Click here to load reader
Upload
prakash-rajiv
View
557
Download
45
Embed Size (px)
Citation preview
1
BANKING PRACTICES LAB RECORD
[MBABT 419]
INTERNSHIP TRAINING
at
INDIAN OVERSEAS BANK Reddiarpalayam Branch, Pondicherry
Submitted by
S. PRAKASH RAJIV
REGISTER NO: 14381044
DEPARTMENT OF BANKING TECHNOLOGY
PONDICHERRY UNIVERSITY
PUDUCHERRY-605014
JANUARY 2015
2
DEPARTMENT OF BANKING TECHNOLOGY
SCHOOL OF MANAGEMENT
PONDICHERRY UNIVERSITY
PUDUCHERRY-605014
BONAFIDE CERTIFICATE
Certified that this is the bonafide record of work done by S. PRAKASH RAJIV
(REGISTER NO: 14381044) in the BANKING PRACTICES LAB (MBABT 419) during
the academic year 2014-2015.
LAB IN-CHARGE HEAD OF THE DEPARTMENT
Submitted for the University Practical Examination held on ………………………..
INTERNAL EXAMINER EXTERNAL EXAMINER
3
ACKNOWLEDGEMENT
I would like to express my sincere and heartfelt gratitude to my mentor
Mr. C. P. ABDUL GAFOOR, Assistant Professor, Department of Banking Technology,
Pondicherry University, for his valuable suggestions and his timely guidance.
Mere word of thanks would not be sufficient to express my gratitude to the ever
motivating Head of the department, Prof. Dr. K.CHANDRA SEKHARA RAO, for his
valuable advice and moral support during the Banking Practices lab.
I also express my sincere thanks to Mr. A. LAKSHMANASAMY, BRANCH
MANAGER for giving us an opportunity to undergo the training in the Bank. I wish to
acknowledge my sincere gratitude to all the staffs at INDIAN OVERSEAS BANK,
REDDIARPALAYAM BRANCH, PONDICHERRY who have been constantly helping us in
the training.
I also express my thanks to the Dean Dr. R. PRABHAKARA RAYA, School of
Management studies for providing all the necessary facilities in the University to successfully
complete the Training.
Finally, I would like to thank my parents for their constant encouragement and support.
Also, I would like to thank all the teaching, non-teaching staffs of Banking Technology
Department and our beloved friends for extending their help throughout the training.
To save the best for the last, I wish to express my profound gratitude to the almighty God
who gave me the strength to successfully commence as well as complete the Banking Practices
Lab.
Regards,
PRAKASH RAJIV S
4
TABLE OF CONTENTS
CHAPTER TOPICS PAGE NO
NO
I BRANCH OPENING 1
1. DAY OPENING 1
2. CASH MANAGEMENT AT OPENING/
CASH BOOKLET/ VAULT 1
3. CASH ESTIMATION AND LOADING IN ATM 3
4. ATM OPERATIONS 8
5. DAY END, BACK UP, SERVER CLOSING,
BRANCH CLOSING 21
6. KEY ISSUES 26
II ACCOUNT OPENING
1. ACCOUNT OPENING/ CLOSING FORMALITIES/
KYC 28
2.1.1 KYC/ ANTI MONEY LAUNDERING 37
2.1.2 INDIVIDUALS/ SOLE OWNER/ JOINT/ NRI 38
2.1.3 SOLE PROPRIETORSHIP 39
2.1.4 PARTNERSHIP 39
2.1.5 COMPANIES 40
2.1.6 TRUSTS 41
III DEPOSIT ACCOUNTS
1. DEPOSIT ACCOUNT OPENING/ CLOSING
- FORMALITIES 56
3.1.1 SAVINGS ACCOUNT 61
3.1.2 RECURRING DEPOSITS 63
5
3.1.3 FIXED DEPOSITS 69
3.1.4 NRI DEPOSITS 76
3.1.5 STUDENTS ACCOUNTS 78
3.1.6 SHG 79
3.1.7 PENSION ACCOUNTS 80
3.1.8 DORMANT ACCOUNTS 81
2. KEY ISSUES 81
IV LOAN/ ADVANCE ACCOUNT
1. LOAN ACCOUNT OPENING/ CLOSING
–FORMALITIES 82
4.1.1 CONSUMER LOAN 87
4.1.2 INDUSTRIAL LOANS 89
4.1.3 AGRICULTRAL LOANS 93
4.1.4 GOLD LOANS 99
4.1.5 MICRO CREDITS 103
4.1.6 LETTER OF CREDIT/ GUARANTEES/ LG 108
4.1.7 BILL/ CHEQUE DISCOUNTING 112
4.1.8 DIVERSION OF FUNDS IN LOANS 120
4.1.9 NPA ISSUES 121
2. KEY ISSUES 125
V DELIVERY CHANNELS
1. ALL DELIVERY CHANNEL OPERATIONS 129
5.1.1 DEMAND DRAFTS 129
5.1.2 CHEQUES 131
5.1.3 WITHDRAWAL SLIPS 135
5.1.4 BANK DRAFTS/ BANKERS CHEQUE 137
5.1.5 DEBIT CARDS/ CREDIT CARDS 138
5.1.6 INTERNET BANKING 150
6
5.1.7 MOBILE BANKING 155
2. KEY ISSUES 160
VI AGENCY SERVICES
1. PAYMENT AND SETTLEMENT 162
2. RTGS/ NEFT 162
3. CLEARING SERVICES 169
4. CUSTODIAN 176
5. SAFE CUSTODY 188
6. NOMINATION FACILITIES 194
VII BRANCH MAINTENANCE 214
1. MAINTENANCE OF BRANCH PREMISES 214
2. MAINTENANCE OF FILES 215
3. MAINTENANCE OF CARD/ DEMAND/ CHEQUE 217
4. PASSWORD MAINTENANCE AND ADMINISTRATION 239
5. CORE BANKING SYSTEM (CBS) 240
6. NETWORK FAILURE 241
7
CHAPTER 1
BRANCH OPENING
1.1 START OF DAY OPERATIONS
The first Supervisory user with Senior Manager Level will be assigned SA-Role for the
day. Such user should do the following activities before starting the business for the day.
Application Startup
Day Begin
Attendance Marking – In case the user is a Supervisory level user, he / she can mark
attendance for one Senior Manager only. After that, the Senior Manager only can mark
attendance to other staff members.
Once the above is over, the system can be used by the authorized users to put through
transactions, create masters etc for the day.
1.2. CASH MANAGEMENT
CHECKING OF CASH BALANCE
Before taking notes and coins into the ‘joint custody’ balance, the supervising official
should check their correctness in the following manner:
He/ She will personally count all notes of denominations of above Rupees Ten and will
verify a portion of all other notes on the "clip system". Under this system a few notes in each
book of notes are clipped together at the top and the remainder is counted by an employee other
than the one responsible for its correctness in the presence of the supervising official who
verifies the total by counting the clipped notes (Notes of the same denomination are bundled
together into books of one hundred pieces each, every ten such books being tied up into a section
of one thousand pieces).
He/ She will have all bags of rupees weighed in his presence and a number of bags
emptied to show that the contents are genuine coins. Out of a few bags he will take and count a
8
few pieces and leave the remainder counted in front of him as a similar check to the "Clip
System “for notes, verifying the relative denomination slips in the bags at the same time; he will
also occasionally get this done in the case of small and un current coins.
CHECKING HAND-BALANCE AND CLOSING CASH
The supervising official should satisfy himself each evening that the joint custody
balance corresponds exactly with the entries in the system-generated cash balance printout. He
will also invariably check the entire Head Cashier’s / Cashier’s hand balance of loose notes and
also check the loose packets in hand balance by clip system and initial against the items checked
in the cash balance printout. After the closing cash is checked by the supervising official, he /she
must ensure that the notes and coins held in the Head cashier’s/cashier’s hand balance are kept in
the cash box and locked in his/her presence. He should accompany the Head cashier/cashier to
the safe room when the cash box is kept under joint custody. Before the safe is closed, he/she
should also check the bundles kept in the vault and verify the same with the vault register.
Periodically preferably once a week on different days the officer holding charge of cash should
check the whole of the branch cash balance by test check of different denominations and register
evidence of such check in the cash balance book under his/her signature and date. The First Line
Manager, if he is not in joint custody of cash, should on a surprise date in a month check in detail
all the notes of denominations above Rupees Ten and verify all the other notes on the clip
system. The date of the last such verification should be reported under the appropriate column of
the monthly Manager’s Certificate (AR.15).
EXCESS IN CASH
Any excess in the cash balance must be credited to Sundry Creditors Account on the
same day after the preparation of a credit voucher bearing complete particulars of such excess
cash. Such instances of excess cash should be reported to Regional Office on the same day.
Amounts which have been lying unclaimed for more than six months will be transferred to
Central Office every half year by March and September.
9
1.2.2 CASH BOOK
Currency slips of other banks/parties must be removed by the receiving cashier after due
counting and the same replaced with our Bank’s currency slip and pasted with the security
sticker and checked, initialed/signed by the joint custodians.
The cash balance will ordinarily consist of nothing but notes and coin. In the event of any
cash payment being made or any cash deposit being received after the cash books have been
closed for the day , the relative vouchers must be entered the same day in a Register labeled as
''Late Payment and Receipt Reference Register". The entries in this Register should be made by
the Casher and each such entry should be authenticated both by the cashier and the Deputy
Manager or an Officer not below the rank of Deputy Manager authorized by the First Line
Manager who is verifying the closing cash for the day. ANY DEVIATION FROM THIS
INSTRUCTION WILL BE REGARDED AS A SERIOUS OFFENCE.
1.2.3 VAULT REGISTER
The amounts of all notes and coins withdrawn from, or deposited in, the joint custody
portion of the Bank cash balance (i.e. excluding the Head cashier’s/ cashier’s hand balance) will
be entered immediately in the Vault Register under the initials of the joint custodians. The Vault
Register must always remain in the strong-room. From it the withdrawals and deposits will be
entered in the cash analysis book in which the resultant balances will be struck, the entries being
checked and the balances initialed by the head cashier/cashier and the supervising official. At
branches where transactions in the "joint custody “portion of the Bank cash balance are few, a
cash analysis book may be dispensed with, the relative entries being checked from the Vault
Register and the incurrent coin register.
1.3 CASH ESTIMATION AND LOADING IN ATM
Branches should not load the cassette of the ATM, Currency Notes with the following
characteristics:
-Joined by any means
10
-With staples or pins
-Sticky, adhesive substances
-Repaired with tape
-With tears exceeding 0.5 inches
-With holes or missing sections
-That is excessively crumpled
-That is dog-eared, with a folded edge exceeding 0.5" thickness
-That is limp or moist
-That are excessively bowed or deformed by prolonged storage
-That is dirty.
B.6.2. for ATM operations, the following General Ledger heads of accounts should be
maintained by ATM branches.
CASH AT ATM
Cash loaded in the cassettes placed in ATM should be to the debit of CASH AT ATM
account.
ATM BACK OFFICE OPERATION
Every day at the cut off time, the ATM Officer along with another authorized staff
member should open the ATM cassette, divert cassette and deposit cassette in the ATM as per
the procedure laid down. Physical verification of cash at ATM should be made and the cash
should be tallied with the figures shown in the computer screen and transaction log. The
cherubs and cash deposit covers fed into ATM by the cardholders should be removed and
entered in the Back Office ATM Register. After taking out a print out of the transaction log
(Journal Print out), the ATM should be closed after observing the laid down procedure. The
denomination of cash at ATM should be recorded in a separate register duly signed by
authorized Staff members and it should be tallied with General Ledger.
The covers containing cash and cherubs should be opened in the presence of two
authorized staff of the branch. Details on the transaction log should be verified and
11
cash/cherubs should be passed on to the respective departments at the branch for
credit/collection for the accounts. The contents of the covers should be recorded in a separate
register duly signed by the two authorized staff of the branch. The covers should be preserved.
Cash should be replenished in the ATM to the desired level by debiting Cash at ATM
account.
Cash position of the ATM should be monitored with special attention since cash
shortage will result in ATM closure and disruption of Customer Service.
By studying the cash usage pattern of ATM over a period of time, the average daily
requirement of cash by ATM should be arrived at and the branch should replenish ATM with
sufficient cash to ensure uninterrupted functioning of ATMs.
The branch cashier and ATM Officer should carry out replenishment of ATM cash daily
before the closure of branch Cash Books. In the absence of the Officer-in-charge of ATM, other
officers in the branch should periodically check the cash level of the ATM.
Based on daily cash disbursal through ATM, branch should have an idea of per day
optimum cash requirement, and should load the ATM with adequate cash in the event of
ensuing holidays. If necessary, a separate safe can be provided for holding additional cash for
the holiday period. Such safe should also be under dual custody of two authorized official one
of whom should be the ATM Officer. Under appropriate staff arrangements these officials
should visit the branch on holiday period to ensure adequate cash level at the ATM.
SECURITY OF ATM CASH VAULT KEY
The cash in the ATM Cash Chest should be kept under dual custody of Officer in charge
of ATM and the Officer in charge of the branch Cash Department. The key holding particulars
should be recorded in the Key Movement Register.
The duplicate keys of the ATM Cash Chest should be lodged with the nearby branch as
in the case of other safe keys.
TEST CARDS
a. Branch is supplied with one Test Card, 2 set up cards and one operator card.
12
b. Set up cards and operator card are for encrypting various fields in the card. Test Card
should be in the custody of officer in charge of ATM.
c. Sufficient care, as in the case of movement of Cash Key, is to be taken about the
movement of test card, set up card and operator card and all details should be recorded at the
branch.
d. To have dual control, Branch Manager should hold custody of set up cards and
operator card. Password should be available with ATM in- charge.
The four cash bins in ATMs are configured for 1xRs.50, 2xRs.100 and 1xRs.500.
Branches have to load currencies of all three denominations, since the intention of maintaining
50 rupee denomination is to avoid the customer coming to the counter, for small denomination
currency, after withdrawal. Cash can be loaded upto RS.10 lakhs in ATMs and in certain
branches where the daily disbursement has exceeded 5 lakhs we have permitted for 15 lakhs.
While loading cash branch has to sort the currency and load only ATM-FIT currency. The
following precautions to be taken while loading cash to avoid forged / counterfeit currency.
Currency notes have to be physically verified before placing them in the respective
cassettes of the ATMs in the same way a cashier/teller normally verifies the notes before making
cash payments across counter.
Branches should ensure that currency packets received from other banks / institutions as
well as deposits received from customers should not be used unless they are opened and verified
observing the procedures on cash handling and following the laid down norms to detect forged /
counterfeit currency.
Wherever possible, new currency notes are to be used as a marketing tool to encourage
our customers to use ATMs.
While loading cash, Branch has also ensure that journal paper roll is available adequate
enough to service the requests till the next working day; since if journal roll is exhausted the
ATM will not service even though sufficient cash is available in the ATM.
