Basic Banking CRM-CBS

CRM-CBS
Customer on-boarding, KYC

Basics of Banking- Accounting, Interest, Charges
CASA, FD, RD, NRE, FCNR, NRO
Basics of Banking : TOPICS
1. Accounting Principles – 3 Golden Rules

2. Accounting Entries or Journal Entries
3. Ledger Posting – Subsidiary & General Ledger
4. Assets & Liabilities
5. Running Account & Deal Based Account
6. Charge Types – Flat, Ad Valorem, Slab, Period
7. Interest Types – Simple, Cumulative, Fixed, Floating
8. TAX : TDS, GST
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Basics of Banking
Three Golden Accounting Rules:

1. Personal Account: Debit the Receiver & Credit the Giver
2. Real Account: Debit what comes in & Credit what goes out
3. Profit & Loss Account: Debit all Expenses & Credit all Income
Examples of Types Accounts:
1. Personal Accounts: SB a/c of individuals or CHS ; Current account of
Partnership firms, Companies, Trusts, Banks etc.; Overdraft a/c of Business
entities; Loan a/cs.
2. Real Accounts: Cash a/c., Furniture a/c, Building a/c, Raw material a/c etc.
3. Expenditure a/c: Interest Paid a/c, Salary Paid a/c, Telephone Charges Paid a/c
etc.
4. Income a/c: Interest Earned a/c, Commission Received a/c, Brokerage
Received a/c etc.

Basics of Banking
Examples of Journal Entries/ Accounting Entries:

(1) Debit: Salary Paid a/c Rs. 20,000/-
Credit: SB a/c of abc Rs.20,000/-
(2) Debit : Furniture a/c Rs 35,000/-
Credit: Current a/c of XYZ Traders Rs.35,000/-
(3) Debit: Interest Paid a/c Rs.15,000/-
Credit : TDS deducted a/c Rs.1,500/-
Credit: Fixed Deposit a/c of SCD Rs.13,500/
(4) Debit: SB a/c of xyz Rs. 40,500/-
Credit: Commission on Remittances a/c : Rs.400/-
Credit: GST Deducted a/c: Rs.100/-
Credit: NEFT Suspense a/c: Rs.40,000/-
(5) Debit: Cash a/c: Rs.100,000/-
Credit: SB/ac of abc Rs.100,000/-

Basics of Banking
Accounts Maintenance & Ledger Posting of Various Accounting Entries:

1. Accounts will be maintained according to various Heads and sub-heads of accounts
for the purpose of reporting etc.
2. Broadly each ledger account will have five columns: Date, Particulars, Debit, Credit &
Balance.
3. Debits and Credits of various journal/accounting entries will be posted in the
respective accounts and net balance will be arrived at.
4. Depending upon the nature of accounts, the balances will be either credit balance &
debit balance.
5. Example of Credit Balance accounts: SB accounts, Current a/c, Fixed Deposit
accounts and all Income accounts.
6. Examples of Debit Balance accounts: Overdraft accounts, All Loan accounts, Bills
Discounted accounts & All Expenditure accounts.
7. Credit Balance accounts are known as Liabilities Accounts and Debit Balance
accounts are known as Assets accounts.

Basics of Banking
Subsidiary Ledger, General Ledger (GL Head) & Balance Sheet Consolidation:
1. Normally ledgers of personal accounts are maintained individual account-holder-
wise and consolidated according to types of accounts. For example, SB accounts of
each individual account holder will be maintained individually and credit balance of
all SB accounts will be consolidated as Savings Bank GL A/c. Similarly various GL
accounts of Current A/c, Fixed Deposit a/c etc., are arrived at.
2. Normally Real accounts as well as Income & Expenditure accounts will be
maintained as sub-head wise (Subsidiary Ledger) and the General Ledger of Main
Head and balances will be arrived at. For example, Interest Paid a/c will be
maintained as the sub-heads Interest Paid on SB a/c, Interest Paid on FDs, Interest
Paid on RDs etc. Similarly General Expenditure GL a/c will be maintained as the sub-
heads Salary Paid to Employees a/c, Travel Allowance Paid a/c etc.
3. At the end of each working day, sum total of all Liability Accounts (Credit balances)
and sum total of all Asset Accounts (Debit Balances) shall tally. These GL accounts
are first maintained at Branch Level and then consolidated Zone or Region-wise and
finally for the whole bank.

Basics of Banking
For example the Day-Book or Balance Sheet will look like:

Liabilities Rs. Assets Rs.
Savings Bank a/c 45,000.00 cash a/c 25,000.00
Current a/c 85,000.00 Term Loan a/c 360,000.00
Fixed Deposit a/c 600,000.00 Housing Loan a/c 280,000.00
Recurring Deposit a/c 100,000.00 Bills Discounted a/c 145,000.00
Interest Income a/c 30,000.00 Interest Paid a/c 35,000.00
Commission Income a/c 25,000.00 General Expenses a/c 40,000.00
Total Liabilities 885,000.00 Total Assets 885,000.00

Basics of Banking
Running Accounts and Deal Type Accounts:

1. All Savings Bank Accounts, Current Accounts, Recurring Deposit Accounts
and Overdraft Accounts will be maintained as running accounts in the
name of account holder. All Sub-General Ledger accounts & GL accounts
will be maintained as running accounts basis. These running accounts will
have five columns, namely: Date, Particulars, Debit, Credit & Balance.
2. All Fixed Deposit accounts, Loan Accounts and Bill Discounted accounts
will be maintained as Deal Based accounts. Each Deal account will have
Name of the Customer, Principal Amount, Start Date, Tenor, Maturity
Date, Rate of Interest, Repayment method of interest/principal etc.

