The Law of Limitation Act 1963 (15 Files Merged)

Limitation Act, 1963
Overview
Objectives
After going through this presentation you will be able
to:
• Define limitation period
• List the important sections of the Act
• List the limitation period for filing different suits
Limitation Act, 1963
Governs the period within which suits are to be filed, with
relevant provisions for delay, condonation thereof etc.
The Act contains 137 Articles:
Division Deals With Articles
First Suits 1 – 113
Second Appeals 114 – 117
Third Applications 118 – 137
Basic Principle: The principle that pervades statutes of

limitation is that ‘limitation extinguishes the remedy, but
not the right’.
This means that the legal right itself is not defeated, but
only the right to claim it in a court of law is extinguished.
Period of Limitation
• Defined in Section 2 j of the Limitation Act
• The time limit within which the parties to a legal
agreement can take action in a court of law to
enforce their legal rights
• No limitation period for right of lien or set off and
sale of pledged securities
Prescribed Period: The period of limitation computed

in accordance with the provisions of the Act
Some Important Sections of the Act
Section Contents
Application made to a competent court after the prescribed
3
period shall be dismissed
If court is closed the suit may be instituted on the day when
4
court reopens
If the applicant satisfies the court about delay (if any) in
5
making the application, court can admit the suit
When a person is legally disabled (minor, insane), the period
6 of disability will be excluded to calculate the running of the
period
Once time has begun to run, no subsequent disability or
9
inability to institute a suit stops it
Section Contents
Day from which limitation period is to be reckoned to be
12
excluded
If plaintiff has been prosecuting another civil proceedings, such
14
period shall be excluded
Period of injunction by other court to be excluded for calculation
15
of limitation period
Acknowledgement before expiration of prescribed period gives
18
fresh period of limitation
Payment by the debtor/his agent before the expiration of
19
prescribed period provides fresh period of limitation
Limitation period cannot be shortened or lengthened by mutual
28
agreement
Limitation Period for Suits
Suits Prescribed Date to be reckoned
Period (in
years)
By principals against agent for Three When the neglect or misconduct is
neglect or misconduct known to the plaintiff
For money payable for money lent Three When the loan is made
For compensation for breach of a Three When the time specified arrives or
promise to do anything at a the contingency happens.
specified time, or upon the
happening of a specified
contingency.
On a bill of exchange accepted Three When the bill is presented at that
payable at a particular place place.
On a dishonored foreign bill where Three When the notice is given.
Protest has been made and notice
given.
Limitation Period for Suits
Suits Period Date to be reckoned
(in
years)
Any suit for which no period of limitation is Three When the right to sue accrues
provided elsewhere in this Schedule
For money lent under an agreement that it Three When the loan is made
shall be payable on demand
For money deposited under an agreement Three When the demand is made
that it shall be payable on demand,
including bank deposits
On a bill of exchange or promissory note Three When the bill or note falls due
payable at a fixed time after date
For specific performance of a contract Three The date fixed for the performance,
or, if no such date is fixed, when the
plaintiff has notice that
performance is refused
Limitation Period
Extension of limitation period:

It can be extended by acknowledgement or by part payment BUT
ONLY BEFORE the expiry of the limitation period
Fresh promise to pay – Revival of Limitation:
• Even after the expiry of limitation the liability can be enforced if

there is a fresh promise to pay (express agreement) the
outstanding debt already barred by limitation.
• This is because under section 25 (3) of the Contract Act, a time
barred debt is a valid consideration for a fresh promise to pay.
Banks have to file suits for recovery of loans before

the validity of the documents expire.
Summary
In this presentation you learnt:
• Limitation period
• Important sections of the Act
• Limitation period for filing different suits
Payment System
Infrastructure in
India
ROADMAP
• Introduction.
• Payment Landscape: India & Global
• Evolution of Payment and Settlement Systems in India!!
• NPCI: offering different platforms for payments
• RuPay: say goodbye to MasterCard and Visa
• IMPS: instant funds transfer
• Innovative Payment Models around the world
• Latest developments in the payment scenario globally including
India
• NEFT and RTGS transactions over three financial years
• Proposed TRIPARTITE MODEL
INTRODUCTION
Payment v/s Settlement
Payments:
- something that is paid to someone in return for
goods or services
- traditionally cheques, drafts etc. paid in lieu of cash
- various payment methods have evolved with time
- payment methods now can used for transactions in equity

markets, bond markets, currency markets etc.
Settlement:
- process of fulfilling certain contractual obligations by
means of payment
- settlement is successful in banking when one’s account gets
debited and another’s account gets credited
-
P1 P2
Q1 Q2
Payment and Settlement systems
•the Central Bank (RBI) formulates and regulates its
structure
•BPSS (Board for Regulation and Supervision of

Settlement systems ) has been set up for authorizing,
prescribing policies and setting standards
• DPSS (Department of Payment and settlement systems)

executes the directions of BPSS
•only RBI is authorized to allow different payment

system operators to operate in India
PAYMENT LANDSCAPE IN INDIA
• Electronic payments steadily gaining popularity in the cash
dominant Indian society.
• As of F.Y 2014, percentage share of cheques in retail payments

reduced to 35% from 66% in F.Y 2010; and share of electronic
payments have increased from 34% in F.Y 2010 to 65% in F.Y
2014. As of 2020, the share of paper clearing in total retail
payments plunged to just 2.96 per cent in terms of volume
and to 20.08 per cent in terms of value,
• NPCI set up in 2009: to act as the umbrella institution for all sorts
of retail payments.
• NPCI currently handles around 18mn transactions daily.

• Total Number of ATMs at present= 2lac approx. which is around 15
ATMs per 1 lac people. Very minimal than that of BRIICS countries
where per 1 lac people, the figures are 130, 120,50 and 62.
• Installed 1.1 million POS terminals constitute less than 10% of the
14mn merchants in India.
• e-commerce sector set to touch 150 bn by 2022.

EVOLUTION OF PAYMENT & SETTLEMENT SYSTEMS IN
INDIA
1980 MICR was introduced to mechanise the cheque clearing system
1990s E CS and EFT were introduced, thus permitting issuance of Credit and Debit cards
1996 Institute for Development & Research in Banking Technology (IDRBT) was set-up for technical upgradation and
developing a reliable network
2001 Clearing Corporation of India Limited (CCIL) was set-up by banks, financial institutions and primary dealers
2003 National Financial Switch (NFS) was introduced for interconnectivity of ATMs across the country
2004 Core Banking Systems (CBS) was introduced by banks, and alongside RTGS and NEFT were introduced by RBI
2007 Payment and Settlement Systems Act (PSS Act, 2007) came into existence
2008 Cheque Truncation System (CTS) was introduced, and alongside the National Payments Corporation of
India (NPCI) was also set-up
2009 Introduction of 2nd factor authentication : “Card Not Present”, the first of its kind in the
world(OTP)
2010 Immediate Payment Service (IMPS) was introduced by NPCI
2012 NPCI launched RuPay, the domestic card payment network
2014 RuPay Card was dedicated to India by President Pranab Mukherjee on 8th of May, 2014
2008-15 Improvising of payment infrastructure through creation of AEPS(Aadhar enables

payment system ), APBS(Aadhar payment Brid system), NACH(national
automated clearing House), NUUP(National Unified Unstructured
Supplementary Data Platform)
PAYMENT LANDSCAPE: GLOBAL
• Undergoing constant transformation ever since first ATM launched in US in
1969.
• Growth of domestic card schemes like CUP of China, ELO of Brazil, and our
very own RuPay pose tough competition to global card schemes and
network.
• Around 7.7 bn bank cards will be issued by domestic card issuers by end of
year 2017.
• Stored-value cards and e-wallets such as m-Pesa and Paytm are some success
stories.
• Google-wallet, Apple Pay signifies entry of social sites and tech cos. Into the
payments sector.
NPCI: OFFERING DIFFERENT PLATFORMS FOR PAYMENTS
• A Section 8 Company under Companies Act,2013.

• Started with 10 core promoter banks, but soon going to add 50 new banks
as its shareholders.
• CTS : reduced the time for clearing of cheques through Clearing Houses;
gets cleared in T+1 days; 3 Grids: 66 MICR centers.
• N A C H : centralised clearing house for all ECS transactions; N A C H Debit &
N A C H Credit; N A C H Debit: efficient mandate-based debit services by use
of UMRN; NACH Credit: creates only a single debit in user institution’s
bank account and provides credit (pension, salary etc.) to beneficiaries.
• NFS: ATMs across the country get connected via this switch; it has 470 Banks and conne
approx 2.03 lac ATMs.
• APBS: applicable in DBT schemes based on Aadhaar Card Numbers;

bulk payment system (Aadhar Payment Bridge System)
• USSD: does not require any app to be downloaded or have GPRS

connectivity to enjoy USSD solution
• eKYC: electronic Aadhaar based KYC; workable on mobile, PC, internet

based channels.
• White Label ATMs: around 7000 WLA s of 7 WLAOs are at present.

RUPAY: SAY GOODBYE TO MASTERCARD AND VISA
•Only the 6th nation in the world to have a domestic payment gateway
•More than 170 mn RuPay cards have been issued till date
•Issued by more than 1100 banks
•Usable in 12 lac+ PoS terminals & 30,000+ e-com merchants
•Partnered with JCB International for global usage
•Nearly 1 3 % of all transactions are done via RuPay Debit cards
•RuPay Credit Cards launched in 2016
IMPS: INSTANT FUNDS TRANSFER
• It is a 24*7 inter-bank electronic fund transfer service

• Obtain M M I D and MPIN from the bank: then download the
required Application for using the service to remit money
• The beneficiary should also obtain the M M I D from the bank
• Minimum value: Re.1/- ; Maximum value Rs. 5 lac/-
• PNB tied up with Xoom Corp. for instant transfer of funds from
US to India using IMPS facility
• 107 member banks

INNOVATIVE PAYMENT MODELS AROUND THE
WORLD
• m-Pesa of Kenya
• China Union Pay (CUP)

LATEST DEVELOPMENTS IN THE PAYMENT SCENARIO
GLOBALLY INCLUDING INDIA
• Venmo
• PayPal
• PingPay of Axis Bank
• KayPay
• icicibankPay
One of the main objective of project was to
check the performance of transactions under
NEFT by 15 selected major banks for three
financial years
NEFT PERFORMANCE OVER LAST THREE FINANCIAL YEARS: JULY 2012 TO J
•NEFT projections: Outward Debit comparisons of transaction amount in
Rs. Crore.
• NEFT projections: Inward Credit comparisons of transaction
amount in Rs. Crore.
RTGS PERFORMANCE OVER LAST THREE FINANCIAL YEARS: JULY 2012 TO JU
• RTGS projections: Comparisons of Outward transaction amount in Rs.
Crore.
• Mobile Banking projections: Compariosns for transaction
amount (in Rs.’000)
TRIPARTITE MODEL
• Solace to patients, Relief to hospitals & triggering RuPay’s revenue
generation.
Negotiable Instruments Act, 1881
An Introduction
Objectives
After going through this presentation you will be able to:
Describe negotiable instruments (NI), their features and

differences between them
List the parties to NI and their rights and obligations
Explain the terms holder and holder for value

Negotiable Instruments Act
• Based on the rules of the commercial world namely
merchants, traders and businessmen, Passed in 1881
and has been kept current through amendments
from time to time
• Contains 147 sections
• Sections 138 to 142 (relating to dishonour of
cheques due to insufficiency of funds) were passed
in 1988
• Sections 143 to 147 (relating to electronic cheques)
were passed in 2002
Negotiable Instrument (NI)
• Has replaced the actual passing of cash in mutual
dealings thereby eliminating the risk involved in
handling cash
• Carries the commitment on the part of a certain
person to pay a certain sum of money
• The transfer of NI from hand to hand symbolizes
actual payment
The Act does not define a negotiable instrument but merely states
that a negotiable instrument means a promissory note, bill of
exchange or cheque payable either to order or to bearer (Section
13).
Features of a Negotiable Instrument
A piece of paper which entitles a person to the sum of money stated
therein and which is transferable from person to person by mere
delivery or by endorsement and delivery
The person to whom it is so transferred gets it without the defects in
the title of the transferor
The person becomes entitled to the money stated therein and also the
right to further transfer it
Even the defective title of the transferor does not affect it if it has been
taken in good faith without notice of the defect
Even where it has been obtained by fraud, the rights of the bona fide
transferee are not affected
This feature is distinctly different from the general rule of law that no
one can transfer a better title than what he himself possesses
What are Negotiable Instruments?
u/s 137 of Transfer of

