
 All holders of powers of attorney to operate the account/transaction.
 The beneficial owner(s) of the company
 The majority shareholders of a private limited company.

st
From 31 December, 2008 uniform Account Opening Forms have been introduced by Bangladesh Bank for all the
Scheduled Banks in Bangladesh.

39
Issues regarding Deceased Account
Application of interest in Deceased Accounts

As per Bangladesh Bank BCD Circular # 18 dated 27th May, 1984, the Scheduled Banks are
advised to follow the following Guidelines in connection with application of interest on Deposit and
Loan account of the Deceased.

a) Savings Bank Accounts:

Interest on the balance of Savings Bank Accounts will be paid upto the date of withdrawal /
closing of the accounts as admissible under Savings Bank Accounts rules, irrespective of
the date of expiry of the depositor.

b) Fixed Deposit Accounts:

i) Premature encashment: In such cases deposit should be deemed to have been made upto
the date of withdrawal and not upto the date of death. Interest should be paid and recovery
of penal interest made in accordance with prevalent instructions regarding premature
encashment.

ii) Encashment at Maturity: Interest should be paid upto the date of Maturity at the rate
applicable for the relevant FDR.

iii) Encashment beyond Maturity: Interest upto the period of Maturity should be paid at the rate
applicable for the relevant FDR. Interest for the period beyond the date of Maturity upto the
date of withdrawal should be paid at the rate applicable for the Savings Bank Accounts with
checking facility.

c) Loan Accounts:
Banks may charge interest on loan accounts till liquidation of outstanding bank dues. The
Banks are advised to pursue with the successors to adjust the loan account at the earliest
to avoid accumulation of interest burden.

d) It may, however, be noted that as usual all payments should be made and recoveries
effected from the legal successors of the Deceased Accounts.

Payment to the heirs of the Deceased:

1 In case of death of Account Holder, his / her heirs shall inform the Bank immediately in
writing or by electronic media.
2 In support of their application they will submit death certificate or any other evidence of death.
3 Paper news may be a source of knowing about the deceased.
4 The message received either verbal or in writing, the Bank shall take the fact into account
and proper instruction Drawer Deceased shall be marked in the Computer by the authorized
Officer.
5 The heirs shall apply to the Bank for Balance certificate of the Deceased for submitting to the
court the court in support of their Succession Certificate.
6 After getting Succession Certificate the heirs shall apply to the Bank for releasing the money
in their favor as per court order along with other supporting documents. The branch will keep
photocopy duly attested by an authorized officer after seeing the original.
7 The Branch shall check the genuinity of the Succession Certificate from the office of the
Issuing Authority.

40
8 The heirs of the deceased in an affidavit or through Notary Public will inform their identity to
the Bank and that they are the legal heirs and they will indemnify the Bank for any loss or
damage that may arise in future as well as confirm the Individual in whose favor the payment
is to be released as per Court Order.
9 Any client acceptable to the Bank will identify the Heirs of the Deceased and may stand
Guarantee or sign an Indemnity Bond to compensate the Bank for any loss or damage that
may arise in future.
10 Before releasing Payments to the heirs in case of complicated issues, the Branch shall obviously refer the
same for the Head Office approval and / or Legal Opinion.
11 Payment must be made through Payment Order. No matter, how small the amount involved
the branch shall in no way make cash payment to the Beneficiaries.
12 In case the Nominee (selected by the deceased before his death), the Bank shall act
accordingly.
13 Any event of confusion or suspicion, the matter must be dealt with caution and the Head
Office and / or Legal Advisors should be informed immediately.
14 The procedures shall be applicable in case of credit balance held against all types of Deposit
Accounts.
15 All payments in the Deceased account shall be made released as per CHQ Operations
Circulars and Guidelines.

Documents Required
The following are the relevant documents needed while releasing the fund to the heirs of the
Deceased Account Holder. Depending upon the circumstances the Branches will advise the
heirs to submit the necessary relevant documents required by the Bank.
1 The Death Certificate issued by the Hospital Authority
2 The Death Certificate issued by the Police Station
3 The Certificate issued by the Chairman of Union Council or Ward Commissioner with or
without citing the name of the successors.
4 Death Certificate issued by any other competent Authority
5 Graveyard Certificate in case of Government / municipality Graveyards
6 Succession Certificate issued by the Court. (The authenticity of the same shall be verified
from the concerned Office)
7 Selection of Payee out of present heirs by the Court
8 Passport / NID Card of the successors or any other proof their respective identity
9 Affidavit or Notary Public submitted by the heirs
10 Marriage certificate issued from Marriage Register's Office (in case of spouse)
11 Indemnity from the successors or Guarantee from third party.
12 The payment order may be issued in favour of the payee(s) mentioning the name of his / her
/ their deceased husband / wife or father as applicable.
13 Others

41
 Different Types of Account Holders

Accounts of Individuals
1 The person attaining 18 years age of or more is considered as an adult is competent to enter
into contracts. But lunatics, persons of unsound mind, insolvents / bankrupts are not
competent to enter into a contract. The person competent to enter into contracts can open
bank account.

2 The persons below 18 years of age are treated as Minor in the eye of law. The account
opening by the Minor is discussed in this Chapter separately.

Accounts of Joint Account Holders

1 More than one adult person jointly or adult with minor may open joint account with the Bank.
2 All parties to a joint account must sign the Account Opening Form and Specimen Signature
Card.
3 When opening the account, all parties to a Joint Account will be asked to give clear and
specific instructions with regard to the operation of the account and payment of the balance to
the survivors in the event of death of one or more joint account holders. These instructions
may be in any of the following forms:

3 The Account will be operated upon:

i) By either or survivor
ii) By any one or more joint account holders or by any one or all survivors jointly
iii) By all the account holders or all survivors jointly.

4 The operating instructions shall be clearly noted on the Account Opening Form and the
specimen signature card, preferably in red ink. All operations in the account should be
followed strictly in accordance with the instructions given by the account holders. All operators
must sign before the line" Special Instruction".

Where the personalized cheque and paying –in-slip books are not supplied, joint account
holders should be advised to write the full title of their account and the account number on all
cheques and Paying-in-slips. This will facilitate identification of the account in day-to-day
operations.

Accounts of Sole Proprietary Concerns

1 A Business concern owned by a single adult person is called a Sole Proprietorship

Concern.

2 The Proprietor of the concern will complete and sign the Account Opening Form (DEP- F-
13) and Specimen Signature card. The account of a proprietary concern can be operated
by a duly authorized named person on completion of Mandate Form (DEP F-17) from the
proprietor. His signature will be attested by the proprietor on the Mandate Form and verified
by an Authorized Officer of the Bank on the Specimen Signature Card.

42
Accounts of Partnership Firms

1 A business concern owned and managed by more than one person under a contract is called
a Partnership Firm. A Partnership Firm may be registered or unregistered.
2 The Partnership Firm can be managed by all or several partners and their number is restricted
from 2 to 20.
3 The Partnership Firm has not its own separate entity so the Firm is operated along with the
name of the Partners.
4 The partners are individually or jointly liable for any liability of the Firm.
5 All partners in a firm must complete and sign Account opening Form and Specimen Signature
Card.
6 The account must be opened by all and operations may be allowed to any one or more
partners of the firm, provided a mandate has been issued by all the partners, authorizing one or
more to operate the account.

Minor as Partner
1 While opening the account of a partnership firm in which a minor has been admitted as partner,
the date of birth of the minor partner should be recorded on the Account Opening Form.
However, the minor is not liable to the liabilities of the firm. Ordinarily, a minor should give
notice within a specified time on his attaining majority or on his obtaining knowledge that he is
admitted to the benefits of a partnership, that he has opted to be liable or not to be liable as a
partner in the firm. If he fails to give notice, he becomes the partner after the expiry of the
specified period. Branches should consult the local lawyer to determine the period within which
a minor should opt to become a partner after attaining majority and should obtain his signature
if the minor fails to give notice after the expiry or the specified period.

Partnership Deed
1 Ordinarily, branches should insist on the production of a partnership deed. It will be accepted
and recorded. A certified true copy of the partnership deed will be filed in the Account Opening
File.

Registration of Firms
1 Bank should insist that a firm should be registered with the Registrar of Companies. In case of
Registered Partnership the retirement, new entry and death of partners are properly recorded
which keeps the bank's position update, clear and safe.

Authority of Third Parties to operate

1 Where a third party is authorized to operate a Partnership Account, a mandate on Form must
be signed by all the Partners and the signature of the third party should be attested thereon.
The third party's signature should also be obtained on a Specimen Signature Card. Any
relevant special signing arrangements should also be included in the Account File, and on the
Specimen Signature Card.

43
Accounts of Limited Companies

1 Limited Company is a Body Corporate formed and registered under the Companies Act 1994
with limited liability of the Share Holders. The Company comes into existence through the
issuance of a Certificate of Incorporation by the Registrar of the Joint Stock Companies.
2 The Public Limited Company requires Certificate of Commencement but the Private Limited
Company does not.
3 It is run by its Memorandum and Articles of Association.

3 The Company has a separate legal entity and the Company is run by its own seal. The
Company can sue and it can be sued by its own name.

4 Branches should obtain the following documents from a Limited Company to open an account:
a) Account Opening Form
b) Specimen Signature Card; Specimen signatures of all Directors and all Authorized Signatories
are required. The Bank must ensure that the mandate is in conformity with the Memorandum
and Articles of Association.
c) Up-to-date Memorandum of Association attested by Registrar of Joint Stock Companies.
d) Up-to-date Articles of Association attested by Registrar of Joint Stock Companies.
e) Certificate of Incorporation. The Original certificate may be returned after inspection and a
certified photocopy retained in the Account Opening File.
f) Certificate of Commencement of Business: This is applicable to Public Limited Companies
only. The original Certificate may be returned after inspection and a certified photocopy
retained in the Account Opening File.
g) Certified photocopy of the Resolution of the Board of Directors resolving to open an account
with the Bank. Authority to ensure that it is in accordance with the relative provisions of the
Articles of Association. In the event of any change in the Board of Directors of the company, a
certified true copy of the fresh Resolution should be obtained. The signatures of the Authorized
Officials should be verified by the Chairman of the Company.
h) Trade License from the Municipality or Local Council.
i) Copy of the latest Audited Balance Sheet and Profit and Loss account.
j) References are to be taken on
a) Company
b) Its Directors
k) A search from the Registrar of Companies.

Accounts of Trusts

1 Trusts are created by Trust deed in accordance with the law. trustees are given the control of
an Estate usually of the Deceased for the benefit of certain persons who are called
Beneficiaries.
2 Trust Accounts- private or public, charitable or otherwise-should not be opened by the
branches unless prior permission is obtained from the Head Office.
3 Account Opening Form and Specimen Signature Card signed by all the trustees should be
obtained irrespective of the mode of operation on the account. Before opening the account, a
copy of the Trust Deed should be registered with the Bank, along with the following documents:
i) A Certified copy of the Certificate of Registration of Public Trust.
ii) A copy of the resolution passed by the Trustees in respect of the Trust Account to be opened
with the Bank. This copy should be signed by all the Trustee. In the event of change of any
Trustee, a copy of fresh resolution shall be obtained.

44
Accounts of Societies / Associations / Clubs etc.

1 Branches may open the account of a Society / Association / Club or a Committee by using
Account Opening Form and Specimen Signature Card.
2 The following additional documents should be obtained in consonance with the local
regulations.

a) Copies of the Bye –Laws or

b) Memorandum of Association
c) Copy of Certificate of Registration
d) A copy of the Resolution passed by the Governing Body authorizing the opening of an
account and conferring authority to operate the account.
e) List of members of the Executive / Managing Committee.

3 The Account Opening Form should be completed and signed by the Chairman and other Office
Bearers of the Society / Association / Club etc., in terms of the Bye-Laws and the Resolution of
the Management Committee of the Society / Association / Club etc.
4 Cheques drawn on the account of Societies / Associations / Clubs etc. shall not be collected for
credit of the personal account of the Office Bearers and other employees of those Bodies.

No overdraft should be allowed in the accounts of Societies / Associations/ Clubs without prior
approval from the Head office.
In the event of transfer or death of the Office Bearers of the Society / Association / club operating
the account all operations on the account should be suspended forthwith until a fresh Resolution is
passed by the Management Committee. And its copy along with the specimen signatures of the
new Office Bearers are received by the Bank.

45
 Payment Orders
Issuance of Payment Orders:

1. The client shall fill up the Payment Order Application Form. The application form is treated as
credit voucher.
2. The Cash Department shall receive money against Payment order in case the party pays
cash.
3. In case of Issuance of Payment Order against Cheque or party‟s instruction respective
account shall be debited. The party‟s signature shall be verified before debiting party‟s
account.
4. Commission shall be received from the Party under the Head: “Income A/c - Commission -
Remittance (P.O.)”
5. After receiving payment, Payment Order application form and income vouchers shall be
returned to Local Remittance section.
6. The description of the P.O. shall be recorded on the Payment Order Issuing Register/File
7. The Payment Order is prepared, dated and protect graphed.
8. The branch seal must be put on the Payment Order.
9. The Payment Order number is written on the voucher.
10. The Payment Order Block and Vouchers along with the Payment
11. Order Register are sent to the Remittance In-charge for checking and signatures.
12. After signature of the Officer-in-Charge, the Payment Order and the
13. voucher are sent to other Authorised Officer for second signature
14. The Payment Order is crossed if the customer so desires and it is delivered to him against his
acknowledgement on the reserve of the application form.
15. The vouchers are sent to Accounts Department.
16. While the Payment Order is issued against cheque, the cheque is sent for passing and
cancellation.
17. The following entries are passed :

Debit : Party‟s Account (cheque)

Credit : Bills Payable Account Payment Order Issued.
Credit : Income Account-Commission-Remittance (PO)

18. After the cheque is passed, similar procedure as explained above is followed.

19. Issuance of Payment Order against a letter of instruction should normally be avoided. If it is
done, the following procedure should be followed :

i) Payment Order The letter is sent to Deposit Department for verification of

signatures.
ii) Other procedure is similar that explained above.

Issuance of Duplicate Payment Order

1 On receipt of application from the purchaser of the Payment order regarding its loss and issue
of a duplicate once, the signature of the applicant is verified from the original application.
2 The Purchaser shall make a General Diary (GD) to this effect and submit a copy to the Branch.
3 An Indemnity Bond affixed with special adhesive stamp of adequate value is obtained from the
application.
4 The Payment Order is issued marked Duplicate in lieu of P.O number .........in red ink.

46
5 A note to this effect is made on the original application on form and on the Payment Order
Issued Register.
6 The Indemnity Bond is filled in the Indemnity Bonds for Duplicate Instruments issued file.

Cancellation of Payment Order

1 On receipt of application along with Payment Order for its cancellation, the signature of the
applicant is verified from the original application.
2 To cancel Payment Order, it must be ascertained that no duplicate P.O. has been issued.
3 No refund will be made to the purchaser against duplicate without proper endorsement from the
beneficiary of P.O.
4 The following entries are passed :

Debit : Bills Payable Account – Payment Order issued.

Credit : Party‟s Account /Bills Payable Account Pay Slip issued (in case party does not
have account).