Basics of Banking
Charge Types:
1. Banks will collect charges from their customers for providing various types of
services. This will be booked under as Charges Income a/c. Banks will pay
commission to various selling or recovery agents or business correspondents for
availing services. This will be booked as Commission/Charges Expense a/c.
Following are few types of charges:
2. Flat Charge – Fixed: (Example) Rs. 100/- i.e., flat charge irrespective of amount.
3. Flat Charge- Slab-wise: (Ex) Rs. 50/- if transaction value upto Rs.5 lacs; Rs.100/-
if transactions value above Rs.5lacs
4. Ad valorem Charge Fixed: (Ex) 0.25% of the value of the transaction
5. Ad valorem Charge Slab-wise (Ex) 0.25% of the value of the transaction upto Rs.
1 crore & 0.10% of the value above
6. Ad valorem Charge Fixed Period-wise: (Ex) 0.25% p.a. of the value of the
transaction
7. Ad valorem Charge Period-wise Slab-wise (Ex) 0.25% p.a of the value of the
transaction upto Rs. 1 crore & 0.10% p.a. of the value above
Basics of Banking
Interest Types:
Banks will collect interest from their borrower-customers for providing various types of loans. This will be
booked under as Interest Collected or Interest Income a/c. Banks will pay interest to Depositor Customers
for taking various types of deposits. This will be booked as Interest Paid or Interest Expense a/c. Following
are few types of interests:
Regular Interest– Fixed Rate of Interest: (Example) 10.25% p.a. of the value of the transaction for actual
period say 3 months = 25,000.00X(3/12)X(10.25/100)
Slab-wise Fixed Rate of Interest: (Example) 10.25% p.a. upto Rs.1 crore & at 12% p.a for the remaining of
the value of the transaction above Rs. 1 crore for the actual period say 3 months
= 1,00,00,000.00X(3/12)X(10.25/100) + 25,00,000.00X(3/12)X(12/100)
Regular Interest– Floating Rate of Interest: Expressed as Base Rate plus Spread (Example) MCLR for 3
months plus 3% p.a :: As and when MCLR for 3 months undergoes change, the ROI of the loan will undergo
change automatically
Resetting of Rate of Interest at regular period: Expressed as Base Rate plus Spread (Example) MCLR for 1
month plus 3% p.a :: If the loan is for a period of Six months then for each month the ROI of the loan will be
MCLR for 1 month at the beginning of that month plus 3% p.a irrespective of change of MCLR during the
month.
Basics of Banking
Days Basis:
Rates of Interest are normally expressed in percentage per annum. Since
banks compute interest on actual number of days, the period is to be
converted into year. So the actual days shall be divided by number of days per
year. Internationally, there are three standard methods:
1. 360 days (for currencies like USD) (Actual/360) irrespective of the
calendar year
2. 365 days (Actual/365) irrespective of the calendar year
3. 366 days (Actual/366) in case of leap year & (Actual/365) in case of non-
leap years

Basics of Banking
TAX Types:
TDS : Tax Deducted at Source:
TDS is Income Tax Deducted at source. Whenever bank pays interest to the
depositor customer or pays commission to its agents, that interest or commission is
deemed as income of the recipient and hence income tax @10% is deducted on the
amount payable. This will vary as per prevalent Income Tax provisions.
GST: Goods and Services Tax
Whenever the bank collects commission or charges from the customers, applicable
GST will also be collected as per the following rule:
If the bank branch & the customer reside in the same State, then CGST @ 9% plus
SGST @ 9% will be collected.
If the bank branch & the customer reside in the different States, then IGST @ 18%
will be collected.
CBS – CASA : TOPICS
CUSTOMER ACCOUNTS – CASA & Term Deposits

Savings Accounts
1. Regular Savings A/c, Salary A/c , Jan Dhan, Aadhaar based DBT A/c, HNIs, Society,
Trust, ASBA - Single & Joint.
2. NRE, NRO.
3. QA 22 Accounts – Expats
Current Account
1. Proprietorship Firms, Partnership Firms, Private Limited Companies, Public Limited
Companies.
2. Minimum Balance, Service Charges
Term Deposits:
1. Fixed Deposits – Regular, Reinvestment Plan, NRE, FCNR, NRO & Recurring Deposits
2. Interest Calculations – Accrual & Capitalization & TDS Recovery

CBS – CASA : Savings Bank Accounts (SB accounts):
Salient Features of SB Accounts:

• Main objective of Savings Bank account is to promote savings.
• SB accounts are maintained as running account in the name of the
customers.
• Individuals, Hindu Undivided Families, Co-operative Housing Societies,
Trusts etc., can have SB accounts for other than Business purposes.
• SB accounts can be maintained either in the name of sole account holder
or in the joint names of more than one person.
• SB accounts can be opened in minor children’s name operated by parents
as Guardian or Court appointed Guardian

CBS – CASA : Account Opening Process
• In the Account Opening screen, first type of account should be chosen viz. :
Single or Joint.
• Next type of Account holder should be chosen viz.: Individuals, HUF, Co-
operative Society or Trust.
• Product name or Type of SB Account should be chosen like Regular, Premium,
Salary, Jan Dhan, No Frill.
• CIF ID of the account holder should be inputted. In respect of Joint account, CIF
ID of each account holders should be inputted.
• CBS system will auto populate the data stored in CRM module of respective CIF
ID(s).
• If any additional data is required like address for communication etc., user
should in put the same.
• List of Authorized signatories & their CIF ID are to be inputted if required as
explained below.