By Custom and Property Act Instruments NOT
Usage: Quasi NI Considered as NI
• Bank drafts Bill of Lading and
• Hundies Railway Receipts are • Money/Postal
• Share Warrants referred to as NIs Order
• Dividend Warrants (Document of Title to • Bank Deposit
Receipts (FDs)
• Treasury Bills Goods)
• Air Way Bill
• Bearer Bonds
• Government NI Act provisions do
Promissory Notes not apply to these
(GP Notes) instruments
• Bearer Railway
Bonds
Negotiability
Implies ‘easy transferability from one person to another

in return for consideration’.
It means:
A NI is freely transferable:
• By delivery when it is a bearer instrument (Section 47)
• By endorsement and delivery when it is an order instrument (Section 48)
The transferee taking the instrument for value and in good faith gets better
and absolute title despite any defect in the title of the transferor (called
endorser)
Endorsement means transferring ownership free from defect
A NI can be transferred any number of times till its maturity
Currency Note
Currency Note
• Although currency notes, being money, fulfil a number
of conditions of promissory note (PN), they are not
PNs and have been excluded from PN as per Indian
Currency Act (Section 21)
• Currency Note is a “promissory note payable to

bearer, issued by the Governor of RBI”
RBI Act, 1934 (Section 31):
No person other than RBI or Central Government can draw,

accept, make or issue any bill of exchange or promissory note
payable to bearer on demand.
Instruments Payable to Bearer
• Since only RBI has the authority to issue bearer PNs,

no one can issue a NI made payable to just ‘bearer’
• A payee name has to be necessarily specified
• A promissory note cannot be made payable to bearer
even if it is a usance promissory note
• Cheques can, however, be made payable to bearer (
since it is drawn on a banker where he maintains a
running account)
Presumptions as to Negotiable Instruments
Section 118: Assumptions as to negotiable instruments, until the contrary
is proved
It was made, drawn, accepted, endorsed and negotiated or transferred for
consideration
It bears the date on which it was made or drawn
It was accepted within a reasonable time after its date and before
maturity
Every transfer of NI was made before maturity
Endorsements appearing on NI were made in the order in which they
appear thereon
It was duly stamped
Holder is holder in due course
The burden of proof that the instrument is contrary to all/any of the
above presumptions is with the person who challenges such presumption
Promissory Notes (PN)
A promissory note contains the promise of the debtor to

pay
Section 4: “Unconditional promise to pay a certain sum of

money to or to the order of a certain person”
It is signed by the maker/promisor/drawer across a

revenue stamp
Person who makes and signs the promissory

There are basically two parties note – “drawer” – debtor/promisor
to a PN Person to whom the payment is to be made –
“Payee” – creditor
Types of Promissory Notes
Promissory Notes Contents
Demand Promissory Note Contains a promise to pay whenever the
(DPN) payment is demanded
Usance Promissory Note Two types:

1. Contains a promise to pay after a
certain period, say one month after the
date of the promissory note or on a
specific date in future
2. Usance promissory note with an
“interest clause”
A usance promissory note has to be
stamped by affixing non-judicial stamps of
requisite value, as per Stamp Act
Bill of Exchange (BE)
Section 5:
“Instrument in writing, containing an unconditional order, signed by
the maker, directing a certain person to pay a certain sum of money
only to, or to the order of, a certain person or to the bearer of the
instrument”.
There are three parties to a BE:

• Drawer/maker - the person who orders to pay
• Drawee - who is directed to pay
• Payee - who is authorized to obtain payment
A bill of exchange contains an “order” from the creditor to the debtor to
pay the amount he owes to the payee named in the bill
The creditor is the “drawer” of the bill and the debtor is the “drawee” of
the bill (as it is addressed to him)
Classification of Bills
Inland Bill • It is drawn in India on a person residing in India
(Section 11 ) whether payable in or outside India
• It is drawn in India on a person residing outside India
but payable in India
Foreign Bill • A bill drawn in India on a person residing outside India
(Section 12) and made payable outside India
• Drawn upon a person who is a resident of a foreign
country
Demand Bill A bill payable at sight or on demand
Time / Usance • A bill payable after a fixed time
bills • A bill payable “after date”
Trade Bill A bill drawn and accepted for a genuine trade transaction
Accommodation A bill drawn and accepted not for a genuine trade
Bill transaction but only to provide financial help to some
party
Capacities of Parties
Section 26:
“Every person capable of contracting, according to

the law to which he is subject may bind himself
and be bound by making, drawing, acceptance,
endorsement, delivery and negotiation of a
promissory note, bill of exchange or cheque”.
Different Cases of Incapacity (1 of 2)
Minor • May draw, endorse, deliver and negotiate a negotiable
(Section 26) instrument so as to bind all parties except himself
• Does not incur any liability but other adults parties do
remain liable.
• Can be an endorsee or payee
Insolvent Is not competent to draw, make, accept or endorse

Corporation • A company cannot incur liability under negotiable
instrument unless expressly or impliedly permitted by
the Memorandum of Association or Articles of
Association.
• Can be a payee or endorsee
Agent: Every person capable of binding himself or being bound
(Section 27) by a negotiable instrument, may so bind himself or be
bound by a duly authorized agent acting in his name
Different Cases of Incapacity (2 of 2)
Legal • Can deal with NIs belonging to the deceased to

Representative the same extent as the deceased could have
(Section 29) done
• If he signs, he must use words to indicate that
he is not personally responsible
Joint Hindu Family • The Karta can bind the joint family by executing
negotiable instrument provided it is for the
benefit of family
• Other members are not liable personally
Liability of the Parties
Drawer
Maker and Acceptor (Section 30)
(Section 32)
The drawer of a BE or cheque, in case
The maker of a PN and the acceptor of a bill of dishonor by the drawee or acceptor
of exchange are primarily responsible for thereof, to compensate the holder,
the payment due
provided due notice of dishonor has
been given to, or received by the
drawer
Drawee of a Cheque Endorser

(Section 31) (Section 35)
The drawee of a cheque having Is liable to all subsequent parties in case
sufficient funds of the drawer, in his of dishonor of the instrument provided
hands, properly applicable to the due notice of dishonor has been given to
payment of such cheque must pay the him
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
Different Ways of Drawing a Usance BE
1. On 31.05.2014, pay ____________.
2. Three months from date, pay ____________.
3. Three months from acceptance, pay ____________.
4. Three months after sight, pay __________.
5. 90 days after sight, pay __________.
Inchoate Stamped Instrument
Section 20
An inchoate stamped instrument is a paper signed and stamped in accordance with

the law relating to negotiable instruments and either wholly or partly blank.
When one person gives another such a document, the latter is prima facie entitled to
complete the document and make it into a proper negotiable instrument up to the
value mentioned in the instrument, or up to the value covered by the stamp affixed on
it.
The person signing the instrument is liable on it to any holder in due course.
Difference Between PN & BE
Promissory Note Bill of Exchange
Contains a promise to pay Contains an order to pay
Is presented for payment without any Required to be accepted either by the drawee or
previous acceptance by the maker by some one else on his behalf, before it can be
presented for payment (not applicable for
demand bill)
• Cannot be made payable to the The drawer and payee or the drawee and payee
maker himself may be the same person
• The maker and the payee cannot
be the same person
Two parties: Maker and Payee Three parties: Drawer, Drawee and Payee
Can never be conditional Cannot be drawn conditionally, but can be
accepted conditionally with the consent of the
holder
In case of dishonor, no notice of A notice of dishonor must be given in case of
dishonor is required to be given by the dishonor
Holder
Cheque
Section 6:
An instrument in writing; containing an unconditional order; signed
by the maker (drawer); directing a specified banker (drawee); to pay
a certain sum of money; to a certain person (payee) or to the order
of the person or to the bearer; on demand
• A cheque is also a bill of exchange in that it is an instruction from an
account holder to his bank to pay a certain sum of money to the
person named in the cheque
• It also includes the electronic image of a truncated cheque and a
cheque in electronic form
• A cheque is always a demand instrument
• There are 3 parties to a cheque:
o Drawer (account holder)
o Drawee (bank)
o Payee (person in whose favor the cheque is drawn)
Amendment to NI Act in 2002
Cheque in Electronic Form Electronic Image of a Truncated

Cheque
The exact mirror image of a paper Electronic image of a physical
cheque; generated, written and cheque usually used in clearing
signed in a secure system ensuring process
the minimum safety standards with
the use of the digital signature and
asymmetric crypto system
Bank Draft
If the bank does not have a
branch at the other centre
A bill of exchange drawn by a where the draft is required to be
branch of one bank on another paid, it may be drawn on
branch of the same bank. another bank with which the
former bank has a
correspondent relationship.
This also applies to drafts in

foreign currencies payable
abroad (correspondent banks).
Consideration & Negotiation
Consideration • The words “for value received” are an affirmation by
the drawer that he has received ‘consideration’ for
the money he is promising to pay.
• Law of contract requires that agreement between
two persons should be supported by consideration.
• Only when a contract is supported by consideration is
it legally valid and the aggrieved party in the case of
“non-performance” can approach the court of law.
• In the case of negotiable instruments existence of
consideration is presumed; the onus of proof lies with
the other party.
Negotiation • It means transferring an instrument from one person
to another person in such a manner as to convey title
and to constitute the transferee the holder thereof
• The transferee or the “holder” of the instrument
becomes the owner of the instrument
Holder
Holder Means any person entitled in his own name to be in possession thereof
(Section 8) and to receive or recover the amount due thereon from the parties
thereto
• Order cheque: Payee or the last endorsee
• Bearer cheque: Any person to whom the cheque is validly negotiated
• Stolen cheque: A thief cannot acquire title to the cheque
Holder in • A person, who becomes a holder of a NI for valuable consideration
Due and in good faith and not knowing that the transferor did not have
course good title to it
(Section 9) • Entitled to receive the payment and give a good discharge to the
person making the payment
• Can negotiate the instrument
• Can file a suit in his own name against parties liable to pay
• Can complete an inchoate stamped instrument
• Can claim a duplicate of a lost cheque
Holder for • Not defined in NI Act
value • A holder is a holder for value if the value of a bill is partly or fully paid
at any time either by him or any party prior to him
Know Your Customer (KYC)
Overview
TOP Indian Banks faced with
KYC Violation Fines
Who is a customer???
A ‘Customer’ may be defined as:

A person or entity that maintains an account and
has a business relationship with the bank;
One on whose behalf the account is maintained
(i.e. the beneficial owner)
Beneficiaries of transactions conducted by
professional intermediaries, such as Stock
Brokers, Chartered Accountants, Solicitors etc. as
permitted under the law, and
Any person or entity connected with a financial
transaction which can pose significant
reputational or other risks to the bank, say, a wire
transfer or issue of a high value demand draft as a
single transaction.
Guidelines of KYC
Under Sec 35 (a) of Banking Regulation Act 1949, RBI issued the KYC guidelines
To be aware of the identity of the customer
To be aware of the location of the customer
Manage risks associated with customers in a prudent manner
Prevent the banking system from being used by anti-social/criminal/terrorist
elements
To understand the customers and their financial dealings better which in turn
help it manage the risks prudently
What are the Key Elements of KYC Policy?
Customer Acceptance Policy

Customer Identification Procedure
Monitoring of Transaction
Risk Management
No account is opened in anonymous or fictitious/ benami
names.
Customer identity should be established before opening the

account.
What is
Customer Documentation requirements and other information to be
Acceptance collected in respect of different categories of customers.
Policy (CAP)? Checks to be done about the identity of the customer such that
it does not match with any person with known criminal
background, banned entities or terrorist organizations etc.
Circumstances, in which a customer is permitted to act on

behalf of another person/entity, should be clearly spelt out.
Customer Identification
Procedure (CIP)
Obtain documents for
verification and Normally a meeting
identification between bank official and
PAN of the customer or form
customer should take place
• Photograph 60/61 should be taken
before opening of any kind
• Proof of identity
of account.
• Proof of address
Account opening form

should be checked by bank
For customers who are legal
official and opening of the
persons or entities, banks
account should be
should verify the legal status
authorized by operation
head.
List of Documents
Sr. Type of account Documents
No. Identity Proof (ID)/ other Documents Address Proof (AP)
1 Accounts of i) Passport i) Telephone/Electric bill
individuals ii) PAN Card ii) Bank A/C Statement
(In case of Joint iii) Voter’s ID card iii) Ration Card
A/c separate ID & iv) Driving license iv) letter from employer/ any
Address Proof of v) letter from a recognized public recognized authority to the
each authority/ Employer’s ID card to satisfaction of the Bank
the satisfaction of the Bank
2 HUF i) PAN of HUF i) Any one of above APs of

each member
ii) Declaration from Karta
iii) Prescribed Joint Hindu
Family Letters signed by all
the adult coparceners
Monitoring of transactions
Account should be opened after verification of the particulars furnished in the
account opening form.
Newly opened accounts should be closely monitored at least for a period of six
months.
Cheque book should be issued after confirmation of address
Special caution should be exercised if a prior dated/ large amount instrument is

deposited in a newly opened account
Any suspicious transaction to be reported to higher authorities
All the branches are required to submit report of cash transactions of Rs 10 lakh
and above to higher authorities on a monthly basis.
After acceptance of the customer, a
risk profile is to prepared based on
the following points:
◦ Identity of the customer
◦ Nature of business activity,
Risk Management ◦ Location of customer and his clients,
◦ Mode of payments/ sources of
funds
◦ Volume of turnover,
◦ Social and financial status etc
Risk Categorization
Low Risk Medium Risk High Risk
Customers whose identity Customers whose sources Customers requiring very

and sources of funds may of funds are not clear and high level of monitoring,
be easily identified involve huge transaction such as:
• Salaried employees • Self-employed Politically Exposed Persons
• Senior Citizens • Professionals • Non Resident customers
• Government • Partnership Firm • High net worth
department & • Minor Account individuals
Government owned • Clubs, Societies, • Trust, Charities, NGOs
companies & Regulators Executors and • Non face to face
and Statutory bodies Administrators customers
• Bullion Accounts
• The customer profile will • Share Brokers
be updated once in • The customer profile will
every 10 years • The customer profile will be updated once in
be updated once in every 2 years
every 8 years
Documents Identity Proof
KYC Proof of communication address Guidelines on Small Accounts
Documents
and Opening of SB accounts for underprivileged
section duly introduced by an existing
Violations customer, under the following conditions:

• Balance at any point of time not to exceed Rs.50,000
• Aggregate credits in a year not to exceed Rs.1 lakh Violation
• Aggregate of all withdrawals and transfers not to
exceed Rs 10,000
RBI has powers to impose fine under

Section 47 of the Banking Regulation Act
1949, for violation of KYC norms.
Anti
Money
Laundering
OVERVIEW
Money laundering involves disguising financial
assets so that they can be used without
detection of the illegal activity which produced
them.
Through money laundering the criminals

What is transforms the money earned from illegal
activities and into funds with apparently legal
money source.
laundering?
There are two main reasons for money
laundering:
• To protect the money trail which is evidence of crime

• To protect the money itself which is vulnerable to seizure
Steps Involved in Money
Laundering
The complex money laundering involves the following three steps:
Placement: The initial movement of criminally derived currency or other

proceeds of crime to change its form or location to places beyond the reach
of law
Layering: The process of separating the proceeds of criminal activity from
their origin.
Integration: The process of using an apparent legitimate transaction to

disguise the illicit proceeds allowing the laundering of funds to be
disbursed back to the criminal.
Structuring or smurfing: Illegal money is put
into the economy in such a way as to avoid
any reporting of transactions by banks to RBI
or other government agencies.
Techniques
Shell company: No real business is
of Money conducted.
Laundering
Offshore banks: Money launderers may use
offshore banks to avoid detection in their
own country.
An
intergovernmental
body
Develops and
promotes an
Financial international
response to combat
money laundering
Action Task
Force (FATF) Established at G7
Summit meeting held
in Paris
Monitors
international
standards for anti
money laundering
regulations
PMLA came into effect on July
1, 2005
Objectives:
Prevention of
Money
Laundering
To prevent, control and
Act-2002
combat money laundering
To confiscate illegal property

acquired by money laundering
Finance Intelligence Unit-India
(FIU-IND)
An independent body reporting directly to the Economic
Intelligence Council (EIC) headed by the Finance Minister
Set by the Government of India as the central national agency

responsible for receiving, processing, analyzing and disseminating
information relating to suspicious financial transactions
Collects information on cash transactions of Rs.10 lakhs and above

and suspicious transactions from banks
Banks’ Obligations to FIU-IND
PMLA Measures:
Cash Transactions Report (CTR): Rs.10 lacs and above

to be reported to FIU, New Delhi on monthly basis
Suspicious Transactions Report (STR): to be

submitted to FIU, New Delhi within seven days
Counterfeit Currency Report (CCR): to be submitted

within seven days from date of occurrence
Records of transaction: to be preserved for 10 years

from the date of transaction.
Thank You…
Fraud Prevention
Objectives
At the end of the session, the participants will be able to understand
• The impact of Frauds on Bank’s performance
• Types of Bank Frauds- Related to Deposits/ Advances/ Services
• Fraud Preventive Measures
• Reporting System of Frauds to RBI

Definition of Fraud
The word “Fraud” can be defined as
“Any behavior by which one person intends to gain a dishonest advantage over another".
Fraud is an act or omission which is intended to cause wrongful gain to one person and
wrongful loss to the other, either by way of concealment of facts or otherwise.
Types of Bank Frauds (1 of 9)
Types of Bank Frauds
• Deposit- Related
• Advances-Related
• Services-Related
• Cyber Frauds
Types of Bank Frauds – Deposit related
Most of the deposit related frauds in banks are committed because of Lapses in KYC
compliance and negligence in following specified procedural norms.
These types of frauds have come down in the last few years on account of
 Improvements in cheque and payment processing,
 Usage of technology and
 Tightening the provisions of NI Act & KYC compliance

Types of Bank Frauds - Advance related
The advances related frauds continue to be the major concern for banks - because of its far
reaching implications on the financial soundness and integrity of the bank.
Majority of the credit related frauds committed are on account of
Deficient appraisal system,
Poor post disbursement supervision and inadequate follow-up.
Lack of due diligence on professionals like CAs, Valuers and Advocates

Delay in identifying and reporting of the fraud cases- come to light after the accounts have
been classified as NPA.
Types of Bank Frauds – Service related
Frauds are committed in other banking services that are extended to customers-
Remittances (clearing operations, Demand drafts, and NEFT & RTGS services),
Safe deposit lockers etc.,
Non-compliance of systems and procedures plays the major role in the frauds committed in
these areas.
Types of Bank Frauds – Cyber Frauds
Cyber Frauds/ Cybercrime is a generic term that refers to all criminal activities done using the
medium of computers, the internet, cyber space and the worldwide web.
It is just a combination of crime and computer.
To put it in simple terms any offence or crime in which a computer/ computer system is used
either as tool or a target or both is a cybercrime.
• Phishing
• Vishing
• Smishing
• Man in the browser
Fake Apps:
Hackers create fake apps which will look exactly like the original.
Once entering user name and password, the fraudsters get access to that information.
SIM Swap:
 The fraudsters will first collect your personal banking information

 Get the SIM blocked
 Obtain a duplicate with fake identity proof
 Deactivates the genuine SIM card
 Generate a one-time password (OTP) received on the new SIM held by the fraudsters
 Transact before the bank customer realizes the theft and alerts the bank.
Mobile Banking Frauds: App mapped to incorrect number
• Happens in accounts where the account holder is not using the mobile app
• Somebody can manage to attach a different mobile phone number and install a mobile
application on the mobile device & can do transactions
• SMS alerts usually sent by banks will not be received by the original account holder.
Card Frauds:
The point of sale (PoS) terminals and the ATM use the same channel for the bank. Here
fraud may happen if the card gets cloned or skimmed through the PoS or ATM.
Cloning:
Cloning can happen online as well as offline.
Skimming:
This involves a machine or camera that is installed at an ATM to pick up card information and
PIN numbers when customers use their cards.
Net Banking Frauds:
• As a legitimate transaction from the account holder’s computer
• It would either be through stealing passwords from customers or stealing customer details
from bank systems.
• An indirect approach is to hijack a person’s Net banking session through his/ her
computer using a malware so that it appears

Impact of Frauds (1 of 2)
Financial and Reputation loss Undermine operating efficiencies

and reliability of services
Investors and Customers lose Negative impact on employees

confidence in the bank morale
Impact of Frauds (2 of 2)
Cost of External Resources (Police, CBI, Vigilance)
Penal action by Regulatory Authorities ( RBI )
Action on employees perpetrating frauds in terms of financial penalty / service termination/

imprisonment
Some Statistics on Frauds
Frauds Reported by Banks > Rs 1 Lakh.
Financial Year Amount- Rs in Crores
2012-13 8,649
2013-14 10,170
2014-15 19,361
(Central Fraud Registry - CFR)

Introduction to Fraud prevention
Financial Institutions and Banks - vulnerable targets
Awareness of possible bank-frauds for Small Finance Banks
Frauds in Technology based services

Prevention of Frauds (1 of 6)
Account Opening:
Verify KYC documents of the customer before account opening

Meet the applicant & joint applicants personally
Obtain signature of all applicants in your presence
Verify photocopies of documents with originals & certify them as “original seen and
verified”
Visit the communication address/ work spot of the applicants in case of current
accounts
While updating contact details (mobile numbers, address); standing instructions etc.
proper check-up with account holder/s
Cheque passing:
Verify signatures carefully before passing cheques.

Proper authorization for issuing of cheque books
In case of doubt use UV lamps
Sending SMS alert to payer/drawer when cheques are received in clearing.
Due diligence for transfers & immediate cash payments in new accounts;
More care to scrutinize all High Value transactions
Check accounts for any irregularity- low balance; Zero/debit balance;
inactive/dormant accounts recently activated
Services:
Due diligence in issuing of duplicate demand drafts
Immediate action on customer’s instruction for hot-listing of credit/debit
cards
Check on unauthorized operations in safe deposit locker accounts

Advances:
Due diligence in checking supportive documents submitted by loan customers- legal
opinion, valuation report;
Personal visit to business site and informal enquires about customer’s financial worth and
line of business
Proper appraisal of the Loan Proposal as per specified norms/ procedures
Ensuring proper documentation before releasing of loans
End use of loan amount disbursed and follow-up for timely repayments of loan installments
Due diligence on professionals like Chartered Accounts, Valuers and Advocates enlisted
with bank
Cyber Frauds:
Inform customers that the bank will never ask for their internet banking Password/ OTP,
Card No/ PIN/ CVV No.
They should not disclose these details with anyone to prevent misuse.
Programmed alert SMS messages to the customer’s registered mobile numbers of any
credit/ debit/ funds transfer operations carried out in their accounts.
Employees involved in Frauds:
 Several frauds are insider jobs; or at least with the involvement of insiders.
 Bankers are generally people of integrity
 The selection process is highly sensitized in this respect.
 Still, Banks have to take extra care to have continuous vigil on their staff.
 Background checking for antecedents, checks and balances, periodic rotations, vigilance
assessments, internal audits, etc.
 Techniques will have to be employed to know the employees better and as preventive
measures
Reporting of Frauds
Banks need not report cases of attempted frauds of ₹10 million and above to
Reserve Bank of India
However, banks should place a report on individual cases of attempted fraud

involving an amount of ₹10 million and above before the Audit Committee of its Board
Thank You
FIXED
DEPOSIT .
Features of Fixed Deposit
Minimum Amount of
Multiples of :Rs1,000.00
Rs10,000.00
Schemes Available:
• Reinvestment Deposit
Certificate(RIC)
Tenure: 7 days to 10 years • Monthly Interest Certificate(MIC)
• Quarterly Interest Certificate(QIC)
• Recurring Deposit(RD)
Reinvestment Deposit
Certificate(RIC)
Interest accrued at the end of quarter is reinvested along with
the Principal.
The principal and interest are both rolled over.
Tenure : Minimum 6 months
Maximum : 10 years
Fixed monthly interest is paid to the customers savings/current
account.
Designed for customer who do not have any other source of

regular income.
Monthly Interest
The principal is not changed.
Certificate(MIC)
Amount
Minimum: Rs10,000 thereafter in multiples of Rs1,000.00
Tenure
Minimum:12 months Maximum: 120 months

Interest is paid quarterly to
savings/current account of the customer.
The principal is intact.
Quarterly
Interest Tenure
Certificate(QIC)
• Minimum: 12 months
• Maximum: 120 months
Amount
• Minimum: Rs10,000, thereafter in multiples of

Rs1,000.00
Automatic Rollover
Options Available:
• Rollover only Principal
• Only principal amount will be
rolled over.
• The interest will be either
credited to the designated
account or paid out.
Automatic rollovers of FD on • Rollover Principal and Interest
maturity for both the principal and accrued in Reinvestment Deposit
interest. scheme
• The rollover for both the deposit
and the interest accrued.
• The tenure will remain the same
and the interest rate applicable
will be as per the maturity date.
Changes in Rollover
instructions
THE FOLLOWING CHANGE IN TENURE CHANGE IN MATURITY CHANGE IN PAYMENT CHANGE IN PRINCIPAL
CHANGES CAN BE INSTRUCTIONS INSTRUCTIONS (ONLY REDUCED
MADE IN THE FD AMOUNT)
BEFORE MATURITY:
CHANGE ROLLOVER OF WITHDRAWALS OF ALL ENCASHMENT OR

PRINCIPAL TO FIXED DEPOSITS WITHDRAWALS OF
ROLLOVER OF FIXED DEPOSITS CAN
PRINCIPAL + INTEREST, ONLY BE MADE AT THE
OR VICE VERSA. BRANCH WHERE THE
DEPOSIT WAS BOOKED
OR ONLINE.
Tax
Two schemes TDGRI (Reinvestment Type) and TDGQI (Quarterly

Interest Type).
Minimum Amount: Rs100 or multiples Maximum Amount:

Rs150,000
Time Period: lock in period of 5 years
Type of deposit:
RIC Scheme (provided quarterly
Tax Saver compounding/reinvestment of interest)
QIC Scheme (providing for quarterly payout of Interest).
Fixed Deposit Premature closure of Fixed Deposits:. A minimum lock in period
of 5 years is stipulated to enable the deposit to be assessed as
exempt from taxable income u/s 80C of the IT Act.
The maturity period of a term deposit receipt of any

denomination shall be five years commencing from the date of
the receipt.
No term deposit shall be en-cashed before the expiry of five

years from the date of its receipt
Fixed amount is collected from savings account on a monthly basis
and gets accumulated in an RD account.
Interest is applied on quarterly compounding in the account.
The amount of installment once fixed, cannot be changed.
Amount
◦ Minimum: Rs1,000.00 Multiples of
Rs500.00
Tenure
Recurring ◦ Minimum: 12 months Maximum: 120 months
Deposit(RD) ◦ Thereafter in multiples of 12 months.
Penalty
Installment for any calendar month is to be paid on or before the last

working day of the month.
Incase of delay in payment it can be regularized by paying the

defaulted installment together with a penalty (at present it is @ PLR
plus 4 % for the period of delay).
Fraction of a month will be treated as full month for the purpose of

calculating the penalty.
The Encash 24 provide liquidity of a Savings Account
coupled with high earnings of a Fixed Deposit.
Minimum threshold limit: Rs25,000.00
Sweep in and Sweep out in multiples of Rs5000.00
Period of FD: 6 months to 5 years

Encash 24
Flexi Deposit Sweep in : Every Monday
Sweep out: Daily when balance is below threshold.
TDS applicable as per normal rate.
Penal interest applicable on the FD interest rate.