5 The Payment Order is cancelled by tearing off signatures thereon and a note to this effect is
made on the application form and on the Register. Tee entry is to be reversed.
6 The cancellation Payment Order is attached with the debit voucher

Payment of Payment Order

When Payment Order is presented for encashment it can be paid through transfer or clearing. The
P.O. can be paid in cash by making “Pay Cash”.

Payment to the Purchaser

1 The Payment Order purchased may not be used by the payee or the purchaser may encash
the same when its utility is ended the same without handing over to the payee; in both cases
the issuing Bank has to release payment against the Payment Order.
2 In case the Payment Order is issued in favour of say, Executive Engineer DESA to participate
in a tender. In case the purchaser failed to get the tender, the DESA office will return the
Payment Order by releasing the same by signing at the back by the Tender issuing Authority. If
confusion arises the branch shall verify the discharge over telephone or by any other easy
access media.
3 The signature of the payee shall be verified from the Payment Order Application Form by an
authorised officer.
4 Payment shall be credited into party‟s account. If the party does not maintain any account with
the branch the payment shall be made through issuing another Payment Order favouring the
purchaser.
5 If the Payment Order is placed through clearing by the purchaser‟s Bank, in that case the
Collecting Bank„s endorsement must confirm that purchaser‟s account is credited.

47
 Fixed Deposit Receipts

Opening of FDR:

1. Receive the completed account opening from, duly signed and dated along with the
specimen signatures along with copy of NID, Photograph of the Purchaser and one copy of
the nominee.
2. Special instructions regarding repayment on maturity shall be obtained on the account
opening form.
3. Voucher crediting FDR Account with amount of deposit including the name of the Party,
Account Number shall be prepared.
4. In case of payment by cash the cashier receive the cash and send back the same to FDR
section.
5. In case of payment by cheque the credit voucher shall be attached with the cheque and
send for posting and cancellation.
6. On receipt of vouchers from cash / deposit department a FDR shall be prepared.
7. The said FDR, AOF and deposit slip shall be sent to computer section for opening FDR
Account consisting the name of the party (title of Account), receipt no., date of opening,
rate of interest, maturity date and account number allocated, which shall also be written on
the deposit slip and on FDR Account form and give computer posting number on AOF,
voucher and initialed.
8. Signature on the A.O.F. shall be admitted by an Authorised Officer with red ink.
9. Then the AOF, vouchers FDR Block shall be sent to the Officer-in-Charge for signature.
10. The in-charge checks the authenticity of the voucher and be ensured about the money
deposited or received against the voucher and sign on the FDR and will also sign on the
A.O.F.

11. Then the FDR shall be received by the party after signing on the counter foil.
12. The voucher and the cheque shall be released.
13. The account opening from shall be pasted in pasting file in numerical order.
14. The Manager / GB in-charge shall ensure that the printed number and other details have
entered into the computer.
15. He will also check the total amount for which FDRs are issued both from credit vouchers
and counter foil of the FDR block.
16. The FDR in-charge shall also check that non-issued Receipts are in tact in the relative
book. The spoiled and cancelled leaves are to be kept attached with the respective counter
foil.
17. On maturity the FDR may be brought back for renewal. The concerned officer shall renew
the same for further period and calculate the up to date balance and return the Receipt
under Bank seal & signature.
18. A computer printout may be supplied to the client for ready reference.
19. In case of loss or mutilation, duplicate receipt may be issued at the request of the client. An
indemnity bond signed by the client and incase of joint names, indemnity Bond from all
depositors are to be obtained.
20. In the event of death of the Depositor(s) the amount thereon can be distributed to the
nominee, one or more legal heirs or legal representatives. The formalities regarding "
Deceased Account" are applicable in this regard.

21. The FDR may be encashed before maturity; in that case Head Office circular may be
followed regarding payment of interest etc.

48
22. Any FDR under Lien must be properly discharged by the Authorizers / signatories and
Lien mark and encashment restriction must be given in the computer. A FDR in the name
of two or more persons must be discharged by all the signatories and all will sign in the "
Letter of Lien" although there might be instruction either or survivor etc.

23. The Authorised officer in computerized branches should check particulars of the new
account opened from the Customer and Account Update Reports and should initial the
reports in token of having checked the accuracy of the details.

24. Authorised officers in computerized branches should also check details of deposits
received in the branch from the statement of activity.

25. The Account Opening Form and other related documents should be filed in the Account
File. One file will be allocated for each account.

Due Date

1. The due date of a FDR shall be calculated on the basis of months, say 1 month, 3 months,
6 months, one year, two years etc. For example a three months FDR dated 15.6.98 will be
payable on 15.09.98. (Provided it is a working day). However, a deposit made on 30.8.1999
for 6 months should fall due for repayment on 29.2.2000 i.e. on the last day of the month.
Of due dates fall on a holiday, the deposit would normally be paid on the next working day.
Interest would be paid according to the actual number of days.

2. For deposits with broken periods, say 60 days or 100 days or 3 months and 15 days, the
actual number of days should be counted and the due date worked out accordingly.
3. Head Office should be informed if a large deposit is withdrawn before the Date due.
4 When deposits are withdrawn before due date the FDR should be returned to the issuing
Branch for cancellation ( an officer should write the word " CANCELLED" across the receipt
and sign in full).

Payment of FDR

1. From computer software on every working day you will get the details of FDR falling due for
payment.
2. The rate of interest on FDR is fixed by Head Office from time to time. The amount of
interest is payable on the maturity date.
3. If the interest is not withdrawn on maturity it will be automatically renewed and shall be
compounded at prescribed rate prevailing on that date.
4. If the client takes away the interest on maturity and continue the Deposit for further period,
the principal will be renewed at the prevailing rate.
5. When a FDR is presented for encashment on maturity the particulars of the receipts shall
be checked.
6. The client shall sign (twice) at the back after writing proper instruction for payment if any for
crediting any specific account or issuing payment order etc. The signature of the holder
shall be verified by an Authorised officer.
7. Voucher for interest payable on FDR shall be prepared and signed by two officers.
8. The original receipt shall be sent to Authorised Officer for cancellation.
9. Before encashment of the FDR Tax, Excise duty etc should be deducted as and when
imposed by the Government.
10. After cancellation the interest voucher and original receipt shall be sent to cash department
for cash payment or in the FDR section for making payment as opted for.

49
11. In case of premature encashment of FDR all procedure should be followed as mentioned
earlier excepting the following:

01. No interest shall be paid if the deposit is encashed before one month.
02. The interest on the deposit shall be calculated at Savings rate or as determined by
the competent authority.
03. In case of premature encashment, if applicable, the immediate below interest rate
shall be applied for calculating interest on FDR. Say, if a FDR of six months maturity
is encashed at the end of 4th month, the three monthly rate of interest will be
applicable or as determined by the competent authority.

12. If any FDR is reported lost the depositor shall apply to the bank for a duplicate and also
sign the Indemnity Bond on Non-Judicial stamp of adequate value. The duplicate shall be
issued with prior permission from Manager.

13. Any maturity date falling on holiday, the payment shall made on next opening day.
14. Although the FDRs are issued for a period of 1 month, 3 months, 6 months etc. the interest
shall be calculated against number of days the money was invested with the Bank.
15. The Branch might have differential rate of interest on FDRs depending upon the amount
invested, period involved and negotiation with the client, in that case the branch shall
maintain strictest confidentiality regarding the interest rates offered to various clients.
16. In case of death of the client the principle and interest shall be paid as per instruction
contained in the AOF. Where the client nominates nominee(s) the payment shall be made
accordingly.
17. Any FDR payable to Either or Survivor may be paid to any One only after maturity. In
case of premature encashment all the signatories will sign and discharge the FDR although
there might be the instructions like Either or Survivor etc.
18. In case of death of a joint holder of a FDR bearing the mandate Either or Survivor, the
amount can be paid to the surviving person only on maturity.

Precaution while encashment of an FDR

1 " Pay Cash" stamp is affixed on the receipt.
2 The necessary vouchers have been prepared and signed.
3 The necessary entries have been made in the Computer.
4 The signature of the client at the back of the instrument has been verified by the
Authorized Officer.
5 The Authorised Officer has cancelled the Receipt and has authenticated the Debit
Voucher.

Renewal of Term / Call Deposits

1. The FDRs with OBL are automatically renewed on the date of maturity for a similar
period, if instructions to the contrary are not received from the client.
2. Interest on the receipt are paid to the depositor in accordance with the Procedure
explained in the section on payment of interest.
3. Branches are provided with Report sheet providing details of FDRs due for automatic
renewal. The Report gives the identification number of the deposit and interest accrued
and payable. The officer concerned should verify the details and authorise renewal. All
deposits are then automatically renewed.

50
Overdue FDRs
Every FDRs with OBL is automatically renewable for the same period unless otherwise instructed
by the Client. No FDR will be overdue and interest will be payable on it as usual.

Preparation and Issuance of Deposit Receipts

1. A stock of Fixed Deposit Receipts is supplied to branches. The stock control should be
treated as security stationery and should be stored under dual control after duly entered into
Security Stationery Register.
2. Receipts should be issued free from alterations. Those spoiled in preparation should be
cancelled. Fixed Deposit Receipts are numbered serially. Cancelled Receipts will be retained
along with the counterfoil/ copies.
3. The Receipts should be prepared from the pay-in-slips / credit vouchers. The correct name of
all the depositors should be imprinted on the receipt. The principal amount of the deposit
should be written in words and figures. Instructions regarding repayment of the deposit
should be entered on the AOF.
4. The Authorised officer should verify the details on the Receipt.
5. The FDR shall be signed by two Authorised Officers

Issuance of Duplicate FDR

1. In case the FDR is lost or destroyed, the purchaser shall apply to the bank for issuance of a
duplicate FDR. The signature of the purchaser shall be verified from the original application
form.
2. The purchaser shall make a General Diary (GD) with the local Police Station and submit a copy
of the same to the Branch.
3. The Branch will seek CHQ permission TO issue a duplicate FDR to the Client.
4. A duplicate FDR shall be issued to the Purchaser after obtaining Indemnity Bond in presence of
at least two witnesses. The signature on the Indemnity Bond shall be verified by an Authorised
Officer with pencil.
5. A new FDR leaf shall be used to issue a duplicate FDR without altering the printed number and
repeating the original serial number by the words “Duplicate issued in lieu of FDR no …”
marking in red ink on the new FDR leaf.
6. A note to this effect shall be written on the original Application form/voucher and on the FDR
Issue Register and in the computer record.
7. The Indemnity Bond shall be kept in Duplicate FDR Indemnity Folder without punching the
same.
8. The issuance of duplicate FDR should be circulated among the OBL Branches.

51
 Bangladesh Automated Clearing House (BACH) – Settlement
Mechanism

What is clearing: The Banking mechanism for settling payment of cheques, drafts, bills etc. drawn on other
scheduled banks is called clearing. The scheduled Bank that clears the instruments drawn on other scheduled
banks is called clearing bank.

Before the year 2010, the clearing was in manual process which was a complex way to proceed a huge
volume of cheques.

From the year 2010, Central Bank has introduced a latest system for clearing to accelerate the whole
economy, named - Bangladesh Automated Cheque Processing System (BACPS). The total clearing
processing system is organized by the Bangladesh Automated Clearing House (BACH).

The procedure of BACH is depicted below:

Bangladesh Automated Clearing House (BACH) means the overall system and facility that supports the
exchange and settlement of payment items between participating banks and Bangladesh Bank. The system
governs paper based payment items that are eligible cheques truncation and electronic cheques presentment
using the Bangladesh Automated Cheque Processing System (BACPS). The purpose of these rules is to
support the use of imaging and the transmission of electronic information among Banks and to create new
option for storage and retrieval of images and associated information.

The operational procedures are intended for the use of operational officials and staff of clearing department
which are engaged in the preparation and submission of outward payment items to the Clearing House and in
the receipt and verification of Inward items from Clearing House.

Apparatus for BACH are the following:

a) 1. Scanner Machine
b) 2. MICR encoded cheque (MICR – Magnetic Ink Character Recognition ).There are 31 digits in
MICR encoded part.07 digits for cheque number,09 digits for Routing number,13 digits for Account
number and 02 digits for Transaction code.

Software Terms:
a) CPS – Cheque Processing System
b) PBM – Participant Bank Module i.e. Bangladesh Bank Server

There are two types of clearing cheque

52
(1) Inward Cheque – The cheques(instruments of one bank) which are presented on ONE bank ltd by other
banks.
(2) Outward Cheque – The cheques(instruments of other bank) which are presented by ONE bank ltd on
other banks

To perform clearing we have a Central Clearing Unit. The Central Clearing Unit performs debiting Inward
Clearing Cheque centrally and Outward cheque processed by the Branch and zone wise which is coordinated
and supervised by CCU.

Inward cheques are cleared in two ways:

Regular Value (RV): Less than Tk.5.00 lac amount cheque must be placed on in regular value but 5.00 lac
and above amount may be placed in RV or not.

High Value (HV): The criteria of H/v cheque is must be amounting 5 lac & above.

1) Regular Value (RV) cut off Time by Bangladesh Bank

Presenting last time 12.30 P.M.
Return Cut -off time 05.00 P.M.

2) High Value (HV) cut off time by Bangladesh Bank

Presenting cut off time 12.00 P.M.
Return cut off time 03.00 P.M.

But branches should perform the job of presenting cheques before 01 hour of every cut off time for
CCU reconciliation.

The procedures to be followed for Automated Clearing (BACH) operation by the OBL Central Clearing
Department and all OBL Branches are given below:

OUTWARD CLEARING:
1. Branches will receive Clearing Outward Cheques over the Cash Counter.
2. While receiving the clearing outward cheques, the respective officer will must check and
ensure that the cheque number, amount, beneficiary’s name and account number are correctly
incorporated in the Deposit Slip.
3. Cash Department will send all clearing cheques to Clearing Department after necessary
checking by UV detector. Teller will put his/her initial/Signature on the back of each cheque.
4. Then the Clearing Officials will prepare Excel sheet of clearing cheque and incorporate
Special Crossing, Clearing and endorsement seals on the cheques.
5. Authorized Signatory will sign on the endorsement seal.
6. After completing the endorsement procedure the cheques will be scanned branch wise or
according to necessity Zone wise (cluster system) through CPS. After balancing in CPS the
cheques will be transferred to PBM and then to respective Bank and branches.
7. Branches/zone will send their IBDA for outward cheques to the Central Clearing Unit.
8. In cases of cluster method i.e. zone wise scanning system the Branches will send the IBDA to
selected zone and the zone will accumulate the cheques and IBDA and then a single IBDA of
whole amount will be sent to CCU.
9. The scanned item of outward clearing cheques should be credited in UBS by matching
clearing cheque and attached deposit slip.
53
 10. All Branches or Zonal Branches will send HV IBDA by 11.00 A.M. and RV IBDA BY 11.30
A.M. TO CCU positively to ensure the right presentment.
11. CCU will respond all IBDA which are received from Branches/Zone Branches against
instruments presented for clearing and will keep a record of total amount of Branch-wise
outward presentment for counter checking with the BACH settlement report that will be
available immediately after the Presentment Cut-off time. In case of any deviation, proper
action is to be taken to rectify the same.
12. After return cut-off time, designated Clearing official in CCU will check the return item report
against outward presentment and will distribute the same to Branches through folders in FTP
server. Required IBDAs to be raised by CCU after receiving settlement report from
Bangladesh Bank for the return items and will send those to respective Branches/Zonal
Branches through FTP server and e-mail.
13. Charges for outward return items will be realized by the presenting Branches.
14. All the Branches should preserve the Validation Print of out ward cheques record purpose.
15. The Branches will realize the presenting charges of clearing outward cheques.