13
CASH RECONCILIATION
The cash inside the ATM has to be treated at par with the cash in the safe; hence, it is
mandatory on the part of the branch to tally ATM cash on daily basis. For this purpose the ATM
attached branches are provided with the following reports.
This report is generated whenever the Supervisory Card is used in the ATM for cash
proofing and Host Totals option is selected after ‘Stop Cash Replenishment’. This report
contains the details of transactions which have taken place since the last cash proofing to the
current cash proofing, one row for each transaction, with the status of the transaction. This report
is downloaded to the branch from the switch within 15 minutes from the time of generation of
the report and available under ‘View / Print reports’ and can be selected by giving the report date
and by using search option in CBS.
The ATM Cash report for GL code 3003, ‘Statement of ATM CASH Transactions’ can
be generated from the branch applications for any day, range of days. This gives the list of ATM
cash transactions which were accounted at the branch attached to the ATM. Both the reports
have the necessary details and by cross verifying both the reports the branch can easily reconcile
cash. Any variance found has to be reported to IT department – ATM helpdesk for resolution.
The ATM journal is the final proof of status and the branch should take adequate care to
label and preserve the same for a minimum period as applicable for vouchers. The ATM journal
should be verified where the status of any transaction is marked as suspect. In addition to the
above two reports the branch is provided also the IPG Summary which will give a list of all
transactions under gl code 2526 for the given date, inclusive of ATM transactions.
IPG Reports (ipg4_1) has been added as a new feature under gl module for generation of
various utility based reports on ATM as under.
TODAY PREVIOUS DAY SWITCHDATE
FINANCIAL REQUEST
ALL TXNS PENDING TXNS SUPPLEMENTARY CASHSTATUS OF ATM
14
The cash status of ATM report provides information on the cash balance available in the ATMs
attached to the branch apart from status of diagnostics like cash dispenser/card
reader/connectivity/journal printer/receipt printer/cassettes.
1.4 ATM OPERATIONS
Automated Teller Machine (ATM) is used for dispensing cash and also to receive
cash/cheques/requests for statement of account and issue of cheque books round the clock-
throughout the year. ATMs have been installed by our Bank in many centers to enlarge our
clientele. The Bank has multi – branded ATMs of Diedold, NCR, Wincor and Cash link cash
dispensers. The Bank has also arrangements with three consortiums -Cash tree, NFS & VISA,
HARDWARE SETUP
1. Branches in which ATMs are installed should ensure that they are functioning properly and
also to keep the rooms (customer lobby as well as back lobby) clean and tidy.
2. Wherever 1 is installed onsite, the router should be kept in the ATM room only and the leased
line is terminated there.
3. Where ever ATM is installed offsite, separate leased line should be obtained for the offsite
ATM and router should be kept in the ATM room.
4. The UPS connected to the ATM room and supplying power to the router kept in the ATM
room should always be kept ‘ON’ and should never be switch off.
DEBIT CARD MANAGEMENT
DEBIT CARD
Debit Card gives you global access to one’s account whenever and wherever they want.
The Debit Card allows purchasing goods at Merchant Establishments and also gives the freedom
to withdraw cash from ATMs in India and abroad. The customer need not carry cash anymore to
make his purchase and the purchases will be debited to his account instantly.
The cards which were issued for ATM usage were also used for AWB operations. These
cards could be used in the ATMs of IOB / member banks’ of ‘Cash tree’ and ‘NFS’ consortiums.
15
To facilitate our customers with global acceptance of their cards at ATMs, Merchant
establishments and for e-commerce transactions, the Bank has entered into agreement with VISA
and from October, 2005 the Bank started issuing VISA Debit Cards.
At present the Debit cards are issued free of charge. As per RBI directives, any
cardholder can use other banks’ ATM for financial/non-financial transactions in his SB accounts,
free of charge 5 times a calendar month. Beyond 5 times, he will be charged Rs.20 per additional
transaction. However, this redate facility is not available for CD/CC account Cardholders.
When a Debit Card is used in an ATM, POS or for e-commerce transaction; the
customer is expected to maintain required balance in his account. In a Debit card usage, the
transaction will be authorized only after debit to the customer’s account. The transaction will not
be approved if the balance in the account is not adequate. The debit cards are convenient way of
carrying money instead of carrying physical cash.
ELIGIBILITY
The following account holders are eligible for issuance of debit card.
Savings Bank – Individuals – Single, A or S, Minor accounts operated by guardian and minor
students under SB-STUDENT scheme.
Current Account - – Individuals – Single, A or S CD – Proprietary Firms (Card will be issued in
the name of the Proprietor) CC- Individuals – single, A or S with prescribed minimum balance.
Legal persons like Incorporated Companies, Trusts, and Partnership firms are not
eligible.
In the case of A or S accounts, separate customer id has to be created for each constituent and
cards can be issued in their name. In the case of Cash credit accounts, the customers who enjoy
cash credit limits against deposits and other readily realizable securities (except shares) for
personal purpose are eligible for Debit Cards. Earlier, in addition to illiterates, the Bank was not
extending the Debit card facility to visually handicapped persons due to the issues involved in
their operation of their account through ATMs. But recently, pursuant to directives from
Government of India, the Bank has decided to extend the facility to Visually impaired customers
16
subject to certain additional safeguards (MISC / 242 / 2008-09 dated 9.6.08 issued by
Management Services Department).
OTHER CONDITIONS
The Cardholder should maintain the minimum balance prescribed by the bank and
failure to do so will attract penal or service charges as per bank's rules from time to time or
withdrawal of ATM facility to the Cardholder.
The following services are offered free to the customer for application form, processing,
issue of card, drawl or any other ATM transactions such as balance enquiry, wrong entry, wrong
try etc. Cardholders should be advised that the charges for other services may be varied by the
Bank without reference / notice to them.
When an account is overdrawn by the ATM Cardholder, interest on such overdrafts as
prescribed by the bank should be charged and collected as per the instructions in force for TODs.
During the currency of the ATM card, the SB/CD account of the Cardholder cannot be
closed or transferred to other branch. If the cardholder wants to close his/her SB/CD account,
he/she should surrender the card and give the bank not less than seven working days time from
the date of surrender of the card, for effective closure of the account.
The bank is entitled to terminate ATM facility with immediate effect and the card shall
be impounded upon occurrence of any of the following events.
a. Failure to adhere to or comply with the terms and conditions of ATM facility.
OR
b. An event of default under any agreement of commitment
(Contingent or otherwise) entered into with the Bank relating to
Transactions other than the ATM
OR
C. On the cardholder being adjudicated as insolvent or on the cardholder
17
Filing insolvency petition.
OR
d. Demise of cardholder or any one of the joint account holders.
OR
e. Any other event by which bank concludes that allowing possession of card with the cardholder
is detrimental to the image / interest of the Bank.
In the case of joint accounts, the obligations of such executants to the agreement will be
joint and several and notice to any one Joint account holders will be deemed effective
notification to all joint holders.
Any notice sent by post to the last known address of the ATM cardholder by the bank
will be deemed to have been received by the Cardholder on the third day of posting.
The Bank reserves the right to disclose any information as may be necessary or
appropriate in connection with its participation in Electronic Funds Transfer Net Work, in strict
confidence, to any other Institutions, for issuance / cancellation of the card, operations in ATMs
and card holder's account with the bank.
The card holder alone should use the ATM Services and will be responsible for all the
transactions effected by the use of the card, whether authorized by the card holder or not and
shall indemnify the bank for the loss or damage caused to or suffered by the bank by any
unauthorized use of the card or the relative PIN.
The card is and will be at all times the property of the bank and delivered to the
Cardholder in trust and shall be returned by him/her to the bank unconditionally and immediately
upon the bank's request. The bank will not be liable for failure to provide any service or to
perform any obligation where such failure is attributable (whether directly or indirectly) to any
malfunction of ATMs or the card, insufficiency of cash held in ATM, failure of power etc.
18
APPLICATION FOR DEBIT CARD, PERSONALIZED AND INSTACARD
The applicant for the ATM Card should apply to the branch in the prescribed application
form F 604(EH) in duplicate after confirming his/her acceptance to and accepting the terms
conditions applicable for ATM facility. The application should be retained at the branch except
except for Student card for which application affixing the photo should be sent to Central office)
and should record the details of application in the ATM application / issue register.
The Bank is issuing two types of VISA Debit cards, Personalized / customized Cards and
Instacards. Personalized cards are cards where the customer’s name is printed on the card and the
card is customized and issued, at the request of the customer, only after submission of
application by the customer, where as an Instacard is a pre-customised card without customer’s
name which is available in dockets, as stock with the issuing branch. These Instacards, which are
non-personalised cards can be issued for all category of customers of CBS branches. Other than
printing of name the functions and usage of both types of cards are similar. Student Cards are
issued to Students of age 16 and above with Photo.
BRANCH OPERATIONS
The details provided by the customer in the application form from the customer are
entered at branch level, through card master program, which is a part of awb module and ATM
option. The users should familiar with various options viz., Issue, Modify, Cancel, View,
Approve, Status-Marking and Quit.
After the data is entered, the officer shall approve the entry. The data then will be
automatically sent to Central office for further processing and card customization. Data will not
be transmitted unless it is approved by an officer.
On specific request from the cardholder or at the time of closing the account, the card
should be cancelled. Neither a Replacement card nor a new card will be issued to the customer.
Status Marking – Various options for marking status such as Suspended, Lost, Hot
listing, Damaged and for issue of New VISA Debit cards are available and the user should use
appropriate options as described in the user manual.
19
Safe custody of Instacard Kits has to be scrupulously followed, on the same lines
stipulated in our circular ITEC/1/2006-07 dated 18.6.2006 and COMLET No: 4 /2006-07 dated
23.6.2006.
INSTA CARD
ATM / Debit cards are to be issued on the day of opening account for all category of
customers of CBS branches, whoever do not insist for personalization. The customer will be
given the kit containing PIN and the Debit Card immediately after opening of account, and the
card will be activated within 24 hours of opening of the account.
Stock will be supplied to the CBS branches in individual sealed covers (kits) consisting
of the Debit Card, PIN Mailer, Terms & Conditions Booklet, User Manual, etc.
The stock received has to be entered in the CBS System through the ‘InstaCard Stock
Maintenance’ program. The above cards, when delivered to the customer after opening of SB or
CDCC account, will get attached to the account, through entry in the revised Card Master
Program.
On receipt of the stock, the Officer-in-charge of ATM cards has to physically count the
number of Kits received and ensure the correctness of the stock supplied to the branch. The kits
should not be opened by any branch staff, and has to be intact at the time of delivery to the
customer.
The details of the stock received, namely starting kit number, ending kit number, count,
received from branch are to be entered in system by the officer- in-charge of the ATM cards
using ‘InstaCard Stock Maintenance’ option. InstaCard Stock Maintenance application consists
of Receive and View options and user should get familiarized with these options as detailed in
User manual.
In the eventuality of the branch finding any missing kits in the stock received, or any kit
damaged, the user is to use the option ‘Receive’ and enter the number of missing / damaged
cards individually with the respective status as detailed in the user manual.
20
Regional Office, with a copy to card division of Transaction Banking Department for
getting fresh stock of Instacard Kits. Branches cannot take Kits from other nearby branches as it
is validated at the central database.
CUSTOMIZED CARD
Once the service provider completes card customization, the cards relating to each
branch are sent directly from the service provider to the respective branches through courier
service. After dispatch of cards to branches, the individual Pin mailers with the related welcome
letter, Terms & Conditions booklet and charges details are dispatched by the service provider
directly to the customer, through speed-post services. The customer on receipt of PIN mailer has
to collect the Debit Card from the Branch where he is having his account. In case the customer
has not received his pin mailer, branch should obtain a written request for generation of new pin
mailer, deliver the card to the customer and send his request for re-generation of PIN by lodging
complaint in IOBONLINE. On receipt of the request, ATM section at Central Office will
generate a new pin and send it to branch for delivery to customer. On receipt of the Debit cards
consignment from the card customizing service provider, the branch has to verify and confirm
correctness of the physical cards received with the dispatch list from the service providers.
Immediately after receipt of cards, the branch has to enter the card details in the related register.
The guidelines for reducing operational risks in handling of ATM / Debit cards is advised vide
the Common Letter 4 / 2006 – 07 dated 23.6.2006 issued by IT Department.
DELIVERY OF CARD
Branches have to deliver the Debit card to the cardholder after proper identification,
against his acknowledgement in the ATM / Debit card register. Branch has to advise and ensure
that the customer signs his signature at the specified place on the reverse of the card. Branches
should not under any circumstance deliver the card without the customer signing at the reverse of
the card, or, to any other person including the joint account holder.
Branch should never ask the customer to hand over the card, except in cases where the
ATM rejects the card immediately on insertion (without even prompting for the PIN). Branches
should collect the card and send it to CARD DIVISION TBD for verification of the encoding on
21
the magnetic stripe. The status of the card should be marked as Suspended immediately on
receipt of the card from the cardholder and before sending it to TBD.
Branches should not insist on production of evidence for having received the PIN mailer
before handing over the card. A format of the register to record the receipt / delivery of Debit
cards / PIN at the branch is enclosed (Annexure I).
In the case of NRIs where a foreign address is provided, branch should first send the card
through a courier. On receiving their confirmation that card has been dispatched, Transaction
Banking Department will send the PIN mailer also to the branch for onward transmission to the
foreign address through a separate courier.
As a precaution, at the time of delivery of Debit Card itself, the customer should be
advised of the importance of the PIN, and should be advised of the safety measures he/she has to
take like
a. Not retaining PIN with the card, so that anybody other than the customer, who gets access to
both the card and PIN can withdraw cash through any ATM.
b. Always change the PIN through PIN change option available in the ATM, after the first
transaction using the original PIN.
c. Always to retain the PIN only in memory and not to retain it in physical format.
d. Other precautions as per the Terms & Conditions booklet issued with each Debit card.
ACTIVATION OF CARD
In the case of both personalized cards and non-personalized Instacards the customer
should be advised to make the first usage of the card in an ATM of our Bank or a consortium
member Bank. With the first successful PIN verification the card gets activated, and only
thereafter the card can be used for merchant transactions. This precaution is required to ensure
that both the card and PIN mailer are properly received by the applicant customer. Any attempt
to use the card at POS machines or for online transactions will fail if the card is not used for the
first time in an ATM.
CARD SECURITY MEASURES
22
The Debit card and PIN mailer for that card should not be held at the branch at the same
point of time under any circumstances, except where specifically authorized by Central Office.
At the time of applying customers should be told to provide their current address and
other contact details including mobile numbers, following all the KYC guidelines. These details
are to be entered, counter-checked and approved in the system and these forms are to be retained
at the branches and filed with the ATM / Account opening forms. This shall address the problem
of PIN mailers being returned undelivered for want of correct / complete mailing address of
customers.