CBS – CASA : Savings Accounts Transactions
Transactions in SB Accounts & Authorized Persons to Operate:

• Operations in the account can be either by way of cheques or instructions via internet banking or by
swiping Debit Cards either at various Merchant Establishments or ATMs.
• Manual operations in the account will normally authorized by duly signed instructions of the account
holder.
• Even Single account holder may authorize any other person to operate the account on his behalf.
• Minor accounts will be operated by any of the parents as guardian or court appointed guardian.
• Joint holding SB accounts will have operation instructions: Operation severally means all account
holders should sign the cheque for any debit to the account. Operation by either or survivor means
anyone of the account holders can sign the cheque for any debit to the account. Account holders may
stipulate any special type of operation instructions like Customer A with any one of B, C or D or by any
two customers etc.
• For Hindu Undivided Family (HUF) may normally be operated by Karta of the family or by other
members (coparceners) of the family as authorized by the Karta.
• For Co-operative Societies & Trusts, list of authorized signatories will be captured.
• Each one of the account holders or authorized signatory of accounts should have a CIF id.

CBS – CASA : Savings Accounts
Business Rules of SB Accounts:

• Banks may stipulate various business rules for operations in SB accounts in
order to discourage too many transactions. Few sample rules are as follow:
• Banks normally stipulate minimum balance for SB accounts on daily basis or
average balance on a monthly or quarterly basis.
• Banks restrict number of cheques to be issued on a SB account.
• Number of cash withdrawals at the home branch and other than home branch
may be restricted. Number of cash withdrawals at the ATMs maintained by the
same bank and other banks may be restricted.
• Whenever these rules are breached banks may levy nominal service charges.

CBS – CASA : Savings Accounts – Resident account Types
Various Types of SB Accounts or Products

• Depending upon various business rules and restrictions on operations,
banks offer various products or types of SB accounts to its customers.
Banks may sell these products by different names. Some prominent types
are:
• Regular SB Accounts: Normal Minimum/ Average balances, Nominal
number of cheques per quarter & ATM withdrawals.
• Premium SB Accounts: Higher Minimum/ Average balances, unlimited
number of cheques per quarter & ATM withdrawals.
• Salary Account: To cater to the need of employees of large corporate
clients. NO minimum balance requirement but Nominal number of
cheques per quarter & ATM withdrawals.

CBS – CASA : Savings Accounts - Types
Jan Dhan Accounts, Aadhar based Direct Beneficiary Transfer Account, No

Frill Accounts:
• These accounts meant to cater the need of poorer sections of society.
There will be no minimum balance requirements; however higher
restrictions on withdrawals.
ASBA Account: (Part of 3-1 Account)
• If the Account holder desires to apply for shares in IPO or other Public
Offer, SB a/c with ASBA facility (Applications Supported by Blocked
Amount) will enable him to earmark or freeze the required balance and
bid for the shares. To the extent of the allotted shares the account will be
debited and the balance amount will be de-frozen. In case no share is
allotted then the entire blocked amount will be de-frozen. Normally ASBA
account will be linked to DMat a/c.

CBS – CASA : Savings Accounts - Deliverables
Debit Cards:
• Banks will issue Debit Card to each account holder to operate the account. Details of the Debit
Card issued viz., Visa/Master/RuPay, Card Number, Name, Expiry Date, CVV etc are to be
captured and should be mapped to each SB account. As and when new cards are issued the
data should be updated. As per regulatory requirements , the debit card number should be
masked (PCIDSS compliance)
Cheque Book Issued:
• Details of Cheque Book (Serial Numbers of the cheques) issued to each SB account are to be
recorded under respective account. As and when new cheque books are issued, the data
should be updated.
Internet Banking Access:
• Bank will provide access internet banking by issuing user id and password to the account
holder to enable operations in the account via net banking.
Mobile Banking Access:
• Bank will provide Mobile banking access by issuing user id and PIN to the account holder to
enable operations in the account via mobile phones.

CBS – CASA : Savings Accounts – Features
Interest on SB accounts
• SB accounts bear interest payable on quarterly or half-yearly basis. Most
of the banks pay interest on SB accounts based on daily product basis i.e.,
the credit balance held in the account at the end of each day. Good old
practice followed by few public sector banks is interest paid on the lowest
of the balance maintained between 10th and the last day of each calendar
month. The rate of interest offered on SB accounts will vary from bank to
bank and among various products.
• Cheque Bouncing Charges: Banks will levy charges if any cheque is to be
returned for any reason.
• Account Statement/Pass Book: Banks will issue account statement at
regular intervals. Customer with net banking facility should be able to
download account statements for any given period.