RETURN: CLEARING OUTWARD:

1. Central Clearing Unit will down load all the return cheques from CPS.
2. CCU will issue IBDA branch wise for the return items.
3. The officers of CCU will Balance whole amount of transaction with Bangladesh Bank by
the adjustment of suspense account in UBS according to the settlement report of Bangladesh
Bank.
4. The Central Clearing Unit will realize the presenting charges of returned out ward clearing
cheques as per return report.

CLEARING INWARD C HEQUES:

1. After getting the inward settlement report from Bangladesh Bank all the inward cheques will
be uploaded from BACH system to UBS by Central Clearing Unit.
2. Central Clearing Unit will down load all the inward cheques from CPS and take print of the
image of the cheques.
3. The respective officers of CCU will check all the material part of instruments like claimed
data of the presenting Bank and other necessary part to ensure the genuineness of the
cheques.
4. Drawer’s signature of the inward cheque images should be verified by the experienced
member of the Central Clearing Unit.
5. Central Clearing Unit will follow up the OD list.
6. At the same time branches will also follow up the OD list and inform the CCU to honour or
dishonor the OD cheque through e-mail.
7. Branches should follow up the error list of clearing Inward Cheques and advise regarding
confirmation of payment.
8. At the same time Central Clearing Unit will control the error list also.
9. If Branches do not inform to CCU about the cheques of error list by 3.00 P.M. then all the
cheques of error list will be returned.

54
 10. Payment Order will be also uploaded by CCU but should be controlled out by the issuing
branches.
11. The CCU personnel will balance the settlement report with Bangladesh Bank.
12. As per B/bank circular the inward clearing cheques of companies amounting tk.01 lac &
above and the cheques of 5 .00 lac and above of personal account should be paid according
to the intimation letter of respective customer. That means the payment of clearing inward
cheques should be confirmed by proper communication with the clients.

INWARD CLEARING RETURN PROCEDURE:

1. Central Clearing Unit will mark the return cheques in Aperta of BACH.
2. All the return images of the respective Branches should be provided by the Central
Clearing Unit to the branches.

RETURN CHARGES:

Return charges for the returned clearing Inward cheques will be realized by the CCU.

Outward Clearing posting in Flexcube (after processing):

01. Outward clearing regular value cheques of amounting below Tk. 50,000.00 (no charges) OCRV
02. Out ward high value cheques of amounting Tk.5.00 lac and above (no charges) OCHV
03. Outward clearing regular value cheques of amounting Tk. 5.00 lac & above CGHR
04. Outward clearing regular value cheques of amounting Tk.50,000.00 and below 5.00 lac CGRV
05. Outward clearing high value cheques of amounting Tk. 5.00 lac & above CGHV

Note: Above mentioned transaction of serial no. 3,4 and 5 are including with charges.

In accordance with settlement report – Suspense A/c wash out as under:

A. For Regular Value:

1. Cr. Outward R/V suspense A/C 108060104
2. Dr. Inward R/V Suspense A/c 108060103
3. Dr. Balance with Bangladesh Bank A/c if favour or Cr if disfavor 0004700000007

B. For High Value:

1. Cr. Outward H/V suspense A/C 108060106
2. Dr. Inward H/V Suspense A/c 108060105
3. Dr. Balance with Bangladesh Bank A/c if favour or Cr if disfavor 0004700000007

**Clearing suspense account for any kind of adjustment is 108060102

55
 Amended Return Reason Codes for BACPS

Code no. Return Reason Re-Presentable (R) Non Re-

1 Insufficient Fund Presentable (N) R
2 Amount in figure and word differs N
3 Stale Cheque N
4 Post dated / Undated Cheque R
5 Drawers signature differs/ missing R
6 Payment stopped by drawer N
7 Item represented too often/more than 3 (three) N
8 Incomplete
times or missing endorsement R
9 Forged endorsement N
1 Material alteration- payee N
10 Forged or unauthorized signature
name/amount/date/account no. N
1 Missing corporate stamp R
12 Incorrect amount, cheque number, account number R
13 Item sent to wrong bank/branch R
14 Account closed/dormant/blocked N
15 Advice not received R
16 Duplicate item- previously paid N
17 Incorrect payee (mismatch with advice) N
18 High value item presented to an ineligible branch N
29 Cheque not activated/intimation not received R
20 Cheque and advice data mismatch N
21 7 (seven) days notice required R
2 Test key required/differs N
23 Not arranged for/Credit limit exceeded N
24 Revenue stamp required/not sufficient R
26 5 Signature and seal required on the stamp R
2 Budget required/refer to the issuer R
27 Item required revalidation R
28 MICR data and Image mis-matched N
9

56
 Branch Premises and Protection
Policy Guidelines and General Control
1 The Branch Manager will be responsible to implement, supervise and enforce protection
procedure including installation of suitable alarm systems in the branch.

2 The Branch Manager will ensure that branch personnel are familiar with relative protective
measures. He will review the protection procedures at least once each month. Any deviations
from prescribed procedures and any deviations that there is inadequate protection for cash
securities or other valuables will be periodically reminded and to refrain from discussing the
protective features of the branch with members of the public.

3 Groups of employees of departments working in the branch after normal office hours or in
holidays will take prior approval of their respective departmental head and their works will be
supervised by an officer. The Branch Manager will make surprise visits to these departments to
ensure that sight supervision is being exercised.

4 A branch record will be maintained showing the arrival and departure time of all personnel
occupying the premises during holidays and outside working hours. this record will be reviewed
by the branch manager weekly.

5 As a general rule customers will not be permitted to the Bank premises outside of business
hours. However, customers who have prior appointments with officers may be allowed to do so.

Emergency Lighting and Alarm System

1 Branches should always have an arrangement to face Electricity failure. Electric Lantern/
Charger should always be kept ready so that instant light can be available in case of power
failure.
2 In case of regular prolonged regular electricity failure electricity Generator or Instant Power
Supply system (IPS) should be installed.
3 The Security Guards, Cash Officers and other staffs shall be cautious immediately after
Electricity failure.
4 Fire Extinguisher shall be kept in such a place ,so that it can be used instantly. The security
Guards and Cash Officers must have training how to use the same. Every year the fire
extinguisher must be properly refilled and confirmed that the existing one is still active.
5 Alarm system shall be kept active at all time. The Branch Manager shall ensure that the
alarm system is kept in good working order. He will occasionally test the system after closing
of business hours. All Officers shall participate in the demonstration and shall be made aware
what should be their role in the emergency.
6 The alarm will be installed outside the branch premise kept in a Grill case and connected with
the Chief Cash Officer through conceal wiring.
7 In case of fire breaks out, hijacking or any untoward event the alarm bell shall be rung to
make alert all the Security Guards and the other staffs of the branch.
8 The telephone numbers of the Manager, Deputy Manager, Joint Custodians and other
important telephone numbers like Police, Ambulance, Fire Brigade, Civil Defense etc shall be
kept in such a way that in case of emergency these are easily available.
9 Common sense precautions shall always be observed in the initial entrance to a branch and
in opening and closing the branch to the public. The main entrance shall remain locked until
the branch is opened for business transactions. While the cash shall be opened or closed in

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 the morning or evening the main entrance shall be locked and nobody including our staff
members shall be allowed to come in or go out on that particular moment.

Up-keeping of Branch Premises

1 The Branch Manager or an employee designated by him will satisfy himself that all windows,
doors, etc. are securely fastened before the branch is closed for the night.
2 Overnight the primary records of the branch will be kept locked either in the strong room or in
a cabinet.
3 A prospective customer forms his first impression of the bank as he approaches the exterior of
the building. The exterior décor of the Branch premises should, therefore, be such as to
convey the feeling of warmth and welcome combined with a sense of efficiency.
4 It will be the responsibility of the Branch Manager or an officer designated by him to ensure
that the Bank premises are kept clean, presenting a pleasant appearance and are in general
good condition.
5 Premises will be periodically inspected with particular reference to the following :
a) Interior walls, ceilings, counters, counter fittings and furniture.
b) The stone, brick, wood, metal and other exterior work.
c) The lettering on Signboards, windows etc.
6 Close attention will be paid to the condition, correct framing and hanging of all window signs
and notices .If any of these become soiled or damaged these should be replaced / removed at
once.
7 Inside the office, care will be taken to remove soiled, faded and obsolete notices and maps.
The only notices that may be exhibited in the public part of the office are those relating to the
services offered by the bank and any other notices required by Bangladesh Bank or other
Government Agencies. It is important that all notices are exhibited correctly.
8 Books and papers should not be placed or piled up against windows and window screens as
they create a most undesirable effect. Notices, circulars or other papers will not be affixed to
the glass screens or desks, or to the office walls.

Precautions before Opening Branch for Daily Business

1 Members of staff especially key holders, should vary the time and route taken to the branch as
far as possible. This is most important since the everyday routine followed by members of staff
are observed by the outsiders.
2 Before opening the branch premises, key holders, being the first entrants, should carry out an
external check to see that :
a) All outside doors and windows are unopened as of last working day.
b) Locks to the main door, other doors and side entrances have not been tampered with
c) All strong room doors and vault door locks are not tampered with. The alarm system is
operating well and the same is not tampered with.
3 While the strong room shall be opened the main entrance shall be locked until the Security
Guards take possession of the gun.

Precautions during Opening Hours

1 The main doors to the branch should be opened to the members of the public promptly at the
normal business hours.
2 Ready access to the strong room or safe should not be given to any member of the public.
3 There should be no access to the enclosure behind the cash counter except to the Cash
Officers. The door to the cash counter area must be kept locked at all times.

58
4 Members of staff involved in serving in cash counter must have immediate access to the
personnel attack buttons, installed inside the cash counter.
5 Cashiers must have facilities to store cash away from public view.
6 Movement of cash within the branch must be under dual control.

Cleaning of Premises
1 Branch keys must not be handed over to the cleaners. The Security Guards shall open different
sections and the cleaners will do their job in front of them.
2 The cleaning of the branch premises should be carried out at least one hour before
commencing the normal working hours.
3 At least two members of staff/ security staff should remain in the premises while the cleaning is
carried out. When the cash area is cleaned, the cleaners should be supervised by at least one
member of staff.

Admittance of Outside Workmen

1 Non bank-staff workmen should be positively identified before being before being admitted to
any part of the premises.
2 Where there is any case of doubt independent reference by telephone to the workmen‟s
employers should be made.
3 Workmen should not be allowed to move around the branch premises unless accompanied by
a member of staff.
4 No work should be carried out in the cash area during normal operations unless this is
absolutely necessary. If the work is being carried out, in that case:
a) The contents of the tills should be reduced to the minimum.
b) Till drawers should be kept locked , unless being used by a cashier in the course of his
duties at any particular point of time .
c) Any safe in the cash area and other cabinets and /or drawers should also be kept locked
whilst any work is being carried out.

Maintenance of Branch (Security) Files and Registers

The Branch shall maintain Branch (Security) Files of the following subjects:
1 Gun license, renewal of license and other correspondence relating to gun, cartridge and repairs
etc.
2 Test Key and related correspondence.
3 Power of Attorney signature Booklet of OBL or other Banks.
4 Power of Attorney of individual officers posted in the Branch.
5 Bangladesh Bank permission for Branch license and Authorized Dealership license.
6 Correspondence regarding strong room, vault, lockers and their keys and duplicate keys.
7 Branch lease agreement and related Correspondence.
8 Insurance policy of Cash, Vehicles and other valuables of the Branch.

The Gun license, Branch license, Insurance policy of Cash and other valuables, original of Branch
lease agreement etc shall be put inside a cover file with proper marking on it.
The above items shall be recorded in the Branch Security Register and initialed by the Manager.
Any of the above items issued to any officer or if taken out for any purpose, the concerned officer
shall receive by signing in the Register and initialed by the Manager. The Register and the files
shall be kept in a security box under dual controlled keys inside the Strong Room.

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Strong Room, Safes and Keys
This section deals with the installation, control and safety of strong room, vaults, safes and
handling of keys.
1. The strong room inside the branch should be installed at a position near to handling of cash,
securities and other valuables and it becomes under direct eye contact of the Security
Guards on duty.
2. The wall, floor and roof of the strong room shall be hardened by concrete with a mixture of
rod and cement to take protection against burglary and theft.
3. A strong steel Grill and steel Door shall be installed by a dependable company.
4. Good quality fireproof iron safes of required quality, thickness and size should be procured.
5. All safes and strong rooms shall be equipped with dual locks, that is the safe / strong room
shall be locked or unlocked after consecutive operation of two keys.
6. The two keys of the strong room / safe shall be held separately by two designated officers;
one of them must be the Custodian. Custodians will be nominated by the Branch Manager.
7. Individuals who have already held one set of keys to a safe or strong room may not under
any circumstances, even at later date hold the other set of keys to the same safe or strong
room. If this is unavoidable the lock for which the key was previously held must be changed.
Similar considerations will also apply to keys to dual-controlled boxes / cabinets.
8. A Key Custody register shall be maintained in which the particulars of all important keys are
recorded. A Custodian taking over the keys shall sign the Register immediately on taking
over and initialed by the Branch Manager. The key register shall be retained under the control
of Manager or Deputy Manager at all times.
9. Each custodian will be responsible for all keys registered under his name and must not hand
over any key without authorization by the Branch Manager. Keys shall always be carried by
the custodian / key holders and not left in a drawer or similar place in the office.
10. Once in a year, Safe / Vault / Strong room keys in current use will be exchanged with the
duplicate kept with another OBL Branch or other Bank .The exchange will be recorded in the
Key Custody Register.
11. Where the strong room is equipped with a grill door, the main door may be left open for the
time being during the day provided the grill door is kept locked under dual control. Where
there is no grill door the main door shall be kept locked during the day and similar controls
will apply.
12. A Strong Room Record will be maintained to control movements of items into and out of the
Strong room, the custodian will ensure that all items are properly withdrawn or replaced and
initialed by concerned official. The record will be reviewed by the Manager once a month.
13. The keys to the machine, Specimen Signature cabinet, file cabinet shall be held by the
concerned Custodian Officer. Duplicate keys which do not require to be placed in safe
custody i.e. keys to the machines, signature cabinet, file cabinet etc should be tagged for
identification purpose and kept in a Duplicate Key Cabinet under dual control of two officers.
This Cabinet should be kept in the strong room and the duplicate keys of the Cabinet itself
shall be held in safe custody (duly marked in Safe in Safe out Register.
14. A record will be maintained of the contents of the duplicate key cabinet and of the
movements of keys in and out.
15. The duplicate keys of desks, side racks of the Department/Section shall be kept with the
Departmental/Sectional Head and the duplicate of Departmental/Sectional Head shall be kept
with any officers selected.
16. If any key of the strong room / vault or safe is lost, that immediately be informed to Head
Office and General Diary (G.D.) must be made with the local Police Station. The course locks
shall be changed immediately by the supplier under Head Office approval.
17. Any Officer holding vault / strong room keys shall not leave the station. At the weekend or
during a holiday the key holder shall not leave station even for few hours. In case of

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 emergency during holidays, proper arrangement shall be made with the Manager regarding
holding of keys.
18. Keys to the Branch premises shall be held by Branch Security Personnel. The duplicates
shall be kept in Duplicate Key Cabinet. Under no circumstances the Branch keys shall be
held by cleaners / workers within or outside normal working hours. Hence arrangement
should be made for cleaning the Branch Premises under the supervision of Branch Security
Personnel.