Whenever the VISA Debit Cards / PIN mailers / Instacard Dockets, Student Cards are
received, till delivery of the same, to the customer, they should be preserved under safe and dual
custody at branch level. The cards / PIN / Dockets are equivalent to security items and should be
preserved in the safe room not accessible to anyone other than the custodians of the above items.
RE-ISSUANCE OF PIN
The PIN generated for a Debit Card is not stored anywhere in the system, and hence in
the event of the customer not receiving / forgetting the PIN, only a fresh PIN has to be generated
in the system and sent to the customer. Such requests are chargeable as prescribed.
Original PIN not received by customer
The PIN dispatched through Speed post is not received by the customer due to the following
reasons.
a. The branch is not entering the correct and full address of the applicant with pin code number
in the respective fields at the time of entering the application.
b. The customer has shifted his/her residence and not informed the Bank
c. The customer not available at the time of the visit of the Delivery person and has not left any
information.
d. Normally the postal authorities leave a notice in the case of speed-post to the addressee
informing the consignment, and the customer has not taken enough care to collect the same.
23
In all the above cases the PIN mailer is returned undelivered to Transaction Banking
Department. In such cases branches need not to mark a request for Re-PIN. Instead they should
deliver the card to the customer observing all usual procedures and report to Transaction
Banking Department through IOBONLINE -BRANCH PRODUCTS- CBS/ATM Helpdesk-
ATM Complaints to ensure that at no point of time both the card and PIN mailer remain with the
branch. On receipt of confirmation from the branch regarding delivery of the card to the
customer, a Re-PIN will be sent to the branch, for delivery to the customer. The branch should
observe prescribed procedures in delivering the PIN-mailer to the customer, against due
acknowledgement.
PIN FORGOTTEN BY CUSTOMER
When a customer has forgotten his PIN and has keyed wrong PIN in any ATM for more
than 5 times his card will be blocked temporarily. In the event of the customer being able to
recollect his PIN, then, if taken up with Transaction Banking Department-ATM Help-Desk, the
blocking can be reset. But, when the customer has forgotten his PIN and is not able to recollect,
then only a New PIN has to be issued to him for further operations. In this case the branch has to
mark the Re-PIN request through the status changing option as detailed in user manual as well as
make a complaint through IOB ONLINE-BRANCH PRODUCTS-CBS/ATM Helpdesk- ATM
Complaints. On receipt of modified data a Re-PIN will be generated to the card and will be sent
to the customer. Once Re-PIN is generated the card status at branch level will get restored to
active. Branch should not keep on marking the status again and again, since this will lead to re-
generation of PIN again and again.
REPLACEMENT CARDS
Replacement cards are issued in lieu of VISA Debit Cards reported damaged or lost. The
cards are issued with a different card number and are issued with a revised validity period. A
new PIN also will be generated for the card and the PIN will be sent to the customer while the
card will be dispatched to the branch. On receipt of PIN mailer, the customer has to collect the
Card from the branch. Any status changing process first takes the user to the address columns of
the customer, the correctness of which branch has to ensure before marking the status. This will
avoid any delay in delivery of the PIN mailer to the customer. Even for Instacards the
replacement cards will be only by way of personalized cards.
24
LOST CARD
Whenever a Debit Card or ATM card is reported lost the branch has to act up on the
instructions immediately, by marking the appropriate status as detailed in the user manual to
avoid the lost card being misused in any merchant establishments or for any online transactions.
Even if the customer reports the loss of the card over phone, the branch has to immediately act
on the complaint by marking the status of the card initially as suspended. In the case of
Suspended status, if the customer is able to trace the card, the branch itself can reactivate the
card by changing the status appropriately, and In the case of card being confirmed Lost, branch
has to mark the status as lost as detailed in the user manual. If the customer calls in person and
reports the loss of his / her Card, then the branch can directly mark the status as Lost as detailed
in the user manual. For such cards, where the status is marked as lost, a replacement card will be
issued to the customer. The branch should have a register to record such cases of card reported
Lost or Damaged, and record the date and time of receipt of such communication from the
customer. In the case of written complaints due acknowledgement should be given to the
customer with date and time of receipt of such intimation.
DAMAGED CARD
Whenever a card is reported ‘Damaged’, the branch has to get the damaged card and
destroy it in the presence of the customer, and mark the status as Damaged through the card
master program as detailed in user manual. On receipt of data from branch, the replacement card
and PIN will be generated and the PIN will be sent to the customer and card will be sent to the
branch in usual course and the cards should be delivered as discussed above in A.8.
CANCELLATION OF CARD
This option to cancel a card should be used by the branch only when the customer wants
to surrender his card once for all, or when the customer is closing his account with the branch.
The account will be permitted to be closed only when the card is cancelled. Once card is
cancelled thereafter the customer is not eligible for any card facility in that particular account.
SUSPENSION OF CARD AND RE-ACTIVATION
25
This option to Suspend the card can be used in situations as explained in A.12.1 when
initial oral complaint is received on loss of card. This option can also be used to temporarily stop
the customer withdrawing money from the account. This is the only option where the branch
itself can re-activate the card by changing the status appropriately as detailed in user manual.
OVERDRAFT DUE TO DEBIT OF CHARGES
The customer is allowed to withdraw the entire balance in his account using his VISA
Debit Card. On rare occasions due to the charges debited to the account if the transaction has
taken place in other bank ATMs, then the balance may result in overdraft when the charges are
debited to the account. In such cases the overdraft has to be treated like regular overdraft and the
branch should take steps as in normal course to contact the customer, to regularize the account,
and advise him to keep adequate balance in his account before withdrawal. In case the customer
is not regularizing the account, the branch is in order in temporarily suspending the card to avoid
further debits due to charges on continued attempts by the customer, in other bank ATMs, for
balance enquiry etc...
DAILY LIMITS OF CARD
Daily limits on the use of the Debit Card at ATMs and Merchant Locations is at present
as follows:
Usage at ATM: between Rs.20, 000/- and Rs.50, 000/- as recommended by the branch
Usage at merchant establishments & internet (jointly) Rs.50, 000/- (per day)
CHARGES ASSOCIATED WITH THE CARD
Issue of New Cards No charges
Renewal of Cards No charges
Annual Fee No charges
Re-issue of Lost / Stolen / Damaged Card Rs.100/-
Re-issue of PIN Rs.20/-
26
For transactions at InstaCash ATMs / VISA / Plus ATMs / Other shared ATM Network (Cash
Tree and NFS) For transactions at InstaCash ATMs /
VISA / Plus ATMs / Other shared ATM
Network (Cash Tree and NFS) –
No charges upto 5 transactions for SB customers
For usage at Merchant Establishments No charges
For usage at Petrol Pumps Surcharge of 2.5% of transaction amount or Rs.10/- (whichever is
higher)
For usage at Railway Stations Surcharge of 2.5% of the transaction amount
For SB Account holders For SB a/c cardholders, First 5 transactions (Financial and Non-
financial txns viz. Balance enquiry/Pin change etc) in a calendar month is free of charge. For
subsequent txn charges will be Rs.20/- per such txn. For CD and CC account Cardholders, all
txns are charged at Rs.20/-per txn from the first txn itself
RENEWAL OF ATM CARD
If the ATM transactions put through by any Card holder is unsatisfactory, viz., frequent
overdrawals, discrepancies in cash deposits etc, the branch concerned should submit a detailed
Report to the ATMCC at Central Office. This information should be given, to ATMCC in
advance at least one month before expiry date.
On expiry of validity period, the ATM Division, ITD, Central Office will renew the card
automatically unless any information of unsatisfactory operations by cardholders is received
from the branches as above.
HELP DESK & COMPLAINTS
Any complaint regarding ATM is to be lodged with the ATM Help Desk at Transaction
Banking Department on all days through 24/7 basis. Also the complaints can be routed to the
Service Providers Help desk number given in the Debit Card for assistance and marking the
27
status. Though action will be taken based on oral complaint, in all cases the customer should be
advised to confirm his complaint at the branch, in writing, on the following working day.
1.5 DAY-END CONSOLIDATION
Before consolidating the cash at the end of the day, the following points have to be
observed. It is the primary duty and responsibility of the Cashiers / Tellers / Special Assistants /
Officials attending to cash related schedule of work to ensure strict compliance to the operational
instructions put in place by Central Office under Clean Note Policy. The said Policy which was
framed by our Central Office in the light of Notification under Section 35A of Banking
Regulation Act issued by Reserve Bank of India. Copies of related circulars { MISC/96/2003-04
dated 28th April 2003 and Government Accounts Department Circular No:5 / 2003-04 dated 3rd
January 2004) are appended to this Chapter for ready reference of Branches and Controlling
Offices.
(I)Cashiers have to segregate notes into soiled/cut and reissuable including ATM-fit and prepare
sections separately for soiled / cut notes and reissuable notes.
(ii)Notes of the same denominations have to be bundled together into books of one hundred
pieces each and bank's currency bundle label has to be placed on the section to go round the note
packet on the left side to cover a major portion of the front and rear of the note packet and tied
firmly with twine. Thereafter, the packet must be secured with twine / paper band / rubber band /
polymer band firmly to ensure that all the notes inside the paper band packet remains intact. It
should be borne in mind that using stapler / sticker / gummed labels / stitching-needle or any
method which tend to damage the currency notes, is prohibited in terms of the provisions of
Clean Note Policy implemented in our Bank. As compliance to the said provisions is legal
requirement, utmost care should be taken by the staff members handling cash.
The branch round rubberstamp must be affixed on the label ends and the label must be signed by
the cashier who has prepared the packet. The band must thereafter be placed in such a manner
that it covers a part of the branch round stamp and cashier’s signature. Every ten such books
must be tied up into a bundle of one thousand pieces.
(iii)Before taking notes in joint custody and depositing them in the Currency Chest, both officials
in joint charge should personally count all notes of denominations above Rupees Ten and will
28
verify, as large a proportion as possible, of all other notes on the "Clip system". Under this
system, a few notes in each book of notes are clipped together at the top and the remainder is
counted by a cashier other than the two cashiers responsible for their correctness.
(iv)The checking officer must ensure that all the leaves are firmly held in the packet and the
security paper band is fixed in the manner as mentioned above.
(v)Branches can retain the reissuable note packets for transactions and remit the non-issuable
note packets into the currency chest. If the branch holds surplus cash, reissuable note sections
can also be remitted into the currency chest.
1.5.2 BACK UP
In terms of instructions currently in force ( Circular - Government Accounts
Department, Central Office Circular No: 6/2003-04 dated 5th January 2004) the Cashier shall be
solely responsible for the quality of the notes from Rupee one to Rupees fifty. In respect of
denominations above Rupees fifty ( i.e. Rupees one hundred, five hundred and one thousand) the
cashier shall remain responsible only jointly for the quantity of notes prepared by him / her along
with Officer / Special Assistant.
In the light of the above, the responsibility in case of shortage detected in the packets (no matter
when it is detected) will be fixed equally on the cashier and the checking officer whose
signatures appear on the label. In other words, the cashier and officer who have originally
made/checked the packet will be accountable for any discrepancy even if they are not the
custodians at the time of detection so long as the seal is intact. If the security bands have not
been disturbed and there is no evidence on the face of the packet to indicate that it has been
tampered with, then in such cases, where a shortage is detected (this can take place when one or
more notes are physically torn out of the section leaving a part of the note stuck inside the
stitched packet) the responsibility for such shortage will be decided on a case to case basis.
29
1.5 SERVER CLOSING
Every user having a need to work in the CBS system should have an individual
login-id created in the CBS server identifying the user with a branch. For the purpose of Login-
id, the user’s Roll No. as allotted by PAD, Central Office should only be used, which will be
validated by the system with the PAD Salary Database. Wherever the user-id is less than 5 digits,
the roll-no should be prefixed with 0 to make the total digits as 5. In case the user’s roll-no is not
found in the PAD system, the system would not allow the user creation. It is the responsibility of
the Regional Office and PAD, C.O. to ensure that as and when a member is posted to a branch /
Department / Office, the roll no. of the member is attached immediately to the branch in the PAD
Salary Database to enable verification by CBS system. The User-id should be created and
approved by Senior Manager / System Administrator users of the branch as and when any user
joins the branch / office.
All login to the CBS server are controlled by two level authentication, viz. User-id and
Password. Every user should create his/her own password as prompted by the system which
should NOT be revealed to any other person under any circumstances. The password should be
of minimum 5 characters with a maximum of 8 chars and should consist of Alphabet and
Numbers. The password should be changed at frequent intervals but not later than 7 days. As and
when the password is due for change, the system would prompt the user to enter a new password.
Every user should remember the password created by him / her.
At times, users may forget the password created by them as a result they would not be
able to login to CBS system and worI. In such instances, the user should make a written request
to the Branch Chief and request for password change. The Branch Chief should record the letter
in a separate register as per format given in annexures before deleting the existing password of
the user using the ‘del_passwd’ option in user maintenance. Under no other circumstances, this
option should be used by the Branch Officials. Once the existing password is deleted, the user
should login and give a new password. Then the user-id has to be approved by the Senior
Manager / System Administrator before the user would be allowed to login to CBS for working.
30
CBS permits creation of users with various levels and Roles depending on the
designation of the user as well as the responsibilities assigned to the users. The System
Administrator / Senior Manager who creates the user should assign only the relevant level / Role
to the user. In case any user has to be assigned with a higher level / role than what he / she is
eligible, the fact should be recorded in a register with appropriate reasons duly authenticated by
the Branch Chief. Once the exigency is over, the user should be reset to his authorized level /
role without fail. The following list indicates the various level and role authorized in CBS :
Designation Level
All Clerical Staff 11
Head Cashier-II 29
Special Cadre Assistants 31
Assistant Manager (Scale –I) 51
Manager (Scale – II) 51
Senior Manager (Scale – III ) 81
Chief Manager (Scale –IV) 81
Branch Chief 99
Type Description
------- -----------------
S Supervisor
L Client User
M Manager
31
E Branch Chief
P Special Cadre Assistant
A User Creator/Administrator
R RCC
N Senior/Chief Manager
F C.O/R.O User
H Head Cashier
I Inspectors
D Concurrent/External Auditors
O Operator
Branch Chief to be assigned to Head of the Branch irrespective of his Grade/Scale. Depending
on the requirement of Management, the levels will be changed by ITD, CO from time to time for
better control and users informed of the changes.
1.5.4 BRANCH CLOSING
The First user Senior Manager level user logging to the System would be assigned with the SA-
Role. This user would have to function both the SA as well as the normal Role as assigned to
him during the day. In case the user has to leave the office before closure of the day’s work in
the system, he / she has to assign the SA-role to another user before leaving office. The user
having SA-role should do all Administration related jobs like Application Start-up, Day begin,
Attendance marking, User Maintenance, User-Reset, Day end, Application Shutdown etc.