CBS – CASA : Savings Accounts – Non Resident Indian
Special Types of Accounts:

• NRE A/c: Non Resident External SB Account
• Indian citizens residing in overseas country is called NRI Non Resident Indian.
Citizens of overseas country who himself or their ancestors were Indian citizens
are called PIO Persons of Indian Origin.
• Banks can open NRE A/c in the name of NRI or PIO. NRE a/c can be in the name
of single or Joint; all NRE account holders should be either NRI or PIO.
• All Credits to an NRE account should be proceeds of inward remittance received
from abroad. Interest Credit is the only exceptional domestic credit.
• The balance held in NRE account is freely repatriable; i.e., the balance can be
remitted abroad.
• Other operations are similar to regular SB account.
• NRE account holder can authorize a resident Indian to operate the NRE a/c.

CBS – CASA : Savings Accounts – Non Resident Indian
NRO A/c: Non Resident Ordinary SB Account

• Banks can open NRO A/c in the name of NRI or PIO. NRO a/c can be in the name
of single or Joint; all NRO account holders need not be either NRI or PIO. A
resident Indian can open an NRO a/c with an NRI or PIO.
• Credits to an NRO account can be any domestic Rupee earnings or out of
proceeds of inward remittance received from abroad.
• The balance held in NRO account can be remitted abroad subject to certain
restrictions like payment of Income tax.
• Interest Credit to NRO account is subject to 33% TDS to be deducted at source.
• Other operations are similar to regular SB account.

CBS – CASA : Savings Accounts – Foreign nationals
QA22 Account
• Foreign Nationals who work in India with valid work permit cum Indian
Visa are allowed to have account with a bank in India. Apart from passport
details of the foreign national, visa & employer details are also to be
recorded in CRM. Only salary from the employer is the permitted credit.
Debit towards local expenses is allowed without any restriction. Up to 75%
of the salary credit can be remitted abroad.

CBS – CASA : Current Accounts
Salient Features & Business Rules of Current a/c

• Current accounts are maintained as running accounts in the name of customers
for Business Purposes.
• Type of Customers who can have Current a/c:
• Individuals, (like Traders)
• Proprietorship Firms,
• Partnership firms,
• Private Limited Companies
• Public Limited Companies
• JV
• Sometimes, more than one entity (ex: two public limited companies) may
together request the bank to open a current a/c for JV purposes (Joint Venture)
• One customer can have more than one current account .

• Current accounts do not bear interest. i.e., banks will not pay any interest
on the credit balance held in the current accounts.
• Banks normally stipulate minimum daily balance or average monthly
balance in the current accounts. Banks will debit service charges if the
minimum/average balance not maintained
• Banks will levy service charges based on the number of cheque books
issued, number of transactions etc.
• Normally Current accounts will have credit balance only. Whenever the
current accounts are overdrawn temporarily (TOD) i.e., if the closing
balance in a current account on any day is a debit balance then the bank
will charge interest/penal interest on such temporary overdrawing.

• Account Opening Process:

• In the Account Opening screen, first type of account should be chosen viz. : Single
Entity or Joint Venture.
• Next type of Account holder should be chosen viz.: Individuals, Proprietorship Firms,
Partnership firms,
• Private Limited Companies, Public Limited Companies.
• Product name or Type of Current Account should be chosen like Regular, Premium, (if
exist).
• CIF ID of the account holder should be inputted. In respect of Joint account, CIF ID of
each account holders should be inputted.
• CBS system will auto populate the data stored in CRM module of respective CIF ID(s).
• If any additional data is required like address for communication etc., user should in
put the same.
• List of Authorized signatories with their respective CIF ID are to be inputted

Transactions in Current Accounts & Authorized Persons to Operate:

• Operations in the account can be either by way of cheques or instructions via
internet banking or by (if applicable) swiping Debit Cards either at various
Merchant Establishments or ATMs.
• Manual operations in the account will normally be authorized by duly signed
instructions of the account holder or by its authorized signatories.
• Even Single account holder (Individuals or Proprietorship Firm) may authorize
any other person to operate the account on his behalf.
• Corporate accounts will have to give operation instruction with list of authorized
signatories; Account holders may stipulate any special type of operation
instructions like Signatory A with any one of B, C or D or by any two signatory
etc. : Operation severally means all signatories should sign the cheque or other
instructions for any debit to the account. Operation by one or two means
anyone or two of the signatory can sign the cheque or other instructions for any
debit to the account.

• Debit Cards: Banks may issue Debit Card to current account holder to
operate the account. Details of the Debit Card issued viz.,
Visa/Master/RuPay, Card Number, Name, Expiry Date, CVV etc are to be
captured and should be mapped to each SB account. As and when new
cards are issued the data should be updated.
• Cheque Books Issued: Details of Cheque Books (Serial Numbers) issued to
each Current account are to be recorded under respective account. As and
when new cheque books are issued, the data should be updated.
• Internet Banking Access:
• Bank will provide access internet banking by issuing user id and password
to the account holder to enable operations in the account via net banking.
Corporates will be provided with multiple layers of user access like Maker,
Checker(s), Authorization Matrix etc.