Duplicate Keys
1. The duplicate keys of the strong rooms and safes are lodged in a sealed cover with the
principal Branch / Main branch in the city / town. Where there is no other branch of OBL in that
case the duplicate keys shall be lodged with the branches of Bangladesh Bank and where
there is no branch of Bangladesh Bank the keys should be lodged with Sonali Bank or any
other Bank designated by the Head Office.
2. Immediately after opening of a new branch, the duplicate keys shall be lodged with Bangladesh
bank / Sonali Bank / another branch of OBL in the locality whatever may be the case.
3. In the key deposit letter it shall be stated that the keys will be withdrawn under joint signatures
of two Authorized Officers of the Branch.
4. While keys in current use are exchanged with the duplicate, the keys should be lightly oiled or
greased and wrapped in grease-proof paper before being placed in the cotton wrapped
envelope. The branch Manager and the Officer will both sign across the seals.
5. While duplicate keys are withdrawn, the envelopes will be opened by the signatories, who will
satisfy themselves regarding the application of any duplicates brought into use. They will retain
control over all the duplicate keys until the envelopes are re-sealed and re-deposited.
6. The particulars of lodgment / re-lodgment will be noted in the key Register and initialed by the
Manager.
Guide for the Key Holders
1. Members of the staff especially the key holders should vary the time and route taken to the
branch as far as possible.
2. After closing of vault / strong room the key holders shall not leave branch premise together.
They will vary the time and route of leaving. The key holders while holding the keys will avoid
travelling in the same vehicle / transport.
3. The Officer holding keys shall never leave the keys unlocked or shall not leave the same in the
bank premises overnight.
4. He shall not hand over the same to any officer without transferring it in the Key Register.
5. Any loss of keys shall immediately be informed to the police and to the Bank.
6. The key holders shall always be extra cautious while carrying the Safe / Strong Room keys.
They should put the same in a key wallet and keep in a safe place at home, obviously under
lock and key.

Maintenance of Firearms and the Duties of Security Guards

1 At least two guns shall be procured for the branch and shall always be kept in workable
condition.
2 Head office shall arrange to get the license and the license shall be renewed in time by the
Branch.
3 The fire arms shall only be held by the Security Guards authorized by the Branch Manager.
The branch manager shall assign fire arms by serial numbers and will ensure that the fire arms
and ammunition are locked up inside the strong room overnight or when not in use.
4 The branch manager will also ensure that the concerned Security Guard is thoroughly
familiarized himself with its use and proper maintenance.
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5 The cartridges shall always be in good and workable condition. Every two years the cartridges
shall invariably be changed for new set.
6 The existing invalid cartridges shall be destroyed under supervision of two authorized Officers
including the Manager of the Branch and Head Office should be informed of procuring the new
and destruction of the old set.
7 While on duty, the Security Guard shall always be alert with loaded Gun along with eight to ten
extra bullets in the cartridge belt.
8 Depending upon the law and order situation, Branch Manager may deploy additional Security
Guards with loaded guns and extra bullets.
9 In case of emergency the Branch Manager may seek the cooperation of the nearest police
outpost or police station.
10 The security guards will perform their duties with utmost care along with loaded guns and extra
cartridges. While on duty he will be on full alert and shall not be engaged in any other official
duties or shall not gossip.
11 The guns and cartridge shall be kept inside the strong room before closing it for the day. The
cartridges shall be kept out of the gun. The gun and the cartridges shall be kept in such a way
that due to sudden earthquake or blast in or outside the branch premises, the gun or the
cartridges cannot easily be fallen on the ground causing any sort of explosion or damage
thereon.
12 The Custodians will ensure that the Guns and the cartridges are kept inside the strong room
before closing the same for the day.
13 The gun shall always be cleaned and greased regularly.
14 In case of any disorder the gun shall immediately be repaired from Gun shop or from original
supplier. The firearm shall be sent to gun shop by the security guard along with one Officer
and the receipt shall be kept with the Gun license file duly seen by the Manager. While taking
the gun back, the same precaution shall be made.
15 The Gun license, other supporting papers and correspondence etc should be kept in a file
cover and kept inside the strong room after entering into Safe-In-Safe-Out Register.
16 The Security Guards shall perform their duties as per roster maintained by the Branch
Manager or Deputy Manager. The security guard shall report with complete uniform at least
fifteen minutes before his duty begins. The security guard shall not leave his duty until the
reliever joins. The roster register shall be signed by the securities on resuming his duty. The
register shall be countersigned by an Authorized Officer every day.
17 Any leave to any security guard shall not be sanctioned until a reliever is arranged.
18 The security guard shall not sleep while on duty either at day or night.
19 The security guard shall possess the telephone numbers of Manager, Deputy Manager,
Custodians and important telephone numbers of different organizations like Police Station,
Police Control Room, Police Line, Hospital, Fire Brigade, Ambulance Services which may
useful in case of emergency.
20 The Security Guard shall guard the Branch premises and shall not interfere with any outside
incidents. In case the emergency bell rings, he will make alert everybody by whistle and shall
close the entrance immediately.
21 The obsolete cartridges shall be destroyed under Head Office approval and instructions under
the Fire Arms Act.

Signature Booklet of Officers holding Power Of Attorney

1 The Power of Attorney Booklet of OBL or other Banks shall be held by an authorized officer
of the Branch or Head Office.
2 The Booklet should not be handed over to any one without instruction from the Manager or
Departmental in-charge.

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3 The Power of Attorney Booklet shall be entered into the Branch Security Register and the
Authorized Officer shall receive the same by signing in the Register and countersigned /
initialed by the Manager.

4 Manager‟s instructions regarding holding of Power of Attorney Booklet shall be filed in the
Branch Security file.
5 Only the Officer holding the booklet shall verify the signature on TT, DD, L/C, and other
documents by tallying the same with the signature booklet.
6 The Power of Attorney Booklet shall always be kept under lock and key while not in use.
7 Any advice of cancellation and addition of power of attorney shall be recorded immediately
after receipt of the same.

Insurance
The cash held with counter, in safe and in transit must be insured by the Branch to protect Bank‟s
pecuniary interest.
1 An insurance file shall be opened and maintained for cash counter and cash in vault and in
transit.
2 The Cash Officers shall never exceed the counter limit and after a certain interval they will
keep the excess amount in the vault. When the branch cash exceeds the vault limit the excess
amount must be remitted to principal branch in case of Dhaka and in other cities/towns the
excess cash shall be deposited with designated/feeding branch or with Sonali Bank or other
banks as per arrangements.
3 While cash is sent from one branch to another or from one of our branches to other bank the
insurance limit for cash in transit shall not be exceeded.
4 The cash or other valuables must be sent through armed guarded vehicles.
5 In special circumstances where the overnight cash holding is expected to be abnormally high
and the excess cannot be remitted to Principal branch/Feeding branch or other banks in that
case a temporary overnight insurance limit can be arranged through Head Office. Branches
are advised to contact Head Office in this regard.
6 The Manager/ Deputy Manager / GB-in-charge shall ensure having insurance limit of cash and
other assets. They will give reminder the concerned offices so that the cash insurance policy
can be obtained in time and obviously before expiry of the existing policy.
7. In case of any mishap of Cash, Branch must inform Head Office immediately and General
Diary / First information report (FIR) shall be lodged with the local Police Station. The Branch
shall lodge claim with the Insurance Company

Maintenance of Vehicle
1 The Branch Vehicle shall always be kept in tiptop and workable conditions.
2 Periodical servicing shall be done in time and the engine oil, gear oil, break oil and other
spares shall be replaced as and when due / required.
3 The Vehicle shall be parked overnight in safe and protected place.
4 The Blue Book, Tax Token, Fitness Certificates, Insurance policy and other relevant
documents / Permits / Pass etc. shall always be kept inside the Vehicle which may required to
be shown to the concerned Authorities any time.
5 The above shall be handed over to the Manager or Authorized Officer along with the Vehicle
Keys for overnight safe-keeping.
6 A Driver having proper category of valid Driving License shall be assigned to drive the Vehicle.
The Driver will take delivery of the Keys and other Vehicle documents from the concerned
Officer by signing in a Register.

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7 Before starting the Vehicle the engine oil, gear oil, break oil, Water, break etc and overall
condition of the Vehicle should be checked daily.
8 The duplicate Key and the photocopy of relevant papers shall be kept in a secured box /
cabinet inside the Strong Room. A file shall be maintained in this regard.
9 The Vehicle Keys shall not be handed over to anyone other than the authorized persons. The
Vehicle shall not be driven by anyone other than the authorised person(s).
10 A Log Book shall be maintained for each Vehicle in which the daily mileage, Servicing,
purchase of fuel, engine oil, gear oil, break oil and other spares etc shall be recorded and will
be countersigned by the Manager or Authorized Officer.
11 Petrol / octane / diesel should be procured from designated Fuel / Gas Stations in the locality.
In case of procurement of fuel through slips / vouchers, the same shall be signed by the
Manager or Authorized Officer and the payment shall be made through Payment Order.
12 The Repairs and Servicing shall be done in designated Workshop or Service Centre. In case
of any repair which requires leaving the Vehicle with the Workshop overnight, proper receipt of
Vehicle for Repair shall be taken from the Workshop Authority.
13 The engine oil, gear oil, break oil and other spares should be purchased from the enlisted /
reliable shops ensuring.
14 The Workshop Authority shall give an estimate incase of Repair Works of substantial amount
which might require Manager's or Head Office approval.
15 Except the minor repair works, the payments to the Workshop shall always be made through
Payment Order.
16 The same procedures shall be followed in case of denting and painting of the Vehicles.
17 Hijacking of the Vehicle or any incident of major accident shall immediately be informed to the
Head Office and General Diary shall be lodged with the local Police Station and the Bank shall
undertake all sorts of steps to safeguard Bank's interest.
18 The Branch shall lodge claim with the Insurance Company for loss / damage.
19 The Branch Manager shall ensure economy in using the Branch Vehicles.
20 Tax Token, Advance income Tax, Fitness Certificates, Insurance Policy and other relevant
documents / Permit / Pass etc shall always be acquired well ahead of their expiry.
21 Prior permission from Head Office shall be taken in case of any requirement of Inter-District
journey with by the Manager or Authorized Officer.
22 In case the Branch Vehicle is enlisted for Requisition by the Local Government Authorities for
any Official Purpose, the Driver shall report for duty as per schedule and accompany the
Vehicle for all time. Normally the fuel, lubricants, daily allowances and other expenses are
borne by the Requisition Authority.
23 Any loss of Vehicle Keys, Blue Book, Tax Token, Advance income Tax, Fitness Certificates,
Insurance policy and other relevant documents / Permits / Pass etc shall immediately be
informed to the Head Office and General Diary shall be lodged with the local Police Station.
24 Proper Official steps shall be undertaken by the Branch for issuing duplicates of the above
documents from relevant Authorities.
25 When the Vehicle will be obsolete, the Branch shall seek Head Office advice regarding the
disposition of the same.

Maintenance of Computers
1 The Computers are the most sophisticated and delicate office Electronic Equipment which
aids the Bank Personnel in handling their daily Banking affairs with higher speed and accuracy
by replacing traditional Ledger / Books and Registers, as well as saving time, energy and
physical space.
2 The Computers shall be handled by the designated persons and its handling of Banking
software shall not be exposed to any outsiders.
3 Every Designated Officer shall have a password to enter into the Banking software. The
password shall be changed periodically and the same shall not be exposed to anyone. The
Officer holding the Password is solely responsible for relevant Data Entry in the Computer.
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4 The Computers shall not be used for any purpose other than official.
5 To get started the power supply line should be connected first and Computers shall be opened
properly.
6 At the end of the day the Computers shall be properly shut down and power supply should be
disconnected, the switch of Computer, Printers, UPS etc should be turned Off.
7 To make the existing software VIRUS free, the upgraded anti - VIRUS program should be run
periodically.
8 Diskette or Compact Disk (CD) from unauthorized sources shall not be used in the Computer.
9 The Computers shall always be kept in workable condition. The Electricity supply line
connecting the Computer shall be made safer by installing various devices. Any sort of
problem in Software or Hardware shall be handled by the suppliers or any designated
Computer Expert.
10 The Branch should have good liaison with the suppliers or Computer Experts so that they can
be available within short notice. Head Office Computer Department can also help in this
regard.
11 The Branch shall ensure to renew the Computer Servicing Contract well ahead of its expiry.
12 The Back-up of day's transaction shall be taken in floppy disks at the end of the day to avoid
any future exigencies. The floppy disks should be stored at a place away from the Computer.
13 Every Officer of the Branch should be reasonably Computer literate.
14 The Computer should be placed in safer place and confidentiality of Banking Operations shall
be maintained.
15 The Branch should have its own Generator or IPS, generating sufficient power supply for the
Computers and printers etc for longer time so that the Banking Software can also be active in
times of Electricity failure.
16 Any new approved software should be installed in the Computer by the Software Supplier.
17 Any trouble shooting in Computer shall be handled by an authorized expert and to contact IT
Division, CHQ .
18 The Branch Manager, Deputy Manager and the persons handling the Computer shall ensure
the safety and security of the Computer, its accessories, software etc.
19 Any repair or replacement of spare parts etc shall be done by the Enlisted / Designated
Persons or Organizations.

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 BRANCH ADMINISTRATION

Duties and Responsibilities of a Branch Manager:

Introduction
Branch Manager is the Chief Executive of the Branch. Virtually he is the local representative of the
Bank in the area. He is responsible for overall management of the Branch and all sorts of Banking
Functions will be carried out under his supervision, guidance and control. The Administrative,
financial and business powers delegated to Branch manager shall be exercised for the interest of
the Bank. The duties and responsibilities of a Branch Manager in different areas are as under:

Primary Responsibilities
1 Managing all sorts of Banking Operations of the Branch.
2 Ensuring safety and security of Cash and other valuables.
3 Distribution of duties and responsibilities of departmental in-charges, individual officers and
employees.
4 Checking of cash, securities, bills parcels and godown etc.
5 Routine and surprise checking of Cash, bills, and works of the officers and employees
6 Ensuring timely recovery of loan and supervision of all outstanding advances.
7 Constant monitoring of branch deposits and steps taken towards mobilization of deposits.
8 Deployment of bank‟s fund in business as per Guidelines and instructions given by CHQ.
9 Steps undertaken to maximize profit by increasing income and minimizing expenses and
monitor through different Management Accounting tools.
10 Maintenance of personal liaison with Valued Clients and officers of local administration and
public sector enterprises and the prospective Clients, elite of the area.

The Manager may perform the following personally where the branch size is relatively smaller:

1 Opening and closing of Cash.

2 Checking of General Ledger, Detailed Ledger, suspense account, sundry deposit account
in the soft and hard copies etc.
3 Maintenance of Safe Custody items, if any.
4 Ensuring that all the securities are properly under lock and key.