.
THANKYOU
Inter Bank Clearing Operations
Overview
Objectives
Explain clearing and the Discuss about a clearing

instruments exchanged house and its objectives
Describe a settlement Describe the MICR and

bank and the process of Non-MICR clearing
settlement process
Explain the advantages

and disadvantages of the
MICR clearing process
About Clearing & Instruments Exchanged
Clearing is a method of exchanging cheques/other instruments by banks.
Instruments are those that are drawn on each other and affecting a settlement on
the basis of netting payments due and receivables amongst the banks.
Some instruments drawn on each other are:
Cheques
Demand drafts
Payment orders/bankers’ cheques
Dividend warrants
Interest warrants
Clearing House and its Objectives
A clearing house is an association of banks that facilitates payments through
cheques or other instruments, between different bank branches within a city /
place.
It is also considered a central meeting place for exchange.
Objectives:
Ensuring speedy and economic collection of cheques, or other NIs/other

instruments payable/deliverable at the member/sub-member bank branches.
Ensuring that members/sub-members are situated in a place.

Functions of a Service Branch
A service branch of a bank collects all the instruments
from various branches and consolidates them for
presentation to all the banks in the clearing house.
It receives all the instruments drawn upon its branches

from other banks in the clearing house and distributes
among its branches.
It performs a crucial intermediary role between the

clearing house and the branches of a bank.
Management of Clearing House
Generally, the RBI manages the clearing house

wherever they have an office.
In the absence of RBI, SBI or the other bank,

normally the largest bank at the centre is
nominated by RBI to manage the clearing house.
Settlement Bank
The bank, which manages the clearing house
is called settlement bank
It facilitates settlement of claims on each

other
All banks will maintain current accounts with

the settlement bank for settlement of claims
Process of Settlement
The clearing house computes the amounts receivable
and payable by each bank and arrives at the net
amount receivable or payable by each bank.
The clearing house instructs the settlement bank to

credit the accounts of banks, which are net receivers
and debit the accounts of banks, which are net payers.
Those whose outward clearing is more than inward

clearing are said to have favorable settlement and vice
versa.
MICR
Magnetic Ink Character Recognition, or MICR, is a
character recognition technology used primarily by the
banking industry to facilitate the processing of cheques.
The technology allows computers to read information

(such as account numbers).
Unlike barcodes or similar technologies, however, MICR

codes can be easily read by humans.
Sample - MICR Cheque
Fields in MICR Cheque
Fields Explanation
Cheque Number 6 digits – unique cheque number
Sort Code (City Code/Bank 9 digits – the paying bank and
Code/Branch Code) branch are debited based on this
code
Account Number 6 digits - hits account on inward
clearing upload
Transaction Code 2 digits – 10 for saving, 11 for
current account etc.
Amount 13 digits including paisa – this
field is encoded by the service
branch processing outward
clearing
MICR Clearing Process (1 of 2)
• All branches send the outward clearing cheques received by
them to the main branch/ service branch.
• At the service branch, the amount of each cheque is printed on
the MICR band. Date of presentation and other details are
printed on the back of the cheque. This process is encoding.
• Cheques are sorted in bundles of 200 cheques. Each bundle is
called a batch.
• These outward clearing cheques are presented to the clearing
house and the total amount is receivable to the presenting bank
from the clearing house.
• The clearing house processes these cheques, sorts bank-wise
and makes available to the drawee branches. These are inward
clearing cheques. Amount is payable to clearing house.
MICR Clearing Process (2 of 2)
The drawee branches debit the customer account and pay

to the clearing house. Cheques for return are sent back to
clearing house for forwarding to presenting banker.
The clearing house debits the current account of the

drawee bank (Amount of all cheques sent to them less
returned cheques) and credits the current account of
presenting banker.
The presenting banker, on receipt of credit from clearing
house credits to the customer account who deposited the
cheque.
Non-MICR Clearing Process
• Non MICR clearing pertains to those locations where
ordinary non-MICR cheque leaves are used.
• The presenting banker has to sort the cheques bank-
wise and prepare a list called ‘’patty’’ covering the
amount of each cheque and amount of total cheques
presented to each banker.
• The total amount of patty for each drawee bank is
the amount to be received from that bank.
• Similarly this has to be prepared for all those banks
where cheques are drawn.
• This process is laborious compared to MICR clearing.
Machines Used in MICR(1 of 2)
In MICR clearing 2 types of machines are used:
• Encoder
• Reader-sorter
What is Encoder?
• An encoder is a table top machine, which is used to print
in magnetic ink on the read band portion. The encoders
are programmed to simultaneously affix/print clearing
endorsement stamp on the reverse of the instruments.
• Encoding work may be decentralized at branches or
centralized at the service branch.
• Clustering of encoding work at some branches is also
available.
Machines Used in MICR(2 of 2)
What is a Reader/Sorter?
A reader or sorter reads the MICR coded documents and

sorts them as per the pre-determined pattern.
It can operate on off-line and on-line with a host computer.
Documents are fed from the input hopper.

Advantages & Disadvantages of MICR Clearing
Advantages Disadvantages
Problems of balancing due to MICR readers and printers are
errors in recording the expensive.
amounts or listing are
avoided.
Simpler, faster, accurate and The system can accept only

convenient few characters.
Cheques size is standardized.

Summary
Clearing and the
Clearing house and
instruments
its objectives
exchanged
Settlement bank MICR and Non-

and the process of MICR clearing
settlement process
Advantages and
disadvantages of
the MICR clearing
process
Cash Management
Services
CMS objectives
Delay in receipt of funds from customers (i.e our client’s customer) leads to larger working
capital requirement,which in turn leads to increased interest costs & reduced profit.
Every payment involves a transaction cost resulting in reduced profit.
Objective of Cash Management Service is Efficient Management of “FUNDS”.
CMS is combination of
collection & payment services,
customized & packaged to meet the needs of individual business clients

What is Cash Management Services
It is a system of collections and remittances which addresses

the limitations of Clearing through technology and provides
client liquidity and enables efficient funds planning.
Cash Management Services addresses three basic components
Collection Payables Management of

Management Management Information System
Working Capital Cycle
PAYABLES PAYABLES
Raw Materials
Cash
CMS
RECEIVABLES Work-in-Process
Finished Goods
Conventional Banking Channels
• Locks up funds in transit, strains liquidity
• Borrowings to bridge funds gap
• Reduce profitability due to interest outgo
• Adversely affects return on investment
• Lowers returns to shareholders
• These problems are addressed by using CMS solution

Traditional services offered by Banks
Collection Services:
Local cheque collection
Upcountry cheque collection
• - From locations having collecting bank’s branches- From locations not having collecting bank’s branches
Payment Services:
Local Payments
• Cheques, Payorder
Upcountry Payments
• - Demand drafts
• - Anywhere or Payable at par cheques
• - EFT
CMS - Collection Services
Value added in Clearing Pickup cheques from

Provide collection boxes
Process: customer premises
Capture the details of the

Credit the amount of Value added in
depositors & provide it to
cheque on the date of Upcountry cheque
the company in electronic
deposit or the day after collection:
form
Pick up the cheques at

It will be collected thru
the place of dealer
local clearing and Correspondent
periodically & deposit it
credited to customers arrangements
at the local branch to the
account
credit of the company
Local Cheque Collections – Own Network
Customer office/
vendor
Clearing RBI/SBI
Axis Bank
ICICI Branch
Credit to
Company
Courier pickup
Path of Cheque
Path of return
cheque
Data/ MIS
CMS Hub
Cash Collections
Customer
OPS team Agency arrives
registers for Verification of
enrolls the at the time as
Doorstep agents
client requested by
Banking authenticity: ID
the customer
Services card check etc.
Cash /
Cheque is
handed over
to the agent
Nodal branch Agent hands Agent

Credit in the
completes the over cash / acknowledges
client’s a/c transaction cheque to the pickup /
nodal branch delivery
Printing of cheques or Payorder or demand draft,
Payment locally or at various centres for easy delivery to
the payees
services Printing covering letters with addresses and

details of the payment
offered Couriering the instruments to the payees
Providing reconciliation as to the instruments

couriered/ paid/ returned undelivered / remaining
to be paid
Providing bulk Payorder and demand drafts
Remote printing of Payorder/Demand Drafts

Management Information System (MIS)
The Bank captures the
information regarding the Under MIS, the Banks provide
Helps the company to keep
cheques collected on behalf of this information to the
track of cheques, funds flow
its customers including their Companies in the formats they
and reconciliation.
collection, payments from require.
dealers, their invoice details etc.
a) They are relieved of the work

involved in compiling and
The advantages to the b) The information reaches
reconciling the information
company is that : them in a timely manner
related to receivables and
payments from dealers.
c) Companies can upload the

information received from d) The funds & receivable
banks directly on to their management improves
system for updating their resulting in better profits
accounts of their dealers
Features of MIS Reports
MIS reports can be customized to suit client requirements.
For collections additional data can be captured up to 5 fields at the time

of data capture
Upload file can be designed to suit the client’s ERP system for automatic
reconciliation.
Value added MIS such as location-wise collections, returns, dealer-wise
collections, returns, volume tracking per location, etc can be designed
Details such as Instrument-wise outstanding report, forecast report,
cheque realized report can be provided.
MIS reports can be sent at a frequency convenient to the client
Advantages of Cash Management Services
Timely Providing Bulk

Saving cost and
information or Payorder or
time
MIS Demand Drafts
Remote Printing Courier service to Faster credit of

of Payorder collect cheques cheques
Multicity cheques
and Cheques
payable at par
Thank You
Card Business- Debit and Credit Cards
Overview
Objectives
• Explain the benefits and procedure of using a debit
card
• Explain the benefits and procedure of using a credit
card
• Explain the common terms used in association with
credit cards
• Explain the features of charge card and travel card
• Explain the features and benefits of RuPay card
Debit Card and Credit Card: Features
The information on the cards include:
• Name of the cardholder
• Card number
• Date of issue
• Card Verification Value (CVV) number
• Date upto which the card is valid
Debit Card: Convenient Banking
• Plastic Card which acts as a substitute for cheques and cash
• Can be used in Automated Teller Machines (ATM) and share
the network of other banks
• Ensures security though a confidential Personal Identification
Number (PIN)
• Can be used to withdraw cash and make balance enquiries
from ATMs and transfer amount to accounts held in the same
bank
• Can be used to make payments at Point of Sale (PoS) up to
available balance
• Can be used to avail services like recharging of pre-paid
mobile cards and booking air tickets, as allowed by the
concerned bank
Procedure of Use at a PoS
1. Customer swipes card in the PoS
2. Electronic Data Capture Machine in the merchant
establishment asks for the PIN
3. Customer provides PIN to the machine
4. Machine reads details of the card
5. Bank account is debited instantly for the value of
the goods purchased
6. Merchant establishment gets payment for providing
the goods or service
Credit Card: Introduction
Plastic card, that is given by the bank with a loan limit.
The card holder should get the credit limit sanctioned
by the issuing bank.
The cardholder can use it to:
• Make payments for purchases made at merchant
establishments or online
• Withdraw cash from ATMs
• Make payment in Indian Rupees
Credit Card: Features
• Works the same way as debit card
• Customer’s credit card account is debited and not
their savings account
• Customer gets some time to pay the amount to the
bank
• Cardholder has the option of paying the entire dues
or a portion thereof (Roll Over), as mentioned in the
card statement by the due date
• Interest is recovered till the day of repayment for
cash withdrawal from ATM
Procedure of Use at a PoS (1 of 2)
1. Cardholder makes purchase at a specified retail

outlet and confirms the purchase by signing a slip
2. Outlet bills to the account of the cardholder
3. Organization makes the payment to the outlet
4. Organization, in turn, demands payment from the
bank that had issued the card
5. Bank debits the amount from the card account of
the customer and makes the payment to the
organization
Procedure of Use at a PoS (2 of 2)
6. The customer is billed on the last date of the billing

cycle.
7. The customer pays the money in one lump sum or in
installments(Roll Over), as per the arrangement.
The whole process takes about 20 to 50 days; in this

period, the cardholder enjoys credit. Beyond a
stipulated period the card holder should pay interest.
Credit Card: Terms Used (1 of 2)
The terms used in relation to Credit Cards are as
follows:
Term Meaning
Card Limit Limit sanctioned to the
cardholder
Charge Slip Provisional bill relating to
purchase of goods or services
Floor Limit Limit prescribed to the merchant
Credit Card: Terms Used (2 of 2)
Term Meaning
Hot Card Lost, stolen, or misplaced card
Hot List Caution marked by the issuer
bank in the event of default in
payment
Point of Sale (PoS) Place where customers makes
the purchase
Charge Card
• Charge card is similar to credit card
• The debit balance cannot be rolled over
• The cardholder should pay the amount by the due
date
• If the amount is not paid within the due date, it may
lead to the cancellation of the card
Travel Card
• Pre-paid debit card
• All features of debit card apply to travel card
• It offers hassle-free business for pleasure trip abroad
• Offers customers a safe, secure, and convenient way
to meet all expenses while traveling abroad
• Chip-based card that stores encrypted and
confidential information
• Available in many foreign currencies
RuPay Card: Introduction
National Payments Corporation of India (NPCI) has
launched RuPay as a substitute for Visa and
MasterCard to facilitate use of Debit Cards at PoS.
RuPay has been conceived to fulfil the RBI vision to