Blocking, De-blocking, Hot listing, Stop Payment etc:

The system shall enable user to record any loss of Debit Card or cheque
leaves, stop payment of cheques as and when customer complains.
Cheque Bouncing Charges:
Banks will levy charges if any cheque is to be returned for any reason.
Account Statement: Banks will issue account statement at regular intervals.
Customer with net banking facility should be able to download account
statements for any given period.

CBS – CC/OD Accounts
• Over Draft accounts

• Cash Credit Accounts
• Credit Limit – Drawing Limit – Stock Statements
• Interest Calculations – Accrual & Capitalization
• Back Value Posting – Effects on Interest

CBS – Cash Credit or Overdraft Accounts (CC-OD accounts)
• CC-OD accounts are current accounts where overdrawing is allowed i.e., the
account holder can draw more than the credit balance. In other words, CC-OD
accounts will have debit balance. Banks will extend CC-OD facility only to their
creditworthy customers by fixing credit limit. The Debit Balance in the account
cannot exceed the stipulated credit limit.
• Cash Credit facility is extended against the stocks of raw material or finished
product held by the business entity. Every fortnightly or monthly, the customer
will submit stock statement and the drawing power will be determined as value
of stocks minus margin. Overdrawing will be allowed upto the Drawing Power or
the credit limit whichever is lower.
• Overdraft facility is generally extended against fixed deposit or other securities
like shares etc. For highly creditworthy corporates, overdraft facility will be
extended without any security as well.
• Interest Accrual & Capitalization: Interest will be computed on daily product
basis i.e., based on the debit balance held at the end of each day and debited to
Current or CC-OD accounts at the end of each month.

CBS – CASA – value dated transactions
• Back Value Dated Transactions: CBS will permit passing back value dated
accounting entries i.e., passing accounting entries as on a date earlier than
the system or current date. In such cases all the EOD balances will be
recast and daily interest accruals will be reset.

CBS : Deposits
• Fixed Deposit – Concept - Simple Interest – Periodic Interest Credit – TDS

• Reinvestment plan – Cumulative Interest – TDS
• NRE FDs – No TDS
• NRO FDs – Compulsory TDS
• FCNR Deposits – Foreign Currencies – No TDS
• Recurring Deposits – Interest concept

CBS : Term Deposits FD
Term Deposits or Fixed Deposits (FD): Salient Features FDs are maintained as
Deal type accounts in the name of the Depositor Customer.
• As the name defines, FDs can be held for a fixed period from7 days up to 10
years (applicable for Resident individuals/ non individuals or NRO deposits)
• Exception – NRE deposits – min tenure 1 year ,max upto 10 years
• There is no restriction on the type of customer who can have FD. Individuals &
all legal entities are allowed
• It can be held in the name of a single customer or in the joint names. Each &
every depositor should have a CIF ID in CRM after completing KYC & AML
checks.
• By modifying & customizing few business rules, banks may offer various
products under FD module
• Regular FD (Simple Interest), Reinvestment Plan/Cumulative Interest FD, NRE
FD, NRO FD and FCNR FD are some of the standard products.

CBS : Term Deposit FD
• Creation of Fixed Deposit or Account Opening Process:

• Each FD is created as a deal with following details:
FD Reference Number: (System Generated)
• Name of the Product (from pick list)
• Name of the Depositor(s): CIF ID: Senior Citizen: Yes or No
• Source of FD: SB/CA/OD Account or Cash or Inward NEFT/RTGS
• Principal Amount: Currency: INR/USD/GBP/EUR/JPY
• Start Date DDMMYYYY
• Tenure: in Number of Days… Months… Year…(Minimum period of FD is 7 days
and maximum normally 10 years)
• Maturity date: DDMMYYYY
• Rate of interest : .. % per annum (0.50% additional ROI for Senior Citizen , Staff
of the same bank , 1% higher rate of interest))

• Interest Type: Simple or Reinvestment plan (For reinvestment plan: Minimum period
SIX Months)
• Method/ & Frequency of interest payment.. Normally interest is payable on quarterly
basis. If the depositor desires, interest can be paid monthly on discounted basis.
• Settlement instructions at Maturity: Auto Renewal of entire maturity value or Auto
Renewal of Principal only or Crediting Entire proceeds to SB/CA/OD Account
• Depositors can opt for cumulative interest where the quarterly interest is reinvested in
the FD and the proceeds (principal & accumulated interest) will be paid to the
depositor at maturity. Minimum period for cumulative FD is six months.
• Banks will issue a Fixed Deposit Receipt in plain letter head or Security paper.
• Accounting Entries for Creation of FD:
• In case, the depositor does not have any account with the bank and remits cash or
transfer funds from other bank through clearing or NEFT/RTGS, the proceeds will be
first credited to an Internal Suspense a/c.
• Dr: Source SB/CA/CC-OD A/c or FD Internal Suspense A/c Cr: Fixed Deposit A/c

CBS : TDS on Interest
TDS on Interest: (Tax Deducted at Source)

• As per the present Income Tax Rules for resident individuals, banks will have to deduct
Income Tax @10% if the interest amount exceeds Rs.10,000/- in a calendar year on all
fixed deposits and recurring deposits held under the same customer id . This process is
known as Tax Deducted at Source or TDS. TDS is not applicable for savings accounts .
• For Non resident individual customer on NRO deposits (savings & fixed deposits), TDS
will be deducted at 30%( plus surcharge) irrespective of the interest amount paid on
the deposit.
• In the case of Reinvest plan or cumulative interest FDs, TDS will be done on quarterly
basis and the interest net of tax will be added back to principal.
• At the Financial year end, on 31st March of every year, TDS will be deducted on the
accrued interest till 31st March and remitted to Government. This will be adjusted
during the ensuing calendar quarter.
• In case the depositor customer declares in 15G( for individual customer below 60 years
of age) , 15H ( for senior citizen customer age 60 years and above) form that he does
not have taxable income, banks will not deduct TDS.

