Prepared by Sakhawat JAIBB SUPER HAND NOTES ON LPGB FOR 98™ BPE SUGGESTION & SUPER HAND NOTES ON LAWS & PRACTICE OF GENERAL BANKING For 98"" Banking Professional Examination Prepared by Sakhawat Hosen BBA, MBA, JAIBB, OAIBB Banker, Writer & Online Course Instructor (JAIBB &AIBB) FE Banning oirtoma with SaKHAWAT (01818 285370qWnarsApp Only-No call pla)Prepared by Sakhawat Laws and Practice of General Banking (LPGB) Full Marks:100 Part-1 “Module: Financial Insitutions Related Laws + Bongladesh Bank Order, 1972 + Bank Company Act 1991 ‘+ Financial Institutions Act, 1993, + Artho Rin Adala,2003, ModuleB:FinanciallnstrumentRelated Lams ‘+ Nogotiable Instrument Act, 1881 + Note Refund Regulations, 2012 “ModuleC: Financial Activities Related Laws Foreign Exchange Regulation Act, 1947 + Money Laundering Prevention Act2012 + _Anti-orrorismAct,2009 “ModluleD:Business Related Laws ‘Company Act 194 Contaet Act, 1872 ansferof Property Act, 1882 Limitation Aet, 1908 Bankruptcy Act, 1997 Customs Act 1969 Stamp Act, 1899 Partnorship Act 1982 + Registration Act, 1908 ModuleR:InformationandDataRelated Laws ‘+ Bankers Book Evidence Act,1891, Rightto Information Aet.2009 + Information and Communication Technology Act.2006, Digital Security Act, 2018 ModuleF:General Laws + Bangladesh Environment Conservation Act, 1995 Powerof Aworey Act.2012, + Bank Deposit Insurance Act,2000 Part-I Module A:Overview Banik, Types of Bank, Functions of Banks, Areas of General Banking, Customers, Relationship with the customers, Rights & Obligations of banks & customers, Providing serviees in accordance with customer acceptance policy & schedule of charges ModuleB:Deposit Accounts & Operation Customer and UCIC(UniqueCustomerldentificationCode)KYCe-KYC,CDD (customer due diligence), EDD, PEPS/Ps, Beneficial Owner, Types of Deposit Accounts, Procedures of openingof Accounts and relevant FE Banning optoma wit saHawar (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat documents required for opening of accounts, introduction, Letter of thanks, Sanction screening, Opening of Account through digital Platform, Issuance of Cheque book. ModuleC:Negotiablelnstruments Act 881 Negotiable Instrument,Promissory note, Bill of exchange Cheque,Drawer&Drawee Payee,Holder, Holder in due Course, Payment in due Course, inland instruments, foreign instruments, Negotiation, Endorsement, Effect of endorsement, Cheque payable to order, effect of material, revolution of bankers” authority, erossing of cheques S its effects, Collecting Banks’ responsibility, ModuleD:GeneralBanking Debit Cards, Internet banking, Transfer of accounts, Standing instruction, Stop & lost payment instructiond&itsrevocation, Dormantaccountsanditsrevival,unelaimeddepositaccoumts.Closingof accounts, Operation of minor students, no-fiills, Incapacitated-sick-disabled accounts, Resident & Non-Residents Accounts, ‘Accounting entries related to depositwithdrawaltransfer of money. Fees and commission, charging interest in deposit/oan accounts, encashment of deposit accounts, Tax and Excise duty, Issuance and payment orders, Demand draft, Telegraphic Transfer, Cancellation and Duplicate Issuance, BACH operation management, BEFTN, PSB and RTGS. ModuleE:Cash Management Demand and time liabilities (OTL), Calculation and maintenance of CRR, Maintenance of clearing accounts with Bangladesh Bank and other banks, Vault limit and transit limit management, Insurance Coverage, Management of cash in vault, Counter, ATM and feeding branches, Handling of Mutilated/Torn’ soiled’ issueire-issue and fale notes, Purchase, sell of prize Bond, Maintenance of security stationary, stamps, safe in-sale out Registrar, Management of Locker and safe custody services, Inward and outward bills for collection (IBC and OBC), chalan, A-chalan, E-gp. Payment foreign inward remittance (COC and A/C payee) ‘ModuleF:OtherGencralBanking Reconciliation’ checking of daily activity report, DCFCL, Management and Preservation of reeords, Documents and Vouchers, Checking of daily statement of affairsincome and expenditure related statement, balancing of all heads of general ledger (GL). Instruction: firrazem, Legs WS 4G Fraat| ae ag frevamce WE Sar UTA? Sia! Cras wT CBT ST/300 CIA at AT TT FE Banning oirtoma with SaKHAWAT (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat Suggestion for 98" Banking Diploma Short Notes/ques Customer acceptance policy Retail banking and Virtual Banking Gamishee Order Schedule and non-schedule banks Right of tien Right of Setoff Schedule of Charges ‘Trustee and beneficiary relationship 9. Bailor and Bailee Relationship: 10. Principal and agent relationship Broad questions: State the obligation of banker to their customer? Describe general and special relationship between banker and customer? Briefly discuss the functions of commercial bank? How banker customer relationship terminate? Define central bank? What are the functions of central bank (Bangladesh Bank)? Define bank? What are the types of bank? Module B: ‘Short questions: 1. What is CDD? When a bank should conduet Enhanced Due Diligence (EDD)? 2. Who is a beneficial owner? Explain with example. 3. ucIC 4, What are the documents required to open a proprietorship account? 5. 1P Broad questions: 1. What formalities should the banker follow while opening an account in the name of a partnership firm and that of a limited company? Before opening a deposit account, the banker should observe certain precautions and formalities. What are the general precautions to be observed for opening a deposit account? ‘What do you mean by PEPs? Why Special A\tention for PEPs to be taken by the banker? Explain the concept of KYC and e-KYC? What are the components of KYC? State the precautions to be observed while opening accounts of the following: Educational institutions FE Banning oirtoma with SaKHAWAT (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat + Religious institutions + Govt./Semi-Govt/Autonomous body/Local authority + Club/Societies! Association Public Limited Company/Private Limited Company Module C: Define negotiable instrument? How can you define a cheque? Differentiate between Cheque and a bill of exchange, When a banker can legally return a valid cheque without payment? Gamishee order Broad questions: 1. What are the points to be considered by a paying banker before passing a cheque for payment? 2. Define endorsement. Describe different types of endorsements. What-are'the measures to be taken if fake note is detected in a bank branch? 3. What do you mean by holder in due course? State the essential. conditions to become a holder in due Module D: General Banking. ‘Short notes/questions: ‘Stop payment Internet Banking Unclaimed deposit account RTGS, EFT,BACH.NPSB Define dormant siccount, What are the consequences of dormant account? How it can be reactivated? 2. What is no-fiills account? State in details about the Account operation of minor students. 3. How to open farmer account/ Non-resident aecount ? 4, Discuss operation procedures of Ineapacitated, sick and disabled accounts. Module F PART 2: Other General Banking ‘Short Questions/notes: 1, Why checking of daily activity report required to be done? 2. DCFCL, Documents and vouchers 3. Management and preservation of records FE Banning optoma wit saHawar (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat Part 1, Module A. ‘What are the main funetions of the Bank as per BB order 1972? What should be the Composition and Mandate of the Board of Directors under Bangladesh Bank Onder, 1972? Mention power of BB to control Advances as per Banking company act 1991? What will you do if your bank has unclaimed depesite more than 10 years?/Mention unclaimed deposits procedures as per banking company act 1991? State in brief about the provisions/restrctions to be maintained as per the Banking companies Act, 1991 of SLR & CRR and Maintenance of Capital Artho Rin Adalat Ain, 2003 ‘What are the Duties and Responsibilities of the Banker for Recovery of Loans before filing suit under Artho Rin Adalat Ain-2003 (Sec. 12, 33, 46 & 47)? Discuss about the provisions made for Appeal and Revision (Sec. 40-44) under the Artho Rin Adalat Ain, 2003. Do you think the existing law relating to Artho Rin Adalat Ain are adequate to deal with the delinquent borrowers? ). SLR VS CRR B: Financial Instrument Related Laws ‘Mention Main characteristics of a cheque? Mention duties and responsibilities of a Paying Bank? Mentione duties and responsibilities ofa collecting bank? Discuss about the disposal of obliterated, mismatched, altered, and damp notes as per the Note Refund regulations 2012. ‘What is Mutilated note? Discuss Disposal of mutilated note(s). Authorized Dealer Bangladesh Financial Intelligence Unit (BFIU) ‘Suspicious transtction Prodicate Offences ‘What is Money Laundering? What are the stages of ML? What are the responsibilities of the reporting organizations in prevention of money laundering? ‘What are the key functions of the BFIU? D: Business Related Laws What are the Difference between Public Ltd. Company and Private Lid. Company ‘The Memorandum of Association (MOA) ‘The Articles of Association (AOA) (One Person Company \Winding-up a company as per company act 1994 Convertible and non-convertible preference share Ordinary shares FE Banning oirtoma with SaKHAWAT (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat 8. Preference shares ‘Contract Act, 1872 ‘What are the essential elements ofa contract as per Contract Act, 18722 Write short notes on Free consent, ‘Fraud, Mistepresentation as per contact act, Misrepresentation: Contract of guarantee: Contract of Indemnity (Section 124) ‘The transfer of property Act, 1882 Powers of Attomey Act, 2012 Deposit Insurance BEST OF LUCK! Law & Practice of General Banking (LPGB) ‘A bank isa financial institution authorizad to accept deposits from the public and provide various financial services such as lending, money transfers, and safekeeping of valuables. It acts as an intermediary between those who have ‘money (depositors) and those who need it (borrowers). Banks are regulated by the central bank of the country i.e, Bangladesh Bank. ‘Types of Bat Banks in Bangladesh are pritnarily of two types: 1. Scheduled 2. Non-Sehedhuled banks. ‘Scheduled B: ‘Scheduled banks are licensed under the Bank Company Act, 1991 (Amended up to 2013). Scheduled banks are comprising of both Commercial and Spevialized hanks. Example of Schedule Banks: SEBL, CBBL, Jamuna Bank and so on. ‘Non-scheduled hanks: Non-scheduled banks are licensed only for specific funetions and objectives and do not offer the same range of services as scheduled banks. They do not get the privileges of clearing system and re-discounting of bills. These banks clear their cheques through any scheduled bank. Exmaples of Non-scheduled banks are as follows’ Ansar VDP Unnayan Bank FE Banning optoma wit saHawar (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat Grameen Bank Jubilee Bank Karmashangosthan Bank alliSauchay Baak ‘The well-known systems of banking prevalent in different parts of the world which we can see are discussed below: Branch banking : Branch banking is 2 system where the banking business is carried on by a single bank with a network of branches spreading all over the country. 4 Single bank, nationwide reach: Bangladesh employs a branch banking system, where one bank operates through a network of branches spread across the country 4 Centralized control: Each branch is overseen by the Head Office, located in a major eity, which sets policies and oversees operations. 4 Local management: Fach branch has a manager responsible for conducting business according to Head Office instructions and Bangladesh Bank regulations. Unit Banking: In the unit banking system, the banking operations are carried out through a Single office and confined toa particular 4 The banks maintain no branches. Unit Banks offer limited services from one fice though a small numberof services suchas ‘aking deposits or cashing of cheques “These organizations are common in U.S. banking today: Chain banking: ‘Chain banking refers to a system within the banking industry where two or more independently chartered banks are controlled by the same individual or group of individuals. This control can be established through various means, cluding: “+ Majority Shareholding: Owning enough shares in each bank o dictate policy an decision-making 4 Interlocking Directorates: Individuals holding board positions in multiple baaks, enabling influence accoss institutions. Management Contracts: single entity, often controlled by the same group, manages multiple banks under contract, Deposit banking: Receiving deposits and making advances for short period is called deposit banking. “+ The undetlying principle ofthis system i that banks cannot lock up their deposits in long-term investment, as the deposits are repayable on demane. 