offer a domestic, open-loop, multilateral system that
will allow all Indian banks and financial institutions in
India to participate in electronic payments.
RuPay Card: Features
• It functions as an exchange for all domestic
transactions between banks in India.
• It uses the National Financial Switch (NFS) to settle
the transactions.
• It has the provision for customization of products.
• It provides protection of information related to
Indian consumers.
RuPay Card: Benefits
• Flexibility of the product platform
• High levels of acceptance
• Affordability
• Strength of the RuPay brand, which will contribute
to an enhanced product experience
• Protection of information related to Indian
consumers
• Inter-operability between payment channels and
products
Summary
• Benefits and procedure of using a debit card
• Benefits and procedure of using a credit card
• Common terms used in association with credit cards
• Features of charge card and travel card
• Features and benefits of RuPay card
Collection of Bills
Overview
Objectives
Explain bills of exchange and the documents

required in trade transactions
Discuss OBC and IBC and the processes involved

in both
Identify the types of bills and explain their

features
What is Bill of Exchange?
Bill in banking practice refers to “Bill of exchange”.
Bill of exchange is a written instruction issued by the seller (drawer) to the

buyer (drawee) to pay a certain sum of money to the person named in the
document (payee).
The creditor will give the bill to the payee to claim the money from the debtor.
The payee will “present” the bill to the debtor to claim the money.
A cheque is indeed a bill of exchange, the only difference is that in the case of
a cheque the drawee is always a bank/post office.
Documents-Trade Transactions
Invoice
Transport Document (Railway Receipt (RR), Lorry Receipt (LR),

Airway Bill)
Bill of Exchange
Any other document the seller has to send to the buyer as per
mutual agreement (like certificate of inspection, insurance policy,
packing list etc.)
What is Outward Bill for Collection (OBC)?
• A bill submitted by a customer and sent out for
collection to another branch or bank at the place of
the buyer is called OBC.
• It is also known as Outward Documentary Bill for
Collection (ODBC) as documents of title to goods are
involved.
Process Involved in OBC
Seller dispatches the consignment by rail, road or air to the place
of buyer in his own name.
Seller gives the bank, documents like covering letter (with

instructions), bills of exchange, RR or LR in favor of seller and
endorsed to bank, invoice signed by him etc.
Banks should ensure that the instructions of the seller are clear
and the bill as well as the transport document are in bank’s favor.
If it is sent to another bank for collection, the bank should

endorse the bill and the transport document.
What is Inward Bill for Collection (IBC)?
Inward Bill for collection is a bill

received from another bank or branch
and drawn on a customer for
collection.
It is also called as Inward Documentary
Bill for Collection (IDBC).
Process Involved in IBC
Bank should ensure that all the documents stated in the bill
schedule have been received and the instructions in the
schedule are clear.
A covering letter is sent to the buyer (drawee) giving full
details of the bill and asking the buyer to make payment and
take delivery of the documents as instructed by the seller.
On the buyer making payment, the transport document will
be endorsed in his favor.
The proceeds should be remitted to the seller’s bank as

instructed by them.
Types of Bills
Documentary
Demand Bills Usance Bills
Bills
Clean Bills Inland Bills Foreign Bills
Accommodation
Trade Bills
Bills
Demand and Usance Bills
Demand Bills:
The transport documents will be delivered to the drawee or buyer only on his
making payment of bill.
Usance Bill:
Transport documents will be handed over to the buyer after he accepts the
bill.
Buyer’s bank should deliver the documents against acceptance. On default
they may also have to protest the bill.
Usance bills have to be stamped as per Stamp Act.
The value of stamp to be affixed depends upon the amount and period of
usance.
Differences between Demand & Usance Bills
Demand Bills Usance Bills

Bills purchased Bills discounted
Normally secured Unsecured as the
documents are
handed over to the
drawee on
acceptance
Documentary and Clean Bills
Documentary Bills: Document of title to goods should
accompany the bill.
Clean Bills : Document of title to goods need not

accompany the bill.
Example of clean bills:
Bills for collection of service charges like consultancy

charges or software development charges.
Inland and Foreign Bills
Foreign Bills: The bills

Inland Bills: The bills
should be drawn by
should be drawn and
or drawn on a party
payable in India.
outside India.
Trade and Accommodation Bills
Trade Bills: To facilitate settlement of genuine trade
transactions
Accommodation Bills: Not supported by a trade

transaction
Note: Banks should be very careful in entertaining

accommodation bills, since two parties may collide
by drawing and accepting a bill to raise funds.
Summary
Bill of exchange and the documents

required in trade transactions
OBC and IBC and the processes
involved in both
Types of bills and their features
Bankers’ Books Evidence Act
Overview
©Copyright 2014, All Rights Reserved. Manipal Global Education Services Pvt. Ltd.
Objectives
After going through this presentation you will be able
to:
• Describe the admissibility of certified copies of
banks’ books including electronic records as evidence
• List some important sections of the Act
• Explain the provisions relating to certifications
Introduction
Why Bankers’ • Bankers keep their accounts and other details in journals,
Books Evidence ledgers, and documents.
Act? • When any claim of the bank needs to be established or
proved in court these books need to be produced in court.
• To give the account statements and extracts, evidentiary
value this Act was enacted on October 1, 1891.
• Now-a-days, most of these books are computerized.
Meaning of • Bankers’ books include: ledgers, daybooks, cash-books,

Bankers’ Books account-books etc. used in the ordinary business of a bank.
• The records may be kept in written form or in an electronic
data retrieval mechanism - on-site and off-site along with a
back up or recovery mechanism.
Section Deals With
2 (3) Books including electronic storage
2 (4) Legal proceedings, certified copy
2(8) Conditions in the print out - certification
4 Certified copy - prima facie evidence
6 Court may order inspection of books/copies

Meaning of Certified Copy
If maintained in the written form, a copy of any entry
in such books together with a certificate written at
the foot of such copy mentioning that:
• It is a true copy of such entry

• That such entry is contained in one of the
ordinary books of the bank
• That such entry was made in the ordinary course
of business
• That such book is still in the custody of the bank
Evidence by Certified Copy
• A certified copy of any entry in a banker’s book
shall in all legal proceedings be received as prima-
facie evidence of the existence of such entry.
• It shall be admissible as evidence of all the

matters, transactions and accounts therein
recorded in every case as the original entry itself.
Certificate from the System In-Charge
Additionally, a certificate is required from the person
in-charge of the computer system:
To certify that to the best of his knowledge and belief,

the computer system is operated properly at any
point of time, he was provided with all the relevant
data and the printout in question represents correctly
and is appropriately derived from the relevant data.
Bank Books In Computers - Certificates
When books of the bank are not handwritten and copies are to be taken, the printout of
the copy must be accompanied by the following:
• A certificate by the principal accountant or the Manager to the effect that it is a print
out of such an entry or a copy of such printout.
• A certificate by a person in-charge of computer system containing a brief description
of the computer system and it’s particulars regarding :
o The safe guards adopted by the system to ensure that entry of data or any other
operation is performed only by authorized personnel.
o Further safeguards adopted to prevent and detect unauthorized change of data.
o Safe guards available for retrieval of data due to systemic failure or any other
reason.
o The manner in which data is transferred from system to removable storage
devices like floppies, DVD’s & pen drives.
o The mode of verification in order to ensure data has been transferred accurately
to any removable device.
o The arrangements made for storage and custody of such storage devices.
o The safeguards to prevent & detect tampering with the system, other safeguards
to vouch for integrity & accuracy of system.
Bank Officer’s Attendance can’t be Compelled
In any proceedings where the bank is not a party

no officer shall be compelled to produce any banker’s
book’s contents which can be provided under this Act
by production of certified copies.
Similarly, no officer of the bank shall be called as

witness to prove the matters or the transactions and
accounts recorded in the certified copies.
However, the Court may order otherwise for a special

cause.
Court Order for Inspection/Production of
Books
The bank may prepare and

produce, within a specified
On application of time period, certified
any party during copies of all such entries,
legal proceedings, The order so accompanied by a further
the Court may passed shall be certificate
order that, such a served on the
party is at liberty to bank at least
inspect and take three clear
copies of any entry working days
in a banker’s book before the same The bank may at any time
for any of the before the time limited for
is to be obeyed.
purposes of the obedience to any such
proceedings order either offer to
produce its books at the
trial or give notice of its
intention to show cause
against the order.
Summary
In this presentation you learnt:
• The admissibility of certified copies of banks’ books