32
As part of security implementation, all the users in CBS would be deactivated at
the end of the day. As and when users of a branch / office report for duty next day morning, the
Senior Manager or the SA-user should mark the user as ‘active’ by marking their attendance in
the system. Only then, the user would be allowed to login to the system. Under no circumstances,
the attendance should be marked for all the users irrespective of their physical attendance in the
office / branch. Such act would be viewed as serious lapse and action initiated against the erring
officials.
A select number of branches have been provided with Bio-metric authentication
system as part of enhanced security measure using which the user is authenticated by reading the
Finger print recorded in the system. The system would be implemented at all branches shortly.
Wherever the system is implemented, branch users should take care to maintain the system in
perfect condition and strictly enforce its use without trying to circumvent the system. In case of
mechanical fault the matter should be taken up with the vendors immediately and necessary
repairs carried out to bring the system to working condition. In case of such emergency, request
may be made to ITD, CO to bye-pass the control as an exception. However, it should not be
resorted as a routine feature.
Users should use only those terminals authorized by ITD to get connected to CBS
system. Whenever a user has completed his/her work and does not want the use of the terminal,
he / she has to log out from the programs gracefully (using 0 or Q as the case may be) so that any
other user who might require the terminal can use the same using his/her user-id and password.
In case of the user wants to temporarily log out for a very short duration of time, using ‘F4’ key
the terminal should be locked by the user before leaving his/her seat. To re login, the user should
enter his/her password once more and enter the system. Every user is responsible for the
transactions put through under their User-id and hence the users should ensure that others do not
have access to their password.
1.6 KEY ISSUES
Whenever a staff member is transferred out of the branch or is no more attached
to the branch, the Senior Manager concerned should remove the user from the branch user-list
using User Maintenance Program and record the same in the attendance register also. Under no
33
circumstances, the user-id of a user who is not attached to the branch should be kept open
leading to perpetration of frauds. Any omission on this account will be viewed seriously and any
repercussions thereon will be the sole responsibility of the Senior Manager concerned.
Due to exigencies, Regional Office may depute members from one branch to
another on a temporary basis. In such cases, the branch where the member is originally attached
should ‘De-activate’ the member’s user-id from their branch user list before relieving the
member to the other branch. The branch where the member is going on deputation should create
a fresh login id for the member as per extant guidelines and activate the same. On completion of
the deputation period, the relieving branch should ensure that the user-id is de-activated before
he/she reports for duty at the parent branch.
34
CHAPTER 2
ACCOUNT OPENING
2.1 ACCOUNT OPENING /CLOSING
2.1.a) SAVINGS BANK ACCOUNTS
Individuals–single accounts, or joint accounts of two or more individuals.
minors by themselves or on behalf of the minors by their guardians
Following entities Primary Co-operative Credit Society which is being financed by the
bank.
Khaki and Village Industries Board
Agriculture Produce Market Committee
Societies registered under Societies Registration Act, 1860 or any other corresponding
Law in force in the state or Union Territory.
Companies Governed by the Companies Act 1956 which have been licensed by the
Central Government under section 25 of the Act, or under the corresponding provisions
in the Indian Companies Act 1913 and permitted, not to add to their names the word
"Limited or the words "Private Limited"
Government departments/bodies/agencies in respect of grants/subsidies released for
implementation of various programmers/schemes sponsored by Central
Government/State Governments subject to production of an authorization from the
respective Central/State Government departments to open savings bank account.
Development of women and children in rural areas (DWCRA).
Self-help Groups (SHGs) registered or unregistered, which are engaged in promoting
savings habits among their members.
Farmers'Clubs - Vikas Volunteer Vahini. (V V)
Branches shall not open Savings Bank account in the name of the following:
a. any trading or business concern, whether such concern is proprietorship, partnership, company
or association.
35
B.Government departments/bodies depending upon budgetary allocations for performance of
their functions.
C.Municipal Corporations/Committees
d.Panchayat Samities
e.State Housing Boards
f.Industrial Development Authorities
g.State Electricity Boards
h.Water / Sewerage / Drainage Boards
i.State Text Book publishing corporations / societies
j.Metropolitan Development Authorities
k.State / District level housing Co-operative Societies.
L.Other banks including Regional Rural Banks, Co-operative Banks and land Development
Banks.
M.Political parties
These Institutions / Organizations are specifically excluded from opening SB
Accounts with Banks and earn interest thereon and hence branches are prohibited from opening
such Accounts.
Introduction of Accounts
Where the applicant for a SB Account submits sufficient proof of identity and
address as prescribed in KYC-AML Policy of our bank and the branch is satisfied with the
bonafides of the applicant and as a respectable person, with such proof of identity and address,
branch may open the account without insisting on an introduction by an existing account holder.
However a Letter of Thanks to the depositor should be sent as envisaged in Chapter.1 on
“Constituents’ Accounts - General”. Branch should be in a position to classify such account
holders under “Low risk-RIP I under KYC Norms / AML Standards.”
With the exception of the above, and “No frills Accounts” all other Accounts should be
introduced as guided in Chapter.1on “Constituents’ Accounts - General”.
36
2.1.b) CURRENT ACCOUNT
Instructions relating to the formalities to be observed for opening of an account,
operations in an account and other matters relating to maintenance common for current and
savings accounts have been given in Chapter.1on “Constituents’ accounts – General”.
The additional provisions relating to Current Accounts and Cash Credit accounts (only the
operational part and not credit monitoring) are provided in this chapter. The provisions contained
herein must be read together with those in Chapter.1 on “Constituents’ Accounts - General”.
All formalities connected with opening of an account as detailed in Chapter.1 on
“Constituents’ accounts-General” should be carefully followed. Branch Managers/Second Line
Functionaries/ Departmental Officers must see that the particulars in the account opening forms
signed by constituents are recorded in the computer master and that the forms and all other
documents relating to the opening of the accounts are serially numbered and systematically filed.
The serial numbers of the opening forms, the numbers of the relative specimen signature sheets
and Powers of Attorney or Letters of Authority, must be recorded in the computer master. Any
special instructions affecting the authority of the drawer(s) must be recorded in the computer
master as well as on the specimen signature sheet.
Partnership letters, Joint Hindu Family Letters, Letters of Authority to operate
accounts and copies of partnership deeds, memoranda and articles of association of Companies
and rules of Associations and Societies should be filed with the account opening forms. In the
case of accounts in the names of limited companies, firms, co-operative societies etc., where
such documents are numerous, a separate file should be maintained for each account to facilitate
reference.
Branches should adhere to the KYC Norms / AML Standards as detailed in our
KYC policy. Branches should obtain KYC forms for the legal persons (entities) as well as the
constituents of the legal persons ( e.g. partners, directors, office bearers , power of attorney ,
mandate holders etc) . Branches should also obtain address proof and identify proof from all
parties to an account to complete the customer acceptance policy and customer identification
procedure, in respect of legal persons branches should additionally obtain documents like
37
partnership deed, memorandum and articles of association, resolution etc., without fail. Based on
the customer acceptance policy and identification procedure branches should categorise the
accounts on risk perception as Low risk – RIP I, Medium risk – RIP II, High risk - RIP III,
exceptionally high risk – RIP IV as detailed in KYC policy and monitor the accounts
accordingly.
Documents for Individuals (natural persons) and legal persons (entities)
Customer identification details (for individuals/Proprietor/Partners/ coparceners/ Directors /
Authorised Signatories ) :
a.Passport alone where the address on the Passport is the same as the address on the account
opening form
Or
b.Any one document from each of the under noted TWO lists, for a photo ID and proof of
address
List I - photo proof List II – address proof
1 Passport where the address
differs
1 Current telephone bill /Postal
identity card/ Current Pass Port
2 PAN Card 2 Letter from any recognized
public authority
3 Voters Identity Card 3 Bank account passbook/
statement
4 Driving license 4 Latest electricity bill
38
5 Identity card
( subject to Bank’s satisfaction)
5 Letter from employer to
Bank’s satisfaction
6 Letter from recognized public
authority Or Public servant
verifying the photograph to
Bank’s satisfaction
6 Property tax book / Receipt
7 Registered lease deed
8 Ration card
Any one or more document(s)
which provide customer
information to Bank’s
satisfaction
Additional documents required , ( Legal persons – entities)
For the partnership firms
Registration Certificate if registered
Partnership deed
Power of Attorney grantedto a partner or an employee of the firm to transact business On Firm’s
behalf (as provided in the partnership deed , otherwise all partners should be involved in all the
transactions )
Telephone bill in the name of the firm / partners
Any Officially valid documents identifying the partners and the persons holding the power of
attorney and their (PA) addresses
For Limited Companies
A copy of the Certificate of Incorporation duly certified by a Director or Secretary of the
Company
39
A copy of the Certificate of Commencement of business duly certified by a Director or Secretary
of the Company ( for Public LTD Companies only)
A copy of the Memorandum and Articles of Association certified to be true and upto date by a
Director or Secretary of the Company
Resolution of the Board of Directors to open an account and identification of those who have
authority to operate the account ( specimen annexed)
Power of Attorney granted to Company’s Manager(s),/ officers/ Employees to transact business
on its behalf
Copy of the PAN allotment letter / PAN card
Copy of the Telephone Bill
For Trusts / Association/ Clubs / Societies
Trusts Associations / Clubs / Societies
1.Certified copy of the trust deed
2.If a charitable trust, a certified copy of the
certificate from Charity commissioner
3.Where there is no trust deed, a certified
copy of the order from a competent Court
4.Certified copy of the resolution
regarding opening and conduct of the bank
account
5.List of present trustees with bio data of
each trustee
6.Certified copy of a certificate under IT
act wherever the deed provides for use of
1.Certified True copy of the Rules, Regulations,
Bye-Laws (as the case may be)
2.Certified True copy of Certificate of Registration
in case of Registered bodies
3.(original to be verified)
4.A certified true copy of the Resolution certified
(by the Chairman of the meeting of the Governing
Board or Managing Committee or Like Body, at
which it was passed)
5.A copy of the Balance sheet in the case of Co-
operative Society, if available
6.Certificate of Registration if registered
40
Trust money for business activities.
7.Certificate of Registration if registered
8.POA to transact business if applicable
9.Any officially valid document to identify
the Trustees, Settlers, beneficiaries and
those holding Power of attorney,
Founders/ Branch Managers / Directors
and their addresses
10. Telephone bill
7.POA to transact business if applicable
8.Any officially valid document to identify the
committee members, office bearers, Directors and
their addresses
9.Telephone bill
2.1 c) CLOSING OF ACCOUNTS
When a customer approaches a branch with a request for closing his account, it is
necessary for the branch to ascertain the reasons for the closure of the account.
If it is on account of poor service, reported by the customer, then steps must be taken to see that
the quality of service is improved and the customer is persuaded to retain his account with us. If
the request is due to the customer’s transfer to another station where our Bank has a branch, the
branch should suggest that the account can be transferred to the other place. If the closure is
inevitable, then the following procedure must be followed.
On receipt of the letter from the customer requesting closure of the
account(Request letter format appended), the signature on the letter should be verified with the
specimen on record. It must be noted that the letter requesting closure of the account must be
signed by all the joint account holders, irrespective of the mandate (such as either or survivor,
any one or survivor etc.). However, where all the joint account holders authorize the Bank in
writing to close the account on the instruction of one of them, the account may be closed on the
basis of a letter signed by the person named in the authorization letter. The letter must be
circulated to the other departments of the branch to ascertain whether there are any
41
liabilities/dues to the branch from the customer. On the same letter department officers should
initial and convey the liabilities / dues or no liabilities / dues to the branch /bank. The letter
should then be referred to the Branch Manager for instructions.
After receipt of the letter, duly approved by the Manager for closure of the
account, the department should proceed to close the account and deal with the balance payable to
the customer after adjusting our dues as per his/her instructions.
In the case of accounts bearing interest, the amount of interest should be
calculated at the rate and for the period upto which such interest is payable and applied to the
account.
In the case of cheque operated accounts if there are any cheques issued by the
customer but not yet presented, the customer must be requested to make suitable arrangements
for meeting them, as otherwise, they will be returned unpaid.
Where the customer has come in person he/she should be asked to draw a cheque
for the net amount payable to him/her and the cheque should be paid in the usual manner. Where
a customer has sent a blank cheque duly signed by him/her through a third party with a proper
letter of authorization to receive the payment on his/her behalf after establishing authenticity of
such instructions , the departmental officer should inform the third party the amount payable so
that he/she can fill up the amount in the cheque and present it for payment. The departmental
officer may render any assistance that the third party may require in filling up the cheque. The
cheque should then be paid in the usual manner.
After closure of the account, the account should also be removed from the
account master.
The pass book must be updated and closed with the notation “Account closed on
42
___________. Unutilized cheque leaves from---------- to -----------------returned” and returned to
the customer.
The unutilized cheque leaves returned must be dealt with as stated in
The Account Opening Form and the specimen signature card of the customer
should be cancelled by drawing a line across the face of the form and writing in red ink in bold
letters "ACCOUNT CLOSED". Such forms should be stitched along with the day’s vouchers.
An entry should be made in the Accounts Opened and Closed Register and the running number
of live accounts should be reduced.
The account must be removed from the index by drawing a line over the entry.
The noting if any, in the standing instructions register should also be similarly deleted. For the
same purpose, a letter of cancellation of standing instructions should be obtained from the
customer.
If the customer has not made any arrangements for meeting the cheques issued by
him but had not been presented before his request for closing the account, any cheque presented
on the account after closure of the account should be returned with the reason "Refer to Drawer".
REQUEST FOR CLOSURE OF ACCOUNT (FORMAT)
Place:
Date:
To The Branch Manager
Indian Overseas Bank
__________________ Branch
Dear Sir,
43
Request for closure of account
Name of the A/C :
Type of Account :
Account Number :
=======================================================
I/We am/are having the captioned account with your branch for the
last_____________ years.
I/We request you to close the above deposit account for the following
reason/s.
a)
b)
I/We enclose herewith the unutilized cheque leaves for the purpose.
Yours faithfully,
2.1.1 KYC NORMS / AML STANDARDS
Along with the application form as under noted branches should obtain KYC-
CROP form from all individuals / parties to the account including mandate holders / power of
attorney holders. Branches should also obtain KYC-CROP form for the entities ( legal Persons )
like Partnership, Company, Associations, clubs etc., and do the risk classification . However if
the customer has already been subjected to due diligence for KYC / AML for the Current
account or Savings bank account, the process need not be repeated for term deposits. However
the risk classification as ascertained from the Savings bank or Current account department
should be noted in the application form along with Customer ID provided by the computer
system for such CA / SB account.