4 Banks were custodians as well as trustees to keep safe the deposits ofthe public. ‘4 Pure deposit banking has its origin in England. Banks in England were only confined to accepting deposits and lending for short periods to industries and trade 4 specialized segment of the financial services industry that deals with raising capital for clients and providing high-level financial advisory services. Unlike commercial banks, which primarily focus on individual and everyday banking needs, investment banks cater to large comporations, governments, and institutional wvestors, FE Banning oirtoma with SaKHAWAT (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat Mixed Banking: ‘The banking system that combines deposit banking with investment banking is known as Mixed Banking. The mixed bank receives deposits from public and provides short term, medium term and long-term loan to industries, Retail bankin; Retail banking, also known as consumer banking or personal banking, is the provision of services by a bank to the ‘gencral public, rather than to companies, corporations or other banks, Key Dimensions of Retail Banking are: Customer Focused. Prudent Risk Management Convenience of Customer. Widespread distribution network. ‘Variety of Produets. Strong Processes. ‘Virtual Banking: ‘The important types of virtual banking services include automated teller machines (ATMs), shared ATM networks, electronic fund transfer at point of sale (POS), internet banking, mobile banking, smart cards etc. With the help of these modern and virtual devices the customers can transact banking business from anywhere as he desires easily Define Central Bank? What are the Funetions of Banks Central Bank (Bangladesh Bunk)? Central Ban ‘A central bank is a financial institution given privileged contfol over the production and distribution of money and credit for a nation. In modern ceonomies, the central bank i usually responsible for the formulation of monetary policy and the regulation of member banks. Functions of Central Bank. 1. Monetary Management 2. Banking Supervision 3. Development Functions of Commercial Banks ‘Note Issue Bankers tothe government Banker's Baok Clearing House Operation Lender ofthe lst Resort Foreign Exchange Operation Controter of Credit Banking Supervision: Supervising and regulating the operation of financial institutions are one of the important functions of a central ‘bank. Bank regulation and supervision has three important objectives: Firstly, promoting the soundness of banks to protect the interests ofthe depositors. Secondly, encouraging the economic efficiency of financial institutions. ‘Thirdly, ensuring that banks comply with the monetary policy measures. FE Banning oirtoma with SaKHAWAT (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat ‘A central bank is commonly seen in terms of its traditional functions as issuer of currency, government’s banker, bankers’ bank, controller of eredit and a lender of last resort. However, it ean also be viewed as a developer of the financial system and promoter of economic development. ‘The promotional role of central bank should be guided by supply rather than demand considerations. A central bank has to be an innovator as well as catalyst in its promotional role for which there is a wide variety of techniques available such as deposit insurance, credit guarantce, establishment of DFls, differential interest rates and reserve requirements, establishment of CIB ete. Although the developmental rationale of central banks is well grounded, but in case_of any conflict between allocation of eredit and control of credit, the control of credit should be the first priority ofthe central bank. Overall, the developmental functions of a central bank are critical to promoting sustainable economic growth, ‘maintaining finaneial stability, and safeguarding the interests of citizens. ‘What are the Functions of Commercial Ban! Banks perform a variety of functions that are critical to the functioning of the financial system andl the economy as a whole. Some of the key functions of banks include: Accepting Deposits Lending Issuing Credit Cards Facilitating Intemational Trade Providing Investment Services Payment Processing Providing Financial Advice ‘Accepting Dep Banks provide a safe place for individuals and businesses to deposit their money. This can include savings accounts, checking accounts, and other types of deposit aceounts. Lending: Banks lend money to individvals and businesses, which help to finance new projects, purchase homes, buy cars, and more. Issuing Credit Cart Banks issue eredit cards, which allow individuals to make purchases on credit, Facilitating International Trade: Banks facilitate intemational trade by providing letters of credit, foreign exchange services, and other services that help to reduce the risks associated with international transactions, Banks offer a range of investment services, including wealth management, mutual funds, and other investment products Payment Processing: FE Banning optoma wit saHawar (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat Banks process payments between individuals and businesses, including checks, wire transfers, and other forms of payment. Providing Financial Advi Banks provide financial advice and guidance to individuals and businesses, helping them to make informed financial decisions. Overall, banks play a critical role in the economy by providing access to capital, managing risk, and facilitating the ‘movement of funds between individuals and businesses. ‘Who is a Banker & Customer Banker: jenerally, a person who is doing the banking business is called banker. A Banker's main job is to give financial advice (0 clients, especially on matters related to savings, investments, loans, and securities, Their knowledge and advice help customers solve their financial problems while also increasing the organization's profit. Customer: In simple words, a customer is such a person to whom one extends their services in return for consideration. According to Sir John Paget one has to fulfil two conditions to become a bank customer. First, there must be some recognizable course of habit of dealing betweenthe customer and the bank and second, the transactions must be in the nature of regular banking business. In the context of Bangladesh, general banking is the key component which eonsists of the management of deposits Ge, current deposit, savings deposi, short notice deposit, fixed deposit, and recurring deposit), eash,honor cheques, clearing of cheques, customer services, locker facilities and other ancillary services of the bank. General Banking Department is considered as the diteet customer service center. It is the starting point of all the banking operations. Moreover, it opens new account, remits fund, takes deposit, issues bank draft and pay ord: issues debit and eredit cards ete. Banker - Customer relationship: ‘The relationship berween a banker and a customer is established when the bank agrees to open an account in the customer's name. This relationship is contingent on the range of activities, prodves, or services offered by the bank and utilized by the customer. 4A strong and trusting bond is crucial for the success of a bank’s business, with trust playing a significant role in fostering a healthy relationship. ‘The conneetion between hanks and their clients is fiduciary, built on trust, and requires the bank to lil its dutics to the customer with utmost good faith and due diligence “The primary responsibilty of the bank is to protect customer deposits and maintain confidentiality The relationship should be impartial and non-diseriminatory, and any preferential treatment towards a specific elicnt or group is considered a violation ofthe fiduciary relationship. wen Banker and Cus ‘When an individual enters a bank to open a bank account, they are essentially proposing to enter into a contractual agreement. The banker, upan agreeing to open the account, legally accepts this offer, establishing a binding contract. + The foundation of this relationship is rooted in the Contract Act of 1872, Before finalizing the agreement, the banker ensures the suitability of the customer, often through personal introduction, references, or inquiries like Know Your Customer (KYC) procedures. FE Banning oirtoma with SaKHAWAT (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat The essence of the relationship between a banker and a customer is contractual, specifically that of a debtor and a creditor. The customer, as an account holder, assumes the role of the ereditor regarding funds deposited, while the banker acts as the debtor for these funds and as the ereditor for any money lent by the bank. Some general relationship berween Banker and Customer are discussed below Debtor and creditor relationship: ‘When a banker receives deposits from a customer, he is technically said to borrow money from the customer. So, he is acting as 2 debtor who is bound to return the money on demand to his creditor namely his customer. But in the ceases of a loan, cash eredit and overdraf, the banker becomes a ereditor and the eustomer assumes the role of a debtor. Principal and agent relationship: When the banker collects cheques, bills, dividend warrants, pays insurance premium, subscriptions ete. on behalf of his customer then the agent ~ principal relationship exists between a banker and his customer. Banker acts as an agent on bebalf of their customer. So, customer is the principal and bank being the agent, ‘Trustee and beneficiary relationship: ‘When a person entrusts valuable items with an intention that such items would be returned on demand to the customer*beneficiay the velationship becomes of a trustee and beneficiary. A banker becomes a trustee only under certain circumstances, for example, when money is deposited for a specific purpose, till that purpose is fulfilled; the banker is regarded as a trustee for that money. Again, ‘when a cheque is given for collection, till the proceeds are collected, he holds the cheque as a trustee Bailor and Bailee Relationship: This connection is formed through a "bailment" contract, where one person gives goods to another for a specific purpose, with an agreement that they will be retumed or handled as instructed when the purpose is fulfilled. The aiiver of the goods is the "bailor.” and the receiver is the "bailee." This arrangement is applicable in situations like lending money with goods pledged as security. Lessor-Lessee Relationship: ‘The banks provide safe deposit lockers to the customers who hire them on lease basis. The relationship, therefore, is ‘that of lessor and lessee. In such case u barker becomes the lessor and the customer becomes the lessee. Mortgagor-Mortgagee Relations A-mortgage is when someone gives a part of their rights in a particular immovable property to ensure the repayment of a loan or the fulfillment of a financial obligation. The one transfetring the interest is the "mortgagor," and the recipient is the "mortgagee." Discuss Special Relationship hetween Banker and Customer? ‘Statutory obligation to honour cheque Banker's duty to maintain secrecy of customer's account Right to claim incidental charges, interest ete Banker's Lien Apart from general features of relationship, there exist some special features that arise due to the following legal obligations: ‘Statutory obligation to honour chequ ‘When a customer opens an account there arises a contractual relationship between the banker and the customer by Virtue of which the banker undertakes an obligation to honor its customers’ cheques. FE Banning oirtoma with SaKHAWAT (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat This obligation is a statutory obligation under section 31 of the Negotiable Instrument Act 1881. However, this statutory obligation is not absolute. The statutory obligation to honour a cheque is limited in the following ways: + Properly drawing ofthe cheque & The availabilty ofthe money in the account ofthe customer Proper application ofthe Funds Reasonable time for collection Banker's duty to maintain secrecy of customer's account ‘When someone opens a bank account, they expeet that information about their account is kept private between the bbank and the account holder. It's a erucial duty of the bank to maintain the secrecy of its customer's account, and this responsibility continues even after the account is closed, However, there are specific situations, like under legal compulsion or by court order, where the bank may be required to disclose information about a customer's account. For example, the bank might provide certified copies of account entries to the court if producing ledgers and records is inconvenient, Ri In the relationship between a banker and a customer, a special arrangement allows the banker to apply charges on accouats. These charges include service fees, processing fees, appraisal fees, peal charges, handling or collection fees, and similar eos Banker's Lien: In the relationship between a banker and a customer, there's a special provision called the right of lien. This means the banker can keep hold of goods and securities entrusted to them. This right, often seen as an implied pledge, not only allows the banker to retain the items but also permits them to sell the eustomer’s securities and goods after siving reasonable notice. This selling right is usually associated with a pledge, making a banker's lien essentially an implied pledge. Discuss Rights and Obligations of Banks & Customers? ‘The obligations or duties of a banker may be explained under the following heads: Obligation to Honour Cheques: ‘When a customer opens an aecount there arises contractual relationship between the bunker and the customer by virtue of which the banker undertakes an obligation to honor its customers’ cheques, This obligation is a statutory obligation under section 31 of the Neyotiable Instrument Act1881. However, this statutory obligation is not absolute. The statutory obligation to honour a cheque is limited in the following ways: Property drawing of the cheque + The availability of the money in the account of the customer Proper application of the funds Reasonable time for collection Obligation of Banker for Wrongful Dishonor: According to Section 31 of the Negotiable Instruments Act, 1881, the Banker is liable to compensate the drawer for loss or damage caused by wrongful dishonour. ‘When someone opens a bank account, they expect that information about their aecount is kept private between the bank and the account holder. It's a crucial duty ofthe bank to maintain the secreey of its customer's account, and this responsibility continues even after the account is closed. FE Banning oirtoma with SaKHAWAT (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat However, there are specific situations, like under legal compulsion or by court order, where the bank may be required to disclose information about a customer's account. For example, the bank might provide certified copies of account entries to the court if producing ledgers and records is inconvenient Other Obligation of banks/ Customer's Rights o Banker to Maintain Proper Records. Banker to Follow Customer’ Instructions properly. Banker to give Notice before Closing the Account. Bank should exercise proper care and skill in carrying out any business it has agreed to transact for its customer. ‘What are the Rights of a Banker? Discs Right of lien: ‘A banker's lien is a legal right granted to a bank to bold onto any property in its possession as security for the repayment of a debt owed by the customer, This gives the bank a stronger position in case the customer defaults on their loan or other obligations. ‘Types: There are two main types of banker's liens: eral lien: This applies fo any property belonging fo the customer that isin the bank's possession, regardless of the specific debt associated with the property. Particular