including electronic records as evidence
• Some important sections of the Act
• The provisions relating to certifications
Banker Customer Relationship
Overview
Objectives
• Know the definition of banker
• Describe the banker customer relationship
• Explain the categorization of customers
• Describe the RBI guidelines of customer
• Explain the termination of relationship
• Explain the classification of relationship
Introduction
• Depends on the activities; products or services
provided by bank to its customers or availed by the
customer.
• Is the transactional relationship. Bank’s business
depends much on the strong bondage with the
customer.
• “Trust” plays an important role in building healthy
relationship between a banker and customer.
• Definition of a ‘BANKER’ The Banking Regulations Act
(B R Act) 1949 does not define the term ‘banker’ but
defines what banking is
Banking and Banker Definition
Act Section Definition
N I Act Sec 3 “banker includes any person acting as banker and any
post office savings bank”.
Bill of Exchange Sec 2 banker includes a body of persons, whether
Act, 1882 incorporated or not who carry on the business of
banking.’
B R Act Sec 5 (c ) "banking company" as a company that transacts the
business of banking in India. Since a banker or a
banking company undertakes banking related
activities we can derive the meaning of banker or a
banking company from Sec 5(b) as a body corporate
that:
(a) Accepts deposits from public.
(b) Lends or
(c) Invests the money so collected by way of deposits.
(d) Allows withdrawals of deposits on demand or by
any other means.
Features
• Accepting deposits from the ‘public’ means that a
bank accepts deposits from anyone who offers
money for the purpose. Unless a person has an
account with the bank, it does not accept deposit.
• For depositing or borrowing money there has to be
an account relationship with the bank. A bank can
refuse to open an account for undesirable persons. It
is bank’s right to open an account.
• Reserve Bank of India has stipulated certain norms -
“Know Your Customer” (KYC) guidelines for opening
account and banks have to strictly follow them.
Customer (1of 2)
• The term Customer has not been defined by any act.
• Has been derived from the word ‘custom’, which
means a ‘habit or tendency’ to-do certain things in a
regular or a particular manner
• As per Sec.131 of N I Act, when a banker receives
payment of a crossed cheque in good faith and
without negligence for a customer, the bank does
not incur any liability to the true owner of the
cheque by reason only of having received such
payment.
Customer (2of 2)
• To become a customer account relationship is must.
• Account relationship is a contractual relationship.
• Any individual or an organization, which conducts
banking transactions with a bank, is the customer of
bank.
• However, there are many persons who do utilize
services of banks, but do not maintain any account
with the bank.
Categories of customers
Those who maintain account Existing customers
relationship with banks
Those who had account Former Customers
relationship with bank
Those who do not maintain any Technically they are not customers, as they do not
account relationship with the maintain any account with the bank branch
bank but frequently visit branch
of a bank for availing banking
facilities such as for purchasing a
draft, cashing a cheque, etc
Prospective/ Potential customers Those who intend to have account relationship
with the bank. A person will be deemed to be a
'customer' even if he had only handed over the
account opening form duly filled in and signed by
him to the bank and the bank has accepted it
No Frill Accounts
• In the past, for opening account there has to be an initial
deposit in cash.
• Initial cash deposit for opening the account have been
dispensed with the opening of ‘No Frill’ account by banks as
per directives of Reserve Bank of India.
• ‘No Frill’ accounts are opened with ‘Nil’ or with meager
balance
• With the implementation of’ ‘Core Banking Solution’ the
customer is the customer of the bank and not of a particular
branch.
• In the event of arising any cause of action, the customer is
required to approach the branch with which it had opened
account and not with any other branch.
Customer – KYC guidelines by RBI
• A person or entity that maintains an account and/or has a
business relationship with the bank;
• One on whose behalf the account is maintained (i.e. the
beneficial owner);
• Beneficiaries of transactions conducted by professional
intermediaries, such as Stock Brokers, Chartered Accountants,
Solicitors etc. as permitted under the law, and
• Any person or entity connected with a financial transaction,
which can pose significant reputational or other risks to the
bank, say, a wire transfer or issue of a high value demand
draft as a single transaction.
Features
• Banking is a trust-based relationship. There are numerous
kinds of relationship between the bank and the customer. The
relationship between a banker and a customer depends on
the type of transaction. Thus the relationship is based on
contract, and on certain terms and conditions.
• These relationships confer certain rights and obligations both
on the part of the banker and on the customer. However, the
personal relationship between the bank and its customers is
the long lasting relationship.
• Some banks even say that they have generation-to-generation
banking relationship with their customers. The banker
customer relationship is fiducial relationship. The terms and
conditions governing the relationship is not be leaked by the
banker to a third party.
Classification of relationship
General Relationship Special Relationship
Sec 5(b) of Banking Regulation Act, Relationship arising out of the activities
envisages that bank’s business hovers mentioned in Sec.6 of the act is termed as
around accepting of deposits for the special relationship - Bills, FE, LC, SDL,
purposes of lending. Thus the relationship Insurance business or any other business
arising out of these two main activities which the Central Government may notify
are known as General Relationship
General Relationship – Banker Customer
Debtor - Creditor When a 'customer' The money so deposited by customer
opens an account with becomes bank’s property and bank has
a bank, he fills in and a right to use the money as it likes. The
signs the account bank is not bound to inform the
opening form. By depositor the manner of utilization of
signing the form he funds deposited by him. Bank does not
enters into an give any security to the depositor i.e.
agreement/contract creditor. The bank has borrowed money
with the bank. and it is only when the depositor
demands, banker pays.
The demand is to be made at the
branch where the account exists and in
a proper manner and during working
days and working hours.
Creditor - Debtor Customer who borrows Borrower executes documents and
money from bank owes offer security to the bank before
money to the bank. utilizing the credit facility.
Special Relationship – Banker Customer
Trustee - Sec. 3 of A "trust" is an obligation annexed to the ownership of
Beneficiary Indian property, and arising out of a confidence reposed in and
Trust Act, accepted by the owner, or declared and accepted by him,
1882 for the benefit of another, or of another and the owner.’
Thus trustee is the holder of property on behalf of a
beneficiary
Sec. 15 of A trustee is bound to deal with the trust-property carefully
the ‘Indian as a man of ordinary prudence would deal with such
Trust Act, property if it were his own; and, in the absence of a
1882 contract to the contrary, a trustee so dealing is not
responsible for the loss, destruction or deterioration of the
trust-property
Sec.32 of A trustee has the right to reimbursement of expenses
Indian
Trust Act.).
Bailee - Sec.148 of A "bailment" is the delivery of goods by one person to another
Bailor Indian for some purpose, upon a contract that they shall, when the
Contract purpose is accomplished, be returned or otherwise disposed
Act, 1872, of according to the directions of the person delivering them.
Banks secure their advances by obtaining tangible securities. In
some cases physical possession of securities goods (Pledge),
valuables, bonds etc., are taken. Banks also keeps articles,
valuables, securities etc., of its customers in Safe Custody. As a
bailee the bank is required to take care of the goods bailed.
Lessor- Sec.105 of A lease of immovable property is a transfer of a right to enjoy
Lesseee Transfer of such property, made for a certain time, express or implied, or
property in perpetuity, in consideration of a price paid or promised, or
Act 1882 of money, a share of crops, service or any other thing of value,
to be rendered periodically or on specified occasions to the
transferor by the transferee, who accepts the transfer on such
terms.
Banks provide safe deposit locker facilities to customers.
The agreement is known as “Memorandum of letting” and
attracts stamp duty.
Agent - Sec.182 of A person employed to do any act for another or to represent another in
Principle ‘The Indian dealings with third persons. The person for whom such act is done or who is so
Contract represented is called “the Principal”.
Act, 1872’
An agent is a person, who acts for and on behalf of the principal and under the
latter’s express or implied authority and the acts done within such authority
are binding on his principal and, the principal is liable to the party for the acts
of the agent.
Banks collect cheques, bills, and makes payment to various authorities viz.,
rent, telephone bills, insurance premium etc., on behalf of customers. . Banks
also abides by the standing instructions given by its customers. In all such cases
bank acts as an agent of its customer, and charges for theses services. An agent
is entitled to charges. Charges are levied in when the cheque is returned in the
clearinghouse.
Custodian A person who acts as a caretaker of some thing. Banks take legal responsibility
for a customer’s securities. Ex. Opening a demat account .
Guarantor Sec 31 of Guarantee is a “ contingent contract ". Contingent contract is a contract to do
‘The Indian or not to do something, if some event, collateral to such contract, does or does
Contract not happen.
Act, 1872 Banks give guarantee on behalf of their customers and enter in to their shoes.
Termination of Relationship
The relationship between a bank and a customer ceases on:
• The death, insolvency, lunacy of the customer.
• The customer closing the account i.e. Voluntary termination
• Liquidation of the company
• The closing of the account by the bank after giving due notice.
• The completion of the contract or the specific transaction.
Banker Customer Relationship
TRANSACTION BANK CUSTOMER
Deposits in Bank Debtor Creditor
Loan from Bank Creditor Debtor
Safe Deposit Locker(Sec.105 of ‘Transfer of property Act 1882’ ) Lessor Lessee
Safe Custody(Sec.148 of Indian Contract Act, 1872) Bailee Bailor
Collection of Cheque(Sec.182 of ‘The Indian Contract Act, 1872) Agent Principal
Purchaser of Draft Debtor Creditor
Payee of Draft(As per Sec. 3 of Indian Trust Act, 1882) Trustee Beneficiary
Pledge – Jewel Loans Pledgee Pledger

Mortgage(Housing/Property ) Mortgagee Mortgagor
Articles left by mistake Trustee Beneficiary
Assignment (policies) Assignee Assignor
Money deposited-instructions not given Trustee Beneficiary
Summary
In this session you have learnt
• Definition of banker
• Banker customer relationship
• Categorization of customers
• RBI guidelines of customer
• Termination of relationship
• Classification of relationship
Types of Deposits
Low Cost Deposits –Savings Bank
Objectives:
• Low cost deposits
• Benefits to bank and to customers.
• Who can and cannot open account.
• Documents required for opening account
• Precautions at the time of opening account
• Operation of account
• Dormant account
• Mandate
Types of deposits
1. Demand deposits- Savings and Current

2. Term deposits- fixed deposits, recurring deposits
Both Savings and Current deposit accounts are a source of low

cost funds for the bank hence termed as Low Cost Deposits –
LCD
Benefits to bank:
• Interest paid on SB is low – hence less expenditure.
• SB account helps in increase customer base.
• Large customer base helps in cross selling
• Easy operation – any time banking
• Reduces transaction cost to bank.
Benefits for customers:
• Easy liquidity
• Banking anytime anywhere
• Debit card, Cheque book
• Sweep facility
• Standing instructions
• Fund transfer – bills payments.
• Use of alternate delivery channels
• Auto credit of salary/wage/scholarship/pension
• Interest received on daily balances.
Purpose of Savings bank account
Savings Bank Accounts (SB A/cs) are designed to help

customers inculcate the habit of savings. It helps the
customers keep their surplus funds with the bank and earn
interest while providing the flexibility for withdrawals
Eligibility
Deposit accounts can be opened by an individual in his own

name or by more than one individual in their own names (joint
account)
Savings Bank Account can also be opened by a minor jointly
with natural guardian
or
with mother as the guardian. Minors above the age of 10 will
also be allowed to open and operate saving bank account
independently.
Who can open account:
• Individuals
• Minor under guardianship
• Non profit organisation
• Primary cooperative credit society
• Khadi village industries board
• Agri product market committees
• Government departments having authorisation to open account
from Govt. departments.
• HUF not engaged in business
• Development of women and children in rural areas
• Self help group & farmer’s club.
Who cannot open SB account:
• Trading & business concern
• Government departments – depending on budgetary allocation.
• Municipal corporation
• Panchayat samiti.
• State housing board.
• State electricity board
• Industrial development authority
• Water/Sewerages/Drainage Board
• State text book publishing corporation
• Metropolitan development authority.
• RRBs, cooperative & land development bank.
• Any political party.
Documents required:
• AOF 1- resident individuals
• CIF 1 – customer information file
• NOM – nomination form
• AOF 2 – other than individuals
• DDL1 – due diligence form
• DDL2 – other than individual
• Form 60 or copy of pan card
• ID proof – to be verified with originals
• Address proof
• Recent photograph
• FATCA declaration (foreign account tax compliant act): now this
declaration is printed in our account opening forms. We need to
obtain the customer signature.
# KYC REQUIREMENT
• # Account can be opened without third party introduction

• # Due diligence as required under KYC guidelines
• # Mandatory to visit the place of business for inspection.
Process of account opening
Process of Account Opening

• In Person –By Customer or Bank Executive(TAB) banking.
• The Bank is required to obtain Permanent Account Number (PAN)
of the customer or declaration in Form No. 60 as per the I.T. Act
(vide Section 39A) from the person opening the account along with
Acknowledgement of having applied for PAN
• The prospective customer will need to comply with the Know Your
Customer (KYC) guidelines which are mandatory.
Precaution at the time of opening account
• Account opening form duly filled and signed with all details
• No account should be opened without the personal presence of the
customer.
• Signature to be obtained in the presence of branch official
• Get mobile number and email id
• Nomination to be insisted if not given to be recorded.
• Letter of thanks to be sent to customer address
• Introduction not necessary
• Latest photograph/s is to be obtained
• Latest address proof/s should be obtained
• All KYC documents should be ascertained against banks requirements
• Entire Signature should not be in capital letters
• Proper mandate is to be obtained for operating instructions
Operational guidelines:
• Kit (Insta/Non-Insta)-Depending on Choice.

• Pass book/statement facility to customer.
• Cash transaction if exceeds Rs.10.00 lacs per day, it needs
RO approval
• Interest presently @ 4% calculated on daily product basis
payable quarterly.
• Transactions in the savings account to be monitored by the
branch frequently as per AML guidelines
Mandate
• Operation of Joint Account – The Joint Account can be

operated by single individual or by more than one individual
jointly.
• The mandate for operating the account can be modified
with the consent of all account holders.
• The Savings Bank Account opened by minor jointly with
natural guardian /legal guardian can be operated by such
natural guardian/ legal guardian only till attainment of
majority.
Mandate
The joint account holders can give any of the following

mandates for the disposal of balance in the above accounts:
• Either or Survivor
• Anyone or Survivor/s
• Former or Survivor/s
• Latter or Survivor/s
Monitoring of Accounts
• Cash transactions above Rs 10 lac per month is to be

reported to FIU-IND
• Any suspicious transactions in the savings account are to be
reported.
• Interest payment in SB deregulated by RBI
• Nomination facility is available for all Savings Bank Account
in the name of an individual and in the joint names
Dormant account
An account will be classified as dormant, if there are no

transactions in the accounts for a period of 2 years (24
months).
After identifying such accounts, banks should issue a notice
after 21 months, to operate the account else after 24 months
the account should be classified as dormant.
Closure of account
Bank reserves the right to close or freeze the Account(s), after due
notice to the Customers for reasons which may include, but not
limited to, the following:
• In case any of the documents furnished towards Identity and
address proof are found to be fake / forged / defective;
• The Account opening cheque is returned unpaid for financial
reasons/ signature not matching;
Closure of account….
• In case fraudulent / forged / fake cheques / bank drafts or any

such instruments are attempted to be cleared / cleared through
the Account;
• In case of frequent returns of inward / outward cheques in the
Account;
• Improper conduct of the Account in terms of volume / type of
transactions;
• For unsatisfactory conduct of the Account.
• Upon the request of the customer
• Under compulsion of law
CURRENT DEPOSITS
CURRENT DEPOSITS
Objectives
• What is Current Deposit?
• Eligibility - Features
• Benefits for Banks
• Variants of Current Account
• Operational Guidelines
• Common Documents
• Minimum Balance Maintenance
Current Account is
• Demand deposit wherefrom withdrawals are allowed any number of
times depending upon the balance in the account.
• opened by the businessmen/organizations for the purpose of their
business transactions.
• CASA is low cost deposits, as for Current deposit, no interest is paid

and for Savings deposit low rate of interest is paid to deposit holders.
• Higher the quantum of CASA deposits, higher is the profit to the bank.
• Benefits for the customer:
• Current Accounts are normally opened for commercial or business purposes.
• Overdraft facility, : In case of shortage of funds Overdraft also can be allowed in
the account and credit can be given against the cheque deposited by the party.
• Third party cheques endorsed in favour of Current Account holder can also be
accepted as credit to the account.
• Difference between SB & CD:
• SB Account is for Non-business purpose whereas Current Account is for business.