Managerial Duties
1 The Manager is authorized to undertake any step for safeguarding the interest of the
branch under his delegated authority.
2 He will preserve CHQ Manuals, Guidelines, Circulars and ensures following them
meticulously by himself and by the Branch staff.
3 He can direct the Officers and employees ensuring proper functioning of daily work.
4 He will maintain cordial relationship amongst the staff members and shall motivate the
employees for greater output.
5 He will take initiative for promoting knowledge, develop alertness, awareness and practice
discipline in the branch.
6 He will ensure rotation of all employees so that they can be trained up to perform all kinds
of works independently.
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7 The Manager shall allocate duties of departmental and sectional in-charge as per Branch
Organogram circulated by CHQ. The duty allocation shall be reviewed at least once a year.
8 The list of departmental in-charge shall be sent to CHQ for record.
9 The Manager will issue office order for passing and signing limit for the officers of the
branch considering their grade, efficiency, experience etc. in line with CHQ guidelines.
10 The Manager shall ensure that the vouchers / instruments are passed, signed by the
authorized officers within their respective limit.
11 Any voucher required countersign of the Manager shall be first signed by the Officer-in-
charge of the department from where the transaction originates.
12 The Manager shall sign or countersign the Annual Performance Appraisal forms of the
employees of the Bank.
13 The Manager can recommend for any employee for promotion / increment /special
increment / special award /punishment to t CHQ.
14 The Manager can ask any employee of the Branch for explanation for any act considered
as offence punishable under Employee Service Rules.
15 The Manager shall frame charge for misconduct, negligence of duty, insubordination etc.
The matter shall be reported to CHQ elaborately for necessary action.
16 The Manager is authorized to grant leave to the employees as per delegation given by the
Head Office and make internal arrangement for work.
17 The Manager shall not leave station or shall not stay outside the Branch even for overnight
without the permission of the CHQ. In case he requires leave he will apply and Head Office
will make suitable arrangement.
18 After sanctioning leave the Manager shall not leave station until he hands over the charges
to the reliever and obtains copy of the taking over charge report from his reliever in respect
of Cash security, godown etc with a copy to the head office.
19 When a Manager is unable to attend office due to sudden illness or circumstances beyond
control; the immediate Supervising Officer shall take over the Charge of the Branch under
intimation to CHQ. When there is no power of attorney holder officer in the branch the
Cash- in-Charge shall inform CHQ for instruction.

Establishment
1 Regular periodical servicing will be done for Bank‟s car / jeep, Air Conditioner, Electricity
Generator / IPS, Cash Counting Machine etc. These machines should be cleaned daily /
weekly/monthly basis. The vehicles / generators should be properly maintained; Engine oil,
Water etc. should be checked daily before starting them and always be in workable
condition.

2 Constant monitoring is needed by the Manager for Keeping the computers operative and;
keeping the password confidential with the respective Officers and confirms that
Authorization is being used by the respective.
3 Repair of wooden and steel furniture by getting them polished and painted after certain time
interval.
4 Monthly servicing of fans and cash counting machine, photo copier machine etc.
5 Repairing of guns and changing / testing of cartridge.
6 Refilling of fire extinguisher after expiry of limit period.
7 Keeping the Branch signboard / display in tiptop condition.

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Inspection of Lease / Tenancy Agreement
1 The Branch Lease / Tenancy Agreement with the Landlord / Lady shall be held under
Manager‟s custody. In case of big Branches the same may be held with the Deputy
Manager / General Banking in-charge; in some case it is held with CHQ.
2 The Manager shall scrutinize the clause of lease / tenancy agreement and take steps to
avoid lapses and shall issue notice in time.
3 Manager shall not withhold payment of rent of the premises unless agreed upon in writing
and shall continue to pay rent in terms of lease / tenancy agreement is terminated or
expires and not renewed or extended.
4 If the lessor / landlord / landlady accepts rent after termination of lease / tenancy
agreement, the lease / tenancy agreement is deemed to have been extended. Manager
shall appreciate that mere sending of Payment Order of rent is not sufficient. What is
required is that of virtual acceptance.
5 In case the lessor / landlord / landlady refuse to accept the rent. Bank shall arrange to
deposit rent with the House Rent Controller within 15 days of refusal. Otherwise the Bank
shall be defaulter and liable to be objected by the court. Deposit of rent with the House Rent
Controller shall prove that the Bank is not a defaulter in the eye of law for non-payment of
rent.
6 At the time of execution of lease / tenancy agreement, it shall be ascertained that the
person / persons executing the agreement are actual owners and that there are no
claimant / co-sharer. The title of the property can be verified from local land revenue.

Filing and Follow-up Civil / Criminal case

1 Where circumstances demand the bank might resort to civil / criminal case. FIR is to be
lodged with local police station under CHQ concurrence.
2 FIR is not an substantive one but is vital. Omission of point like date of occurrence, name
and address of the accused and witness, if any, modus operandi, shall cause damage to
our case. In drafting FIR extra care is needed, if necessary, local lawyer may be consulted.
3 After filing FIR, investigation of the case shall be followed with the Investigation Officer and
if need be with higher authority.
4 When accused is brought to the court, or the case is taken up in the court, local lawyer shall
be engaged to follow-up the matter in the court, as well as with the Investigation Officer.
5 Whether it is a civil or criminal case, consultation with CHQ is a must.

Financial Power
The Managers shall be fully conversant with their Financial Powers. The Managers are authorized
to incur expenditure like payment of rent, rates, taxes, telephone bills, gun licensee fees,
conveyance, T.A., D.A., repairs etc. and for routine expenses including stationery, table stationery
etc. Payment of interest on deposits will be made as per CHQ circulars. Manager shall not incur
any expenditure which is not authorized by CHQ; and prior approval is needed in this regard.

Business Power
The Managers should be well conversant with the Business powers delegated upon them.

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Business powers are delegated to Managers by CHQ from time to time through circulars. No
Manager shall exercise any business power beyond delegation.

Others
1 Managers shall not make any written / verbal business commitment to any client which is
not under his power
2 He cannot retire any staff.
3 He cannot grant annual / special increment to any staff.
4 In respect of disciplinary action, Managers can not dismiss any staff, frame memorandum of
charges and sign dismissal, suspension, termination and discharge letter.
5 Managers can not appoint, promote or transfer any staff nor he can accept resignation of
any staff.
6 Regarding the above staff matters Manager shall report to the CHQ in detail for necessary
action and guidance.
7 Manager shall keep the Inspection file under his control ensuring in time compliance.
8 Any letter addressed to CHQ must be signed by the Manager.
9 Any letter addressed to other office or individual should be signed by the Manager or by any
officer under proper delegation.
10 The Key Register shall be held with the Manager.
11 Highly confidential file / legal matter etc. shall be dealt by the Manager himself.
12 Manager shall arrange meeting of all Officers and staff at least once a month to review
business position and progress of the Branch.
13 Manager shall be responsible for overall functioning of the Branch.

Duties and Responsibilities of GB In-charge/Deputy Manager/Sub-Manager:

1 The GB In-charge/ Deputy Manager is the second in command in the Branch. Generally the
senior most officer after the Manager is designated the Deputy Manager/ Second Officer of
the branch by the CHQ. In case of short absence of the Manager the Deputy Manager has
to give some decisions regarding passing of cheques, instruments etc.
2 In most cases while the Manager is on leave the Deputy Manager shall hold the charge of
Manager as per CHQ instruction.
3 While holding the charge he will not exercise business power unless conferred by CHQ.
4 In case of short absence of Manager the Deputy Manager will be responsible for any
consequences and shall try to tackle the situation.
5 While holding charge he will sign in all correspondence and also mark the letters to the
concerned department.
6 While holding charge he can exercise all the powers of the Manager except the business
and financial powers unless authorized by CHQ.

Duties and Responsibilities of Head Teller of a Branch:

1 Shall act as overall Custodian of Cash and Valuables.
2 Shall hold the keys of Cash Safe and Vault Door.
3 Shall open the cash safe before commencement of banking hour along with other officers
holding the keys of safe and strong room.

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4 Distributes cash among Tellers against receipt on a memo and supervise the carrying the
cash to the Cash Department.
5 Supervises receipt and payment of cash.
6 Ensure the use of MICR, Cash Counting and Forged Note Detecting Machine.
7 Educate the fellow colleagues against frauds and forgeries, forge notes etc.
8 Making available sufficient cash to the counters or withdraw cash while in excess.
9 Supervises the receipt and payment Registers, signs the Balance Book and Vault
Registers.
10 Manages the Counter and tries to satisfy the Clients and upkeep the Bank‟s images by
using common sense and better behavioral approach.
11 Receives cash from other branches or Banks
12 Arranges sending cash to Bank‟s branches
13 Will check the receiving and paying Teller‟s Receipt / Payment Register and will collect
Cash from them.
14 Countersigns the receipt and payment Registers, signs the Balance Book, Cash position
memo and Vault Registers.
15 Cash in hand shall be checked with the Register by the Authorized Officer or Manager.
16 Supervises the custody of cash in the safe and books in the strong room.
17 Shall check the drawers of the cash officers before leaving the Office.
18 Shall take all the Cash Receipt or Payment seals in his own custody and also keep all the
scrap seals in his custody until destroyed by the Management.
19 Maintain record of all stamps and those shall be kept in the vault overnight.
20 Shall not allow any guest / customer / outsider inside the Cash Counter.
21 Shall ensure adequate security measures for the Cash Department.
22 Shall leave the premise immediately after closing the Cash and the strong room.
23 Shall not leave the Vault / Strong Room keys in the Bank premise.
24 Shall ensure that the Books and Registers relating to Cash are kept inside the Strong room.

Duties and Responsibilities of Remittance-In Charge:

1 Shall hold Test Key, Code Book and tables and keep them under lock and key during office
hours and in the Safe over night.
2 Codes and decodes outward and Inward Telex / Fax / Telegram/ SWIFT applies and
checks the tested message.
3 Custodian of security stationery of his department.
4 Checks and signs the Registers, instruments, vouchers, advice, Telex/ Fax, Telegram and
their confirmations.
5 Checks and cancels the instruments / debit vouchers received for Payment.
6 Checks and initials the books maintained in the department and supervises the balancing
and checks and signs the balance books.
7 Shall supervise the works of the departmental staffs and ensure in time dispatch of
incoming and outgoing Remittances.
8 Shall handle the correspondence and statements relating to the department.

Duties and Responsibilities of Clearing-In-Charge:

1 Ensuring the proper receipt of instruments in right account as per Negotiable Instruments
Act, 1881.
2 Supervises the safe keeping of instruments inside the Vault or any safe over night.
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3 Checks and signs vouchers and advice.
4 Signs the vouchers and signs for Endorsement / discharge on the instruments.
5 Checks and signs the Computerized schedule.
6 Signing the IBDA on the main branch handling Clearing House with Bangladesh bank.
7 Ensuring proper dispatch of the instruments to the main Branch.
8 In case of Principal Branch in Dhaka and main branch out side Dhaka the in-charge will
ensure proper dispatch of the instruments to the clearing house and also will ensure proper
distribution of incoming checks and their returns if any.
9 Any clearing cheque returned unpaid must be informed to the respective client.
10 Ensures reversal of entries outstanding in Sundry Asserts Account.
11 Ensures the proper entry in the Computer and keep their printed back up for future
reference.

Duties and Responsibilities of Bills-In-Charge:

1 Ensuring the proper receipt of instruments in right account as per Negotiable Instruments
Act, 1881.
2 Supervises the safe keeping of instruments inside the Vault or safe over night.
3 Checks and signs vouchers and advice. Signs the vouchers and signs for Endorsement /
discharge on the instruments.
4 Checks and signs the instruments, vouchers and advice.
5 Checks and initials the Registers maintained.
6 Receives the departmental mail and attends to it.
7 Issues reminders in respect of outstanding Bills.
8 Supervising the safe keeping of Computer printout / Registers and parcels.
9 Supervising the balancing and checks and signs the balance books.
10 Getting prepared the various statements in time.
11 Ensures that the bills under collection do not lie longer time and the clients are informed
immediately in case of returns or otherwise. The client‟s account shall be credited
immediately after receipt of proceeds.

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Duties and Responsibilities of Accounts-In-Charge:
1 Responsible for overall branch accounting performance including daily balancing General
Ledger, Subsidiary Ledger and other detailed ledger / sub-head details etc.
2 Responsible for intimating the daily fund position to CHQ.
3 Originating depreciation, accrued expenses and other related vouchers.
4 Responsible for preparing monthly salary and allowances.
5 Custodian of stitched and sealed vouchers.
6 Send Statements and Returns to CHQ and Bangladesh Bank.
7 Supervises the safe keeping of books / Computer printouts and vouchers.
8 To complete the double entry requirement the Accounts in-charge shall pass the
adjustment, closing and reversing entries.
9 Attends the Reconciliation statement of Banker‟s and OBL Head Office Accounts.

Duties and Responsibilities of Security Guards:

1 Responsible for overall security of the branch both during and after office hours.
2 Shall attend office at least 15 minutes before his duty starts.
3 Shall follow the rooster of his duties until it is changed by the Branch Management.
4 Shall not leave duty until the reliever comes and takes charge of the gun and cartridges.
5 Shall wear uniform and keep gun and cartage while on duty.
6 Shall not allow any guest, staff, outsider to enter into office premises after office hour under
any circumstances.
7 Shall not bring bed or sleep in the Office while on duty especially at night.
8 Shall not absent from duties without prior sanctioned leave.
9 While on duty, shall not sleep or be inattentive or engaged in any other duty; does not
matter of how important that is.
10 Shall possess the Telephone / Fax numbers of Manager, Deputy Manager, Custodians and
important telephone numbers of different organizations like Police Station, Police Control
Room, Police Line, Hospital, Fire Brigade, Ambulance Services which may useful in case of
emergency
11 In case of any accident of dacoity, theft the Security Guard shall resist first. When the
situation goes beyond control shall inform Police / Manager / Officer over telephone and
scream at the top of his voice to attract the attention of outsiders and ring the alarm bell
until any sort of help comes or the miscreant leaves the area.

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 Management Accounting of
Bank’s Business Performance

Attention of the branches is drawn to the above subject. We enclose a set

of formula as guidelines to prepare this statement.

Branches are advised to follow the procedures mentioned in the enclosures

meticulously and send the statement to the Head Office the following month:

Explanations:

1. Deposit = the actual deposit, after closing of the business of every month.

2. Advance = the actual Advance, after closing of the business of every month.

3. Average Deposit = total deposit product (From 1 to 30/31) divided by

number of days (i.e. 30 or 31)

4. Average Advance = means total Advance product (From 1 to 30/31)

divided by number of days (i.e. 30 or 31).

5. Foreign Exchange Business = import business and export business from

January to up-to-date showing separately.

6. Total Income = all kinds of income from 1st January to up-to-date.

7. Total Expenditure = all kinds of expenditure from 1st January

to up-to-date.

8. Net Income = Total Income minus Total Expenditure:

(a) Total Interest Income = interest earned from loans & advances and
also interest received from OBL General A/c up-to-date.

(b) Interest Paid = interest paid to the depositors and Interest paid
to OBL General A/c from January to up-to-date.

(c) Net Interest Margin = Total interest income minus Total interest

expenses.

(d) Other operating income = Total income - Total interest income.

(e) Total operating income = Net interest margin + other operating income (i.e.
c + d)
(f) Operating expenses = Total expenditure - Interest expenditure.