lien: This applies only to the specific property that was used fo secure a particular loan or obligation. Right of Set-off Barker's Right of Set-off refers to a legal power granted to banks that allows them to combine a customer's debit balance and eredit balance in different bank accounts held with the same bank, and ultimately settle the net position, ‘This means they can use the funds in one account to offset or reduce the debt in another account. The right of set-off is a legal provision allowing a debtor to decrease what they owe to a ereditor by adjusting any amounts owed by the creditor to the debtor. How banker customer relationship terminate? ‘The relationship can be terminated because of two reasons: 1, voluntarily at customers: 2. Operation of law. ‘Termination by the customer: ‘A customer may close his account at will without notice to a banker at any time in the following circumstanees. Ifthe customer is not satisfied with the services of the bank, I?he cannot get required facilities from the banker It he loses his confidence in the bank’s reputation, economic stability, ete. If he does not agree with the terms and conditions of the bank. ‘Termination by the banker “Death ofthe customer Customer's insanity Customer's Insolve & Assignment FE Banning oirtoma with SaKHAWAT (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat Customer aeveptance pol ‘Customers play a erucial role in the banking business, contributing tothe survival and success of the bank. However, it's important to be cautious as some individuals with criminal intentions may enter banks as customers, posing risks like money laundering and tevroristfinaneing, In our country, banks only engage with customers whose identity is known and verified, avoiding those with unknown of fictitious names. To mect regulatory requirements, each bank must establish a Customer Acceptance Policy, outlining specific criteria for accepting customers. This policy includes detailed descriptions of customers ‘based on their associated risks, and the bank conducts due diligence appropriate tothe risk profile of each client. ‘The following important factors are required to be taken into consideration: Customer's background, Country of erigin, Public or high-profile position Linked accounts, Business activities of customers Basie requirements for account opening Other tisk indicators Branches should not open the account, commence business relations or perforin the transaction; or should terminate the business relationship if it is- ‘4 usable to identify the customer and verily that customers identity using teliable, independent source documents, data or information; unable to identify the beneficial owner taking reasonable measures; and 4 unable to obtain information on the purpose and intended nature ofthe business relationship; In such a situation bank branch should consider the customer as suspicious and make a suspicious transactions report in relation to the customer. schedule of Charges: ‘Banks charge fees for the services they provide to their customers. These fees may be charged on a one-time or ‘ongoing basis. Bank charges make up a big portion of bank revenue in addition to their interest income, Module B: Deposit Accounts & Operation ‘Customer and Unique customer identification code (UCIC) Banks offer different accounts and loans to various people, like individuals, businesses, and farmers. To avoid confusion, each person should have a single unique ID across all their accounts and Josns within the bank. This ‘unique ID will help banks easily identify customers, track their activities, and make sure everything runs smoothly. KYC (Know vour customer): KYC (Know Your Customer) is a mandatory process by which banks verify the identity and background of their customers before opening an account or providing certain financial services. It's a erucial step in preventing money laundering, terrorist financing, and other financial crimes. Money Laundering Prevention Act, 2012 requires all reporting agencies 10 maintain correct and concrete information with regard to identity of its customer during the operation of their accounts. KYC is a regulatory and legal requirement, KYC typically involves in banks for the verification of: FE Banning oirtoma with SaKHAWAT (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat This usually includes checking government-issued photo Ds like passports or driving licenses. oof of address documents like utility bills or bank statements ate verified. Source of funds: Banks need to understand where your income comes from, especially for large transactions. Some banks may require tax returns or other documents to verify income and tax KYC will be carried out atthe following situations Opening of a new account Opening of a subsequent account where documents as per current KYC has not been submitted while ‘opening the initial account Availing of Locker facility [At the desire of the bank if itis necessary to obtain additional information from existing customers based ‘on conduct of the account ‘When there aro changes to signatories, mandate holders, beneficial owners ete, Short KYC where nevessary in ease of non-aceount holders Electronic Know Your Customer (c-KYC): ©KYC, or Electronic Know Your Customer, is a digital version of the traditional KYC process. Instead of relying ‘on physical documents and manual verification, e-KYC uses technology to automate and streamline the process of verilying customer identity and assessing their financial risk ‘Components of KYC Program: ‘When creating a Know Your Customer (KY) program, financial institutions must focus on crucial elements that stem from their risk management and control procedures. 1. Customer acceptance policy, 2. Customer identification, 3. On-going monitoring of high-risk accounts, and. 4. Identification of suspicious transactions. Customer acceptance policy of a bank must include 4 Noaccount in anonymous or fictitious name or account only with numbers shall be apened; No banking relationship shall be established with a Shell Bank; and ‘No account in the name of any person or entity listed under United Nations Security Couneil Resolutions (UNSCRS) or their close alliance adopted under Chapter VII of the Charter of UN on suspicion of involvement in terrorist or terrorist financing activities and prescribed or enlisted by Bangladesh Government shall be opened or operated ‘Customer Due Diligence (CDD): Customer Due Diligence (CDD) is a process where a customer's relevant information is collected and analyzed to assess the risk of money laundering. This involves obtaining details like the customer's name, photo on an official ID, address, and date of birth FE Banning optoma wit saHawar (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat Banks use CDD checks to verify identities and ensure clients ate not involved in financial crimes. After CDD, ‘customers may receive a risk rating based on factors like "low risk" or "high risk," determined by a pre-defined set oferiteria, Enhanced Due Diligen Enhanced Due Diligence (EDD) involves thorough measures taken by organizations to closely examine high-risk clients and transactions, especially within Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. It surpasses standard Customer Due Diligence (CDD) to reduce the risk of financial erimes, such as ‘money laundering and terrorist financing. EDD is specifically erafted for high-risk or high-net-worth customers and large transactions, as these pose greater risks to the financial sector and require strict regulation and monitoring to ensure compliance, Both PEPs and IPs are individuals considered to be at higher risk for potential involvement in financial exime, typically due to their prominent positions or influence. Understanding who they are and the associated risks is «essential for organizations with Know Your Customer (KYC) and Anti-Money Laundering (AML) obligations, PEPs (as well as their family members and persons known to be clo&e associates) are required to be subject 10 ‘undertake enhaneed due diligence by a reporting organization in general (PEPS): Individuals entrusted with prominent public functions, either domestically or internationally. This includes: Heads of state, heads of government, ministers and deputy or assistant ministers 4 Members of parliament (MP3) Senior officials of government agencies, judicial bodies, and military Senior executives of state-owned enterprises Close family members and associates ofthe above ‘The FATE has categorized PEPs into 3 (three) criteria which include: + Foreign PEPs: + Domestic PEPs (known as Influential Persons Ps in Bangladesh) and & Chief or similar high-ranking postions in an international organization Beneficial owner(s): ‘A beneficial owner is the individual or entity who ultimately benefits from the ownership of a legal entity or account, even if they do not directly hold the ownership title. This can be seen as the "real" owner behind the scenes, controlling the assets and enjoying the profits. Here are some common examples of beneticial owners: “The real owner of a company, even ifthe shares are held in someone else's name. This could be through a complex web of shell companies or nominees The person who gots the profits from a trust, even ifthey are not the legal trustee. 4 The person who controls a bank account, even if they are not the named aecount holder. Identifying the beneficial ownership of a customer one must apply three elements. Any one element or any ‘combination of these three elements satisfies beneficial ownership. These elements are: |. Who owns 20 oF more pereent of a company oF legal arrangements FE Banning oirtoma with SaKHAWAT (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat Whe has effective control of the eustomer; 3. The person on whose behalf « transaction is conducted Purpose: Identifying beneficial owners helps banks comply with Anti-Money Laundering (AML) and Counter~ ‘Terrosism Financing (CFT) regulations. These regulations aim to prevent financial institutions from being used to launder illegal funds or Finance criminal activities. ‘Current Deposit Account Savings Deposit Account Fixed deposit Account Short Term Deposit Account Recurring Deposits Account ‘4 School Banking Account 4 ‘No-fills’ Accounts % Bank account for farmers ‘School Banking Account: ‘A savings Avcount for those kids who aspire to be more responsible from a youngage. ‘No-frills’ Account ‘The central bank lad introduced ‘no-ills! accounts in 2005 to provide basic banking facilities to poor and promote financial inclusion. One very important feature of these accounts is that opening of these accounts requires only a ‘nominal opening balance. No minimum balance is required and banks do not charge any fees for maintaining these accounts, Bank account for farmers: ‘A farmer can open a bank account by depositing BDT 10 at any state-owned commercial and specialized bank against national ID cardibirth registration card and ‘agricultural equipment assistance card’ issued by the Department of Agricultural Extension Discuss Account Opening Procedures and relevant documents required for opening of accounts: As the banker-customer relationship is a contractual relationship, all the essential features of a valid contract roquired to be present when a banker opens an account. + Every person who is at least of 18 (eighteen) years old is competent fo enter into contract and as such ean ‘open aa account with the bank. Persons of unsound mind cannot enter into a contract and they cannot open an account with the bank. To ‘open an aecount, one must be capable of understanding the contract and of forming a rational judement as to its effects upon his interest. FE Banning optoma wit saHawar (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat “4 The bank has to be satisfied regarding the genuineness of all information and documents that are requiced for opening the account and should be willing to establish banking relations. "Normally banks have to deal with the following types of individual and non-individual accounts: Single / Joint Minor iterate person Disabled person Executors and Administrators Account counts: Corporate or Account of Business Organization A Sole Proprietorship & Parmership Limited Company (Private;Public) Government accounts (including ministries/divisions), Accounts of state-owned ofganizations and semi government ‘or autonomous bodies, Accounts of projects operated under various ministries Other organization’s account: 4 ClubSociety 4 Cooperative Society/Limited society 4 Non-government school, college, university, madrasa, religiousorganizations 4+ Trusts ‘Transaction profile (TP): A transaction profile (TP) for a bank wecount is a detailed record of the account's activity, providing insights into its spending pattems, income sources, ané-overall financial behavior. It typically inclndes the following information: Title of the account account number type of account ‘monthly probable income to be obtained in the TP [Number of monthly probable deposit withdrawal ‘maximum amount in single deposiv withdrawal ‘monthly probable total deposit withdrawal as against the following to be filled in by the account holder ‘TP should be periodically updated — because nature of transaction, number of monthly transactions, maximum size ‘ofper transaction and total amount of transaction may change or vary. Personal information form (PIF) Every bank must obtain Personal Information Form which isto be filled in properly and to be affixed with the main Account Opening Form (AOF) for customer information and customer due diligence of the respective non- Individual account holders as per the indications of Bangladesh Bank given below. Banks may obtain additional information and documents subject to banks satstetion, FE Banning optoma wit saHawar (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat While opening an account following papers and documents are required for- Generally required for all types of non-Individual accounts are: Properly filled & Signed AOF 2{two) recent passport size photographs NID/Passport Birth Registration certificate of proprietor /partner /signatory / principal shareholders’ Key EC Members of entity’ Trustee as applicable. AVC payee cheque /eashy transfer slip ‘Supporting documents of source of Fund, Occupation & Address eTIN & VAT certificate, Official seal as