• No restriction on number of transactions in Current Account whereas in case of SB
accounts there is restriction of number of transactions.
CURRENT DEPOSITS
ELIGIBILITY
Current account can be opened by:
• Individuals
• Proprietorship
• Partnership & LLP firms
• Private and public limited companies
• HUF
• Societies
• Trust, executors, other Banks, State Financial Corporations etc.,
CURRENT DEPOSITS
FEATURES
• No restrictions on number of withdrawals/deposits
• Cheque book facility
• Non interest bearing
• Overdraft facility for short period
• Cheques/bills collection facilities
• Providing statement of account periodically
• Nomination facility is available for individual, joint individual and
proprietorship firm.
Minimum balance requirement
Current Deposit Accounts- Cheque book is

Centres
compulsory
Other than Company Company
Metro 5000 10000
Urban 3000 10000
Semi-urban 2000 10000
Rural 1000 5000
CURRENT DEPOSITS
BENEFITS FOR BANKS
• Float funds to the banks

• No cost involved by way of interest
• Cost of other deposits gets compensated
• Improves spread
• Helps in improving profitability
• Leverage on interest on loans
Common Documents
• AOF-1: Account Opening Form for Resident Individuals

• AOF-2: Account Opening Form for other than Individuals
• CIF-1: Information of applicant/Signatory of the form
• DDL-1: Interview and customer due diligence form and is to be used for
individual applicant/signatory
• DDL-2: Interview and customer due diligence form and is to be used for other
than individual
• NOM: Nomination Form
• Annexure-A: Declaration by individual/proprietor/partner, HUF, etc
• Annexure-B: Declaration by company/Trust, Association, Society, Club, etc
• Copy of PAN Card
• Form-60: If the customer is not having PAN card, obtain form-60
• Recent Photograph
• FATCA
Documents -Individuals
• Proof of the name, address and activity of the concern

• Registration certificate (in the case of a registered concern).
• Certificate/licence issued by the Municipal authorities under Shop & Establishment Act.
• Sales and income tax returns
• CST/VAT certificate·
• Certificate /registration document issued by Sales Tax/Service Tax/Professional Tax authorities.·
• The complete Income Tax return (not just the acknowledgement) in the name of the sole proprietor where
the firm's income is reflected, duly authenticated/ acknowledged by the Income Tax Authorities.
• Utility bills such as electricity, water, and landline telephone bills in the name of the proprietary concern.
• Any two of the above documents would suffice. These documents should be in the name of the proprietary
concern.
• PLUS
• ID and address proof of the proprietor
DOCUMENTS-PARTNERSHIP
• Registration certificate
• Partnership deed
• An officially valid document in respect of the person
holding a power of attorney to transact on its behalf
• PLUS
• Proof of identity & address of all the partners
DOCUMENTS-COMPANIES
• Certificate of incorporation
• Memorandum & Articles of Association
• A resolution from the Board of Directors and power of attorney
granted to its managers, officers or employees to transact on its
behalf; and
• An officially valid document in respect of managers, officers or
employees holding an attorney to transact on its behalf
• PLUS
• Proof of identity & address of all the beneficial owners
DOCUMENTS-Trusts & foundations
• Certificate of registration;
• Trust Deed; and
• An officially valid document in respect of the person
holding a power of attorney to transact on its behalf
• PLUS
• Proof of identity and address of persons like
trustees, executors, administrators etc.
DOCUMENTS-Hindu Undivided Family (HUF)
• Declaration from the Karta.

• Proof of Identification of Karta.
• Prescribed Joint Hindu Family Letter signed by all the
adult coparceners
• Identity of the adult coparceners
THANK YOU
Types of Customers
Overview
Objectives
• Define customer
• Explain various types of customers and accounts
• List banker-customer relationships
Who is a Customer?
According to RBI’s KYC guidelines, a customer is:
• A person or an entity who maintains an account
and/or has a business relationship with the bank
• One on whose behalf the account is maintained (i.e.
the beneficial owner)
• Beneficiaries of transactions conducted by
professional intermediaries
• Any person or entity connected with a financial
transaction, which can pose significant reputational
or other risks to the bank
Types of Accounts
• Individual Accounts
• Hindu Undivided Family Accounts
• Proprietorship Accounts
• Partnership Accounts
• Company Accounts
• Trust Accounts
• Club, Association, Society Accounts
• Self Help Group Accounts
• Government Department Accounts
Individuals-Single Accounts
• Single accounts: Account in the name of one individual
and operated by the same individual
• Mandate - An authority given by the account holder to
another person (mandate holder)to operate his account
and authenticity to be verified
• Power of Attorney - A registered document duly
stamped, by which the account holder grants certain
power to another person and authenticity to be verified
o It may be specific or general
o This authority can be withdrawn at any time at the
desire of the account holder
Executors and Administrators
• Executor: Person named in the will left by the
customer. He will assist in distributing the assets of
the deceased customer
• Probate: Will certified by the court
• Administrator: Executor appointed by court through
a letter of administration
Individuals-Joint Accounts
When two or more individuals join to open an account,
it is called as Joint Account.
Mode of operations
• Both Jointly: operated by both together
• Either or Survivor: any one can operate
• Former or Survivor: operated by former
Nomination (1 of 2)
• Nominee is the person appointed by the account
holder/s to receive money after his death
• Nomination is compulsory for single accounts and
optional for joint accounts
• Account holder can nominate only one person in
deposit accounts
• Nominee is a trustee for legal heirs
Nomination (2 of 2)
• Nominee should produce death certificate of the
customer and a proof of his own identity
• Bank is discharged of its liability if it makes the
payment to the nominee after due identification
• Even a minor can be made nominee
• In such cases, minor’s DOB and the guardian’s name
should be furnished
• In a joint account, signatures of all depositors are
required for changing/cancelling of nomination
Nomination: Rules and Forms
• Rule 2(1) of Banking Companies (Nomination) Rules,
1985
• Section 45 ZA of Banking Regulation Act, 1949
• Form DA 1: for fresh nomination
• Form DA 2: for cancellation of nomination
• Form DA 3: for variation of nomination
RBI has mandated that the name of nominee must be
printed in the savings account pass book of the account
holder
Special Type of Customer: Minor
A minor is a person who has not completed 18 years of
age.
Type of Guardian Authority

Natural Guardian Mother/Father
Testamentary Appointed by Will of
Guardian Minor’s Father
Legal Guardian Appointed by Court
Some banks open self operated SB accounts if the

person is 10 years and above.
Special Type of Customer: Minor
Act Section Description
Indian Contract Act, 1872 Section 11 Any contract with minor
is null and void
Indian Majority Act, 1875 Section 3 One who has not
completed 18 years of
age
Negotiable Instrument Section 26 Can draw, endorse or
Act, 1881 negotiate a cheque but
cannot be held liable
Indian Partnership Act, Section 30 Can be admitted to the
1932 benefits of partnership
with the consent of other
partners
Hindu Minority and Section 6 Father/mother shall be
Guardianship Act, 1956 the natural guardian
Special Type of Customer: Illiterate
• A person who cannot read or write
• For entering an agreement he should put his thumb
impression duly witnessed
• For withdrawing cash, he should come to the branch, affix
thumb impression in front of bank official duly witnessed
• Bank official to verify photograph of customer to confirm his
identity
• Banks to ensure customers understand terms/conditions
• Banker should educate the customer to open a joint account
with a close, literate, blood relative in his own interest
• If he wants to open an individual account, bank has to oblige
him
Special Type of Customer: Blind Person
• Is fully competent to enter into a valid contract
• For entering into an agreement he should lay his
thumb impression duly witnessed
• Cash payment or deposits should be made in the
presence of a witness, preferably a customer of the
bank
• Banks are now venturing to provide ATMs installed as
talking ATMs with Braille keypads
• Married Women
• Purdanashin
• Mentally retarded person
• Incapacitated person
• Politically Exposed Person
• NRIs
Hindu Undivided Family (HUF) Accounts
• A legal entity with a perpetual existence, Registration is
not necessary
• All male and (female members in case of Dayabhaga
school of thought in Bengal and Assam) are called
coparceners
• Karta, the eldest member is the manager of the business
• To open an account, all members have to authorize the
karta to operate the account
• On the death of the karta, next eldest member will
become the karta
• Death/insanity/insolvency of any of the coparceners does
not result in the dissolution of the HUF
• HUF will cease to exist only when the property is
partitioned
Proprietorship Accounts
• Business unit owned by an individual
• Business need not necessarily have to be named
after the individual
• He is entirely liable for any debt of the business
• He has to sign cheques on behalf of the business
Partnership Accounts /
Limited Liability Partnership(LLC)(Partnership Act Not
applicable)
• Indian Partnership Act, 1932 - the relationship between two
or more persons who agree to share profits of business
carried on by all or any of them acting for all
• Min. no. of partners is 2 and max. no. is 50
• Partnership may be orally agreed upon or in writing called as
partnership deed and must be stamped as per state
government stamp duty
• Bank should obtain partnership deed and partnership letter
from all the partners indicating the partners who are
authorized to operate the account
• Partnership is dissolved on the death/retirement/insolvency
of a partner, by mutual agreement or by operation of law
• Clayton’s Rule
Company Accounts: Companies Act, 1956
• Can be private/public limited /Government companies
• Features - Legal entity , perpetual existence, common seal
• Private Limited: min of 2, max of 200 (share holders)
• Public Limited: min of 7, max is unlimited (share holders)
• Documents required:
o Memorandum of Association – Object clause
o Articles of Association – Rules and regulations
o Certificate of Incorporation – Issued by Registrar of
companies
o Certificate of Commencement of Business (Public &
PRIVATE Limited Companies)
o Board Resolution – For operation of bank accounts
Trust Accounts: Indian Trust Act, 1882
• Author /Creator/Donor– person Creating & transferring
ownership
• Trustee - person in whose favor the possession is transferred
• Beneficiary - person for whose benefit the trust is formed
• Trusts are created for specific purposes
• Trust deed is the basis for trust
• Trust deed must be obtained and identification of trustees
must be established by bank
• Trusts can be private trust or public trust
• All charitable trusts must be registered with the
Commissioner of Charity and certificate of registration must
be obtained
Club, Association and Society Accounts
• Non-profit making organizations
• Co-operative societies have to be registered with the
Registrar of Co-operative Societies and other
societies have to be registered with Registrar of
Assurances
• Bye laws framed by these institutions will be the
basis for their functioning
• Bank should obtain a certified copy of the
registration certificate, bye laws and resolution
passed by the committee
• Banks to ensure due diligence in the operations of
these accounts
Self-Help Group Accounts
• Unregistered associations with a maximum
membership of 20 members
• Bye Laws as per NABARD guidelines
• The secretary and the treasurer are authorized to
operate the account
• Resolutions passed by the group as a whole
Government Department Accounts
• Can open savings account provided they do not receive
any budgetary funds
• Normally, these accounts are operated by the officials
authorized by the government department
• Such authorizations have to be obtained by banks while
opening accounts for government bodies
RBI guidelines-SB account should not be opened for:
• Municipal Corporations or Municipal Committees
• Panchayat Samitis
• State Housing Boards
• Other government bodies receiving budgetary allocation
Banker-Customer Relationships
Banker Customer
Debtor Creditor
Creditor Debtor
Guarantor Beneficiary
Agent Principal
Bailee Bailor
Pledgee Pledgor
Mortgagee Mortgagor
Hypothecatee Hypothecator
Advisor Client
Trustee Beneficiary
Indemnifier Beneficiary
Lessor Lessee
Termination of Relationship
The relationship between the banker and customer is
terminated under the following circumstances:
• On closure of account by customer
• On death of customer
• When customer is declared as insolvent by courts
The bank will exercise its authority to terminate the

relation when the customer is violating stipulated
terms and conditions.
Summary
• Definition of a customer
• Banker-customer relationship
• Types of customers and accounts
Evolution of Banking
Overview
Banking Origins
Objectives
• List the highlights of the development of banking
• List the role of banks
• Identify the types of risk and income for banks
• Identify the types of customer
• List the banking regulations in India
Etymology
• The word, ‘bank’ is derived from the Italian word
‘benca’ that means ‘bench’ or ‘counter’.
• In other languages, the equivalent word was often

phonetically similar, for e.g.
o In German, the word used was ‘banc’
o In Greek, the word used was ‘banque’
Origin of Banking
• The Roman period witnessed the earliest known
banking activities
• Wealth accumulated due to trade between countries
• A method of safe-keeping of valuables evolved
• As an acknowledgement, receipts were issued, which
evolved into cheques
• Safe-keepers later evolved into banks by offering
fund transfer facility and later, credit facilities
Development of Banking
The highlights of the development of banking are:

1. 600 BC: Pythius emerged as the earliest known
banker.
2. 1156 AD: Bill of exchange was introduced.
3. 1401 AD: Bank of Barcelona emerged as the earliest
known bank.
4. 1694 AD: The concept of Double Entry Book
Keeping was introduced.
Development of Banking in India
1. 1809: Bank of Bengal
2. 1865: Allahabad Bank
3. 1921: Imperial Bank was formed by merging:
o Bank of Bengal
o Bank of Bombay
o Bank of Madras
4. 1935: Reserve Bank of India (RBI)
5. 1955: Imperial Bank was renamed ‘State Bank of India’
Definition of Banking in India
Section 5(b) of the Banking Regulation Act (BR Act),
1949 defines banking as “accepting, for the purpose of
lending and investments, of deposits of money from
the public, repayable on demand or otherwise, and
withdrawable by cheque, draft, order or otherwise”.
History Of Banking in India
Transition of Banking in India
CONSOLIDATION OF PUBLIC SECTOR BANKS
Banking Today
Structure of Indian Banking
System
Financial Intermediaries
Banks
Financial
Institutions
Non - Banking
Finance Companies
Indian Banking System
Reserve Bank of India
Banking Finance Cos NBFCs
Commercial Co-op Banks (