9(a) % of Interest Cost to Interest Income = Interest Expenses X 100

73
 interest Income
b(i) % of Interest Cost to Total Cost = Interest Expenses x 100 Total

Expenditure

(ii) % of Staff Cost to Total Cost = Estt. Exp.(Salary & Allowances)x 100
Total Expenditure

(iii) % of Other Cost to Total Cost= TotalExp- Int. Exp- Salary & Allow. X100
Total Expenditure
c(i) % of interest Expenses to Total income= Interest Expenses x 100
Total Income
(ii) % of Operating Exp to Total Income = Operating exp.(Total Exp.-Int. Exp)
Total Income
(iii) % of profit Margin = Net Income x 100

Total Income

d(i) % of Yield on Fund = Total income x 12 x 100

No of month x Average Resources

(for January to up-to-date)

(ii) % of Cost of fund= Int. Paid to Depositor & Inter Branch(8.b) x 12x100

No of months x Average Resources.

(iii) % of Administrative Cost= Operating Expenses(8.f) x 12 x 100
No of month x Average Resources

iv) Spread = Yield of Fund - (Cost of Fund + Administrative Cost)

V. Average Resources = Average Deposit + Average General A/c

(from January to up-to-date)

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 Handling of Cash and Defective Notes

Duties and Responsibilities of Cash-In-Charge

1 Shall act as overall Custodian of Cash and Valuables
2 Shall hold the keys of Cash Safe.
3 Shall open the cash safe before commencement of banking hour along with other officers
holding the keys of safe and strong room.
4 Distributes cash among cash officers against receipt on a memo and supervise the carrying
the cash to the Cash Department.
5 Supervises receipt and payment of cash.
6 Educate the fellow colleagues against frauds and forgeries, forge notes etc.
7 Making available sufficient cash to the counters or withdraw cash while in excess.
8 Supervises the receipt and payment Registers, signs the Balance Book and Vault
Registers.
9 Manages the Counter and tries to satisfy the Clients and upkeep the Bank‟s images by
using common sense and better behavioral approach.
10 Receives cash from other branches or Banks
11 Arranges sending cash to Bank‟s branches
12 Will check the receiving and paying Cash Officer‟s Receipt / Payment Register and will
collect Cash from them.
13 Countersigns the receipt and payment Registers, signs the Balance Book, Cash position
memo and Vault Registers.
14 Cash in hand shall be checked with the Register by the Authorized Officer or Manager.
15 Supervises the custody of cash in the safe and books in the strong room.
16 Shall check the drawers of the cash officers before leaving the Office.
17 Shall take all the Cash Receipt or Payment seals in his own custody and also keep all the
scrap seals in his custody until destroyed by the Management.
18 Maintain record of all stamps and those shall be kept in the vault overnight.
19 Shall not allow any guest / customer / outsider inside the Cash Counter.
20 Shall ensure adequate security measures for the Cash Department.
21 Shall leave the premise immediately after closing the Cash and the strong room.
22 Shall not leave the Vault / Strong Room keys in the Bank premise.
23 Shall ensure that the Books and Registers relating to Cash are kept inside the Strong room.

Payment of Cash
1 The Cash Paying Officer shall maintain a separate Cash Payment Register. He will enter
the whole day‟s transaction serially.
2 Normally Cheques, Drafts Payment Orders, FDRs, Pay Slips, Telegraphic Transfer, Debit
Cash Vouchers etc of Clients and Various Departments of the Branch are encashed in the
Cash counter.
3 Before making payment the apparent tenor of the instrument shall be checked. The
following points to be scrutinized before making payment of a cheque.

i) Date: undated, on dated, ante-dated, stale, post dated and impossible dated.
ii) Whether the cheque belongs to the branch itself.
iii) Any Alteration – supported by full signature of the drawer.
iv) Whether the amounts in words and figure tally.
v) Whether the indorsement are proper.

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 vi) Whether there is at least one signature of the presenter at the time of presentment,
in case of cash payment.
vii) Cheque – either bearer or order.
viii) Cheque – either crossed or uncrossed.
ix) Whether there is Stop Payment against the cheque or against whole amount in the
account by the Drawer or by any Court of Law.
x) Whether the account is operative or inoperative or dormant.
xi) Whether there is sufficient balance in the account.
xii) Drawer‟s signature tallies with the Specimen signature kept with the Bank.
xiii) In case of the Firms, Societies, Clubs etc the cheque is endorsed in favor of the
bearer for cash payment.
xiv) A bearer cheque (not crossed) issued favouring a Limited Company will be
collected through company account and no cash payment in the counter will be
allowed.
xv) The Limited Company maintaining account with us may issue cheques for withdrawing
cash say for, salary payments or petty cash expenses of the company itself, in that case
the signature of the bearer will be attested by the signatories (at the back of the
instrument) to get cash payment from the counter. Similar precaution may be needed in
case of the Firms, Societies, Clubs etc
xvi) Whether sufficiently cautious steps are undertaken against large value third party
cheques.
xvii) Whether there is any ground for non-payment.

Before making payment of instruments like Drafts Payment Orders, FDRs, Pay Slips,
Telegraphic Transfer, Debit Cash Vouchers etc necessary similar precautions should be
undertaken.

4 On receipt of the cheque on the counter if the apparent tenor of the instruments seems to
be all right then the same is sent to the Computer Section for posting.

5 While making the posting the Computer Officer must confirm the points mentioned above. He will
give posting of the cheque and put a seal POSTED on the face of the instrument and write the
transaction number and initial.

6 After confirming the Proper Posting in the Computer the Cancellation Officer shall check
the apparent tenor of the instrument, scrutinize the points as above and cancel the
instrument for payment by crossing out the instrument and giving initial on it by red ink and
return the same to the Cash Counter for Payment.

7 Where the amount in the instrument exceeds individual cancellation limit the same will be
presented for SECOND CANCELLATION.

8 The presenter shall put his / her second signature at the back of the instrument like that of
his first one put at the time of presentment and receive money.

9 The Cash Officer shall count the cash for payment and the denominations are written at the
back of the instrument.
10 The stamp CASH PAID is affixed on the face of the instrument and signed by the paying
Cash Officer.

11 Paid instruments are kept with the Paying Cash Officer for ultimate hand over to the
Accounts Department after checking with the Cash Payment Register.

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12 In case of instruments like Drafts, Payment Orders, FDRs, Pay Slips, Telegraphic Transfer,
Debit Cash Vouchers etc one cancellation shall be done by the Officer of the respective
originating /concerned department.

13 The Debit Cash voucher especially the expenditure vouchers shall be signed by two
Authorized Officers including one Signature of the Manager.

14 At the close of banking hour the amount entered into the Cash Payment Register totaled.
The total is written in words and figure.

15 The authorized officer shall check the payment entries and the instruments to ascertain the
correct payment has been made and release the instrument from the Cash Payment
instruments by his initial against each entry.

16 The Paid instrument shall then be sent to the Accounts Department.

17 The unpaid instruments are entered into a Register and a cheque return memo signed and
dated along with the Cheque is returned to the bearer of the instrument. The authorized
officer shall sign on the Cheque Returned Memo and in the Register. The Bearer will
acknowledge the receipt of the returned unpaid instrument by signing in the Cheque
Returned Register.

Excess of Cash

01) In the cash department excess cash may be received sometimes by mistake either from the
Bank‟s side or from the client‟s side.

02) Before declaring any cash as “Excess” the following steps shall be undertaken :

(a) Excess cash may be found due to displace or lost of cash receiving voucher before entering
into cash receive register.
(b) Sometimes really excess cash received against particular transaction.
(c) Especially in rush hours in most busy days this sort of situation may arise.
(d) Wrong entry in Cash Payment Register.

03) Customer may be paid less than the amount written on the debit voucher.
04) Some deposits were received but no voucher was passed or voucher is under process for
submitting to Cash Department.
05) The Receiving and Paying Cash Officers' cash should be kept separate and be counted
one again. The cash in the safe also be counted.
06) The computer posting shall be checked with every payment.
07) The every possibilities and all Books and Registers should be thoroughly checked whether
any mistakes is there.
08) If finally cash shows an excess, the excess amount shall be credited to:

Sundry Creditors – Excess cash

77
Shortage of Cash
1. Shortage of cash may arise due to :
a) Less receive by the cashier against particular amount.
b) Excess payment made to the client
c) Making payment to anybody against non-receipt of debit voucher.
d) Making wrong entry in the Receive or Payment Register.

2. The concerned Cash Officer shall be responsible for cash shortage and the same shall be
recovered from him.

3. If the cash Officer is unable to adjust the cash shortage before closing of the day, the cash
balance book shall be closed by passing the following entry:

Suspense A/c – Others- others (Shortage of cash)

(Debit Cash voucher)

4. The voucher shall be signed by the Cancellation Officer and the Manager. The signature of
the concerned cash officer shall be obtained on the reverse side of the voucher with a note
to that effect.
5. The event shall be informed to Head Office immediately in writing.

Local Transportation of Cash and Securities

1. These requirements cover the local transportation of cash, securities, traveler‟s cheque,
prize bonds and other valuables.
2. Head office will lay down the limits for the transportation of cash and valuables under the
custody of bank employees covered by Insurance Policy.

Handling of Defective Notes

As per Bangladesh Bank Circular no. Paripatra no. Ka: 860 / 23 (Policy) – 87 dated 03.08.1987
and Ehisa: 23/ (Policy) / 95 – 65 dated 11. 03. 1995 all Banks have to receive burnt/soil/defective
notes and give exchange on the counter except some categories of notes which needs
Bangladesh Bank prior permission before exchange.

1. The notes which should be withdrawn from circulation shall be separately bundled and
paste with paper at the Back and put branch seal and sent it to Principal / Main / Feeding
Branch.

2. The Principal / Main / Feeding Branch shall put a seal “Defective Notes” on the face of the
note and signed by an Authorised Officer and make bundle of 100 of each category of
notes and send it to Bangladesh Bank. Bangladesh Bank will receive the same on the
counter and credit our account or it will receive the cash in security vault under joint custody
of Bangladesh Bank and our Local Office.

2. They will fix up a date and the safe shall be opened for counting. Bangladesh Bank will
receive the notes and credit our account. In case of return of any notes against which no
exchange was paid shall be taken back by Principal / Main / Feeding Branch and debit the
concerned Branch from which it receives the value.

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3. While sending defective notes to Principal / Main / Feeding Branch the Journal Entries will be:
Debit : Principal Branch (IBDA)
Credit : Cash
5. Principal / Main / Feeding Branch responds the IBDA and Debit Cash.

4. In case of return of defective notes:

Debit : The concerned Branch (IBDA)
Credit : Cash (Amount of Defective notes)

6 The concerned Branch shall pass the following entries:

Debit : Party A/c

Credit : IBDA (by responding)

1 The Notes received from the client which are not acceptable for paying of exchange value
at the counter; the Bank shall receive the notes and get an application filled in by the client
and send the filled in Application form to Bangladesh Bank. They will give you a date of
decision on the notes. Branch will give a receipt to the Client mentioning serial number of
notes, denomination and total amount etc.
2 On collection of the proceeds Branch will pay off the client.
3 The Branches shall meticulously follow the above two circulars of Bangladesh Bank
regarding handling of defective notes.

4 Types of Notes
1 Legal Tender
3 Altered Note
5 Mutilated Note
7 Charred note
9 Damp note
11 Counterfeit note
2 Mismatched Note
4 Half Note
6 Obliterated note
8 Forged note
10 Built up note

Except number 1 (one), the other types of notes are not eligible for exchange in the Bank‟s
counter. For further details the above two circulars may be consulted.

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 Bank Accounting System
1 Bank maintains two types of account:

a) Account relating to Bank itself

Example:
Current deposit - Local, Account # 80411015
Savings Bank - Savings Accounts, Account # 80431010
Cash and Bank Balances - Cash- local, Account # 90111002
Income a/c- Commission- Remittance Account # 70203017
Expenditure a/c- Salaries & Allowances etc Account # 60300003

b) Account relating to Clients: say,

Savings Accounts of Mr. Hasanuzzaman

Current Account of M/S Navana Ltd.
Cash Credit account of M/S Onix Ltd
Secured Overdraft of Mr. Abedin.

The Banking Transactions are primarily Slip or Voucher based; either Debit or Credit.

2 Bank maintains two types of account:

a) Accounts of the day's position ---- Clean Cash. In calculating Clean Cash all the
credit vouchers are added with the opening cash balance and the debit vouchers
are ducted to find the day end closing balance of cash. If the physical cash balance
tallies with the book then we can conclude that the day's transactions are balanced.
b) Cumulative position ---- General Ledger. All the day's transactions are added with
the respective heads in the General Ledger. The figures in General Ledger are
cumulative figures from the opening of the branch except the figures of Income and
Expenditure, which starts from 1st January to 31st December of a year.

3 All the transactions of the branch are categorized as:

a) Cash : The vouchers against which the cash paid out or received by the bank. The
vouchers which bears the seal CASH RECEIPT or CASH PAID are treated as cash
transactions.
c) Clearing: The vouchers which are received or sent for collecting through
Bangladesh Bank Clearing house are treated as clearing transactions.
d) Transfer : There are transactions which take place within the branch for transferring
amount from on account to another or one head to another without involving cash
are treated as transfer transactions.

4 Heads of Accounts are categorized as: (As per golden rule)

a) Account relating to person or institutions:

Example : Savings Accounts of Mr. Hasanuzzaman

I) In case of Withdrawal - Debit voucher or cheque is used

II) In case of deposit - Credit voucher or deposit slip is used

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 b) Account relating to Income and Expenditure

I) In case of Expenditure - Debit voucher or Debit Cash voucher is used

II) In case of Income - Credit voucher is used

c) Account relating to Assets or Properties

I) When cash is deposited or received by the bank it is debited or entered into

the Cash Receiving Register.
II) When cash is withdrawn or paid by the bank it is credited or entered into the
Cash Payment Register.

5 When all the vouchers of a particular head either cash, clearing or transfer is listed in a
sheet in their respective debit and credit side the sheet is called Supplementary Sheet.

6 Some heads of Income:

i) Interest received on loans and advances

ii) Commission Received
iii) Exchange earning
iv) Rent received -- Locker rent
v) Income from Investment etc.
vi) Recovery of postage/telex/telex charges
vii) Miscellaneous earnings

7 Some heads of Expenditure:

i) Interest paid on deposits

ii) Salaries and allowances
iii) Rent, Rates and Taxes
iv) Electricity and heating
v) Insurance
vi) Legal expenses
vii) Repairs of Bank's properties
viii) Stationery etc.

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 Banker - Customer Relationship
01. Nature of Relationship
The nature of relationship between a Banker and a Customer depends upon the type of services
rendered by the Banker. There are two aspects of relationship between a Banker and a Customer:
one is the legal relationship and the other is behavioral and service aspects of relationship.
The behavioral and service aspects of relationship encompass among other things to make the
Customers easy & comfortable in getting Bank services promptly and sincerely, to show eagerness to
them and to enquire about their need and to attach importance to them and the like. Legal
relationship is based on Banking Law & Practice. The present discussion is confined to legal
relationship only.