44
2.1.1.1 KYC AN ANTI MONEY LAUNDERING INSTRUMENT
Banks were advised to follow certain customer identification procedure
for opening of accounts and monitoring transactions of a suspicious nature for the purpose of
reporting it to appropriate authority. These ‘Know Your Customer’ guidelines have been
revisited in the context of the Recommendations made by the Financial Action Task Force
(FATF) on Anti Money Laundering (AML) standards and on Combating Financing of Terrorism
(CFT). Detailed guidelines based on the Recommendations of the Financial Action Task Force
and the paper issued on Customer Due Diligence (CDD) for banks by the Basel Committee on
Banking Supervision, with indicative suggestions wherever considered necessary, have been
issued. Banks have been advised to ensure that a proper policy framework on ‘Know Your
Customer’ and Anti-Money Laundering measures is formulated with the approval of their Board
and put in place.
This Master Circular aims at consolidating all the instructions/guidelines issued
by RBI on Know Your Customer (KYC) norms/Anti-Money Laundering (AML)
standards/Combating Financing of Terrorism (CFT)/Obligations of banks under PMLA, 2002.
The Master Circular has been placed on the RBI website (http://www.rbi.org.in).
2.1.2 CURRENT ACCOUNT FOR INDIVIDUALS (BUSINESS PURPOSE)
One Identity proof from: PAN Card, Passport, Voter Identity Card, Driving License,
Adhaar Card.
One Address proof from: PAN Card, Passport, Voter Identity Card, Driving License,
Adhaar Card.
Recent Color Photograph
PAN/Form 49 A along with Form 60 if applied for PAN
Account opening Cheque from existing Savings/Individual Current Account
45
2.1.3 SOLE PROPRIETORSHIP FIRM
First & Second entity proof from: Trade license, APMC/ Mandi license or TAN
registration certificate. View complete list of documents Please note that both the documents
cannot be same.
Apart from the above list, second entity proof can also be: Latest copy of Electricity Bill or
registration of firm with EPFO/ ESIC View complete list of documents
Address proof in the name of proprietor or proprietorship firm (if communication address
is different or other than address mentioned on entity proofs)
Proprietorship Letter as per the bank’s format
Identity proof of proprietor View complete list of documents
Account opening cheque from existing account of proprietorship firm or from savings /
individual current account of proprietor (in case of a new firm)
Residence address proof of the proprietor (if account opening cheque is collected from
proprietor's savings / Individual current account)
PAN Card in the name of the Proprietor or Form 49 A along with Form 60 (if applied for
PAN)
No objection certificate (if proprietorship firm is enjoying credit facility from any other
bank (s))
2.1.4 PARTNERSHIP FIRM
Partnership deed
Partnership letter as per the bank’s format
Entity proof* of partnership firm from:
Trade License
Shops & Establishments Certificate/Licence
APMC/Mandi Licence
TAN Registration Certificate. *View complete list of documents
PAN Card in the name of firm or Form 49 A along with Form 60 (if applied for PAN)
Address proof* in name of the firm from (if address is different or not given on the Entity
proof):
46
Latest Three months Bank Account Statement along with account opening cheque
Latest copy of Electricity Bill
Latest copy of Telephone Bill
Property Tax bill along with Tax payment receipts
Water Tax bill along with Tax payment receipts
Identity and Address proof of all partners. View complete list of documents
Partnership Registration Certificate (if partnership firm is registered with Registrar of
Firms)
Account opening cheque from existing account of partnership firm or from savings
account of partner (in case of new firm)
No objection certificate (if partnership firm is enjoying credit facility from any other
bank(s))
2.1.5 COMPANIES
2.1.5.1 PRIVATE/PUBLIC LIMITED COMPANY
Certificate of Incorporation
Board Resolution (BR)
Memorandum of Association (MOA) & Articles of Association (AOA)
Certificate of Commencement of Business (COB) (only for Public Ltd Company)
Latest list of directors as per the bank’s format
Communication address proof in the name of company (if different than that mentioned
in the Certificate of Incorporation):
Trade License
Shops & Establishments Certificate/Licence
APMC/Mandi Licence
TAN Registration Certificate
Latest Three months Bank Account Statement. View complete list of documents
Registered address proof of the company (if different than that mentioned in the
Certificate of Incorporation)
Identity proof of all authorized signatories View complete list of documents
47
Proof of appointment of current director/s (if his/her name is not available in first list of
Director/s)
Proof of resignation of Director/s (if name of that Director/s is not available in latest list
of Director/s)
PAN Card of the company or Form 49 A along with Form 60 Only (for New Companies
which are less than 90 days)
Share Holding Pattern of the company as per the bank’s format
No objection certificate (if Company is enjoying credit facility from any other bank (s))
2.1.6 TRUSTS
2.1.6.1 NRI ACCOUNT
In terms of Section 2 (w) of FEMA "Person resident outside India"means a person who
is not resident in India. Person includes an individual, a Hindu undivided family, a company, a
firm, an association of persons or a body of individuals whether incorporated or not.
1.An Indian Citizen who stays abroad for employment/carrying on business or vocation outside
India or stays abroad under circumstances indicating an intention for an uncertain duration of
stay abroad is a non-resident. Persons going abroad for studies are treated as Non-Resident
Indians (NRIs) and are eligible for all the facilities available to NRIs. Educational and other
loans availed of by them as residents in India will continue to be available as per FEMA
regulations.
1.1.Persons posted in U.N.Organisations and officials deputed abroad by Central/State
Government and Public Sector undertakings on temporary assignments are also treated as non-
residents.
1.2.Non-resident foreign citizens of Indian Origin are treated on par with non-resident Indian for
opening and maintaining accounts and for making investment.
‘Person of Indian Origin’means a citizen of any country other than Bangladesh or Pakistan, if
48
a)he at any time held Indian passport;
or
b)he or either of his parents or any of his grand- parents was a citizen of India by virtue of the
Constitution of India or the Citizenship Act, 1955 (57 of 1955);
or
c)the person is a spouse of an Indian citizen or a person referred to in sub-clause ( a ) or (b);
1.3.Overseas Corporate Bodies (OCBs) have been derecognized as an eligible ‘class of investor’
under various routes/schemes available under extant Foreign Exchange Management
Regulations.
1.4.In case of doubts/clarifications regarding the NRI status of individuals approaching branches
to open accounts, branches should take up with D &A Section, Foreign Exchange Department,
Central Office. Further, FAQ on various entitlements of NRI/PIO published in the website of the
Reserve Bank is also made available in the home page of our TREASURY (FOREIGN) and
branches may refer to the same.
ACCOUNTS OF CERTAIN NON-RESIDENTS TREATED AS RESIDENT ACCOUNTS
Although the under noted categories of persons, firms, companies, etc., are
treated as resident outside India under FEMA, their rupee accounts with ADs in India are
regarded as resident accounts and hence branches may open such accounts and allow free
operation of accounts, provided the requirements under FEMA 1999 are complied with.
(i)Indians, Nepalese or Bhutanese resident in Nepal or Bhutan.
(ii)Offices and branches situated in Nepal or Bhutan of any business carried on by a company or
a Corporation incorporated or established under any Law in force in India, Nepal or Bhutan.
(iii)Offices and branches in Nepal or Bhutan of any business carried on as a partnership firm or
otherwise by Indians, Nepalese or Bhutanese.
49
3.For opening accounts in the names of Pakistani and Bangladesh nationals, branches should
obtain prior approval of Reserve Bank of India and the approval details should be recorded in the
relative account opening forms and Ledger/Register folios/ system records.
4.All the Indian branches of our Bank can open and maintain the following categories of Rupee
Accounts in the names of Non-Resident Indians (NRIs) and Person of Indian Origin.
i)Ordinary Non-Resident Rupee Accounts (NRO Accounts)
ii)Non-Resident (External) Rupee Accounts (NRE Accounts)
A comparative chart containing the salient features and conditions governing credit/debit
transactions of the above four types of accounts are furnished as Annexure-I. Before opening
accounts under these schemes, branches should ensure that the applicants satisfy the criteria laid
down for the residential status under FEMA 1999.
5.Branches should be guided by instructions contained in the following while opening and
allowing operations in non-resident rupee accounts:
i)Foreign Exchange Management (Deposit) Regulations, 2000 issued under FEMA 1999 and
Notification No. FEMA 5 /2000-RB dated 3rd May 2000 .
ii) Master circulars and AP (DIR) Circulars issued by Reserve Bank of India
iii) Circulars issued by Central Office.
(Regulations governing maintenance of and operations on non-resident rupee accounts by
authorised Co-operative/Commercial banks have been given separately by Reserve Bank of India
in Memorandum ABM).
50
2.1.6.2 OPENING OF ACCOUNTS IN THE NAMES OF NRIs
Any Non-Resident of Indian Origin or Nationality who desires to open account with the
branch, may send the prescribed application duly completed and signed - verified by his/her
Bank/Indian Embassy/Notary Public/our Bank’s Account holder along with remittance to the
branch.
Alternatively, photocopies of passport giving passport number, signature, photographs
and date of issue/expiry date of passport may be sent by the prospective account holder.
Branches are permitted to open NRE accounts for Indians before proceeding abroad
with zero balance in the account after verifying Passport, Visa and Air ticket for the journey and
give them the Account Number.
Branches opening rupee accounts in the names of minors, joint accounts should ensure
observance of the usual precautions for opening of accounts, issue of pass book/statement of
accounts, issue and despatch of cheque books, operation of accounts, standing instructions, etc.
Branches should choose the correct type of non-resident account in the CBS package, for
different categories of non-resident accounts opened/maintained by them.
Details such as names of NRIs, their nationality, Indian contact address, overseas
address, passport particulars, name and address of the introducer/identifying overseas
bank/branch, operational/payment instructions like E or S, F or S, A or S, nominations etc.,
should be recorded in the account master in CBS packages authenticated properly by the
authorised official.
Branch should send the deposit receipt through registered post to the NRI depositor at
the address given in the application/account opening form. The deposit receipt should not be
handed over to agents/middlemen/third parties. The branch should ensure that complete postal
51
address of the NRI depositor has been furnished in the account opening form and should exercise
special care, if the address is incomplete or only post box number has been furnished.
The Account opening forms, specimen signature cards, should be properly filed,
preserved and produced for verification by our Internal Inspectors/Reserve Bank of India
Inspectors/External Auditors when required.
In terms of Policy Document on KYC-AML, Non–resident customers are placed under
RIP – Three (high risk) category in the Risk Perception Matrix. Hence branches should apply
due diligence with the available information provided by the customer and the estimation arrived
on the additional information gathered through interaction with the customer. Suitable STTL
(Single Transaction Threshold Limit)may be fixed as applicable to the risk level.
REMITTANCES
Branches handling inward remittances received for opening/credit to non-resident
accounts and outward remittances made to the debit of non-resident accounts should ensure that
the remittances received/made are in conformity with the permitted methods prescribed under
FEMA 1999.
Branches should ensure that each inward remittance is promptly acknowledged to the
NRI and relative credit is made to the account without delay, observing procedural guidelines for
handling inward remittances. Similarly, the requests for foreign outward remittances should be
promptly attended to by branches.
NAD branches opening/maintaining accounts should note to handle purchase
transactions under prior report to the designated AD branch. For sale of foreign exchange on
account of NRI customers, the NAD branch should take up with the designated AD branch,
which will arrange for release of exchange in the form of draft, mail transfer, telegraphic
transfer, foreign currency TCs/Notes, etc. In this connection, branches are advised to ensure
compliance of procedural aspects contained in relevant chapters of this volume.
52
While handling foreign currency notes/coins on account of NRIs, branches should be
guided by the general instructions regarding purchase/encashment of foreign currency notes
contained in Chapter on ‘Foreign Travels’ of the volume.
The purchase/sale transactions (in foreign exchange) in opening/maintaining non-
resident accounts in the names of NRIs by both AD branches and NAD branches shall be
reported to TREASURY (FOREIGN) only by AD branches, in accordance with the procedure
laid down for such reporting.
Branches should properly record and promptly execute the various standing/special
instructions of NRIs for local disbursements under advice to account holders. While executing
the instructions of the customers, branches should ensure that debits/credits made to these
accounts are permitted debits/credits under FEMA 1999.
LOANS AND OVERDRAFTS
Branches granting loans/overdrafts to NRIs against the security of NRO/NRE deposits
should ensure compliance of guidelines contained in Notification No. FEMA 5/2000-RB dated
3rd May 2000 read with subsequent amendments and Volume II of Book of Instructions as well
as circulars issued by Central Office, regarding maximum amount of loan, interest rate, margin,
purpose etc.
Advances against FCNR/NRE deposit to the depositor himself or to a third party should
be granted up to a maximum of Rs.100.00lacs only, only under his specific request/mandate and
after verifying the authenticity of the signature of the depositor. If the NRI availing the loan is on
a visit to India, the loan documentation could be completed at the branch, where he proposes to
avail of the facility. If the NRI seeks to avail of loan from the branch in India, when he is abroad,
the loan document (60 H) should be sent to the NRI abroad with a request to execute the
53
documents at an Overseas Branch or at the branch office of the Correspondent of our Bank and
arrange to forward the documents along with the deposit receipt (carrying the undated discharge
of the depositor/s) through the overseas branch/office of the correspondent bank where the
documents were executed. A copy of the passport of NRI should also be called for along with the
application and discharged deposit receipt.
The covering letter of the overseas branch/Correspondent bank forwarding the
documents should confirm that the depositor had called on them and executed the documents in
their presence. On receipt of documents, branch can affix and effectively cancel the revenue
stamp on the reverse of deposit receipt where the undated discharge of the depositor/s appears
and proceed to grant the loan. The proceeds of loans so granted could be credited to the NRO
account only of the NRI availing the loan. Under no circumstances, the loan proceeds should be
credited to NRE/FCNR accounts of NRIs or repatriated abroad.
Branches have to propose to their Regional Office for sanction of loan against NRE
deposits to third parties.
Branches should not grant advances to third parties against NRE/FCNR B deposits on
the basis of Power of Attorney.
In case of any loan / overdraft availed by a resident and who subsequently became a
person resident outside India, in terms of Reserve Bank guidelines under FEMA 1999, it is left to
the discretion and commercial judgment of the authorised dealer / branch to allow continuance of
such facilities. In such cases, payment of interest and repayment of loan may be made by inward
remittance or out of legitimate resources in India of the person concerned. As per Reserve Bank
guidelines, authorised dealers at their discretion / commercial judgment, are permitted to allow
overdrawing in NRE SB account for a period not more than two weeks, up to a limit of
Rs.50,000 subject to the condition that such overdrawing together with the interest payable
thereon are cleared/repaid within the staid period of two weeks, out of inward remittance through
normal banking channels or by transfer of funds from other NRE/FCNR accounts. However,
branches should be guided by our Bank’s discretionary powers for various branches
54
communicated from time to time, before considering such requests from their NRI customers.
Branches should note that the loan/overdraft facilities granted to NRIs in India against
the security of NRO/NRE/FCNR B deposits could be adjusted—
(a)by foreign inward remittance, or
(b)from the proceeds of deposits held as security, or
(c)to the debit of the NRO/NRE account of the borrower.