applicable. Sole proprietorship accounts eee HE Latest & valid Trade License issued by the Municipal Authority Personal information form (PIF) to be filled in and to be obtained in respectof the operator of the account (Proprietor of the firm) (ene) photo for each Nomince & Photo-ID Proper KYC/TPIRPISS Card to be obtained Latest e-TIN certificate/VAT Registration as applicable ‘Mandate of letter of authority to operate the account, if desised by theaccovt holder. Partnership Accou Partnership firm's account eannot be opened in the name of an individual partner. A banker should get a written roquest from all the partners for jointly opening an account. Letter of partnership and partnership deed duly notarized or registered with the Registrar of Joint Stock Companies and Firms will be required. The following papers and documents also to be required: a “ 4 4 Latest & valid Trade License issued by the Municipal Authority in the name of partnership firm. ‘The partners should give clear instruction as ta the operation of the accounts of the Firm ic, partnership resolution. ‘Specimen signatures ofthe authorized persons to operate the account dulyattested by all the partners. Latest e-TIN/VAT registration certificate to be obtained. Proper KYCITPIRP to be obtained. imited Company (Private er Public): ‘While opening A/e’s of companies’ banker should obtain & examine the following documents: 4 Hebe eee ee Certified copy of MOA/AOA and Cerificate of incorporation from theRegistrar of Foint Stock Co. && Firms (RISC & firms) Board's Resolution for opening and operation of the account & the namesof the person authorized 1 ‘operate the account ‘Specimen signatures of the person(s) who are authorized by the resolutionto operate the account. Such copy should be signed by the Chairman of themecting and the Secretary of the company. Certificate of Commencement of business (In case of Public Limited Co.) Latest and valid Trade license Latest e-TIN Certificate/VAT as applicable Certificate from the respective Trade Body/Assoeiation License from Security & Exchange Commission for Stock-dealer BOI approval for Branch’ Liaison Office (I8/B, as applicable) Form XIl in respect of the list of Directors and authorized signatories dulycertfied by RISC List of Directors and detail of Beneficial Owners (=>20% shareholder) FE Banning oirtoma with SaKHAWAT (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat ‘Schedule-X with regard to shareholding position ofthe Dixectors dulyecrtified by RISC Up-to-date & audited balance sheet of the company Every year up-to-date audited balance sheet and list of ditectors withshareholdings duly certified by the RISC should also be taken for record. ‘Trust Account: ‘Tho person who reposes the confidence is called the author of the trust. Trustee is the person in whom the ‘confidence is reposed. The person for whose benetit the trust is formed is called the beneficiary. A trust is usually formed by means of a document called the “Trust Deed ‘The following papers to be required to open Trust Account: ‘Trust Deed copy for scrutiny of the rules regarding the opening andoperation of deposit account. Resolution for opening account by trustee Board stating Bank’ name. List of Trustees & signed Mandate, Resolution regarding operation of account. Account opening Form (AGF), Specimen signature card (SSC), ChequeRequisition Form properly filled in bee ee Account will be opened and operated jointly. Cash transactions should be done cautiously. Bankers should open aecount in the name of Trust In case of death, Lunacy, retirement, or change of trustee; new Trustee will be appointed in writing ‘Trustees should have financial soundness. Bankers should have vigilant eye on “Breach of trust’ No transfer from Trust A/C to personal account Mark “Trust Account” on Ledger boldly, [No borrowing will be allowed without FO approval ‘There should always be a clause in the mandate binding the trustees to be jointly and severally liable to the ‘bank for any liability incurred by them in the account, 4 4 + a a 4 a 4 4 Government accounts: It includes ministries/divisions/Directorate/Corporations! semi government or autonomous bodies/Local authority/Aceounts of projects operated under various ministries ete): Copy of the relevant Government order’ Gazette Notification’ Provision of law by which the entity is established, 4 Copy of the relevant Government orderiresolution/Letter from competent authority with decision of account relationship with the respective banks, Opening and Operation: 4 Every wing of govt. authority and Local authority shall make arrangement for the proper administration of their finaneial affairs and shall secure that one of their officers has responsibility for the administration of those affairs Request letier for opening bank account, Branch manager specially satisfies himself as regards the provision about the dealings with the fund, ‘opening, operation of the bank account in the *Statute”. Name, style, and nature of account must be stated in the statute or resolution. Any Govt, account will be opened and operated as per official eapacity, subject to the permission from the ‘competent authority, FE Banning optoma wit saHawar (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat Account of Regimental fund (Army account) should be opened and operated as per the letter of authority from the ‘Controller of Military Account’. (Operation of account in contravention of “Statute* will rot be allowed. Cash transaction should be done cautiously. Pre-advice should be taken in ease of cheque drawings. In case of changing officer or office bearer new authorizing letter will be taken issued by competent authori 1 Monty stent of scoomnt query talus confrmtin t beseved upon proper eget count of Club, Societies & Asoviatio + Centfied copy of Registration Certificate (as applicable) 4 Centified copy of Bye-laws /constitution (by Cooperative Orficer for Cooperatives) 4 Executive Committee (EC) Resolution with decision of account relationship with the respective banks. List of Executive Committee (EC) Members with identity details. ‘Non-Government School College /University/Madrasa: + Centfid copy of Registration Certificate (as applicable) 4 Certfied fst of Members of Governing Body/ Management committee with identity details. + Resolution of governing Body / Managing committee with decision of accoust relationship with respective banks. ‘Trusty/ Found: Copy of Registered Notarized Centfied copy of Trust Deed Certified list of Trustees with identity details, Resolution of the Board of trustees with decision of account relationship with respective banks. Letter from NBBVTax authority (if tax is exempted) ‘Sanction Screes Sanctions and PEP screening is a eritical step in the KYC process. Banks and FIs need to perform a detailed ‘Sanction Sereening and politically exposed person (PEP) check when onboarding new customers, as well as during the ongoing review of clients, to ensure thatthe organization’s reputation, revenue and capital are protected. ‘Sanctions lists are established to help reduce financial crime by flagging individuals, businesses and countries that have committed illegal acts (or are suspected of committing them). By sereening customers against sanctions lists, Banks and Fls can lower their risk of doing business with sanctioned entities. Opening of account through digital Platform: Now a days many banks are opening bank account through digital platform. Digital account opening (DAO) is the process of empowering an applicant to open an account digitally. It can be done very quickly, easily and securely. Contact point verification (CPV): Its a process used to verify the details and documents provided by customers, such as ID proof, address proof, and income proof, in order to prevent fraudulent activities. Financial institutions conduct these verifications by hiring trained verifers / agents who collect all relevant data regarding the customer for the institution, Under what circumstances can a banker disclose the secrecy of a customer's aceount? Why is introduction necessary at the time of opening an account? FE Banning oirtoma with SaKHAWAT (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat If there is Legal obligations Ifthere are suspected criminal activities Consent from the customer Regulatory compliance Preventing fraud and money laundering Module C: Negotiable Instruments Act 1881 ‘Negotiable Instruments [Negotiable means transferable by delivery and ‘Instrument’ means a written document by which a right is ercated in favor of some person. The term Negotiable Instrument literally means a document transferable hy delivery. According to see-13 of Negotiable Instrument Act 1881, "Negotiable Instrument” means a promissory note, bill of exchange or cheque payable cither to order or to bearer. Promissory Note: ‘A promissory note is written legal document that serves as a formal promise to repay a debt, It outlines the terms ofthe agreement between the borrower andl the lender. ‘The person who makes the promise to pay is ealled the maker. He is the debtor and must sign the instrument. The person who gets the money (the creditor is ealled Payee, ‘Example: A signs instruments in the following terms (a) “I promise to pay B or order Take 500,” (b) “Tacknowledge myself to be indebted (0 B in Taka 1,000 to be paid on demand, for value received.” Bill of Exchange: A Dill of exchange is « formal written order instructing one party (drawee) to pay a specific sum of money to another party (payee) at a predetermined time or on demand. It plays a erucial role in facilitating international trade, acting, asa secure and reliable payment method. ‘The person who draws the bill is called the ‘drawer’ and the person on whom it is drawn, is called the “drawee" or “acceptor” and the person to whom the amount is payable is called the “payee” | Promissory Note [Bill of Exchange FE Banning optoma wit saHawar (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat Tia promissory nole there are Iwo parties- the |In a bill of exchange there are three ‘maker and the payee, parties: the drawer, the drawee and the payee. Ta promissory note there isa promise to pay. | Ina bill of exchange there is an onder to pay. ‘Aecepiance ‘A promissory aoie is signed by the person lable | A bill of exchange, except in certain to pay; therefore, no acceptance is necessary. _| eases, requires to be acvepted by the drawee before itis binding upon him. Liability ‘The maker of @ promissory note is primarily | The drawer of @ bill is hable only when liable on the instrument. the drawee does not accept the instrument or pay the money due. Cheque: ‘A ‘Cheque’ is bill of exchange drawn on a specified banker and not expressed fo be payable otherwise than on demand, So, it can be said that a check is 2 written, dated, and signed instrument by the account holder that contains an ‘unconditional order directing a bank to pay a definite sum of money to a payee. The maker of the cheque is called the Drawer The person thereby directed to pay is ealled the Drawee ‘the instrument directed to be paid, is called the Payee Ante-dated cheque: An ante-dated cheque, also known as a backdated cheque, is a cheque written today but with a date in the future ‘written on it. In simpler terms, it’s a cheque that appears to be older than it actually is, Example: Date Written: Today's date, December 18, 2023, 4 Date on Cheque: January 15,2024 Post-dated cheque: ‘A post-dated cheque is the opposite of an ante-dated cheque, It's a cheque written with a future date on it, meaning. the payment instructions only become valid on that future date Example: Date Written: November 20, 2023 Date on Cheque: December 15, 2023 FE Banning optoma wit saHawar (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat Payee: Sakhawat This cheque, written on November 20th, states it should be cashed on December 1Sth, Sakhawat, the payee, can only present it to the bank for payment on or after that date. ‘Stale cheque: ‘A stale cheque is a cheque that has been written too long ago and is no longer considered valid for payment by the bbank. A cheque becomes stale after the expiry of 6(six) months from the date of the cheque. Such cheques are returned unpaid to have confirmation of the drawer. Holder: ‘The holder of a promissory note, bill of exchange oF cheque means the payee or endorsee who is in possession of it or the bearer. Conditions to become a holder A person is called the holder of a negotiable instrument subject to the Following eonditions: 4 The person must be entitled to possess the instrument in his/her own namelawfully and in proper manner: 4 The person must be entitled to receive or recover the amount from the parties concemed in his‘her own, Holder in due course: ‘A holder in due course is a person of entity that acquires @ negotiable instrument in good faith, for value, and ‘without notice of any defects or issues with the instrument, To be considered a holder in due course, the individual or entity must meet the following criteria: yod Faith: The holder must acquire the instrument honestly and without any’ fraudulent intent For Value: The holder must provide some form of consideration, such as money or goods, in exchange for the instrument. Without Notice of Defects: The holder must acquire the instrument without knowledge of any issues, such as ‘Forgery, fraud, or other claims that could affect its validity. Payment in due course: Payment in due course means payment in accordance with the apparent tenor of the instrument in good faith and ‘without negligence to any person in possession and the person holding the instrument shouldn't have any reason to think they won't get the money written on it. Inland instrument: A promissory note, bill of exchange or cheque drawn or made in Bangladesh, and made payable in, or drawn upon any person resident in, Bangladesh shall be deemed to be an inland instrument. Instruments to be named as an inland instrument if 4, is drawn within the country on a person residing in the country, whether payable in or outside the country, oF FE Banning optoma wit saHawar (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat b. [his drawn within the country on a person residing outside the country but payable in the eountry. Endorsement: An endorsement refers to the act of signing the back of a cheque or other negotiable instrument, such as