02. Definition of a Banker and a Customer:

Banker and Customer: The Negotiable Instruments Act, 1881 defines: "Banker is a person
transacting the business of accepting for the purpose of lending and investment of deposits of
money from the public repayable on demand or otherwise withdraw able by cheque, draft, order
or otherwise and includes any Post Office Savings Bank.
But the term `Customer' has not been statutorily defined although the term has been used in
Section 131 of Negotiable Instruments Act, 1881. In order to make a person a Customer of a
Bank it is necessary that there must be some sort of account either a deposit or a current
account or some similar relation.

N I Act, 1881: Section 131: Non-liability of banker receiving payment of cheque.

Subject to the provisions of this Act relating to cheques crossed “account payee” where a banker in
good faith and without negligence receives payment for a customer of a cheque crossed generally
or specially to himself, and the customer has no title or defective title thereto, the banker shall not
incur any liability to the true owner of the cheque by reason only of having received such payment.

But a person who has no sort of account with a Bank, but is merely in the habit of cashing cheques
across the counter is not a Customer.

In practice, the following are necessary to constitute a Customer:

a) One should have an account with the Bank.
b) One should deal with the Bank in its nature of regular Banking business and
c) One should have dealing with the Bank with an intention to continue such dealings
frequently though ever a single transaction with the Bank satisfies the test for being Customer of the
Bank.

03. Forms of Relationship

As already stated that the nature of relationship between a Banker and a Customer is that of
contractual in nature. The account of the Customer forms the basis of such contract and the
relationship appears in different forms according to the types of contract. The legal relationship
may be divided into two parts: (a) General Relationship and (b) Special Relationship.

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 General Relationship

3.1 Debtor and Creditor:

This relationship is entered into as soon as the account of the Customer is opened with the Bank. With the
deposit of Customer‟s money in the Bank, the Customer becomes its creditor and the Bank becomes debtor
and the opposite happens when a Customer borrows money, from the Bank. However, the relationship
between a Banker & a Customer is not exactly like that of an ordinary debtor and creditor. The peculiar
features of the relationship include the following:
a) In ordinary commercial lending, it is an established practice that the responsibility of repayment of
loans advanced lies with the debtor. The debtor is to pay back either after a specified time or
according to terms and conditions of the advance. However, in case of Banker, it is the depositor
(creditor) alone who is responsible to demand his money back either in full or part from the debtor,
Banker. The debtor and creditor relationship between a Banker and Customer is different from
ordinary debtors & creditors in the following points:

i) Other debts are payable even without demand but a Banker will pay back its debt (deposits)
only on demand.
ii) In case of other debts, period of limitation is 3 years from the date of creation of debt, partial
repayment and acknowledgement dates. In case of Bank Deposit, Limitation Act provides
period of limitation as 3 years from the date of demand by the depositor.
iii) For other debts, suits can be filed without prior demand. But in case of Banks, demand is be
made to the Bank before filling any suit against the Bank.
iv) An ordinary debtor may or may not honour the demand. But a Banker must honour Customer's
demand i.e. against valid cheques and has to make payment if otherwise in order.

3.2 Principal and Agent:

The relationship arises out of contract of Agency. Section 182 of Contract Act, 1872 states: "An
agent is a person employed to do any act for another or to present another in dealing with third
persons. The persons for whom such act is done or who is represented is called the principal.
While collecting a bill, the Banker acts as an agent of his Customer, who is the principal.”

3.3 Bailor and Bailee:

The relationship arises out of contract of bailment. Section 148 of Contract Act, 1872 defines
"Bailment is the delivery of goods by one person to another for some purpose upon a
contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of
according to the direction of the person delivering them. The person delivering the goods is called
the bailor and the person to whom goods are delivered is called the bailee.
Such relationship is established while Banks make lending against pledge of goods.

3.4 Lessor and Lessee:

This relationship is established out of contract of leasement. In operation of lockers for safe custody
of valuables, good etc, such legal relationship is established between them. A Banker can not
appropriate the things kept under the contract of leasement.

3.5 Mortgagor and Mortgagee:

This relationship is established out of contract of Mortgage between the Bank and the Borrower-
customer. In case of Loans and advance the borrower may mortgage his/ their immovable property

83
like Land, Building / Factory etc as security. Here the borrower is called Mortgagor and the lender
(Bank) is called Mortgagee.

3.6 Trustee and Beneficiary:

The relationship between Banker and his Customer as trustee and beneficiary depends upon the
specific instructions given by the later to the former regarding the purpose or use of the money or
documents entrusted to the Banker. For example, when the money is paid to the Bank to pay the
same to other person and holds the money pending instructions from that other person, a trust
results and the Bank continues to hold the money as a trustee till the instructions for the final
disposal of the money are received from such person. (New Bank of India Ltd. Vs. Peary Lal
A.I.R., 1962 Supreme Court India, 1003). This is the relationship of trustee & beneficiary and not
the ordinary relationship of debtor and creditor. It will turn into ordinary debtor and creditor
relationship if it is later deposited in an account after getting the final disposal instruction. Locker is
the example, where the Customer is the Beneficiary and the Bank is a Trustee; the Bank can not
appropriate commodity held in the Locker.

4. Special Relationship:

At point 3.1 to 3.6 the general relationship between a Banker and a Customer are discussed. There
are some other rights and obligations that arise out of their general relationship of debtor and
creditor in as much as they are relevant only in case of Banker Customer relationship as
against an ordinary debtor creditor relationship. The special relationship includes the
following:

4.1 Obligation to honour Customer's Cheques.

4.2 Obligation to maintain secrecy of Customer‟s Account.
4.3 Banker‟s Right of General Lien.
4.4 Banker‟s Right of Set off.
4.5 Banker‟s right of Appropriation.
4.6 Banker‟s Right to charge interest, commission and incidental charges.
4.7 Garnishee Order from the Court.
4.8 Law of Limitation vis-à-vis Banker.

Let us discuss them briefly in relation to our practical situations in Branches.

4.1 Obligation to honour Customer's cheques:

The obligation to honour cheques of the Customer is a legal one and the primary contract of a
Banker is to repay money received for his Customers account usually by honouring his cheques.
Section 31 of the N.I. Act reads as “the drawee of a cheque having sufficient funds of the drawer in his
hands, properly applicable to the payment of such cheque, must pay the cheque when duly required
to do so, and in default of such payment, must compensate the drawer for any loss or damage
caused by such default” From the above, it is clear that the Banker is bound to honour cheques
provided:

(a) Sufficient funds are available in the Account

(b) The Banker must be required to pay
(c) Cheque should be in proper form/ order
(d) Applicability of funds
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(e) Presentment within a reasonable time (within banking hour and days, not being a stale or post-
dated cheque).

However, there are some circumstances where the Bankers must refuse payment of the cheques/
draft if otherwise as under:
a) When the Customer countermands payments.
b) On receipt of garnishee order.
c) Receipt of notice of Customer's death.
d) Customer's insolvency.
e) Notice of assignment of credit balance as per section 130 of Transfer of Property Act, 1882.
f) Breach of Trust.
g) Defective title of the Party.

N I Act: Section 122A: Revocation of banker’s authority

The duty and authority of a banker to pay a cheque drawn on him by his customer are determined by:

4. countermand of payment;
5. notice of customer‟s death;
6. notice of adjudication of the customer as an insolvent

4.2 Obligation to maintain secrecy of accounts:

It is obligatory on the part of the Banker not to disclose the state of Customer's account with it since
such disclosure may adversely affect the Customer's credit and business. This obligation
continues even after the Customer has closed his account with the Bank and even after the death of
the Customer. However, there are some other exceptions to this which are as follows:

a. Legal Binding (under compulsion of Law) :

I. The Income Tax Act.
II. Companies Act 1994.
III. Banker's Book Evidence Act, 1891.
IV. Banking Companies Act 1991.
V. Foreign Exchange Regulation Act, 1947.
b. Customs & Traditions & Practices in Banking Business.
c. Consent of the Customer.
d. Bankers own interest.
e. In the interest of the public.

4.3 Bankers right of general lien:

According to Contract Act 1872 Sec: 170, a lien is the right of a creditor in possession of goods,
securities or any other assets belonging to the debtor to retain them until the debt is repaid. Lien
given a person only a right to retain the possession of the goods and not the power to sell unless
such right is expressly conferred by statute (e.g. to unpaid seller or Pawnee) or by custom or
usage.

Lien is the right to withhold property until the claim on that property is paid. More explicitly; lien
is the right of a creditor to retain goods / securities belonging to the debtor, until the debt due from
the later is paid.
Bankers are entitled to General lien but it also goes a stop further to realize the security. Banker's
lien is equal to implied pledge and can sell the security after reasonable notice to the debtor
85
provided the property comes into the hands of the Banker in the ordinary course of business. The
right of lien to the Banker is conferred by the Contract Act, as such, no separate agreement or
contract is necessary. However, to be on the safe side, the Bankers take a letter of lien from the
Customer mentioning that the goods are entrusted to the Banker as a security for loan- existing or
future-taken from the Banker and that the latter can exercise the right of lien. The right of lien also
can he exercised on goods or other securities standing in the name of the borrower only and not
jointly with others e.g. in case the goods / security and held in joint names of two or more persons,
the Banker can not exercise his right of general lien in respect of a debt due from a single person.

However, the Banker's right of lien is not applicable to the following properties of the Customers,
viz. safe custody deposits i.e. jewelry of documents for safe custody, bills of exchange or other
documents entrusted for special purpose money deposited for special purpose, documents or
valuables left in the hands of Banker's hand inadvertently, amounts not due, trust accounts etc.

Particular Lien
1. It is attached to some specific goods.
2. It is a right to retain possession over those particular goods in connection with which the debt
arose.
3. It is restricted to those goods which are the subject matter of the contract and are Liable for
certain demands of person in possession of these goods.

According to section 170 of the Contract Act, a bailee can exercise particular lien over the goods
bailed, provided:

i) There is no contract to the contrary,

ii) Bailee has rendered some services some service involving labour as skill to the goods bailed
iii) The service is not contrary to the purpose of bailment.

General Lien
A general Lien entitles a person to retain possession of goods belonging to another for general
balance of account.

It will entitle a person the possession of the goods to retain them until all claims or accounts of the
person in possession against the owner of the goods are satisfied.

A banker is entitled to a general Lien.

A banker, therefore, can retain all securities etc, in his possession fill all this claims against the
concerned person are satisfied.

Negative Lien
In case of negative lien the bank neither has nor obtains possession of any of the assets of the
borrower. It is simply takes a declaration from the borrower that:
i) The assets mentioned there in are free from any sort of charge or encumbrance.
ii) The borrower shall not dispose them of or create any sort of charge against them without the
permission of the bank
The banker cannot directly realize his debts from such assets. However, on account of the
above restriction the interests of the banker are to a certain extent protected.

86
Bank may extends loan facility to its customers against the lien of
a. Fixed Deposit Receipt.
b. Share Certificate. .
c. Credit balance of Deposit Scheme. And others A/C's ( lien- cum- set off )

The following essential conditions for exercising the right of lien must be fulfilled:
a. The goods or securities over which the right of lien shall be exercised must be in the
possession of Bank.
b. There must be a lawful advance due to the Bank.
c. There shall be no contract contrary to lien.
d. Goods or securities over which right of lien shall be exercised must be suitably discharged in
favour of Bank.

Banker does not have lien over the following items:

a. Credit balance of deposit account of the borrower
b. Securities received by Bank for sale
c. Goods or securities left by the customer in the Banker's hand inadvertently
d. Money deposited for a special purpose
e. Instruments deposited for collection
f. Articles deposited for safe custody etc.

4.4 Right to set off:

Right to set off is a right exercised by a Banker arising out of Banker Customer relationship. It
means the total or partial merging of a claim of one person against another in a counter claim by
latter against the former. It is in effect the combining of accounts between a debtor and a creditor
so as to arrive at the net balance payable to one or the other. In practice the Bank sends a notice
to the Customer as soon as the right of set off is exercised.

The following are the circumstances where the Banker‟s right of set off automatically accrues and
no notice of set off is necessary:
i. On the death, insanity or insolvency of the Customer.
ii. On the insolvency of a partner of a firm
iii. On receipt of garnishee order
iv. On the winding up of a company
v: On receipt of an information of second mortgage over the security which is charged to the
Bank and
vi. On receipt of a notice of assignment of the credit balance of the Customers.

Essential Features of Set Off:

(a) Mutual debts must be certain: Before exercising right of set off the claim and the counter claim
must be determined accurately.
(b) Debts must be due: Only those debts which are due and recoverable on the date of set off can
be the subject of set off.
(c) Debts in the same right: The loan account and the deposit account which will be appropriated
must be in the same right.
(d) No agreement to the contrary: The right of set off cannot be exercised if there is any agreement
between Banker and Borrower to the contrary of set off.

87
(e) Notice of set off: Before exercising right of set off Banker's should serve notice of set off to the
borrower before reasonable time.

Notice of set off

Banker should give reasonable notice to the customer of its intention to exercise its right of set off
otherwise it may face troubles. So, it is better for a Banker to obtain a letter of set off signed by the
customer before disbursement of loan so that he can exercise his right of set off without notice.
It is noted that without serving any notice Banker can exercise his right of set off in the following
cases even before the loan becomes due:
a. On the death, insanity or insolvency of the customer.
b. On the insolvency of a partner of a firm.
c. On the winding up of a company.
d. On receipt of a garnishee order.
e. On receipt of an information of a second mortgage over the security which is charged to the
Bank.
f. On receipt of a notice of assignment of the credit balance of the customer.

It is noted that all branches of a Bank are of same entity: If a borrower maintains loan account and
deposit account in the same capacity in different branches, the balances in the loan and deposit
accounts at all branches can be combined at the time of exercising right of set off.

4.5 Banker's Right of Appropriation:

Bank in its ordinary course of business accepts deposits from its Customers and lends money to
them. The Bank may open more than one account in the name of the Customer and also it
can lend money to the Customers at different accounts at different times and on different terms
& conditions. Whenever, such a situation is present, the question of exercising of
appropriation may arise. In English law on the subject was laid down in Clayton‟s case. The rule
regarding the appropriation of such payments have been written down in section 59, of the
Contract Act, 1872 which are as follows:
a) Appropriation by the Debtor : Section 59 of the Act states: Where a debtor, owing several
distinct debts to one person makes a payment to him, either with express intimation, or under
circumstances implying that the payment is to be applied to the discharge of some particular
debt, the payment, if accepted must be applied accordingly. Thus, when a debtor makes a
payment he may appropriate it to any debt he pleases, and the creditor must apply it accordingly.
b) Appropriation by the Creditor: Section 60 of the Act states: Where the debtor has omitted to
intimate and there are no other circumstances including to which debt, the payment is to be
applied, the creditor may, apply at his discretion to any lawful debt actually due and payable to him
from the debtor, whether its recovery is or is not barred by the law in force for the time being as to
the limitation of suits. Thus, a Banker creditor is at liberty to appropriate the money
deposited by the debtor to a certain lawful debt and once the appropriation is made and
communicated the appropriation to the debtor, the creditor has no right to change it otherwise.
Tile creditor can change such appropriation before the appropriation intimated to the debtor.

c) Payment of interest first: In case of a debt carrying interest and the debtor has not given any
specific direction as to the appropriation of money paid. The rule is to against the money in
ordinary cases, first towards, payment of interest and then to apply the surplus in payment of the
principal amount.