Banks Scheduled )[54] Local Area Banks
Regional Rural (Non
State Level
SBI Banks (66) scheduled)(4)
(38) 1.Coastal LAB AP
2.Capital LAB
Public Sector District Level Old Punjab
Banks (12) Generation
3.Krishna Bheema
Urban co-op Samruddhi LAB
Private Sector (52) Banks (14) (AP)
Banks (21) New 4.Subhadra LAB
Foreign Banks (Maharashtra)
PACS Generation
(46)
Banks (12)
NEW PUBLIC SECTOR BANKS AFTER MERGER
TOP Private Banks In India
TOP Foreign Banks In India
TOP Small Finance Banks in India
TOP 5 PAYMENT BANKS IN INDIA
New Banks opened / to be opened
i) IDFC
ii) Bandhan Bank
Small Banks- AU
Finance, - Janalaxmi,
Equitas, Ujjivan, Payment Banks – (8) Post
Capital Area Banks office, PayTM etc. Airtel M
and many Micro commerce, Finopaytec, NSDL,
Finance Companies RIL, Vodaphone M Pesa
(Ujjivan, Utkarsh ) Airtel Payment Banketc
Small Finance Banks
Au Financiers (India) Ltd., Jaipur
Capital Local Area Bank Ltd., Jalandhar
Disha Microfin Private Ltd., Ahmedabad
Equitas Holdings P Limited, Chennai
ESAF Microfinance and Investments Private Ltd., Chennai
Janalakshmi Financial Services Private Limited, Bengaluru
RGVN (North East) Microfinance Limited, Guwahati
Suryoday Micro Finance Private Ltd., Navi Mumbai
Ujjivan Financial Services Private Ltd., Bengaluru
Utkarsh Micro Finance Private Ltd., Varanasi
Importance and primary functions of financial system
The mobilization of savings
Their distribution for industrial investment
Stimulating capital formation
To accelerate the process of economic growth

4 phases of Banking Evolution in India
Phase 1 – Till 1968
Banking in India goes back to the 18th century
The first two banks, Bank of Hindustan and General Bank of India, were established in 1770 and
1786 respectively. Bank of Bengal, Bank of Madras and Bank of Calcutta-Imperial Bank-(Now SBI)
Public sector Banks, Private Banks, Co-operative banks, Regional Rural Banks, Development Banks,
Payment Banks and Small Banks. – are the part of the Indian Financial System.
Nationalisation of RBI in 1947. Banking Regulation Act 1949.

Phase – 2 – 1969 to 1990
Post Nationalisation period
Most of the present day leading commercial banks established in early 20th century) -
1969-90
Nationalisation of major 14 Banks in July 1969
Class Banking to Mass Banking. (Social Banking era)
Massive branch expansion – rural areas
Nationalisation of 6 more banks in April 1980
Mechanization & computerization introduced .

Phase – 3 – 1991 to 2000
Establishment of
Banking sector reforms
Narasimhan Committee
introduced i.e., Micro-finance Scheme –
to improve Productivity, Introduction of Banking
Liberalisation, linking SHGs. (Self Help
Efficiency & Profitability, Ombudsman Scheme.
Privatisation Groups)
operational flexibility &
&Globalisation - (L P G )
functional autonomy.
Phase – 4 – After 2000
Emergence of Universal banking
Revolution of I.T.
Payment & settlement system
Risk Management - Introduction of Risk Based Supervision
Mergers & Amalgamations
Corporate Governance
Financial Inclusion
Bank Branch licensing

Role of Financial Institutions/Banks/Markets
Constituent of Payment &

Settlement system
Banks/FIs/Money
Markets
Financial
Financial
Services
Intermediary
Provider
Financial Intermediary
Thus Fis/Banks/Markets
Collects
Invests or Lends connects the saver and
Deposits/Funds/Resources
investor
Financial intermediary
Liabilities Assets
1 Demand Deposits - CASA 1 Loans and advances
a Current account a Retail Loans
b Savings account i) Personal Loan, Home Loan, Car
Loan, Credit Card Loan
2 Term deposits B Business Loans
a Fixed Deposits i) Cash credit, OD, Term Loan
B Recurring Deposits C Trade Finance
i) Bills Purchase, Bills Discounting,
Bill Negotiation
ii) Foreign Bills Purchase, Foreign
Bills Discounting, Foreign Bills
Negotiation
Bank as a Constituent of Payment System
Cash remittance Demand Draft / ECS / NEFT /

/ payments Pay Orders etc RTGS / IMPS
Foreign remittances Travel Card
Collection of cheques and Bills

Financial services of Banks
Distribution
Collection Safe keeping
Third party
Taxes, Utility bills Safe custody, Safe
products – LI, MF,
etc deposit lockers
Gold coins etc
Demat services Advisory services

Scheduled and Un-Scheduled Banks (1 of 2)
Scheduled commercial Banks constitute those banks which have been

included in the Second Schedule of Reserve Bank of India(RBI) Act, 1934.
RBI in turn includes only those banks in this schedule which satisfy the
criteria laid down vide section 42 (6) (a) of the Act.
The following conditions must be fulfilled before a Bank is included in the

second schedule.
1) It must have a paid up capital and reserve of an aggregate value

of not less than five lakhs of rupees
• 2) It must satisfy the RBI that its affairs are not being conducted in a manner detrimental
to the interest of its depositors and
Scheduled and Un-scheduled banks(2 of 2)
It must be a state co-operative Bank or a company as defined in Sec.3 of the

companies Act,1956 or an institution notified by the central Govt in this
behalf or a corporation or a company incorporated by or under any law in
force in any place outside India.
Scheduled commercial banks are required to maintain CRR and SLR

requirements.
These Banks also enjoy certain principles e.g., they can approach the RBI for
financial assistance under Sec 17 of the RBI
COMMERCIAL BANKS—PSBs (1 of 2)
Have wide network of Branches
Public Sector banks-SBI and its associates (5)
Nationalised Banks-(19)14 banks on19-07-1969
and 6 banks on 15.04.1980
SBI established under SBI act 1955 and Subsidiary Banks

under SBI(Sub.Banks) act 1959
Nationalized Banks set up under Banking co (Acq &

Transfer Of undertakings) act 1970 and 1980.
SBI act as agent of RBI
SBI and other PSBs have enlarged Capital by issuing

shares to the public.
COMMERCIAL BANKS—PSBs (1 of 2)
Were set up as
Joint stock
companies under
Cos Act or as
Public
Corporation
Function on under acts of
parliament. Have access to
sound business
RBI.
principles
Have wide area

Are governed by
of network for
all sections of BR
opening
act 1949.
Branches.
Started lending In Till 1969 were

rural and semi- urban oriented
urban areas for and financed
Agricultural and Trade and
other PSA Industry.
PRIVATE SECTOR BANKS
Narasimham
Committee on
Financial
Sector
(1991)recom
mended for In Jan 2001,
setting up of paid up
Private sector capital raised
banks. RBI New banks to Rs.200
issued required to be crore and
guidelines for registered NBFcs were
setting up[ of with paid up permitted to
Private banks capital of Rs. convert as
in Jan 1993 100 crore Private banks
New Gen 8 new banks

banks are set up. UTI,
tech savvy ICICI. IDBI.
HDFC,(TIMES
BANK merged
with HDFC)
LOCAL AREA BANKS (LABs)
In
1996,Govt.allow Public limited
Minimum paid
ed new LABs, Companies,
up capital is Rs.5
for promoting Individuals, Jurisdiction:
crore with
Rural and semi companies, Maximum 3 LABs allowed to
promoter
urban savings trusts and contiguous open Branches.
contribution of
and proving societies were Districts.
at least Rs.2
credit for viable permitted to set
crore.
activities in local up LABs
area
The Regional Rural Banks: Low cost banks (1 of 2)
Regional Rural Banks

are part of the
commercial banking
segment and were
specifically set up for Set up under RRB Act Authorised share capital
RRBs to have combined
improving banking 1976, as co-op banks was Rs.1 crore to be
touch of local feel and
access in rural and semi and commercial banks shared by GOI, State
modern business,
urban areas and to give failed to meet the credit Govt and sponsor bank
commercial discipline.
a thrust to priority needs in the ratio of 50:15:35
sector lending-
agriculture, rural
industries, self
employed etc
RRB(Amendment )Act 1987, stipulated the authorized capital of each

RRB to be Rs.5 crore and paid up capital to be Rs.1 crore
Business:Loans to Agriculturalist, SF/MF/societies/ artisans, rural poor
RRBs are low cost banks and salary structures of the employees is similar
to state government employees
Sponsor banks to assists in imparting trainings to staff, provide

managerial assistance, monitor progress, conduct inspections, internal
audit and security
Deposits with
RRBs avail RRBs insured
Refinance with Deposit
from NABARD Insurance and
and sponsor credit
banks guarantee
corporation
Co-operative banks (1 of 2)
Co-operative banking is wide

spread and has many tiers.
Urban Co-operative Banks, State
Co-operative bank, District
Central Co-operative Banks,
Have 3 tier setup: State level
State Cooperative Agriculture &
apex institution, Dist co-op banks
Rural Development Banks,
and primary credit societies at
Primary Co-operative Agriculture
Village level.
& Rural Development Banks are
the constituent members of the
co-operative credit structure Co-
Op banks set up under Co-Op
societies act of different states.
Co-operative banks (1 of 2)
Function in
given area.
A few sections Are Rural

of BR Act 1949 oriented and
are applicable finance
to Co- Agricultural &
operative allied
banks. activities.
Only state Co-

Run on
operative
principle of
banks have
co-operation.
access to RBI.
Role of Banks
• Financial intermediary
• Catalytic agent
• Promoter of economic growth of the country
• Counsellor
• Provider of payment and collection system
• Provider of financial services
Types of Risk in Financial Intermediation
For the Banker For the Depositors

Credit risk Loss of investment
Interest rate risk Return on bank
investment is less
than the market
rate
Operational risk Failure of service
Income for Banks
• Interest on loans
• Fee-based income
• Forex business
• Return on investments made in capital and trading
activities
Types of Customers
• Individuals
• Partnership and other firms
• Companies
• Trusts, associations, clubs, and societies
• Governments and their departments
Banking Regulations in India
Banks in India are regulated by:
• Banking Regulation Act
• Reserve Bank of India Act
• Prevention of Money Laundering Act
• Foreign Exchange Management Act
Co-operative banks are regulated as follows:
• State Governments regulate the co-operative banks
under their jurisdiction
• The Union Government regulate multi-state co-
operative banks
Summary
• Highlights of the development of banking
• Role of banks
• Types of risk and income for banks
• Types of customer
• Banking regulations in India

The Law of Limitation Act 1963 (15 Files Merged)

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The Law of Limitation Act 1963 (15 Files Merged)

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Limitation Act, 1963

Basic Principle: The principle that pervades statutes of

Prescribed Period: The period of limitation computed

Extension of limitation period:

Fresh promise to pay – Revival of Limitation:

• Even after the expiry of limitation the liability can be enforced if

Banks have to file suits for recovery of loans before

- traditionally cheques, drafts etc. paid in lieu of cash

- various payment methods have evolved with time

- payment methods now can used for transactions in equity

•BPSS (Board for Regulation and Supervision of

• DPSS (Department of Payment and settlement systems)

•only RBI is authorized to allow different payment

• As of F.Y 2014, percentage share of cheques in retail payments

• NPCI currently handles around 18mn transactions daily.

• e-commerce sector set to touch 150 bn by 2022.

2010 Immediate Payment Service (IMPS) was introduced by NPCI

2012 NPCI launched RuPay, the domestic card payment network

2008-15 Improvising of payment infrastructure through creation of AEPS(Aadhar enables

• A Section 8 Company under Companies Act,2013.

• APBS: applicable in DBT schemes based on Aadhaar Card Numbers;

• USSD: does not require any app to be downloaded or have GPRS

• eKYC: electronic Aadhaar based KYC; workable on mobile, PC, internet

• White Label ATMs: around 7000 WLA s of 7 WLAOs are at present.

• It is a 24*7 inter-bank electronic fund transfer service

• 107 member banks

• China Union Pay (CUP)

• PingPay of Axis Bank

After going through this presentation you will be able to:

Describe negotiable instruments (NI), their features and

List the parties to NI and their rights and obligations

Explain the terms holder and holder for value

u/s 137 of Transfer of

Implies ‘easy transferability from one person to another

• Currency Note is a “promissory note payable to

No person other than RBI or Central Government can draw,

• Since only RBI has the authority to issue bearer PNs,

A promissory note contains the promise of the debtor to

Section 4: “Unconditional promise to pay a certain sum of

It is signed by the maker/promisor/drawer across a

Person who makes and signs the promissory

Usance Promissory Note Two types:

There are three parties to a BE:

“Every person capable of contracting, according to

Insolvent Is not competent to draw, make, accept or endorse

Legal • Can deal with NIs belonging to the deceased to

Drawee of a Cheque Endorser

An inchoate stamped instrument is a paper signed and stamped in accordance with

Cheque in Electronic Form Electronic Image of a Truncated

This also applies to drafts in

A ‘Customer’ may be defined as:

Customer Acceptance Policy

Customer identity should be established before opening the

Circumstances, in which a customer is permitted to act on

Account opening form

2 HUF i) PAN of HUF i) Any one of above APs of

Cheque book should be issued after confirmation of address

Special caution should be exercised if a prior dated/ large amount instrument is

Any suspicious transaction to be reported to higher authorities

Customers whose identity Customers whose sources Customers requiring very

KYC Proof of communication address Guidelines on Small Accounts

Violations customer, under the following conditions:

RBI has powers to impose fine under