a promissory note, to transfer ownership or authorize payment. In other words Endorsement is nothing but the process of signing one’s name or affixing an accepted rubber stamp impression on a cheque, for the purpose of transfer, ‘The person who signs the instrument for the purpose of negotiation s/he is called Endorser & whose favor the instrument is transferred he is called endorsee. Material alteration: A material alteration in a check/promissory note/Bill of exchange refers to any unauthorized change or modification ‘made to a check that significantly affects its terms, such as the amount, payee, date, or any other important details. Collecting bunk/Presenting bank: A collecting banker is one who undertakes to collect the amount of a cheque for his customer from the paying banker, A Collecting Banker undertakes the responsibility of collecting cheques, drafts, bills, pay orders, Letter of eredit, dividend warrants, debenture interest ete., on behalf of the customer. Paying Banker A Banker on whom a cheque is drawn should pay the cheque when itis presented for payment. ‘On what occasions payment of cheques may be refused by a banker although the cheques are otherwise in der? ‘The liability of a banker to honor the cheque of their customer means that the banker has a responsibility to pay out the amount specified on the cheque to the person or entity named as the payee, However, there are sme exceptions when a banker may not be obligated to honor a cheque. Here are a few key exceptions explained here: If there is Insufficient Funds. + Ifthe Account is Frozen Ifthe signature is Mismatehed: 4 there is Stop Payment Request given ‘+ Ifthe chq is Staleypost dated/ante dated Positive Pay Instructio Positive Pay instruction is a security measure used by banks to prevent fraudulent activities related to cheques. tis "Hundi"? Can hundi be regarded as a negotiable instrument? How docs hundi affect the econor Bangladesh? “Hundi" is a traditional way of transferring money especially in South Asia, including Bangladesh, outside of regular banks. In this system, someone gives money to a hundi broker who provides « code or document, The recipient can use this code to get the money from another hundi broker. FE Banning oirtoma with SaKHAWAT (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat Hiundi is not generally regarded as a negotiable instrument in most counties, including Bangladesh. A negotiable instrument is a document that guarantees the payment of a specific amount of money and is legally enforceable. Hundi operates outside the legal framework and lacks the legal protections and regulations associated with negotiable instruments ‘The impact of hundi on the economy of Bangladesh can be both positive and negative. On the positive side, hundi provides a convenient and efficient means of transferring money, particularly for individuals or businesses that do not have access to formal banking services. However, hundi also has negative implications. Because it operates outside the formal banking system, it bypasses regulatory controls and can be used for illegal activitics such as money laundering and tax evasion. Transactions conducted through bundi ate often unreported and undocumented, leading to potential losses in tax revenue for the government. Garnishee order ‘A gamishee order isa legal order that allows a creditor collect verdue amount Of'a debtor from a third party who ‘owes money to the debtor, For example, imagine that you borrowed money from a FI and failed to-repay the loan. ‘The FI may obtain a gamishee order from a court to collect the money from your salary, by instructing your employer to deduet a certain amount from your salary every month and pay it directly to the FLuntilthe debt is fully repaid. Internet banking, also known as online banking, e-banking or virtual banking, is an electronic payment system that enables customers of a bank or othet financial institution to conduct a range of financial transactions through the financial institution's website or apps. Standing Instruction: ‘A Standing Instruction (SI) is like a helpful service from a bank. Instead of telling the bank to do a transaction every time, you can set up an SI for regular transactions. Once you start it, the bank will automatically handle the transactions for you, making it easy to manage your money without having to do it manually each time. ‘Standing instructions are the instructions given by a customer to his banker that relates to certain financial dealings, eee Receipts 4 Transfer 4 Payments of money ‘Some of these instructions are as follows: Payment of life insurance premium to LIC periodically. Payment of periodic membership fee/ subscription to clubs, libraries, professional association etc Payment of various bills of the customer. FE Banning optoma wit saHawar (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat “4 Transfer of specific amount fiom one account of the customer to anotheraccount. Collection of dividends on bchalf of customers. 4 Collection of pensions from Govt. Dept ‘Stop and lost payment instruction & its revocation: ‘A stop payment is like telling the bank not to eash a check for different reasons. I's an order from the account holder to cancel a check before the bank processes it, This can only work ifthe receiving bank hasnt already processed the payment. The bank might charge a fee for doing this service. Dormant accounts and its reviv A dormant account refers to an account that has shown no activities- such as deposits and withdrawals for & long period of time. ‘The main purpose of categorization of an account as Dormant Account is to ascertain safety & security of account and also to avoid the risk of fraud in any account, record keeping and periodie review of accounts. ‘Consequences of Dormant Account: Account holder may face many consequences on his/her account being dormant ike: Cheque book will not be issued ‘Address cannot be changed Cash withdrawal from an ATM or brach is not allowed Add or delete a joint holder in the account [No transaction through internet banking, or phone banking No renewal of ATM/ debit card Gera user ID and password Modification of signature Cannot request to issue a cheque book Banks are to treat their Current and SND accounts as dormant six months after they become inoperative, according. to a central bank notice which means the account cannot be used without official permission, ‘Tho inoperative Savings accounts will have to be considered as dormantafter 18 months, Procedure for renetivating a dormant account Ifyou haven't used your bank account for a long time, it could become inactive. To make it active again, you have to go to your bank and fill out a form explaining why you haven’ used it. The form asks the bank to change your account status from "inactive" to "active." After the bank manager looks at your information, they'll decide if they ‘can reactivate your accout ‘The account holder should also submit the following documents | records to the Bank for verification. ‘Recent color passport size photo~ 2 copies Copy of valid photo ID document Copy of valid address proof documents Ifan account remains dormant for five years, clients will have to fill up a new KYC (know your customer) form to activate accounts, FE Banning optoma wit saHawar (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat If the customer could not be traced after reasonable efforts the banker usually transfers the balance to Bangladesh Bank as “Unclaimed Deposit Accounts,” and the account is closed, All unclaimed deposits & valuable articles for 10(ten)years must be sent to Bangladesh Bank. If there is no transaction for last 10 years or being no trace of the customer in spite of repeated reminders and upon serving 3 ‘months prior notice amount in the account concemed may be transferred to BB. Closing of accounts: Closing of account(s) cab be made at any time by giving notice in writing or submitting Account Closure Form (available in any of bank branches) to the Branch where the customer opened the accounts). ‘When you close your bank account, the bank will give you any money left in the account along with any interest you camed. They will also charge any fees or taxes needed for closing the account, You must return any unused checks, the debit card, and other materials the bank gave you for the account. If you lose any of these items, you need to tell the bank with a written application and a copy of the report forthe lost items. Operation of minor stud 4 Account will be opened with parents! legal guardian as.an authorized signatory; it will be treated as a Minor account + No minimum balance is required to be maintained. + Invorest wil be earned on any balance kept in School Banking Account; no minimum threshold applies. “Interest wil be eamed on monthly average balance and applied to the account quarterly. No account maintenance fee is charged Bank account for farmers: ‘A farmer can open a bank account by depositing BDT 10 at any state owned commercial and specialized bank against national ID card/birth registration card and ‘agricultural equipment assistance card’ issued by the Department of Agricultural Extension, Bank account for hardcore poor? ‘A hardcore poor ean open bank account by depositing BDT10 (equivalent 12 cents only) at any state owned ‘commercial and specialized bank against national ID card and registration card issued by the Ministry of Food & Disaster Management. Bank account for the garment’s workerst All banks have been instructed to open bank account for the garment’s workers by depositing BDT 100 against national ID card/ ID card issued by respective employer. Banks ean use voucher in case of shortage of cheque book. Pay and allowances of garments workers will be payable through these accounts. Banks have been instructed to report opening and operation of this aecount to BB in a preseribed form on a quarterly basis, Incapacitated, siek and disabled aceoun If someone is too sick to sign a check or go to the bank, they can use their thumbprint on the check or withdrawal form. The bank allows this. But, ifthe person can't go to the bank and also can't use their thumbprint because of a physical problem, the bank has special rules for that situation FE Banning oirtoma with SaKHAWAT (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat Here's how it works: If someone is sick, old, or can't be at the bank, they ean use their thumb or toe impression on bank documents. Two witnesses, with one being a responsible bank official, need to confirm this. Ifthe account holder can't come to the bank regularly, they ean give permission for someone else to manage their account through a simple letter called a mandate, The named person must be identified by two witnesses, and the person withdrawing, ‘money should provide their signature to the bank, Non-resident account ‘Non-resident accounts in Bangladeshi banks are bank accounts held by individuals or entities who are net permanent residents of Bangladesh, ‘The banks need to figure out the permanent residence countries ofall account holders andl label the accounts as non= resident, showing the established countries of residence. I there's uncertainty about whether an account should be non-resident, the bank ean ask the Bangladesh Bank for a decision by providing the necessary information. NRTA Account: NRTA stands for Non-Resident Taka Account. It is a type of bank account in Bangladesh that is specifically designed for people who are not permanent residents of the country. NRTA accounts allow you to hold Bangladeshi taka (BDT) and fo carry out financial transactions in Bangladesh, Foreign investor can open a temporary bank account (Non-resident Taka Account: NRTA) without prior permission ‘of Bangladesh Bank to receive the capital remittance from abroad for encashment certificate. Resident account For foreigners living in Bangladesh or companies controlled outside the country but operating here, their bank accounts are considered local (resident). To open these accounts, two things are needed: 1, Someone authorized to use the aceouttt (person or company representative) must sign a form called QA-22. 2. The bank (Authorized Dealer or AD) gets the QA-22 form in two copies, keeping one and sending the other to the Bangladesh Bank for their records. Important note: Getting permission from the Bangladesh Bank beforehand is not needed to open these accounts. ‘Tax and Excise duty: ‘Tax and Excise duty All the banks operating in Bangladesh are bound to deduct Exeise Duty from each of the ‘customer accounts (savings, current, loan or other accounts) held with the bank as per the instruction of National Board of Revenue (NBR) according to NBR’s circular, ‘The latest SRO (Statutory Regulatory Order) No. 143-Law/2020/104-Exeise Dated 11 June 2020 has been applicable from 01 July 2020 (Subject to change from time to time) Highest Balance (Credit/Debit in Taka) Excise Duty in Taka (0-100,000 NIL 4 100,001- 500,000 BDT 150 4 500,001. 1,000,000 BDT S00 1,000,001. 