88
4.6 Banker’s Right to charge interest, commission and incidental charges:
A Bank has the right to charge interest for the advances it might have granted to its Customers.
The interest may be simple or compound depending upon the terms of the contract. Usually the
interest is charged after every 3 months or as per Bangladesh Bank instruction from time to time
and the amount of interest is debited to the Customers a/c which subsequently becomes a part
of the debt due by the Customer and commission, incidental and charges etc. on account
of services rendered to the Customers are recovered as per schedule of rates & exchange. The
Bankers are under obligation to inform the Customer in writing of the debiting their accounts with
such charges, commission in detail. In case of current accounts, the Banks charge their
Customers for incidental charges to meet the incidental expenses they have to incur for such
accounts.

4.7 Garnishee Order:

A Garnishee Order is an order by the court attaching the fund of the judgment debtor at the request of
the judgment creditor in the hands of the third party (Bank-).

Applicability:

Whether a, particular deposit amount is attachable by the garnishee order depends upon the term of
the order. To be affected by the garnishee order it must be a debt, due or accruing due i.e. due
accruing due at a definite and certain date. A debt which is actually existed and not a claim that may
ripen into a debt at some future date. Usually, the following kinds of deposits are attachable:

a. A deposit payable on demand.

b: A deposit repayable on the expiry of fixed notice, which has been given

c. A deposit repayable at a future date or after the lapse of a specified time.

However, Garnishee Order is not applicable in the following cases:

a. Cheques bill of exchange etc. deposited with the Bank for collection but not yet collected.,
b. Sale proceeds of securities etc. of the Customer not yet collected.
C. Deposits made subsequent to the serving of the Garnishee Order.
d. Payments made by the Banker before serving of the Order.
e. Money held abroad by the judgment debtor.
f. Securities lying in safe custody with the Bank.

5. Law of limitation vis-à-vis Banker;

Deposits are repayable on demand made by the Customer. According to Limitation Act the period of
limitation for the refund of Bank deposits is three years with effect from the date the Customer makes
demand for his money. But, in case of other debts the limitation period is three years from the date of
debt, partial, repayment or acknowledgement.

Termination of Banker-Customer Relationship

As already explained, the Banker-Customer relationship is established with the opening of an account
forming, the basis of contractual relationship. Both of them therefore, are; bound certain obligations.

89
This leads to the fact that if one of the parties frees himself .from such obligation then the
relationship is terminated. The following are the circumstances under which the relationship between
them is terminated:

a. Voluntarily by any party.

b. Legal: procedure adapted by Banker & Customer.
c. Death, Insanity or Insolvency of the Customer.
d. Assignment of balance in his account by the Customer.
e. Receipt of garnishee order for the whole account lastly.
f. Charge in the constitution of firm etc. in which the Customer is related.
g. Banks by giving notice can close the long time inoperative accounts.

Under the circumstances pointed out, the relationship between the Banker and the Customer
is terminated. However, the Bank is under obligation to inform the Customer about the termination of
the relationship. Such, unilateral termination of relationship on the part of the Banker is neither
justified morally nor socially praiseworthy. The Banker has to judge the whole relationship in broader
business and social perspective and take decision accordingly.

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 ONE Bank Retail Products
OBL Car Loan
ONE Bank Car Loan is a terminating loan facility for the purpose of financing purchase of brand
new and reconditioned unregistered vehicle, for personal use only, under an Equated Monthly
Installment (EMI) based repayment plan. Any credit worthy Bangladeshi can apply for ONE Bank
Car loan having minimum income of Tk 30,000/- per month. Tenor of the loan is 12 to 60 months
for reconditioned vehicles and 12 to 72 months for brand vehicles. Minimum loan starts form Tk
3,00,000/- to maximum limit Tk 40,00,000/-. Minimum age competency is 21 years to maximum 57
years at maturity. Two (2) Personal Guarantees are required, of which one from spouse/parent
another one from eligible guarantor who is an individual having minimum income to qualify as an
applicant for that specific product Eligibility of guarantor. Applicant is subject to provide necessary
documentation as per requirement.

OBL Home Loan

ONE Bank Home Loan is a terminating loan facility for the purpose of financing Purchase,
Construction, Renovation and/or Refurbishing of Apartment/Flat. Home Loan market is primarily
concentrated in Dhaka and Chittagong metropolitan areas - as these two cities have a large
number of middle and higher middle class population. However, Home Loan may also be
sanctioned to eligible clients wherever OBL has its operations. Tenor of the loan is 3 to 25 years.
Any credit worthy Bangladeshi individual, Expatriate or Foreign Emigrant of Bangladeshi can apply
for the loan. Salaried executive having monthly income of Tk Minimum BDT 30,000/- per month
and Self Employed Professionals like doctor, engineer having minimum BDT 30,000/- per month
can be eligible to apply for the loan. Minimum year for the applicant is 23 and maximum is 67 years
of age.

OBL Personal Loan

OBL Personal Loan is any purpose unsecured and terminating loan facility (EMI based) for any
legitimate purpose. Bank would finance against gross monthly income of the any credit worthy
individual. To meet life style needs of the credit worthy individuals and to capitalize the vast market
gap, this is a suitable unsecured retail loan product. One quotation is to be submitted for all loans.
Loan will be 30% of quoted value of goods/items to be purchased. Any salaried executive with
minimum monthly income Tk 25,000/-, self employed professionals like doctors, engineers with
minimum monthly income Tk 50,000/-, landlord, businessperson and other individuals having
monthly income Tk 50,000/- can apply for the loan. Tenor of the loan is 12 to 60 months to repay
the loan. Minimum age competency is 21 years to maximum 60 years at maturity. Minimum Tk
50,000/- to maximum Tk 10,00,000/- can be loan limit for the loan for the salaried executives, self
professional.

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OBL Cash Line
OBL Cash Line is any purpose secured over draft and EMI based term loan for retail customer.
Minimum limit of the facility is Tk 50,000 to maximum limit is 90% of the Face Value of OBL Term
Deposit and 90% Principal deposit of recurring deposit scheme of OBL. Cash Line OD is revolving
facility for 1 year. Interest rate will be OBL FD & Deposit Scheme: OBL FD rate + 3% p.a or 12%
p.a whichever is higher. In case of monthly interest paying FD, Maximum exposure will be 80% of
face value of FD. Retail Finance Center of Retail Banking will process the application send by the
branches and Retail Assets Operation will arrange to disburse like other retail loan. Assets
Operation will arrange to disburse like other retail loan. OD Limit will be set in a CD account Client
can repay any moment since it is revolving facility. Interest must be realized on quarterly basis

OBL Doctor’s Loan

ONE Bank Doctor‟s Loan is a terminating loan facility under an Equated Monthly Installment (EMI)
based repayment plan meant for Doctors only (Registered Doctors & Medical Practitioners, Eye
Specialists, Heart Specialists, Child Specialists, Surgeons and Dentists) to support their small
scale purchase of different medical equipment, tools, small machineries, furniture etc. for their
medical chambers, clinics and/or hospitals. Any credit worthy Bangladeshi doctor can apply for
One Bank Doctor‟s loan. Salaried Doctors having monthly income Tk 25,000/- or self employed
doctors having Tk 25,000/- can apply for the loan. Minimum age for the loan is 25 and
maximum is 57 years. Repayment of the tenor is minimum 12 months to maximum 60 months.

OBL Banker’s Loan

OBL Banker‟s Loan is an any purpose unsecured and terminating loan facility (EMI based) for any
legitimate purpose. Bank would finance against gross monthly income of the any credit worthy
bank official. To meet life style needs of the credit worthy bankers and to capitalize the vast market
gap, this is a suitable unsecured retail loan product for a segmented customer. Any credit worthy
Bank official can apply for the loan to meet life style needs against his/her gross monthly income.
Minimum monthly income for the eligibility of the loan is Tk 50,000/-. Minimum year for the
applicant is 21 and maximum is 60 years of age. Minimum of the loan is Tk 1,00,000/- and
maximum amount will be Tk 10,00,000/-. Minimum 3 years of banking experience with 6 month
permanent employment with present employer can eligible for the loan. .

OBL Swopno Neer

ONE Bank Home Loan is a terminating loan facility for the purpose of financing Purchase,
Construction, Renovation and/or Refurbishing of Tin-shed/ Semi-paka house. Age of the applicant
is minimum 23 years and maximum 70 years. Tenor of the loan is 3 to 10 years. Salaried
executive having monthly income of Tk Minimum BDT 30,000/- per month and Self Employed
Professionals like doctor, engineer having minimum BDT 30,000/- per month can be eligible to
apply for the loan. Loan limit is minimum Tk 5,00,000 and maximum amount is Tk 20,00,000.

Pensave
PENSAVE is a specially designed scheme for the socially conscious citizens. This special saving
scheme will provide the financial security during your retirement days. It is a secured future of your
years ahead. This scheme is a recurring deposit of a fixed amount for a fixed tenure with terms of
3, 5,8 &10. The account can be opened any day of the month. It can‟t be opened in joint names. A
person can open more than one account of similar/different installment size(s). If the deposited
92
amount is withdrawn within one year, no interest will be paid. If the deposited amount is withdrawn
after one year but before the end of tenor, interest will be given at the prevailing Savings Interest
Rate. On completion of the tenor, the entire payables will be paid to the Depositor after one month
from the date of last monthly installment deposited. Interest rate of the scheme is 6.50% for 10
years of maturity.

Tenure
Payment
Size
3 Years 5 Years 8 Years 10 Years

500 19,443 34,544 61,529 84,261

1,000 38,886 69,088 1,23,058 1,68,521

5,000 1,94,427 3,45,437 6,15,289 8,42,605

OBL GOLD Savings Account

OBL Gold Savings Account” is a daily interest bearing and monthly interest paying savings account
for customers. Any Bangladeshi citizen aged over 18 years with photo ID document is applicable
for opening the account. Interest is calculated on daily basis and paid monthly. Interest rate is
5.00% p.a. If end of day balance of the accounts falls below TK 50,000/-, client will lose interest
for that day. Internet banking is free in this account. No account maintenance charge is applicable
in this account. Customer can open the Gold Savings Account either in the single name or in the
joint name.

Branches will do the KYC portion at the time of opening of accounts mentioned in the account
opening.

Features Saving Account Silver Saving Gold Saving

Minimum Account Tk 2,000/- Tk 25,000 Tk 50,000/-

Opening Amount

Inertest Payment Half yearly Monthly Monthly

Account No maintenance No maintenance No maintenance fee up

Maintenance Fee fee up to BDT fee up to BDT to BDT 5,000/-
5,000/- 5,000/-

VISA Debit Card Fee BDT 400 + VAT BDT 400 + VAT BDT 400 + VAT

Minimum Balance BDT 2,000/- Tk 25,000/- Tk 50,00/-

requirement for
Interest

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Monthly Money Maker
Monthly Money Maker Scheme is a special type of Retail/Individual Fixed Deposit Account which
provides the applicant with monthly interest accrued from the Fixed Deposit to the applicant's
savings/current account. Depositor can open the account in multiples of Tk.50, 000.00 (Tk. fifty
thousand only). Deposit can be made any day of the month. Interest will be credited to the
savings/current account after one month of the initial deposit date. Tenure of the deposit is 1, 3, 5
years. Interest rate of the deposit is 7%. Interest Payout Frequency of the account is monthly.

Money Rotator
Money Rotator has been designed to target the different government agencies along with large
corporate bodies, semi government organization, Universities, NGO's and different individual along
with different proprietorship concern. The main features of the product are to attract the mentioned
clients though compounding of interest for a period of 3/6/12 months. High net worth Corporate
clients, individuals and Proprietorship concerns are main target group of this product. Minimum
amount BDT 1(one) crore and above should be deposited in this account. By nature it's a Term
Deposit account for the tenor of 3/6/12 months in which interest will be compounded at monthly
basis. Interest cycle is monthly compounding.

OBL Quick Millionaire Scheme

OBL Quick Millionaire” is a premium DPS product designed for enthusiastic and aspirant clients.
This will help account holder amass Tk 10 lac in shortest period through monthly installment. Any
Bangladeshi citizen aged over 18 years with photo ID document is applicable for opening the
account. No interest will be provided if the account is closed before one year. If the account is
closed after one year but before four years then prevailing saving rate will be applicable. If the
account is closed after four years then interest at Quick Millionaire rate will be applicable.

Initial Deposit Initial Deposit Initial Deposit

Tk 50,000 Tk 100,000 Tk 2,00,000
Maturity
Tenor
Amount
Monthly Monthly Monthly
Installment Installment Installment

2 Years 36,100- 34,750 13,350

Tk 10.00 lac
4 Years 17,150 15,975 13,620

6 Years 10,510 9,675 8,010

8 Years 7,100 6,420 5,070

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OBL Elegant Savings
Elegant Savings is daily interest bearing and monthly interest paying taka savings account for
Senior Citizens of Bangladesh. Any Bangladeshi citizen who is minimum 50 years old can open
this account. Minimum initial deposit amount is Tk 5,000/- to open the account.

Day End Balance Interest Rate

Above Tk 0.10 lac - to Tk 5.00 5.00%

Lac

Above Tk 5.00 lac - to Tk 10.00 6.00%

Lac

Above Tk 10.00 Lac 6.50%

Interest will be calculated on daily balance of the account. If EOD balance of the accounts falls
below Tk 10,000/-, client will lose the interest for the day. Interest will be accrued on daily basis
and paid on monthly basis. Key benefits of the account are:

 Interest is credited to account on monthly basis

 First cheque book is free
 25% discount in locker services for 1st year)
 0.50% bonus interest rate for retail FD booked for 3 months, 6 months and 1 year
 Free Internet Banking and SMS Banking
 Complementary Medical Checkup Gift Card in Apollo Hospital/Discount in Gym Membership
for 1 year for top 20 customers who will be maintaining Tk. 2 lac average balance during 6
months.

The account can also be opened jointly by any Bangladeshi aged above 18 years. Existing OBL
CASA customers who turned 50 years and have savings accounts with us are eligible to open
Elegant FD (3 month/6 month/1 year) at privileged rate (0.50% extra on top of regular rate) without
further opening Elegant Savings account. Customers who don't have savings accounts with us and
who intend to open Elegant FD should be encouraged to open Elegant Savings Account first and
open Elegant retail FD subsequently.

OBL Pyramid Savings

OBL Pyramid Savings is a special deposit account having flexible deposit option and no withdrawal
option. Any Bangladeshi citizen aged 18 years and above with photo ID document is applicable for
savings account. CASA account is not mandatory to open this account. Once account becomes
mature, account proceeds can be withdrawn by Debit Voucher or Pay Order on maturity of
account. No Cheque book or Debit card will be issued against this account. One person can open
more than one Pyramid Savings. This account cannot be opened jointly.

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 Tenor Minimum Initial deposit Tk. Maturity Amount
20,000
6 Months Client can deposit any amount in Maturity amount will be
any number of transactions provided based on interest
1 Year
without any restriction. Minimum rate, tenure and total deposit
2 Years single transaction amount has to
be Tk. 500 or above
3 Years

If customers do not deposit any amount for two months consecutively, accounts will be closed and
proceeds will be encashed through debit voucher or issuing pay order. Forced closure fee has to
be collected manually at the time of closing of Pyramid Savings Account. No cheque book or Debit
card will be issued against this account.

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