CBS : Term Deposit – Products Features
Auto Renewal: If the depositor customer opted for auto renewal at maturity
either only for principal or with accumulated interest, then the system will create
new FD with original terms.
Pre Closure before Maturity or Breaking of FD:
If the depositor customer desires, FD (either part or full) can be broken or pre
closed before maturity date. Bank will reduce one % in rate of interest as
applicable to the actually run period. System will recalculate interest and reverse
the excess interest paid earlier. Consequently excess TDS will also be adjusted.
Lien Marking on FD: Sometimes the depositor customer offers his FD as collateral
for some credit facility availed from the bank. In such cases, bank will mark lien on
that FD. The interest accrued and / or the maturity proceeds will not be disposed
of freely without fulfilling the obligation under the credit facility. In such cases,
the proceeds will be either credited to the OD/Loan account or the FD will be
renewed and Lien will be marked on the new FD.

Accounting Entries for Interest Component:

• Daily interest Accrual:
Dr.: Interest Paid on FD a/c
Cr: Interest Accrued on FD Suspense a/c.
• On Calendar Quarter & on Maturity date :
Dr.: Interest Accrued on FD Suspense a/c.
Cr.: TDS Suspense a/c (10% if applicable)
Cr.: SB/CA/OD or Settlement suspense a/c or FD Reinvestment A/c (balance)
• Accounting Entries on the Maturity Date:
Dr. Fixed Deposit a/c (Principal) (plus accrued interest in the case of
reinvestment plan) )
Cr: SB/CA/OD or New FD a/c as per Settlement instruction

CBS : Term Deposit FD – Sweepin
SWEEP IN Facility:
Under a Sweep in Facility, a FD is linked to a SB or Current account with a
standing instruction that in case SB/CA account is overdrawn then the FD
will be pre-closed partially to meet the overdrawing. In such cases normal
pre-closure penalty will be levied.
Sweepin , OD facility will be triggered for regular transactions and these

funds will not be considered as balance available for booking new deposits

CBS : Term Deposit FD – Non Resident
• NRE A/c: Non Resident External FD Account (in Indian Rupees)

• Indian citizen residing in overseas country is called NRI - Non Resident Indian. Citizens of
overseas country who himself or their ancestors were Indian citizens are called PIO Persons of
Indian Origin.
• Banks can open NRE A/c in the name of NRI or PIO. NRE a/c can be in the name of single or
Joint; all NRE account holders should be either NRI or PIO.
• Funds Source for creation of NRE FD should be by way of Debits to an NRE account or should
be out of proceeds of inward remittance received from abroad.
• NRE FD can be held either with simple interest or with cumulative interest/Reinvestment plan.
• Interest Credit is the only exceptional domestic credit to NRE FD.
• Interest earned on NRE FDs is exempt from Income Tax. Hence no TDS is applicable in respect
of NRE FD.
• The balance held in NRE account is freely repatriable; i.e., the balance can be remitted abroad.
• Other operations & accounting entries are similar to regular FD account.

CBS : FCNR Deposit
FCNR A/c: Foreign Currency Non Resident FD Account (in USD/GBP/EUR/JPY)

• Indian citizen residing in overseas country is called NRI - Non Resident Indian. Citizens of overseas
country who himself or their ancestors were Indian citizens are called PIO Persons of Indian Origin.
• Banks can open FCNR A/c in the name of NRI or PIO. NRE a/c can be in the name of single or Joint; all
NRE account holders should be either NRI or PIO.
• FCNR a/c is maintained in USD (US Dollars), GBP (British Pounds), EUR (EUROs) or Japanese Yen.
• Funds Source for creation of FCNR FD should be by way of Debits to an NRE account or should be out of
proceeds of inward remittance received from abroad.
• If the source of funds and FCNR currency differ, then appropriate FX rates will be applied for currency
conversion.
• FCNR FD can be held either with simple interest or with cumulative interest/Reinvestment plan.
• Interest earned on FCNR FDs is exempt from Income Tax. Hence no TDS is applicable in respect of FCNR
FD.
• The balance held in FCNR account is freely repatriable; i.e., the balance can be remitted abroad.
• Other operations & accounting entries are similar to regular FD account.