10,000,000 BDT 3,000 ~ 10,000,001- 50,000,000 BDT 15,000 50,000,001 and above BDT 40,000 FE Banning optoma wit saHawar (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat BACH Operation management: Clearing and Collection: (Clearing in banking is like a system that helps banks manage deposits and payments among themselves. It involves using instruments like cheques and drafls through a process regulated by the central bank, in this ease, the Bangladesh Bank. When a person deposits a cheque from another bank, the clearing house makes sure the banks involved settle the accounts properly. ‘The term "collection item” refers to items like cheques presented for deposit that may need further verification before the bank credits the depositor's account, Clearing houses were creaicd to make this process smoother, gathering cheques from various banks and ensuring they get paid by the banks they're drawn on, Clearing house Funct In Bangladesh, the Bangladesh Bank, which is the country's central bank, serye¥ as the clearing house for scheduled banks. This means that banks with official accounts at the Bangladesh Bank can easily and efficiently settle their ‘transactions with each other, The Bangladesh Bank acts as a hub forall member banks, preventing the need for unnecessary movement of funds between different banks. ‘Types of clearing instrument ‘The following MICR encoded paymeat instruments are cligible for clearing in accordance with Bangladesh Bank guidelines: 1 Savings Bank Account Pay Order. Current Account Cheque Government Cheque Cash Credit Account Cheque 363, Credit Card Cheque Dividend Warrant Foreign Taka Demand Draft Demand Draft Foreign Curreney Cheque Refund warrant Foreign Currency Demand Draft + 4 4 4 4 4 4 + 4 4 4 4 a Bangladesh Automated Clearing House (BACH): BACH is a modem system in Bangladesh that uses computers to clear and setle electronic bank transactions among participating banks thas to main parts: 4 Automated Cheque Processing System (ACPS) Electronic Funds Transfer (EFT) FE Banning optoma wit saHawar (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat Both systems work together to provess transactions received from banks during the day, and the settlements are handled through a single netting figure on each bank's books at the Bangladesh Bank. BACH operates with a high-tech Data Center and a Disaster Recovery Site, equipped with the latest software and hardware. A secure Virtual Private Network (VPN) connects the participating banks to the Data Center and Disaster Recovery Site, ensuring safe communication, and a Digital Certificate adds an extra layer of security for data ‘exchange in Bangladesh, Bangladesh Automated Cheque Processing Systems (BAC Since its start in October 2010, BACPS has been a modem and efficient cheque clearing system. It uses Cheque Imaging and Truncation (CIT) technology to electronically handle paper-based instruments like cheques and pay orders BACPS operates in batches, processing cheques electronically through the Bangladesh Automated Cheque Processing System (BACPS) under the Bangladesh Automated Clearing House (BACH). Instead of physically carrying cheques to the Clearing House, banks capture images and information from che cheques, sending them for clectronic clearing through secure communication links. This eliminates the néed for physical movement of instruments across bank branches, reducing time, costs, and delays in processing, making cheque payments fester and more efficient. Operating procedures of automated clearing process are described below: 1. Customers will deposit cheques for collection in the bauk-branch for collecting the amount of money stated on face of the cheque. 2. Collecting banks will check prima facie information of the submitted cheques, capture images and information of the cheques submitted for collection from different banks and send them to BACPS for processing. The paper cheques will be retained by the collecting banks. 3. Collecting banks will send the images and information to BACPS electronically. 4, BACPS will then process and sends the images and information to the paying banks for validation, 5. Paying banks will examine the pettinent images and information for validation. If the information is found OK, paying bank will send dem back to the Clearing House for payment. If any inconsistency found (like signature ‘mismatch, insufficient fund, et:) paying banks will return them with specific reason(s). 6. Ata specific cut-off time, BACPS accumulate all the information, work out a single net amount for each bank, and send the return information to the collecting banks with net figure. 7. Collecting banks process the return information and adjust the customer-accounts accordingly. These operations. oFBACPS using CIT technology are secured, reliable and fast with no impact on the customers Jadesh Electronic Funds Transfer Network (BEFTN) ‘The Bangladesh Electronic Funds Transfer Network (BEFTN) is a robust and widely used payment system in Bangladesh that facilitates quick and secure electronic transfer of funds hetween bank accounts, 1 works in realtime batches, meaning it processes these transactions in groups, All the transactions are combined into one netting figure for each bank, and the final setlement is done through aecounts held with the Bangladesh Bank, In BEFTN, various FE Banning oirtoma with SaKHAWAT (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat banks participate in this electronic clearing system, where payment instructions are shared, reconciled, and the net positions for each participant are calculated at the end of each processing cycle. ‘The participants involved are: Originator. Originating Bank (OB) Bangladesh Electronic Funds Transfer Network (EFT Operator) Receiving Bank (RB) Receiver Correspondent Bank Corporate EF! Different uses of electronic systems include collecting and giving out cash, handling business trade payments, and ‘managing government or tax payments. For cash, companies ean efficiently move funds within their own ‘organization. In business trade, companies can easily share data and money with their trading partners, making it ‘automatic to update their accounts reesivable and aecounts payable systems, Real Time Grose Settlement (RTG! RIGS is a fist-clectronic system for moving finds from one bank account te another in real-time, meaning without any waiting period. It settles transactions instantly as soon as they are made. This system handles high-value ‘transactions in local currency, goverament securities, and foreign currency Unlike traditional systems that settle transactions in batches at the end of the day, RTGS settles each transaction individually as it happens. How does RTGS work? ‘When you initiate an RTGS transfer, your bank sends the payment instructions to the central bank's RTGS system. ‘The central bank then debits the amount from your bank's account and credits it to the recipient's bank account in real-time. Once the transaction is settled, both banks are notified, and the funds are available tothe recipient. Benefits of RTGS: Speed and efficiency: Transactions are settled instantly, providing immediate access to funds for the recipient, Security: Real-time settlement climinates the risk of settlement failure, making RTGS a highly secure way to tanste funds, ‘Transparency: Both the sender and the recipient are notified immediately when the transaction is complete Reduced risk: By eliminating the need for intermediate settlements, RTGS reduces the risk of systemic financial instability. PSB, operational since 2012, helps banks work together for account and card transactions. It connects 53 banks for ATM transactions and allows eash withdrawal, balance inquiries, and mini statements. For Point of Sales (POS), $2 banks can now interact, and 25 banks are connected for Internet Banking Fond Transfer (BFT), NPSB is all about making ATM transactions easier, faster, and cheaper fr everyone. It has several benefits like: FE Banning optoma wit saHawar (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat One Card, Many ATMs: Use your card at any NPSB-linked ATM, no matter which bank issued it. Freedom from bank-specific machines! Cash on the Go: Withdraw cash easily from any NPSB ATM, even if it belongs to a different bank, Convenience at your fingertips! Interbank Harmony: Banks work together through NPSB, making ATM transactions smooth and seamless. Banking bliss! ‘Wide Reach: With over 50 banks on board, NPSB covers most ATMS in Bangladesh inancial Servi Mobile Financial Services (MES) is like having a mini bank on your phone! It lets you do al sorts of financial things ‘without setting foot in a branch: ‘Send and receive money: Move eash to friends, family, or businesses, instantly and securely. Pay bills: Top up your phone, setle utility bills, pay rent, all with a few taps. Save money: Put aside some cash in your digital wallet for rainy days or future goals. Buy things: Scan and pay at shops, buy online, or send gifts ~no cash needed ‘Access credit: Get small loans or microfinance through your MFS account Benefits of Mi 4 Convenience: Anytime, anywhere banking, right in your hand, 4 Sccurity: Transactions are protected with PINS, passwords, and encryption, ‘Affordability: Often cheaper than traditional banking services. + Financial inclusion: Brings banking services to remote areas and unbanked populations. In 2011, Bangladesh Bank introduced Mobile Financial Services (MFS) that operate outside of traditional bank branches. This was possible because Bangladesh las a widespread mobile phone network, a lot of people using ‘mobile phones, and improved technology. In just seven years, his Bank-Led MFS model has become the world's biggest market for Mobile Financial Services, Regulatory FinTech Facilitation Office (RFFO) ‘Technology is changing how we handle money, with digital innovations making a big impact on financial services. This disruptive technology is transforming the financial sector, introducing new solutions from financial and technology companies. FinTech, oF financial technology, has proven to be a powerful foree in the financial markets, bringing improvements in efficiency, reducing risks, and making financial services more accessible to a larger number of people Module F PART 2: Other General Banking, Depurtmental Control Funetion Checklist (DCFCL): DCFCL is the guideline/procedute that deals with matters relating to review/verifications of departmental functions to ensure that prescribed procedures are being followed by each department All departments are required to check that prescribed controls are being observed and laid down procedures are not overlooked & relaxed. Departmental Managers, Line Managers, Branch Managers will review the DCFCL to ensure that control functions are performed and documented in the control sheets atthe prescribed fiequencies ie, Day, weekly, monthly and quarterly. FE Banning oirtoma with SaKHAWAT (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat 4 The DCFCL Checklist should be setained with the branch/depastments for future inspestion by Internal Control and Senior Management Monitoring is an on-going process usually directed by the management fo ensure that processes are working as intended, Monitoring is an effective control within a process, Storage of Accounts Records Account reconds are crucial for making financial decisions, dealing with taxes, settling accounts with suppliers and ‘customers, and even in court cases as evidence. Since these records are kept for a long time, its vital for businesses to maintain them carefully. The paragraph discusses various methods to securely keep account records for an extended period. All the accounts records must be kept in good bindings. Good quality of paper should be used for all vouchers, sales bills, delivery challans ete. Good quality of files must be used ta keep all the vouchers, sales bills, prchase bills ete Proper care should be taken to protect these records from rats and other inseets Filing of all records must be done in good manner. All the supporting documents must be properly attached with vouchers. In case of accounting data lying in computer, proper backup should be taken in floppies or pen drives, Hard copy ofall computer records must be taken, ‘There should be a responsible person who ean look afler all records properly and he/she should be responsible to keep the records in proper way. bee REE EEE Proper and separate store room should be given to accounts department to keep their records. Business Continuity Plan: Business Continuity Planning (BCP) is crucial for dealing with operational risks, including potential disasters affecting 2 wide area or a Data Center. The main goal is to help a bank survive a disaster and get back to normal business operations. The plan should ensure critical operations can resume within a reasonable time. BCP covers business resumption and disaster recovery planning, including backup and recovery processes. Banks must have a BCP in place to recover from disasters and continue operations. All related documents should be kept in a secure oif-site location, with one copy stored in the office for quick reference, Documents and Voucher ‘Vouchers, cheques, bills, P.O ete. orany other records maintained through TT are termed as documents ‘A voucher is the first record made by an accountant using a source document. It has two parts: debit and credit, representing the nature ofthe transaction, Vouchers are crucial for showing the authenticity of transactions and form the base of accounting records. Accountants must assign the correct account head when preparing vouchers to avoid mistakes. Supervisors check vouchers to ensure aecuracy, and each one must be signed by the accountant and supervisor, supported by transaction proof. FE Banning optoma wit saHawar (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat ‘Vouchers can be cash or non-cash, and eash vouchers may be debit or credit. The preparation of vouchers is vital for businesses, serving as evidence for transactions, especially during audits. Vouchers create a paper trail, preventing, ‘misconduct and ensuring transparency in financial teansaetions. a Daily statement of affairs is like a bird's-eye view of the numbers. It shows the bank's health just like a balance sheet and income statement do, From a junior officer to high officials of banks can get information from daily statement of affairs/income and expenditure related statement: 4 See how well their eam is doing: Did their new plan work? Where can they improve? Make better decisions: Allocate resources wisely and choose the right strategies. 