When a loan granted to a NRI against the security of his/her NRE/FCNR deposit is
adjusted out of the rupee resources held in NRO account, branches should note to recover
interest as laid down by Central Office in ‘Interest Rate on Advances’ circulars.
At the time of sanctioning credit facility against the NRE/FCNR deposits, branch should
necessarily obtain instructions from the depositor, well before the due date, for adjustment/roll
over of the facility on the due date. Branch should send deposit maturity notice along with details
of the facility outstanding and the instructions already in place. If any change in instructions is
given by the depositor, branch should take note of the same.
As any interest rate movement/exchange rate movement will result in complaints from
customers, branches should take adequate care on this issue.
BLOCKED ACCOUNTS
The Reserve Bank of India has powers to ‘block’ accounts in India of any person,
whether an individual, firm or company resident outside India and to direct that payment of any
sums due to that person shall be made to such blocked account. A blocked account means an
account opened as a blocked account at any branch or office in India of a bank authorised in this
behalf by Reserve Bank of India. No blocked account may be opened by a branch or an existing
55
‘free’ account blocked, except under directions of Reserve Bank of India. No blocked account
should be un blocked by a branch except under specific direction from Reserve Bank of India.
The Reserve Bank of India will issue special directions regarding operations on
individual blocked accounts at the time of authorizing opening of such blocked accounts.
Submission of STAT 2 return to the Reserve Bank for blocked accounts has been
dispensed with.
Annexures:
I– Comparative chart showing the salient features of NRO and NRE deposit schemes.
II– Account Opening Form for NRE Account.
ANNEXURE I
RUPEE ACCOUNT OF NON-RESIDENTS OTHER THAN BANKS
NON-RESIDENT (ORDINARY) – NRO NON-RESIDENT (EXTERNAL) – NRE
1.WHO CAN OPEN:
Any person resident outside India (other
than a person resident in Nepal and
Bhutan) (Opening of accounts of
individuals / entities of Pakistan /
Bangladesh nationality / ownership as
well as erstwhile OCBs require prior
approval of Reserve Bank of India).
Non-Resident individuals of Indian Nationality
or origin (Opening of NRE accounts in the
names of Pakistani / Bangladeshi individuals /
entities require prior approval of Reserve Bank
of India).
2. SOURCE OF FUNDS :
Proceeds of remittances received in any
Remittances received from abroad in an
56
permitted currency from abroad or any
permitted currency tendered by the account
holder during his temporary visit to India or
transfers from rupee accounts of Non-
Resident Banks.
Legitimate dues in rupees of account holder
in India.
Transfer from NRE/FCNR accounts.
Designating existing account as NRO, of a
person proceeding abroad (other than Nepal
or Bhutan) which would give him the status
of a NRI.
approved manner in freely convertible
currency, Transfer from NRE/FCNR accounts.
Accounts may be opened in the name of any
eligible NRI during his temporary visit to India
against tender of foreign currency, TCs issued
in his own name or notes and coins tendered
provided the branch is satisfied that the status
of the person continues to be a non-resident.
Branches should ensure that TCs and currency
notes tendered by the account holder have in
fact been brought by him from abroad and not
acquired locally.
Transfers from NRO account to NRE account
are permitted subject to the ceiling of USD 1
million already available for repatriation from
NRO accounts
3. TYPE OF DEPOSIT:
SB, CD, Term Deposit
SB, CD, Term Deposit
4. GL CODE :
Same as ordinary deposit.
SB NRE – 1301
CD NRE – 1501
NRE TD (S) – 1101
TD NRE (L) – 1151
5. PERIOD OF DEPOSIT :
TD - 15 days to 120 months
TD – 12 months to less than 60 months
6. INTEREST :
SB &TD–As applicable to domestic deposits.
SB - 3.5 % p.a.
TD-BASED ON LIBOR
57
Depending on period of deposit
(For current rates refer circular issued by
Central Office). No additional interest is
payable on deposit accounts of staff members.
7. JOINT ACCOUNT :
Allowed with resident.
- Joint NRE accounts in the names of two or
more non-resident individuals is permitted
provided all the account holders are persons of
Indian Nationality or Origin. If the spouse of an
NRI is a foreign national, the status of such a
person will be that of a Person of Indian Origin.
However, such persons are permitted to have
only joint bank accounts along with the spouse.
Residents can also be joint account holders in
NRE account son a ‘former or survivor’ basis.
8. REPATRIATION :
Not reparable except for the following in the
account – 1) Current income. 2) Up to USD 1
million per financial year for any bonafide
purpose out of the balances in NRO
account/sale proceeds of assets in India
acquired by way of inheritance/ legacy
inclusive of assets acquired out of settlement
subject to certain conditions.
Freely reparable.
9. NOMINATION :
Nominee can be a person resident in India or
a person resident outside India. In the case of
Non-resident nominee, the amount entitled to
him from the account(s)/deposit(s) of a
Nominee can be a person resident in India or a
person resident outside India. In the case of
Non-resident nominee, authorised dealers are
allowed to remit funds lying in the account of
58
deceased person will be credited to his NRO
account and the repatriation will be subject to
the overall ceiling of USD 1 million per
financial year, subject to taxes.
the deceased account holder.
10. TAX :
Tax at the rate of 30 % on the interest income
is to be deducted at source and remitted to
Government. If the Non-Resident is from any
of the countries with whom Double Taxation
Avoidance Agreement is entered into, the
applicable rate will be deducted.
Income from interest on monies standing to the
credit of NRE accounts is exempt from Income
Tax. Balances held in the accounts are exempt
from Wealth Tax. Gifts made to close relatives
in India from out of balances in such accounts
are also free from Gift Tax. (These Tax
exemptions are available only in respect of
NRE accounts maintained by NRIs and any
fresh directive issued will prevail)
11. PREMATURE CLOSURE :
If the deposit is up to Rs. 5 lakhs, applicable
interest for the period run prevailing on the
date of deposit is payable without foreclosure
charges. 1% less than the rate applicable for
the period the deposit has run prevailing on
the date of deposit, additional interest for
bulk deposits of Rs.15 lakhs and above, is not
payable on foreclosure.
In case of an overdue deposit renewed with
overdue interest, is closed prematurely before
completing the minimum period for which
such deposits are accepted from the date of
renewal, no interest is payable on the
renewed deposit and the interest paid for the
overdue period should also be recovered.
1% less than the applicable interest for the
period the deposit remained with the bank
prevailing on the date of deposit. Additional
interest, if any, payable on bulk deposit of
Rs.15 lakhs and above is not payable.
If an overdue deposit renewed with interest
payment for the overdue period, is closed
prematurely before completing the minimum
period for which such deposits are accepted
from the date of renewal, no interest is payable
on the deposit and the interest already paid for
the overdue period should also be recovered.
59
12. RENEWAL OF DEPOSIT :
Can be done as per Rules as applicable to
domestic deposits.
Renewal of deposit can be done as long as the
depositor’s status is NRI. Renewal must be
made within 14 days from the due date to get
retrospective effect and must be renewed for
the minimum period prescribed. If the overdue
period is less than one year, the interest rate for
one year prevailing on date of maturity or
renewal, whichever is lower, is to be applied.
13. CHANGE OF STATUS :
NRO accounts should be redesignated as
resident accounts on the return of account
holder to India, provided the branch is
satisfied that the account holder has returned
to India for taking up employment, business
or vocation or for any other purpose
indicating his intention to stay in India for an
uncertain period. Where the account holder is
on a temporary visit to India, the account
should continue to be treated as Non-resident
even during such visits.
NRE accounts should be redesignated as
resident rupee accounts or as RFC accounts (if
eligible) at the option of account holder
immediately upon the return of account holder
to India provided the branch is satisfied that he
has returned to India for taking up employment
or for carrying on a business or vocation or for
any other purpose with an intention of residing
in India for an uncertain period.
Where the account holder is only on a short
visit to India, the account may continue to be
treated as NRE account even during his stay in
this country.
In respect of funds held in fixed deposits in
NRE accounts, interest will be payable at the
rate originally fixed, provided the deposit is
held for the full term even after conversion into
resident account.
14. OPERATIONS IN THE ACCOUNT :
Branches may allow transactions in NRO
14. OPERATIONS IN THE ACCOUNT :
Branches may allow transactions in NRE
60
accounts complying with instructions
contained in FEMA Notification No. FEMA
5/2000-RB dated 3rd May 2000.
At the time of opening of the accounts, the
account holders should give an undertaking
that in cases of debits to the accounts for the
purpose of investment in India and credits
representing sale proceeds of investments,
they would ensure that such investments/
disinvestments would be covered by the
general or special permission of Reserve
Bank of India.
Credits: Proceeds of remittances in any
permitted currency from outside India
through normal banking channels or any
permitted currency tendered by the account
holder during his temporary visit to India or
transfers from rupee accounts of non-resident
banks. Other legitimate dues in India of the
account holder.
Debits: All local payments in rupees
including payments for investments subject to
compliance with the relevant regulations
made by the Reserve Bank and remittance
outside India of current income in India of the
account holder net of applicable tax.
A resident can be authorised by the NRI by
way of Power of Attorney or Mandate Letter
to operate the NRO accounts. The
withdrawals are restricted to local payments
only by the mandate holder. Operations on
accounts complying with instructions contained
in FEMA Notification No. FEMA 5/2000-RB
dated 3rd May 2000.
At the time of opening of the accounts, the
account holders should give an undertaking that
in cases of debits to the accounts for the
purpose of investment in India and credits
representing sale proceeds of investments, they
would ensure that such investments/
disinvestments would be covered by the general
or special permission of Reserve Bank of India.
Credits: Proceeds of remittances in any
permitted currency from outside India through
normal banking channels or any permitted
currency tendered by the account holder during
his temporary visit to India or transfers from
rupee accounts of non-resident banks. Other
legitimate dues in India of the account holder.
Debits: All local payments in rupees including
payments for investments subject to compliance
with the relevant regulations made by the
Reserve Bank and remittance outside India of
current income in India of the account holder
net of applicable tax.
A resident can be authorised by the NRI by way
of Power of Attorney or Mandate Letter to
operate the NRE accounts. The withdrawals are
restricted to local payments only by the
mandate holder. Operations on the account in
terms of Power of Attorney is restricted to
withdrawals for permissible local payments or
61
the account in terms of Power of Attorney is
restricted to withdrawals for permissible local
payments or remittance to the account holder
himself through normal banking channels.
remittance to the account holder himself
through normal banking channels.
CHAPTER 3
DEPOSIT ACCOUNTS
62
3.1 DEPOSIT ACCOUNT OPENING/CLOSING
3.1a) TERM DEPOSIT ACCOUNTS CAN BE OPENED BY
a) a person in his/her own name
b)two or more persons in their joint names payable to:
I) both or all of them or to the survivor(s) or
ii) either or any one or more of them or to the survivor(s)
c)a natural guardian on behalf of a minor
d)a natural guardian in the joint names of himself/herself and the minor, payable to either or
survivor
e) a person in the name of any minor of whom he/she is the guardian appointed by a competent
court
f) a minor aged Ten years or above in his/her single name to be operated upon by himself/herself
g) A Club, Association, Society, Educational Institution and other such bodies
h)Trustees/Executors/Administrators/Courts
I) Proprietary concerns, Partnership Firms and Limited Companies
j) Central or State Government departments / Corporations / Organizations, Local Bodies and
Statutory Authorities, Quasi- Government Bodies etc.
k) Members of staff/Ex-staff of Indian Overseas Bank
OBTENTION OF INTRODUCTION
Branches should ensure that all term deposit accounts are properly introduced with the
exception of the following:
a) Where the applicant for a Term deposit Account submits sufficient proof of identity
and address as prescribed in KYC-AML policy of our bank and the branch is satisfied with the
bonafides of the applicant and as a respectable person, with such proof of identity and address,
branch may open the account without insisting on an introduction by an existing account holder.
However a Letter of Thanks to the depositor should be sent as envisaged in the Chapter.1 on
63
“Constituents’ Accounts – General”. Branch should be in a position to classify such account
holders under “Low risk – RIP ME under KYC Norms / AML Standards”.
b) Where the savings bank account holder / current account holder who has been
subjected to KYC due diligence, wants to open a term deposit account, a reference to the account
can be made in the account opening form and introduction need not be insisted upon.
Documents for Individuals (natural persons) and legal persons (entities)
Customer identification details (for individuals / the Prop/Partners / coparceners/ Directors
/ Authorized Signatories ) :
a)Passport alone where the address on the Passport is the same as the address on the account
opening form
Or
b)any one document from each of the under noted TWO lists, for a photo ID and proof of
address
List I - photo proof List II – address proof
1 Passport where the address differs 1 Current telephone bill
2 PAN Card 2 Letter from any recognized public
authority
3 Voters Identity Card 3 Bank account passbook/ statement
4 Driving license 4 Latest electricity bill /postal
identity card
5 Identity card
( subject to Bank’s satisfaction)
5 Letter from employer to Bank’s
satisfaction
6 Letter from recognized public 6 Property tax book / Receipt
64
authority
Or Public servant verifying the
photograph to Bank’s satisfaction
7 Registered lease deed
8 Ration card
Any one or more document(s)
which provide customer
information to Bank’s satisfaction
c)Additional documents required, ( Legal persons – entities ): For the partnership firms :
Registration Certificate if registered
Partnership deed
Authority given to a partner or an employee of the firm to transact
business
On Firm’s behalf (as provided in the partnership deed , otherwise all partners
should be involved in all the transactions )
4. Telephone bill in the name of the firm / partners if available
FOR LIMITED COMPANIES
A copy of the Certificate of Incorporation duly certified by a Director or
Secretary of the Company
65
A copy of the Certificate of Commencement of business duly certified by a
Director or Secretary of the Company ( for public ltd companies only)
A copy of the Memorandum and Articles of Association certified to be true and
upto date by a Director or Secretary of the Company
Resolution of the Board of Directors to open an account and identification of
those who have authority to operate the account
Power of Attorney granted to Company’s Manager(s),/ officers/ Employees to
transact business on its behalf
Copy of the PAN allotment letter / PAN card
Copy of the Telephone Bill
FOR TRUSTS / ASSOCIATION/ CLUBS / SOCIETIES
Trusts Associations / Clubs / Societies
1.Certified copy of the trust deed
2.If a charitable trust, a certified copy
of the certificate from Charity
commissioner
3.Where there is no trust deed, a
certified copy of the order from a
competent Court
4.Certified copy of the resolution
regarding opening and conduct of the
bank account
5.List of present trustees with bio data
of each trustee
1.Certified True copy of the Rules,
Regulations, Bye-Laws (as the case may be)
2.Certified True copy of Certificate of
Registration in case of Registered bodies
(original to be verified)
3.A certified true copy of the Resolution
certified (by the Chairman of the meeting of
the Governing Board or Managing Committee
or Like Body, at which it was passed)
4.A copy of the Balance sheet in the case of
Co-operative Society, if available
5.Certificate of Registration if registered
66
6.Certified copy of a certificate under
IT act wherever the deed provides for
use of Trust money for business
activities.