CBS : NRO Term Deposit
• NRO A/c: Non Resident Ordinary FD Account (in Indian Rupees)

• Banks can open NRO FD A/c in the name of NRI or PIO. NRO a/c can be in the
name of single or Joint; all NRO account holders need not be either NRI or PIO.
A resident Indian can open an NRO a/c with an NRI or PIO.
• Credits to an NRO FD account can be any domestic Rupee earnings or debit to
any domestic Rupee account or out of proceeds of inward remittance received
from abroad.
• NRO FD can be held either with simple interest or with cumulative
interest/Reinvestment plan.
• Interest Credit to NRO account is subject to 33% TDS to be deducted at source.
• Other operations are similar to regular FD account.

CBS : Term Deposit Validations
Validations for opening fixed deposits :

• Select a valid account to open the fixed deposit ( debit account ) . Check the balance of account before
the transaction
• Validations on PAN # basis regulatory requirements , eg . For deposits >= 50,000/- customer id should
have PAN# updated
• Check min / max tenure validations and min amount validations
▪ Basis customer type as Resident/ Non resident (NR) . For NR , selecting NRE CASA / NRO CASA
• Check amount field – should not accept 0 (zero) , negative values / special characters / alphabets
• Check for insufficient funds – ie if transaction amount is more than the balance available in the CASA
account, transaction should not be allowed

CBS : Term Deposit Validations
• Check interest rate displayed

▪ For different categories of customers – ( Resident , senior citizen , staff , minor FD with staff as
Guardian ) validate if special rates are displayed for specific category of customers – senior citizen
, staff .
• For pay out instructions of interest / maturity proceeds to CASA account , check there should be a field
to select the account number
• For minor / non individual account , pay out instruction should be by default minor’s CASA account /
the non individual account only.
• Post successful transaction , check the balance in CASA account is reduced , check the entry in the CASA
account statement . Check the deposit landing and summary page to view the details of the newly
opened fixed deposit and all values input are correctly displayed

CBS : Recurring Deposits
• Recurring Deposit accounts are maintained as a running account for a specific

number of months 12 and above where every month an equal amount
(installment) is deposited.
• Recurring deposits can be booked only in years and months(3,6,9) , ie days will
not be permitted .
• RD will normally carry identical Rate of Interest similar to FD.
• Interest is payable only at maturity and subject to deduction of TDS if
applicable.
• In case of delay in credit of monthly installments, bank will levy service charge.
• Penalty on pre closure, lien marking etc as applicable to FDs are also applicable
to RDs.
• Interest Formula = Monthly Installment X (ROI/100) X (n*n+1)/(2*12) where n is
number of months.

CBS : Recurring Deposits validations
Validations for recurring deposits

• Validations will be same as applicable for fixed deposits with few specific validations for Recurring
deposits :
• Individual and non individual customers can open RD .
• NR customers may / may not be allowed – eg NRE account can be eligible for opening RD , NRO account
may not be eligible – basis product offering specific to banks
• Min / max amount to be checked
• Amount to be in multiples of 100/1000 as specified for the product
• Tenure allowed should be min 6months to max 10 years
• Tenure can only be selected in months or years
• Interest payment will happen only on maturity hence there will be no selection for interest payment
• Maturity instructions for payout or conversion to fixed deposit (specific tenure) , provided PAN#
available for the customer id

CBS : TAX Saver Deposit
• Tax saver FD – can be booked for a period of 5 years and cannot be

redeemed / withdrawn before 5 years
• Per financial year max amount allowed is Rs.1.50lakhs
• Default tenure would be 5 years / 60 months
• Interest payment instructions to be specified as reinvestment / Pay out
• If Reinvestment , interest gets compounded / added every quarter
• If Payout , interest gets paid out to the selected CASA account
• NRI’s will not be eligible for opening Tax saver FD

CBS : TAX Saver Deposit
• Validations for Tax Saver deposits

• Validations on Tax saver FD – similar to FD.
• Since tenure is fixed / auto populated , there will be no additional tenure
validation required here
• Validations for min/max amount. Max amount allowed per financial year is
Rs.1.50lakhs
• Interest instructions should be available as Reinvestment / Pay out
▪ If Pay out , field should be available to capture the CASA account number
• Maturity instructions will be – credit to CASA account

CBS : Loans
• Loans are granted to borrowers for various purposes like buying vehicles, home or utility products and for
other business purposes. Loans will be extended only against credit limits. Loans accounts can be maintained
either in the form of running account or deal type.
• Deal type loan account is input with following details: Name of the Borrower, Principal Amount, Start Date,
Tenor, Maturity date, Rate of interest and method/frequency of interest and/or principal re-payment.
• Normally consumer loans or retail loans will have EMI repayment and maintained in running account type.
Business or corporate loans are maintained in deal type with either bullet repayment or regular
monthly/quarterly repayment schedules.
• Whenever repayment of interest or principal installment is delayed, overdue or penal interest will be debited.
Bill Discounting:
• In a trade transaction, seller draws a bill of exchange on the buyer payable after a fixed tenor. Such Bills are
discounted by the bank and proceeds are credited to the sellers account after deducting the interest in
advance. This facility will be extended only against credit limits.
• Bill Discounting transactions are booked as deal type with following details: Name of the Borrower, Principal
Amount, Start Date, Tenor, Maturity date, Rate of interest. Normally Interest will be deducted in advance at
the time of discounting. (Sometimes banks may agree to collect interest on monthly basis.)
• If the bill is realized earlier than the due date, interest for early realization period will be refunded. If the bill is
realized after the due date, overdue or penal interest will be debited.

