CH 8- RETAIL LIABILITY PRODUCTS: the money deposited with bank is banks liability as interest is paid on that sum to the depositor, main Retail Liability Products of Banks constitute various types of Deposit Accounts as Demand deposits, Term deposits, Recurring Deposit Demand Deposits Deposits which can be withdrawn by the customer at any time on demand are called Demand Deposits, banks pay low interest on saving deposits (SB) or no interest on such deposits (CA), it is in the bank’s interest to increase the proportion of demand deposit to enhance their profitability these deposits are also known as CASA Deposit these deposit brings down the overall cost of funds of the bank and gives them a lot of flexibility to give credit/loans at lower rates and still earn a good Net Interest Margin (NIM) and profitabil + Current Deposit Account Itis opened by businessmen who have a higher number of regular transactions with the bank, It includes deposits, withdrawals, and contra transactions = non-interest bearing bank account = higher minimum balance to be maintained as compared to the SB = Penalty is charged if minimum balance is not maintained = continuing nature as there is no fixed period to hold a current account = requires KYC norms to be completed before opening a current account = no restriction on the number and amount of deposits = no restriction on the number and amount of withdrawals made = can deposit the cash to any other branch of a bank other than the home branch by paying a nominal charge as applicable/ stipulated by the individual bank = can obtain overdraft (short-term borrowing) facility = should be supplied with statement of accounts every month without any charge Document For Openi ren > Individuals (singly/jointly): certified copy of an OVD Telegram—@jaiibontips> Sole proprietary fir following: certified copy of an OVD & Certified copy of any two the Registration certificate Certificate/ license issued by the municipal authorities Sales and income tax returns CST/VAT certificate Certificate/registration document issued by Sales Tax/Service Tax/ Professional Tax authorities © Licence/certificate of practice issued in the name of the proprietary concern by any professional body incorporated under a statute © Income Tax Return in the name of the sole proprietor where the firm’s income is reflected © Utility bills such as electricity, water, and landline telephone bills 00000 > Partnership firm: One certified copy of each of the following documents shall be obtained: © Registration certificate © Partnership deed © OVD in respect of the person holding © OVD ofall the partners as per master directions on KYC > Hindu Undivided Family (HUF) © Joint Hindu Family letter © Certified copy of OVD ©. PAN Card of the HUF > Limited Liability Partnership Firms: Certificate of incorporation © Copy of Resolution ©. PAN Cardiof the LUP firm © OVD ofthe designated partners ited Compani © Certificate of incorporation and Certificate of Commencement of Business in the case of public limited companies © Memorandum of Association Article of Association resolution from the Board of Directors and power of attorney granted to its managers, officers or employees to transact on its behalf OVD of person holding an attorney to transact PAN Card of the entity ° v Telegram—@jaiibontips oe,> Co-operative Societies: Certificate of registration associations, clubs, society Certified copy of the bye-laws of the society ete Resolution of the managing committee List of members of the managing committee, with the copy of the resolution electing them to the committee > Charitable or Public Trust: © Registration certificate © Trust deed @ OVD of the person holding a power of attorney, Transgender Person: Banks should include ‘third gender’ in all forms/ applications etc. prescribed by RBI or the banks themselves oa0 Following points need to take care while opening current account © Before opening a current account of a company or firm, banks should ensure that they do not enjoy any credit facilities with-any other bank/branch * banks may open current accounts for borrowers who have availed credit facilities in the form of cash credit (CC)/ overdraft (OD) from the banking system if exposure of the banking system, ©. less than 85 crore- there is no restriction on opening of current accounts or on provision of CC/OD facility by banks, & obtain a undertaking from borrowers that they shall inform the bank(s) when the credit facilities availed by them reaches %5 crore or more o 5 crore or more- borrower can maintain current accounts with any one of the banks with which it has CC/OD facility, provided that the bank hasiat least 10 per Centr the exposure of the banking system to that borrower ‘© other lending banks may open only collection accounts subject to the condition that funds deposited in such collection accounts will be remitted within two working days of receiving such funds, to the CC/OD account ‘* Non-lending banks are not permitted to open current accounts Y Asper recommendations of Damodaran Committee on Customer Service, IBA has given direction for implementing the facility of account number portability, with same a/c number in the bank even when he/she moves to another city or shifts his a/c to another branch in the same city Telegram—@jaiibontips¥ there are no operations continuously for two years, should be treated as inoperative accounts, The account can be made operative after the bank is satisfied with the reasons for non-operation and fresh KYC documents are obtained and duly verified + Saving Bank Account The SB Account has been designed to meet these needs of individuals. Individuals can open SB Account singly or Jointly. RBI prohibits banks from opening of SB accounts of business entities relationship between the bank and the depositor is of “Debtor” and “Creditor” = Itencourages savings habit * Itenables the depositor to earn income by way of saving bank interest = Saving account passbook