7.Certificate of Registration if
registered
8.POA to transact business if
applicable
9.Any officially valid document to
identify the Trustees, Settlers,
beneficiaries and those holding Power
of attorney, Founders/ Managers /
Directors
10.Telephone bill , if available
6.POA to transact business if applicable
7.Any officially valid document to identify
the committee members, office bearers,
Directors and their addresses
8.Telephone bill, if available
KYC NORMS / AML STANDARDS
Along with the application form as under noted branches should obtain KYC-
CROP form from all individuals / parties to the account including mandate holders / power of
attorney holders. Branches should also obtain KYC-CROP form for the entities ( legal Persons )
like Partnership, Company, Associations, clubs etc., and do the risk classification . However if
the customer has already been subjected to due diligence for KYC / AML for the Current
account or Savings bank account, the process need not be repeated for term deposits. However
the risk classification as ascertained from the Savings bank or Current account department
should be noted in the application form along with Customer ID provided by the computer
system for such CA / SB account.
CLOSING FORMALATIES
67
In the following instances Branch should follow the guidelines
a)If the depositor desires to close the account during the deposit programmed (Stage-I)
prematurely.
b)If the depositor desires to close the account after completion of Stage-I but before
commencement of repayments under Stage-II.
c)If the depositor desires to close the account after commencement of repayment programmed
under Stage-II. Excess interest paid, if any should be adjusted out of the proceeds.
A Stamped receipt in the following form should be obtained at the time of closing the account:
“Received from Indian Overseas Bank a sum of Rs.....………Rupees
…………………………………..only) in full settlement of my/our PIP account No...........”
PAYMENT ON CLOSURE SHOULD BE MADE TO THE DEBIT OF PERMANENT
INCOME PLAN ACCOUNT — GL. HEAD SFD ACCOUNT.
3.1.1 SAVING ACCOUNT
Saving is income not spent, or deferred consumption. Methods of saving include putting
money aside in, for example, a deposit account, a pension account, an investment fund, or
as cash. Saving also involves reducing expenditures, such as recurring costs. In terms of personal
finance, saving generally specifies low-risk preservation of money, as in a deposit account,
versus investment, wherein risk is higher; in economics more broadly, it refers to any income not
used for immediate consumption.
"Saving" differs from "savings." The former refers to an increase in one's assets, an
increase in net worth, whereas the latter refers to one part of one's assets, usually deposits in
savings accounts, or to all of one's assets. Saving refers to an activity occurring over time,
a flow variable, whereas savings refers to something that exists at any one time, stock variable.
This distinction is often misunderstood, and even professional economists and investment
professionals will often refer to "saving" as "savings" (for example,Investopedia confuses the
two terms in its page on the "savings rate").
68
There is some disagreement about what counts as saving. For example, the part of a
person's income that is spent on mortgage loan repayments is not spent on present consumption
and is therefore saving by the above definition, even though people do not always think of
repaying a loan as saving. However, in the U.S. measurement of the numbers behind its gross
national product (i.e., the National Income and Product Accounts), personal interest payments
are not treated as "saving" unless the institutions and people who receive them save them.
Saving is closely related to investment. By not using income to buy consumer goods and
services, it is possible for resources to instead be invested by being used to produce fixed, such
as factories and machinery. Saving can therefore be vital to increase the amount of fixed capital
available, which contributes to economic growth.
However, increased saving does not always correspond to increased investment. If
savings are stashed in or under a mattress, or otherwise not deposited into a financial
intermediary such as a bank, there is no chance for those savings to be recycled as investment by
business. This means that saving may increase without increasing investment, possibly causing a
short-fall of demand (a pile-up of inventories, a cut-back of production, employment, and
income, and thus a recession) rather than to economic growth. In the short term, if saving falls
below investment, it can lead to a growth of aggregate demand and an economic boom. In the
long term if saving falls below investment it eventually reduces investment and detracts from
future growth. Future growth is made possible by foregoing present consumption to increase
investment. However savings kept in a mattress amount to an (interest-free) loan to the
government or central bank, who can recycle this loan.
In a primitive agricultural economy savings might take the form of holding back the best
of the corn harvest as seed corn for the next planting season. If the whole crop were consumed
the economy would deteriorate to hunting and gathering the next season.
3.1.2 RECURRING DEPOSIT
Recurring deposit (rd) scheme is intended to inculcate the habit of saving on a regular
basis. as an inducement, higher rate of interest as applicable to term deposits is offered for
deposits under recurring deposit.
69
Under the recurring deposit scheme depositors are required to remit a fixed sum every
month for a specific period ranging from six months to one hundred and twenty months.
recurring deposit accounts may be opened for periods above six months and in multiples of three
monthly intervals upto one hundred and twenty months viz. six, nine, twelve, fifteen,
eighteen,..... one hundred and twenty months. recurring deposit accounts may be opened for
monthly installment of rupees fifty and minimum in multiples of rupees five only. the amount of
monthly installment and the total number of installments, stipulated at the time of opening the
account cannot be subsequently altered.
Thirty days after payment of the last installment or on the date of maturity, whichever is
later, the principal amount plus accrued interest will be paid to the depositor.
No interest will be payable on the deposit after the date of maturity of the recurring
deposit if the amount remains unclaimed after that date.
3.1.2.1 OPENING OF ACCOUNTS
a)All guidelines stipulated for opening of a term deposit should be strictly followed for opening
of Recurring Deposit accounts also.
b)The depositor after filling in the appropriate account opening form should be asked to remit
the amount of the first installment by filling up common pay in challan . The payment may be
made in cash or transfer from an existing account.
c)Once the initial installment has been paid, branch should open the account in the Recurring
Deposit Register R-126 entering therein the full particulars of the depositor. In the computer
master if the deposits module has been implemented and enabled RD. The maturity value of the
deposit should be arrived at using the maturity value charts supplied by Central Office. The
maturity value given by the computer should be cross verified with the same. The maturity value
thus arrived at and the maturity date should be filled in the appropriate spaces provided in the
70
Recurring Deposit register. The entries in the Register should be duly verified and authenticated
by the officer-in-charge of the department.
d)Accounts should be opened consecutively, in the Recurring Deposit Register, irrespective of
the number of installments, each account being allotted a serial number followed by the year of
opening, which should be entered in the pass book. For example 1/2009...... 10/2009 etc. where
1, 10 etc. indicate the serial number and 2009 the year of opening the account.
e) Branch should then issue the appropriate Recurring Deposit pass book according to the
number of installments, entering therein all the particulars of the depositor and the deposit. The
first installment deposited should be entered in the relevant column in the pass book and
authenticated by the officer-in-charge. The pass book should then be handed over to the
depositor against his acknowledgement.
3.1.2.2 PAYMENT OF MONTHLY INSTALMENTS
1.The installment for any calendar month must be paid by the depositor on or before the last
working day of that month, failing which, penalty should be levied on the installments in arrears
at the following rates:
a. For deposits of sixty month sand less- Rupee one and paisa fifty only for Rupees one
hundred per month
b. For deposits over sixty months-Rupees Two only for Rupees one hundred per month
While calculating the above penalty, fraction of a month should be treated as a full month.
The penal interest thus collected should be credited to Branch Profit and Loss account -
Discount.
2.Branches may waive the penalty payable in respect of delayed installment(s) of a Recurring
Deposit account against payment of equal number of advance installments.
3.Branches may accept standing instructions from the depositor for debiting the monthly
71
installments to his/her account with the branch. Such instructions should be noted in the
appropriate column in the account opening form at the time of opening the account. The standing
instructions should be noted in the standing instructions register and the account number to
which the monthly installments are to be debited should be noted in the RD register at the head
of the account.
4.Standing instructions for payment of installments from the account of the depositor may be
effected free of charge. Where, however, the depositor fails to maintain sufficient balance in
his/her account to effect such transfer, the standing instructions should be treated as cancelled,
under advice to the depositor.
5.The monthly installments may be paid by the depositor at any branch of the Bank by Mail
Transfer/ through CBS, free of charge. Outstation cheques drawn on our Bank may be accepted
free of charge in payment of installment but credit must be given only after realization through
collection if non CBS / through CBS.
6.When an installment is in default even after the close of the month, a reminder on form RD-6
should be sent to the depositor. If the arrears build up for over three months, the branch may
issue a notice calling on the depositor to pay the same within a fortnight. If the depositor is
unable to continue the account, branch may advise the depositor to close the RD account and
transfer the same to his/her account.
3.1.2.3 INTEREST PROVISION
1.Monthly provision for approximate interest payable on Recurring Deposit accounts should be
made by calculating interest at an uniform rate advised by Central Office from time to time. In
a computerized environment the programmed will calculate the interest provision on
actual rates of individual accounts. Such interest provision should be made on the closing
General Ledger balance of each month under Recurring Deposit, except in March and
September when interest should be worked out for each account on the basis of interest
provision chart supplied by Central Office.
72
2.Branches may arrive at the closing balance of the month by adding to the penultimate working
day’s balance receipts less payments, of the last working day.
3.Interest so calculated at the end of each month should be debited to Interest Paid on Deposits
account and credited to Interest Accrued account. This credit should be posted in the Interest
Accrued register in the folio meant for Recurring Deposit.
4.At the end of each half-year, the amount of actual interest accrued on Recurring Deposit
accounts should be calculated from the interest provision charts supplied by Central Office and
should be noted in the column of the Recurring Deposit register against each account. These
interest amounts should be extracted in a balance book with separate folios for different interest
rates. The balance book total will be the actual interest accrued on all RD accounts at the end of
that half year. If the amount of approximate interest provision already made every month and
held in Interest Accrued account as per Para E.5.1 to E.5.3above is more than the actual interest
calculated in the above manner, the excess should be transferred to Interest Paid on Deposits ac-
count.
If, however, the amount of provision already made is less than the actual amount as per
the balance book, the shortfall should be debited to Interest Paid on Deposits account.
The amount outstanding in the Interest Accrued register (RD folio) should tally with the amount
extracted in the balance book. This amount includes interest accrued on Wedding Deposit,
Education Deposit and Permanent Income Plan accounts since they are also classified under the
GL head Recurring Deposits.
NOTE: Interest provision charts for half yearly interest provision of Recurring Deposit,
Wedding Deposit, and Education Deposit are supplied by Central Office. The charts for
Recurring Deposit should be used for PIP accounts also during Stage-1.
In computerized environment, the programmed will calculate the interest on individual accounts
and will make provision. However branches should verify whether the interest provision made
by the system is approximately agreeing with manual calculations based on month end balances
as above.
73
3.1.2.4 PAYMENT OF RECURRING DEPOSITS
1.On maturity
A Recurring Deposit account matures for payment after completion of the term of the account
or thirty days after payment of the lastinstalment, whichever is later.
At the time of payment on maturity, the principal sum along with the accrued interest should be
paid. This sum should be equal to the maturity value calculated at the time of opening the
account.
The following entries should be passed at the time of maturity for making the payment:
Debit: Interest Accrued Account (for the total amount of interest payable on the account)
Credit :Interest Accrued and Payable Account
Debit: Interest Accrued and Payable Account
Credit: Recurring Deposit Account (for the above amount)
Debit: Recurring Deposit Account (for the total amount of installments paid plus the interest)
Credit :Account of the Depositor or pay as per instructions of the depositor.
2.When the deposits are repaid to the depositor, a stamped receipt reading as under must be
obtained:
“Received from the Indian Overseas Bank a sum of Rs...............
(Rupees.......................………………………………………………..) in full settlement of RD
account No........ held with the bank for a period of ...... months.”
3.Where the account has run for the full period but all the installments have not been paid:
The depositor has two options:
i.Regularise the account by paying the defaulted installments with penalty as stated in Para
E.4.1above.
or
discontinue the deposit till maturity without regularizing it and earn compound interest at the
74
contracted rate for the full period. In such cases branches should levy service charges of Rupees
Five only. Such service charges should be credited to Profit and Loss account — Commission.
3.1.2.5 PREMATURE CLOSURE
Eligible interest should be calculated on premature closure of Recurring Deposits as
detailed in Section A of this Volume ( NODCIP form ).
Where eligible , Interest will be paid at the rate applicable to the period for which the
Deposit has run less penalty / no penalty as the case may be , as on the date of opening of the
Deposit and service charges of Rupees Five should be collected.
3.1.2.6 PASS BOOKS
1.Pass books should be presented at the time of every deposit and it should be returned to
the depositor posted upto date then and there.
2.When an account is closed, the pass book should be returned to the depositor duly posted upto
date and stamped “ACCOUNT CLOSED” under the signature of the officer-in-charge, with
date.
3.The procedure for custody and issue of pass books will be same as for Savings Bank Pass
Books.
3.1.2.7 BALANCING OF BOOKS
Ledger balances must be extracted as at the close of the penultimate working day of each
month, except in March and September when balancing must be done as at the close of the
month, and tallied with the General Ledger. Separate openings need not be made for each
category of deposit and only RD account number and balance need be written.
Since the General Ledger balances under Recurring Deposits includes Wedding Deposits,
Education Deposits and Permanent Income Plan accounts, the balancing should be done for all
75
these heads of accounts and tallied.
In computerized environment, the master balance should remain tallied with GL balance .
Branches should take note of the same while doing day end procedure.
3.1.2.8 ADVANCES AGAINST RECURRING DEPOSITS
Drawing power for advances should be worked out as detailed in Part A of this Volume.
The minimum amount of loan should be Rupees One hundred only. The rate of interest
chargeable is circulated to branches from time to time. The interest on the loan account should be
recovered separately from the depositor every quarter. Other formalities like documentation etc.,
should be followed as prescribed in Advances.
3.1.3 FIXED DEPODITS
SHORT AND FIXED DEPOSITS
1. Moneys deposited for six months and above are called Fixed Deposits and deposits for less
than six months are called Short Deposits
2. Branches can accept deposits for a minimum of Rupees One thousand for periods ranging
from fifteen days to One hundred and twenty months except in the case of accounts of minors
and under orders of court, where the branch can accept deposits for periods exceeding One
hundred and twenty months.
2.1. Branches should use the appropriate account opening form for opening of deposits as
prescribed.
2.2. FORMS AND REGISTERS TO BE USED
a) Fixed Deposit Register R-17
b) Deposit Challan/voucher F.No.60
c) Deposit Receipt
d) Account Opening Form F.567
76
2.3. All deposit accounts should be properly introduced as detailed in Para 2 Chapter 1.Once the
account opening form duly filled in is received, the officer in charge of the department should
verify the contents of the form and advise the depositor to fill up the Form 60 i.e. the
challan/voucher for issuing deposit receipts. Once this form is filled the amount of deposit may
be accepted by the branch either in cash or by transfer from an existing account or through
clearing in the case of existing customers.