CBS – Funds Transfer Methods
• Demand Draft – DD
• Pay Order or Bankers Cheque – PO
• National Electronic Fund Transfers – NEFT
• RTGS
• IMPS
• UPI
• ECS
• NACH

CBS : Funds Transfer – Payment Modes
• Demand Drafts (DD): Banks issue Demand Draft at the request of their customers favouring the
beneficiary. DDs are payable at other cities. Before issuing DD, the amount plus commission & GST will
be debited to the account of the applicant.
• Pay Orders or Banker’s Cheques (POs): Banks issue PO at the request of their customers favouring the
beneficiary. POs are payable at the same city of the issuing branch. Before issuing PO, the amount plus
commission & GST will be debited to the account of the applicant.
• Electronic Funds Transfers: NET Electronic Fund Transfer: NEFT/IMPS:
• N06 & N07
• Customers can request for NEFT/RTGS/IMPS by furnishing following mandatory details: Name of
Beneficiary, IFSC code of beneficiary’s bank, Account Number, Details, Mobile number or email id.
Before effecting NEFT/IMPS, the amount plus commission will be debited to the account of the
applicant. CBS will initiate NEFT payment via SFMS and UTR number will be generated.
• NEFT transactions are processed in batches and are eligible for amounts <2lakhs.

CBS : Funds Transfer – Payment Modes
Real Time Gross Settlement: RTGS:: R41 & R42

• R41: Customer Payment & R42: Inter Bank Payment
• Customers can request for RTGS (minimum amount - 2lakhs and above ) by furnishing
following mandatory details: Name of Beneficiary, IFSC code of beneficiary’s bank,
Account Number, Details, Mobile number or email id. Before effecting RTGS, the
amount plus commission will be debited to the account of the applicant. CBS will
initiate RTGS payment via SFMS and UTR number will be generated.
• RTGS transactions are settled as individual transactions.

CRM – Customer Relationship Maintenance
• Types of Customers: Retail/Corporate

• Retail: Resident Individuals, Non-Resident Indians, Trust, Society
• Business / Corporate : Partnership Firm, Private or Public Limited Company.
• KYC – Concept & Documents
• AML Check
• Customer on-boarding
• CIF ID, Cust ID, UCIC
• Maintenance of Changes in data
• Finacle CRM is used for recording LOS details

CRM-Customer Relationship Maintenance
CRM- KYC & Customer On-Boarding:
• Banks will first check the credentials of applicants namely :

Their identity, address by verifying documents like Aadhar Card, Passport, Ration Card, PAN Card
etc. This process is known as KYC (Know Your Customer). Upon successful completion of KYC
process, the applicant will be on-boarded as Customers of the bank. Each Customer will be
identified by assigning CIF id. For detailed information, please refer the document: CRM.
• One Customer can have multiple accounts.
For example, one individual may have a SB a/c, two RD accounts and five FD accounts. Similarly
one corporate may have two current accounts, one overdraft account and two term loan
accounts. Each account will have a unique account number which will be different from CIF id of
the account-holder.

THANK YOU
Head Ofice
419A, C Wing,
Rupa Solitaire, Sector-1, Millennium
Business Park, Mahape, Navi Mumbai –
400710.
Tel. | +91-22-41288200 | 41416900
Email | info@QualityKiosk.com www.QualityKiosk.com

Basic Banking CRM-CBS

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CRM-CBS

Customer on-boarding, KYC

1. Accounting Principles – 3 Golden Rules

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Three Golden Accounting Rules:

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Examples of Journal Entries/ Accounting Entries:

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Accounts Maintenance & Ledger Posting of Various Accounting Entries:

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For example the Day-Book or Balance Sheet will look like:

Savings Bank a/c 45,000.00 cash a/c 25,000.00

Current a/c 85,000.00 Term Loan a/c 360,000.00

Fixed Deposit a/c 600,000.00 Housing Loan a/c 280,000.00

Recurring Deposit a/c 100,000.00 Bills Discounted a/c 145,000.00

Interest Income a/c 30,000.00 Interest Paid a/c 35,000.00

Commission Income a/c 25,000.00 General Expenses a/c 40,000.00

Total Liabilities 885,000.00 Total Assets 885,000.00

Running Accounts and Deal Type Accounts:

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CUSTOMER ACCOUNTS – CASA & Term Deposits

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Salient Features of SB Accounts:

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Transactions in SB Accounts & Authorized Persons to Operate:

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Business Rules of SB Accounts:

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Various Types of SB Accounts or Products

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Jan Dhan Accounts, Aadhar based Direct Beneficiary Transfer Account, No

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Special Types of Accounts:

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NRO A/c: Non Resident Ordinary SB Account

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Salient Features & Business Rules of Current a/c

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• Account Opening Process:

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Transactions in Current Accounts & Authorized Persons to Operate:

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Blocking, De-blocking, Hot listing, Stop Payment etc:

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• Over Draft accounts

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• Fixed Deposit – Concept - Simple Interest – Periodic Interest Credit – TDS

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• Creation of Fixed Deposit or Account Opening Process:

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TDS on Interest: (Tax Deducted at Source)

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