4 Understand the bank's everall picture: Are they making money? Is everything in order? In short, the daily statement of affairs is a powerful tool for managers to steer their teams towards suceess, I's like a ‘map of the bank's finances, guiding them to make informed decisions. Balancing of all heads of general ledger (GI ‘A general ledger (GL) is like a big record book that keeps track of a bank's overall financial aecounts, It includes records of assets, liabilities, equity, expenses, and income. Transactions from journals get recorded in the general ledger. Balancing the general ledger means making sure the total debits (money going out) equals the total eredits (money coming in). Debits go on the left side, and credits go on the right side. To balance, the amounts on both sides must be the same. Reconciliation means comparing the general ledger with other financial documents like statements and reports to make sure everything matches up. Part 1, Module A. ‘The main functions of the Bank as per this order shall be as under: 1. To formulate and implement monetary policy; 2 To formulate and implement intervention policies in the forcign exchange market; 3. To give advice to the Government on the interaction of monetary policy with fiscal and 4. exchange rate policy 5. To hold and manage the official foreign reserves of Bangladesh 6. To promote, regulate and ensure a secure and efficient payment system, including the 7. issue of bank notes: 8 To regulate and supervise banking companies and financial institutions, FE Banning oirtoma with SaKHAWAT (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat Article 9 of the BB Order is fairly comprehensive section dealing with the policy structure of the Bank, Article 9(2) says: “The general superintendence and direction of the affairs and business of the Bank shall be entrusted to a Board of Directors which may exercise all the powers and do all acts and things that may be exercised or done by the Bank.” Article 9(3) says that the Board shall consist of — ‘The Governor; A Deputy Governor to be nominated by the Bank: Four Directors who will not be Government officials to be nominated by the Government from amongst persons who, in the opinion of the Government, have had experience and shown capacity in the field of| banking, trade, commerce, industry or agriculture; ‘Three Government officials to be nominated by the Government. Banking company act 1991 ‘Mention power of BB to control Advances as per Banking company act 1991? As per Section-29 of Banking Compnay Act,1991 Power of BB to control Advantes are as follows: BB may determine the lending poticy to be followed by the Banking Companies. BB may give directions to banking companies in the following matters: Credit ceilings t be maintained ‘The minimum ratio of small loans to the total advances, The purpose of loan ‘The rate of interest to be charged on advances ‘The Limit up to which advances may be given to any bank/group of banks! group of persons if your bank has unclaimed procedures as per banking company act 1991 [As per Section-35: Unclaimed deposits and valuable articles, All unclaimed deposits & valuable articles for 10(ten) years must be sent to Bangladesh Bank. If there is no transaction for last 10 years or being no trace of the customer in spite of repeated reminders end upon serving 3 ‘months prior notice amount in the account concemed may be transferred to BB. Slate in brief about the provisions/restrictions to be maintained as per the Banking companies Act, 1991 of SLR & CRR and Maintenance of Capital ‘Section -33(2): Maintenance of Liquid Assets (SLR) AS pet the Bank Company Aet, 1991 and the amendment made in 2013 under section 33(2), it has ben decided that (2) conventional banks will have to maintain at least 13% of total demand and time liabilities as Statutory liquidity ratio (SLR) over and above the CRR in eash and as deposit within Bangladesh in easily exchangeable asset on daily basis it will not be less than 13% of total demand and time liabilities and (b) in ease of Islami Shariah based Banking it willbe at least 5.5%. FE Banning oirtoma with SaKHAWAT (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat RR RR is maintained in eash form with Bangladesh Bank. In banking system, CRR is a proportion of eash determined. by the central bank from time to time against a bank's total demand and time liabilities (TDTL). CRR ensures flow ‘of money to the economy. Cash Reserve Requirement Ratio was set as 4.0 % in April 2021. ‘Maintenance of Capital: All the banking companies working and having business in Bangladesh will have to maintain their required capital from time to time as determined by the Bangladesh Bank- the amount, the percentage and the ways mentioned therein, ‘The total regulatory capital will consist of sum of the following categories 1) Tier 1 Capital (going-concem capital) Going-concern capital is the capital which can absorb losses without triggering bankruptey of the bank. 8) Common Equity Tier 1) 'b) Additional Tier 1 2) Tier 2 Capital (gone-concern capital Common Equity Tier | Capital) Goneconcern capital is the capital which ‘will absorb losses only in a situation of liquidation of the bank. For the local banks, Common Equity Tier 1 (CET1) capital shall consist of sum of the following items: a) Paid up, capital b) non-repayable share premium account c) Statutory reserve d) General reserve ¢) Retained earnings £) Dividend equalization reserve g) Minority interest in subsidiaries Artho Rin Adalat Ain, 2003 ‘The Artho Rin Adalat Ain, 2003, plays a erucial role in the financial and legal system of Bangladesh by providing a dedicated mechanism for resolving issues related to loan defaults and financial disputes, aiming to facilitate a fait and efficient resolution provess for both lenders and borrowers, ‘The purpose of this law is to streamline the legal process for the recovery of loans and to provide a specific legal framework for addressing financial disputes. What are the Duties and Responsibilities of the Bunker for Recovery of Loans before filing sult under Artho ‘Rin Adalat Ain-2003 (Sec. 12, 33, 46 & 47)? The "Artho Rin Adalat Ain-2003" in Bangladesh outlines the duties and responsibilities of bankers for the recovery of loans before filing a suit under specific sections, including Section 12, 33, 46, and 47. Here's an overview of these sections’ ‘Section 12: Notice for Repayment: Before filing a suit in the Money Loan Court, the banker is required to serve a legal notice to the borrower demanding the repayment of the loan, ‘The notice should specify the outstanding amount and provide a reasonable time for repayment, typically not less ‘than 15 days. FE Banning optoma wit saHawar (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat ‘Section 33: Application for Certi If the borrower fails to repay the Joan within the stipulated time after receiving the notice, the banker can apply to the concerned Deputy Commissioner for a certificate of the outstanding amount. Section 46: Execution of Certificate: ‘After obtaining the certificate from the Deputy Commissioner, the banker can execute it to recover the outstanding. amount as ifit were a decree of a civil court, Section 47: Mode of Execution: ‘The mode of execution may include the attachment and sale of the borrower's property, movable or immovable, to realize tae outstanding debt, Before initiating legal proceedings in the Artho Rin Adalat (Money Loan Court), the banker must follow a prescribed process, including serving a notice for repayment, applying for a certificate, and subsequently executing the certificate for recovery. These sections provide a structured legal framework to facilitate the orderly and lawful recovery of loans by financial institutions in Bangladesh. Discuss about the provisions made for Ay nd Sec. 40-44) under the Artho Rin Ads The provisions for appeal and revision under the Artho Rin Adalat Ain, 2003 in Bangladesh are outlined in Sections 40 to 44, Here's a discussion on these provisions: ‘Section 40: Right of Appeal ‘Section 40 provides the right of appeal to any person aggrieved by a decision or decree of the Artho Rin Adalat. The appeal must be filed within 30 days from the date of the decision or decree, ‘Section 41: Limitation of Appeals: ‘This section sets a limitation on the number of appeals. A person cannot file more than one appeal against the same decision or decree. ‘Section 42: Application for Revis Section 42 allows any person aggrieved by an order of the Artho Rin Adalat to apply for revision to the High Court Division. The application for revision must be made within 30 days from the date of the order. ‘Section 43: Limitation of Revision: ‘Similar (0 the limitation for appeals, Section 43 imposes restrictions on the filing of more than one revision application against the same order. Section 44: Stay of Proceedings: Section 44 grants the High Court Division the authority to stay the proceedings of the Artho Rin Adalat pending the decision of an appeal or revision, provided certain conditions are met, FE Banning optoma wit saHawar (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat fin Adalat Ain are adequate to de: ‘The Artho Rin Adalat Ain is @ law in Bangladesh made to handle cases of loan default. It ereates special called Artho Rin Adalats, to handle these cases, The law allows actions like selling mortgaged property, se defaulter's property, and even arresting and imprisoning them. Whether the law is good enough depends on factors like how well it's enforced, available resources, and specific cease detail. The law has been changed several times to address issues and improve dealing with loan defaulters. Identifying and pursuing defaulters, especially if they have no assets, can be challenging. Evaluating the law's cffectiveness may require legal experts and policymakers to consider and suggest any needed reforms, Module B: Financial Instrument Related Laws Mention Main characterities of a cheque? 4 Iemust be in written & Itmust be signed Hemost have a date 4 It must have a payee 4 4 4 It must have an amount Tt must have a bank aecount number Tt must be payable on demand Me wonsibilities of « Payin, Duties and responsibilities: Payment Processing, Funds Verification ‘Transaction Accuracy. Security and Fraud Prevention Account Management Protections to paying bankers Right to Debit Immunity against Payment in Good Faith Customer Confidentiality Compliance with Anti-Money Laundering Laws PER RRR EEE ‘Mentione duties and responsibilities of a collecting bank: Duties and responsibilities: Receiving Payments Processing Payments Clearing and Settlement Providing Account Updates ‘Communication with Paying Banks FE Banning oirtoma with SaKHAWAT (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat Customer Service Security and Compliance Active Listening Mediation or Negotiation Documentation and Evidence Bsealation and Formal Procedures Review and Resolution Follow-Up and Feedback RRR RHEE ‘The Bangladesh Bank (Note Refund) Regulations-2012 Discuss about the disposal of obliterated, mismatched, altered, and damp notes as per the Note Refund regulations 2012, Altered Now “Altered Note" means a note in which an alteration has been made in the nutmbet, signature or value or in any other respect; Damp Ni “Damp Note" means a note which is wet partly or fully, or so weak that the note(s) can be easily broken or tom ‘when counted or handled; Deformed and Decomposed Note: "Deformed and Decomposed Note” means a note which has been defonned or disfigured or vitiated or decomposed bby anyway or by writing with ink or other materials on the note(s): Mismatched note: "Mismatched note" means a note formed by joining a half note of one note toa half note of another note. Obliterated Note Obliterated Note means a note, not being @ mutilated or altered oF mismatched note, which has become or has been rendered fally or partially undecipherable; Disposal of obliterated, mismatched, altered and damp notes: (Gli) A claim in respect of an altered, mismatched or fully obliterated note shall be rejected, (iv) A claim in respect of a damp note and partially obliterated note shall be rejected unless the Prescribed Officer is satisfied as to the identity and genuineness of such note FE Banning oirtoma with SaKHAWAT (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat "Mutilated note" means a note of which a portion is missing or a note which is composed of pieces, provided that the note presented is clearly more than half a note in area and that if the note is composed of pieces of a note joined together, each pieee is, in the opinion of Prescribed Officer, identifiable asthe part of the same note Disposal of mutilated note( No Claim in respect of a mufilated aote shall be entertained unless the single largest piece of the note presented is ‘more than 50%. Where the single largest piece is more than 50% the payment shall be made in the following ‘manner, namely: (Fall value shall be payable if the area of the note presented is more than 90% of the respective denomination. (ii) Proportionate value shall be payable if the area ofthe note presented is more than $0% and less than or ‘equal to 90% of the respective denomination, ‘An Authorized Dealer refers toa financial institution or bank that has been granted the authority by the central bank ‘or relevant authorities to deal in foreign exchange transactions, Authorized Dealers play a crucial role in facilitating foreign exchange transactions, including buying and selling curreneies, providing foreign exchange services, and participating in international trade and investment activities, Foreign Exchange: Foreign exchange, often abbreviated as "forex" or "FX," refers to the global marketplace where currencies are traded. Itinvolves the buying and selling of different currencies with the aim of making a profit Export: Export refers to the act of selling goods or services produced in one country to customers or businesses in another country. It is key component of international trade and contributes to the economic growth of a country. Import: Import refers to the purchase and bringing in of goods or services fiom another country into one's own country. Countries engage in imports to obtain products or services that may not be readily available domestically or to access goods at a lower cost. Imports contribute to meeting domestic demand and ensuring a diverse range of products for consumers. ‘What is Money Launde are the st Money Laundering: Money laundering is a process through which individuals or entities attempt to conceal the illicit origins of funds, ‘making them appear legitimate. This illegal practice involves a series of transactions or financial activities designed to obscure the true source of the money and make it difficult for authorities to trace its origin, FE Banning optoma wit saHawar (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat Stagev/process of money laundering: Placements, This is the initial stage where illicit funds are introduced into the financial system. It may involve breaking down large amounts of money into smaller, less suspicious sums, and then depositing or transferring them through various channels, In this stage, the goal is to further distance the funds from their criminal source. Money launderers engage in ‘complex financial transactions, such as multiple transfers between accounts, buying and selling securities, or making international transactions. The purpose is to create confusion and make it challenging for authorities to track the ‘money tral Integratio At the integration stage, the "cleaned" funds are reintroduced into the economy tind appear as legitimate income or assets. This can involve investments in legal businesses, real estate purchases, or other financial activities that make the illicit funds difficult to distinguish from lawful transactions What are the responsibilities of the reporting organizations in prevention of money laundering? Reporting organizations play a crucial role in preventing money laundering by acting as the front line For detecting and reporting suspicious activity. Their responsibilities encompass various aspects, ranging from customer duc diligence to transaction monitoring and reporting. Key responsibilitics are mentioned below: Customer Due Diligence (CDD): 4 Know Your Customer (KYC): Implement robust KYC procedures to verify and understand the identity and background of customers, beneficial owners, and their business activities. This helps identify potential risks and establish normal transaction patterns. 