acts as an identity and residential proof of the account holder = provides a facility such as Electronic fund transfer (EFT), internet banking, immediate funds as and when required through ATM, digital transaction Documents Required Proof of identity (OVD) Proof of address in case address is different than the identity proof Recent photograph PAN card or declaration in form 60 or 61 e000 » Minor- SB account in the sole name of ‘minor’ to be operated by the minor can be opened provided the minor is 10 years of age or above = Minor should be able read & write "should be signed by the minor in presence of minor = date of birth of the minor is to be ascertained and authenticity verified with reference to birth certificate issued by his/her school/gram panchayat/municipal "Cheque book facility can be provided, on request, Withdrawals should normally be made by minor in person, except in cases where his/her parent, his/her close relative or a person known to Bank comes to receive payment = Maximum balance to the credit of such account should not exceed at any time %1,00,000/-, for accounts of minors of 14 years and above, there is no limit of maximum balance Telegram—@jaiibontips= accounts of minors if his/her income is not chargeable to Income Tax bank should obtain PAN/GIR Number or Form 60 or 61 of the father/mother or guardian = minors below the age of 10 years, accounts in the sole name of minor can be opened provided the account is operated by the natural guardian(s)i.e father or mother "No overdraft should be granted in Savings Bank accounts of minors held either singly or jointly with guardian/s > Illiterate person- person, unable to write must attend in person and should affix his thumb impression on the account opening form-cum-specimen signature card in the presence of an approved witness * Depositor should lodge his/her recent photograph with the Bank, duly attested by a person known to Bank. Thus he/she need not have his/her thumb impression attested by a witness every time he/she withdraws money from the account. It will suffice if he/ she affixes his/her thumb impression in the presence of an officer of the bank = Joint account of an illiterate can be opened with a literate close relative i.e. father, son, husband, wife, mother and daughter but not two cousins vy Blind Persons- the blind persons are fully competent to enter into a valid contract, = both the signature and thumb impression (even for literate—in case of illiterate thumb impression only) must be obtained on account opening form in presence of bank officials witnessed by a respectable = banks obtain three photographs of blind persons like illiterates for pass book, signature slips/ cards and the account opening form = Cash payment or deposits should be made in presence of a witness preferably a Customer of the bank = all banking facilities including Chequélbook) ATM, ‘and locker facility should be offered to visually challenged without any discrimination = Banks should make at least one third of new ATMs installed as talking ATMs with braille keypads > Incapacitated Persons (Handicapped/ Old/ Sick) = bank branch should obtain the photograph of handicapped person = handicapped person may be requested to put his/her toe impression (either right or left) on the relevant forms in presence of the Branch Manager/Joint Manager/ Departmental Head and a witness Telegram—@jaiibontips= person may be requested to give a suitable power of attorney to a person of his/her confidence = The attorney may then sign the form/s = person is incapacitated due to illness or other reasons to sign a cheque/ withdrawal or is unable to come in person to bank to withdraw money, he can put his thumb impression which is to be witnessed by two independent witnesses = Ifthe customer cannot put his thumb impression, the bank can make payment by impression of other body part to be witnessed by two independent witnesses, one of them should be a responsible bank official along with a certificate from the competent doctor > Pardanashin Women - identity of Pardanashin Women cannot be ascertained as she observes complete seclusion * two respectable persons known to the bank branch should invariably attest the sighatures on account opening form & on withdrawals by withdrawal slips: = Joint account of two or more illiterates can be opened on following terms and conditions: © All the joint account holders should be close relatives, i.e.spouse, children, parents, brothers and unmarried sisters — not cousins ©) The operations in the account Should be allowed jointly by all account holders, survivors or survivor © Nocheque book facility should be provided and all the account holders should come personally to the branch for withdrawals > Non-Individual Entities - the following categories of non-individual entities are allowed to open savings account: = Primary Co-operative Credit Society which is being financed by the bank = Khadi and Village Industries Boards = Agriculture Produce Market Committees = registered Societies = Companies governed by the Companies Act, 1956 & permitted, not to add to their names the words ‘Limited’ or the words ‘Private Limited’ = Government departments/ bodies/ agencies in respect of grants/ subsidies released for implementation of various programmes/ Schemes = Development of Women and Children in Rural Areas (DWCRA) = Self-help Groups(SHGs = Farmers’ Clubs ~ Vikas Volunteer Vahini- VWV Telegram—@jaiibontipsY¥ RBI deregulated interest rate to be paid by the banks on domestic SB Deposit, banks were given autonomy to determine their savings bank deposit interest rate © Should offer a uniform interest rate on savings bank deposits up to %1/-lac ©. For savings bank deposit over %1/-lac, a bank may provide differential rate of interest ¥ alimit on the number of withdrawals that can be made from the SB Account, If the number of withdrawals exceed the specified number, a penalty may be imposed Telegram—@jaiibontips JANB on