4 Enhanced Due Diligence (EDD): Apply stricter EDD measures for higher-risk customers, like politically exposed persons (PEPs) of those in jurisdictions with weak AMLICFT controls. This involves deeper serutiny of source of funds, business purpose, and transaction patterns. Monitoring Customer Relationships: Continuously monitor customer activity for any changes or inconsistencies that might indicate suspicious behavior. This includes analyzing transaction volumes, pattems, and destinations. ‘Transaetion Monitoring: ‘Implement effective systems and controls: Employ technology and data analysis tools to identify potentially suspicious transactions based on pre-defined ed flags and risk seenatios. + Review suspicious transactions: Trained personnel should analyze flagged transactions for suspicious characteristics ike complex structures, inconsistent information or lack of economic justification. + Recond keeping: Maintain detailed records ofall ransaetions, customer information, and tsk assessments to facilitate investigations and support law enforcement. FE Banning oirtoma with SaKHAWAT (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat Reporti 4 Suspicion Reporting: Report identified suspicious transactions or activites to the relevant authorities, typically the Financial Intelligence Unit (FIU) or other designated body. This typically involves submitting Suspicious Activity Reports (SARs) with detailed information, 4 Compliance Reporting: File regular reports on their internal AML/CFT compliance measures and effectiveness, as required by regulatory authorities. Bangladesh Financial Intelligence Unit (BFIU): ‘The Bangladesh Financial Intelligence Unit (BFIU) is the central agency in Bangladesh responsible for combating ‘money laundering (ML), terorist financing (TF), and financing of proliferation (PF) of weapons of mass destruction (WMD), It plays a crucial role in safeguarding the country's financial system and protecting its citizens from the harmful effects of these illegal activities. ‘Some key functions of the BFIU: 4 Receiving and analyzing Suspicious Transaction/Activity Reports. Proxtucing financial intelligence reports based on the analyzed STRS/SARs and CTRs, and disseminating them to relevant law enforcement agencies for further investigation and action Maintaining a database of all STRS/SARs, CTRs, and related information to facilitate investigations and analysis of financial crime trends 4 Supervising the AML/CFT compliance of reporting organizations and issuing guidelines and circulars to censure effective implementation of AMLICFT measures. Cooperating with foreign Financial Intelligence Units (FTUs) in exchanging information and intelligence related to MLITE/PF, Raising awareness about ML/TF/PF risks and conducting training programs for reporting organizations and law enforcement agencies. Predicate Offences (See. 2 SHA) “Predicate offence” means the offences mentioned below, by committing which within or outside the country, the ‘money or property derived fom is laundered or attempt to be laundered, namely: «(28 Predicate Offences) Reporting organization Reporting organization" refers to any entity designated by law to identify and report suspicious transactions or activities to a Financial Intelligence Unit (FIU) like the Bangladesh Financial Intelligence Unit (BFIU), Reporting organizations are banks, insurance companies, moneychangers, remittance service providers and non bank financial institutions. Su ‘A “suspicious transaction” typically refers to a financial transaction or series of transactions that raises coneerns or appears unusual or inconsistent with a customer's normal behavior or the expected pattern of transactions. These transactions may be indicative of money laundering, terrorism financing, or other illicit activities. FE Banning optoma wit saHawar (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat Law: Difference between Public Ltd. Company and Private Ltd, Company Public Limited Company vs. Private Limited Company Public Limited Company Private Limited Company Minimum number of members is 7 and the maximum | Minimum ‘umber is unlimited. ‘number of members is 2 and maximum $0. ‘Ai least 3 directors, ‘Ai least 2 diveetors ‘Can issue PO ‘Cannot issue TPO ‘Statutory meeting and report are mandate tis not required. ‘An audit firm must audit financial statement Ttis not mandatory. Tis financial statement is open for public disclosure, Tis not open for public disclosure, has no resiriotion in transferring of shares Tresiriots to wansfer of shares. Cerificate of commencement 1S required 1 Sart | Certificate of business operation, incorporation is sufficient to start business operation. the Memorandum of Association (MOA) ‘The Memorandum of Association (MOA) is a legal document that outlines the fundamental principles and objectives of a company. In Bangladesh, the requirements for the Memorandum of Association are governed by the ‘Companies Act of 1994. Below is a general outline of the key components typically included in the Memorandum of Association: Name of the Company Address of the registered office Objects of the Company Limited Liability Share Capital Amount and Number of Shares Bach subscriber of the MoA shall take atleast one share Each subscriber shall write opposite to his name the number of share he takes, ‘The Articles of Association (AOA) ‘The Articles of Association (AOA) is crucial document for a company in Bangladesh, as it outlines the rules and regulations for the internal management and operation of the company. Below is a general outline of the key components typically included in the Articles of Association in accordance with the Companies Act of 1994 in Bangladesh Provisions for Regulating the Affairs of the Company Share! General Meeting) Power of Direetors/Accounts/Audit. 4 In case of public Limited Company, a duly signed list of persons has wo be consented as directors ofthe ‘company with their consent A Dectaring that all the requirements of the Act have been complied with Issue a prospectus or statement in lien of prospectus FE Banning optoma wit saHawar (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat Ascertain that minimum subscription has been collected Ascertain thatthe directors’ qualifying share have been collected Declare about the required formalities has been made according tothe aet After obtaining the "Certificate of Commencement", @ public limited company ean start its business operation. ‘One Person Company Recently an amendment to the existing Companies Act 1994 has been enacted, that now makes it possible for one person to forma company. The amendment was made in November, 2020, The RISC started OPC from May,2021 Definition: ‘A one-person company is defined in the Amendment as a company that has only one natural person as its shareholder, Such a company must include the words ‘One Person Company’ or ‘OPC’ at the end ef its name. ‘The Amendment further provides provisions regarding the registration and formation, MA, minimum and maximum capital, paid up capital, share transfer, nominee and winding up of this type of company. ‘Tepes of Shares of a Public Limited Company: Ordinary Share / Equity Share 4 Proference Share Winding-up a company as per company act 1994 + By the Court Voluntary Subject to Supervision of Court Penalty for falsification of book. — In any director, manager, offieer of contributory of any company being wound up destroys, mutates, alters of falsifies or fraudulently secrets any books papers or securities or makes or is privy to the making of any false or fraudulent entry in any register book of account or document belonging to the company with intent to defraudor deceive any person, he shall be liable to imprisonment for a term which may extend to seven Years, and shall also be liable to fine Convertible and non-convertible preference share: Convertible and non-convertible preference share convertible preference share allows preference sharcholders to ‘convert theit preference shares, fully ot partly, into ordinary shares at a specified price during a given period of time. enalty for false statement as per the Company Act,199: ‘Whoever in any return, report, certificate balance-sheet or other documents, required by or forthe purposes of any of the provisions of this Act, willfully makes a statement false in any material particular, knowing it to be false, shall be punishable with imprisonment of either description for a term which may extend to five years, and shall also be liable to fine FE Banning optoma wit saHawar (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat Ordinary share Ordinary shares, also known as common shares or equity shares, represent ownership in a company. When individuals or entities purchase ordinary shares, they become sharcholders and acquire a portion of the company's ownership. Preference shi Preference shares, also known as preferred stock, are a special type of company stock that comes with privileges ‘over ordinary shares (common stock) in two key aspects: dividends and liquidation. Contract Act, 1872 ‘What are the essential elements ofa contract as per Contract Act, 1872? ‘The essential elements of a contraet Offer and Acceptance Intention to create Legal Relationship Lawful consideration Capacity of parties Free consent Legality ofthe object Possibility of performance Writing, Registration and Legal formalities ‘Write short notes on Free consent, Fraud, Misrepres Free consent’ Consent is said to be free when itis not caused by- coercion undue influence fraud rmisrepresentation Mistake, subject to the provisions of sections 20, 21 and 22. ‘Fraud? *Fraud’ means and includes aay of the following acts committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party thereto or his agent, orto induce him to enter into the contract: - (2) the suggestion, asa fact, of that which is not te, by one who does not believe it (Q) tobetme; (2) the active concealment ofa fact by one having knowledge or belief ofthe fact; (3). a promise made without aay intention of performing FE Banning optoma wit saHawar (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat (4) any other act fited to deceives (5) any such act or omission as the law specially declares to be fraudulent. Misrepresentation: Misrepresentation refers to the false statement of fact made by one party to another, inducing the other party to enter into a contract, It can occur either innocently (without the intent to deceive) or fraudulently (with the intent 10 deceive). Misrepresentation isa vitating factor in contract law, meaning that it can render a contract voidable at the ‘option of the party that was misled. Contract of Indemnity Section 124 ‘A contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person, is called a "contract of indemnity" Contract of guarantee: A “contract of guarantee" is a contract to perform the promise, or discharge the liability, of a third person in case of hiis default. The person who gives the guarantee is called the "surety": the person in respect of whose default the guarantee is given is called the "prineipal debtor", and the person to whom the guarantee is given is called the “ereditor". A guarantee may be either oral or written, ‘The transfer of property Act, 1882 ‘Transfer of property” “Transfer of property," which means when a living person gives property to someone else or to themselves, It ean happen now or in the future. The term "living person" includes not just individuals but also companies or groups of people, whether they are officially formed or not. ‘Transfer of property under Mortgage: The legal definition of mortgage is “thé transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by the way of loan, an existing or future debt or the performance or an engagement which may give rise a pecuniary linbility’ Immovable Property: ‘The term “immovable property” consists of land or attachments fo it like tees, building, fixed machinery, ete, Powers of Attorney Act, 2012 “Power of Attorney” means any such deed through which any person provides power to any other person legally 10 execute activities mentioned in the deed on his behalf. “Irrevocable Power of Attorney” means any power of attomey given for executing sales contract forthe purpose of Sale of immovable property or for mortgaging immovable property against loan, or any power of attorney to take price against immovable property in exchange of land development and execution of sale deed, FE Banning optoma wit saHawar (01818 185370(WhatsApp Only-No call piz)Prepared by Sakhawat General Power of Attorney” means any power of attorney executed for any purpose other than an Irrevocable Power of Attomey under Section 4 ofthe law: ‘Bank Deposit Insurance Act, 2000 Deposit Insurance ‘The Deposit Insurance System (DIS) in Bangladesh was ereated by the Bangladesh Bank to safeguard the deposits, of small account holders in commercial banks. It was established in August 1984 under "The Bank Deposit Insurance Ordinanee, 1984.” In July 2000, this ordinance was replaced by the "Bank Deposit Insurance Act, 2000," and the protection of deposits is now governed by this act. It is important for bankers and readers to refer to the ‘original law for accurate information. FE Banning optoma wit saHawar (01818 185370(WhatsApp Only-No call piz)