2.4. The Challan/voucher in Form 60 duly authenticated by the officer in charge, should then be
used as the voucher to issue the Deposit Receipt.
2.5. Branch should allot the next Deposit number from the Fixed Deposit Register which is
entered serially. This number should be entered both in the application form and the challan in
the space provided. Deposit number should be serial number for the year/the year. For example a
Short Term deposit bearing serial number 32 issued in the year 2000 will be numbered in the
receipt as SDR/32/2000.
2.6. The details of the depositor(s) viz. names(s), address(as), mandate for operation like Either
or Survivor, Anyone or Survivor etc., Deposit Receipt printed number as also the number
assigned as per Para B.4.1., amount of deposit, period of deposit, rate of interest appropriate to
the period of the deposit and the maturity date should be filled up in the appropriate columns in
the Fixed Deposit Register R-17.
2.7. The Deposit Receipt should be filled up neatly in good handwriting with full particulars in
the appropriate space provided in the receipt. When a receipt form is spoiled in preparation or a
duplicate receipt is issued, the fact must be noted in the deposit register against the entry for the
particular deposit and the stub marked “Cancelled” or “Duplicate of deposit No....……….
issued” as the case may be, the entries in the stub and the register being initialed by the officer-
in-charge, who should destroy the spoiled form, after tearing off the portion containing the
printed number from the receipt and pasting the same in the counterfoil stub of the deposit
receipt book.
2.8. The principal amount of the deposit should then be entered in the Interest Accrued Register
77
in the credit column of the deposits side under the appropriate rate of interest and the balance
arrived at.
2.9. The due date diary should then be entered to note the month and date of maturity of the
deposit to enable the branch to send the maturity notice to the depositor at the time of maturity of
the deposit.
3. The details of the deposit should then be entered in the index of depositors maintained
alphabetically against the existing entry for the depositor if the depositor has other deposit
accounts or a separate opening should be made for the fresh deposit.
3.1. The officer in charge of the department should then verify and authenticate the entries in all
the registers, check the deposit receipt for accuracy and sign the same in the space provided
appending the specimen signature number below the signature. The deposit receipt should then
be sent to the next higher supervising official along with the application form and the challan for
second signature.
3.2. The supervising official who signs second on the deposit receipt should verify the particulars
on the deposit receipt from the account opening form and the voucher, ensure accuracy and then
append his signature with the specimen signature number on the receipt. In the case of branches
with single officer, the officer should sign at both the places meant for Deputy Manager and
Manager.
3.3. The deposit receipt should then be handed over to the depositor against acknowledgement on
the reverse of the challan.
4. PAYMENT OF INTEREST
78
Interest on Short Deposits is payable only on maturity of the deposit. Interest on Fixed
Deposit is payable half-yearly on the first working day of April and October.
Normally interest should be paid to the depositor on production of the Fixed Deposit
Receipt after entering particulars of payment on the reverse of the receipt in the space provided.
However, branches may credit the interest to the account of the depositor, without insisting on
production of the FDR if the depositor has given instructions (on the account opening form) to
credit the interest to his/her/their account. If the depositor desires cash payment, interest should
be paid only on production of the deposit receipt. Each depositor should be requested to exercise
his/her option at the time of opening of the account.
The interest payments in cash should be properly receipted by the depositor over the
requisite revenue stamp (presently Rupee One) where the interest paid exceeds Rupees Five
hundred only. Where the interest amounts are credited to the accounts of the depositors a rubber
stamp must be branded on the reverse of the FDRs to the effect that interest will be credited half-
yearly to the account of the depositor. This would serve as a precaution in case the deposit
receipt is presented for interest payment in cash.
While making periodical interest payment, the interest entries in the Deposit register
should indicate the date of payment to avoid duplication. The entries should be authenticated by
the officer in charge. In a computerized environment branch should cross verify with the
computer display and deposit receipt on the nonpayment of interest for the particular period
interest is being paid.
5. INTEREST PROVISION
Branches should follow instructions under Para A.14of this Chapter for interest provisions on
term deposits.
6. INTEREST ACCRUED AND PAYABLE ACCOUNT (IAP)
Interest payable for each half year should be noted in the FDR register against each deposit in the
appropriate column at the time issue of the deposit. From this register, the amount of interest
79
payable on each deposit should be extracted at the end of each half year in a balance book with
separate columns for different rates of interest. The total amount of all these columns should be
the total interest payable on deposits for the particular half year.
If the amount of monthly provision already made and held in Interest Accrued account is more
than the amount calculated in the above manner, the difference should be transferred back to
Interest Paid on Deposits Account by passing the following entries:
Debit : Interest Accrued Account
Credit: Interest Paid on Deposits Account
If the amount of provision is less than the actual amount as per the balance book, the shortfall
should be brought from interest paid on deposits account by passing the following entries:
Debit : Interest Paid on Deposits Account
Credit: Interest Accrued Account
The amount thus calculated should be credited to IAP Account by passing the following entries:
Debit : Interest Accrued Account
Credit: Interest Accrued and Payable Account
The net amount of interest available in IAP Account relating to Fixed Deposits should be equal
to the total amount of interest payable on all Fixed Deposits for the relevant half year and the
amount of interest pertaining to the previous half-years not claimed by depositors.
In a computerized environment , the programmed in the system will take care of the above
aspects. Branches should take note of the process and in case of any branch manually
maintaining the deposit registers, the procedure will be applicable to them.
Half yearly interest payments on individual Fixed Deposits should be made to the debit of IAP
Account and such payments should be posted in the respective interest-wise folios in the IAP
register or in the computer programmed as applicable.
7. PAYMENT OF DEPOSIT
While making payment of the deposit, the deposit receipt should be discharged by the
depositor(s) on the reverse of the deposit in the space provided. Such discharge should be on
revenue stamp of requisite value except where the deposit is renewed or the proceeds are placed
to the credit of an account. Branch should compare the signature(s) of the depositor(s) with those
in the account opening form. Once the signatures have been verified and found correct, the entry
80
in the Fixed Deposit Register should be rounded off against the number and the amount, marking
the date of payment of interest and principal in the appropriate columns. The columns for interest
payment on the back of the receipt should be filled in. Care should be taken to ensure that no
“Lien” exists. In the computer programmed the repayment option should be used for making
payment.
The name of the depositor should be rounded off from the due date diary and the list of deposits
held by each depositor maintained alphabetically.
The accounting entries to be passed are:
a. Payment on maturity
i. Fixed deposit receipts:
Debit: Interest Accrued Account (for the interest for the period from first day of the current half-
year till date of maturity)
Credit : Interest Accrued and Payable Account (with the amount of interest calculated for the
period from first day of the current half-year till date of maturity)
Debit : Fixed Deposit Account (for principal amount) (The deposit receipt to serve as voucher)
Debit : Interest Accrued and Payable Account (for the total interest payable to the depositor
including the interest not drawn by the depositor for the previous half-years) and pay cash
or
Credit: The Account of the Depositor/Banker’s Cheque Account/DDR Account (as per the
instructions of the depositor either to credit his/her account, or issue a Banker’s Cheque or a
Demand Draft)
In a computerized environment, the programmed will be debiting Interest accrued account and
allow payment instead of routing through IAP for the current broken period. The debit in IA will
get adjusted in the month end provision. Branches to take note of the same.
ii. Short deposit receipts
Debit: Interest Accrued Account (for the amount of interest payable on the Deposit)
Credit : Interest Accrued and Payable Account
Debit: Short Deposit Account (for the principal amount of the short deposit)
Debit : Interest Accrued and Payable Account
Credit: The Account of the depositor/Banker’s Cheque Account/DDR Account.
81
In the computerized environment the interest payment is not routed through IAP account.
b. Payment before maturity
Premature closure shall be allowed in terms of the instructions provided in part A.
The total interest payable on the deposit should be worked out at the rate arrived at for premature
closure. If the depositor has not drawn the interest for the previous half years and the amount is
lying in IAP account, branch should pass the following entries:
Debit : IAP Account (for the amount already lying in IAP account)
Credit: Interest Paid on Deposit
....Debit: Interest Paid on Deposits (for the actual interest payable)
Credit: Interest Accrued Account (for the actual interest payable)
....Debit : Interest Accrued account (for the actual interest payable)
Credit : IAP Account (for the actual interest payable)
Debit Fixed Deposit Receipt
Debit : IAP Account (for the actual interest payable)
Credit: Depositor’s Account (for principal plus interest on premature closure)
Where the interest has been drawn by the depositor and it is more than the actual interest payable
on premature closure, excess interest paid should be recovered from the principal amount by
passing the following entries:
Debit: Fixed Deposit Receipt Account
Credit : Depositor’s Account
Credit: Interest Paid on Deposits (for the excess amount of interest already paid) In the
computerized environment, the programmed will calculate the premature amount payable,
however branches should calculate the eligible amount as shown in Part. A under NODSIP
format and cross verify with the programmed.
3.1.4 NRI DEPOSITS
Types of accounts which can be maintained by an NRI / PIO in India
82
A. Non-Resident Ordinary Rupee Account (NRO Account)
Any person resident outside India may open NRO account with an authorised dealer or an
authorised bank for the purpose of putting through bona fide transaction in rupees.
Opening of accounts by individual/ entities of Pakistan and entities of Bangladesh require prior
approval of Reserve Bank of India.
NRO accounts may be opened / maintained in the form of current, savings, recurring or fixed
deposit accounts.
● Savings Account - Normally maintained for crediting legitimate dues /earnings / income such
as dividends, interest etc. Banks are free to determine the interest rates.
● Term Deposits - Banks are free to determine the interest rates. Interest rates offered by banks
on NRO deposits cannot be higher than those offered by them on comparable domestic rupee
deposits.
● Account should be denominated in Indian Rupees.
● Permissible credits to NRO account are transfers from rupee accounts of non-resident banks,
remittances received in permitted currency from outside India through normal banking channels,
permitted currency tendered by account holder during his temporary visit to India, legitimate
dues in India of the account holder like current income like rent, dividend, pension, interest, etc.,
sale proceeds of assets including immovable property acquired out of rupee/ foreign currency
funds or by way of legacy/ inheritance.
● Eligible debits such as all local payments in rupees including payments for investments as
specified by the Reserve Bank and remittance outside India of current income like rent, dividend,
pension, interest, etc., net of applicable taxes, of the account holder.
● NRI/PIO may remit from the balances held in NRO account an amount not exceeding USD
one million per financial year, subject to payment of applicable taxes.
83
● The limit of USD 1 million per financial year includes sale proceeds of immovable properties
held by NRIs/ PIOs.
● Other than current income and the limit of USD 1 Man per financial year applicable to
NRIs/PIOs, balances in NRO accounts cannot be repatriated without the prior approval of RBI.
● The accounts may be held jointly with residents and / or with non-resident Indian.
● The NRO account holder may opt for nomination facility.
● NRO (current/savings) account can also be opened by a foreign national of non-Indian origin
visiting India, with funds remitted from outside India through banking channel or by sale of
foreign exchange brought by him to India. The details of this facility are given in the FAQs on
“Accounts opened by Foreign Nationals and Foreign Tourists” available on the RBI website.
● Loans to non-resident account holders and to third parties may be granted in Rupees by
Authorized Dealer / bank against the security of fixed deposits subject to certain terms and
conditions.
84
3.1.5 STUDENT ACCOUNTS
85
3.1.6 SHG ACCOUNT
IOB – Arties Yolanda
Objective To provide financial assistance to Earthiest who are well
established in the line with good reputation.
Eligibility
1.Arthias or Commission Agents functioning in markets / man
dies having field of operations in rural/ semi urban area who
are having receivables from farmers / SHGs/ JLGs and buying
Agricultural produce from farmers / SHGs/ JLGs are eligible
for loan under this scheme.
2. They should have been authorized by the local market yard
(Mandi) or Marketing Board / Committee.
Purpose
To provide loans to commission agents for
1. Extending credit to farmers / SHGs/JLGs
2. Supply of inputs to farmers / SHGs/JLGs
3. Buying produce from farmers / SHGs/JLGs
Cash Credit limit 60 % of value of Book debts, subject to a maximum of Rs 100
laces.
Margin 40 % of Book debts.
Security
Hypothecation of Receivables and Mortgage of immovable
properties other than Agricultural land and/or cash securities
like NSC/KVP/LIC etc, worth at least 150 % of the loan
amount.
Repayment Cash Credit limit with healthy operations in the account, to be
renewed annually.
86
Rate of Interest &
other details You may contact the nearest Branch for interest & other details.
3.1.7 PENSION ACCOUNTS
VARIOUS PENSION PAYMENT SCHEMES OF CENTRAL / STATE GOVT
Pension Disbursement
Centralized Pension Processing Centre (CPPC)
Indian Overseas Bank has centralized payment of Central Civil, Defense and Railways
pensions by formation of Centralized Pension Processing Centre (CPPC). The amount of pension
Payable to these pensioners drawing their pension will be calculated at a centralized level at
CPPC. All Changes in pension payment parameters including arrears of DA, etc. are also to be
done centrally and with this timely and accurate payment of pension is assured.
Government of India Central Civil, Defense, Railway, Telecom & Freedom Fighter Pension
Indian Overseas Bank disburses pension to Civil, Defense, Railway, Telecom and State
Government retired employees , Former MPs, Former MLAs of Tamil nadir through 1032
branches.
Indian Overseas Bank disburses other Pensions Viz. Employees Provident Funds
Organization, Chennai Port Trust, Tamil Nadu Electricity Board, Madras Dock Labor
Board CMPFO(Coal Miners Provident Funds Organization) Pensions.
Pension payment Scheme for the benefit of pensioners
In case of complaints/grievance pensioners may approach the pension paying branch. They may
also access the Grievance Redressed Portal of Ministry of Personnel, Public Grievance and
Pensions under http://pensionersportal.gov.in/cnetizen/homepg.htm
87
3.1.8 DORMANT ACCOUNTS
If no transaction — credit or debit other than crediting of periodic interest or debiting of
service charges — takes place in your savings account for more than 12 months, the account
becomes inactive. And if the period exceeds 24 months the account is declared dormant or
inoperative. The exact period after which a bank is declared inactive or dormant varies from one
bank to another. For instance, ICICI Bank declares an account inactive after 15 months and
dormant after 18 months. Punjab National Bank and Barclays, on the other hand, declare it as
dormant after just six and three months respectively.
3.2 KEY ISSUES
Once an account turns inactive or dormant, you can't perform several operations. In case of an
inactive account you cannot request that a cheque book be issued. Once an account turns
dormant, the number of restrictions increases even further. You can't request that a cheque book
be issued, the address be changed, the signature be modified, a joint holder be added or deleted,
or an ATM/debit card be renewed. You will also not be able to withdraw money from an ATM
or carry out any transaction either through internet banking or a branch of the bank.
However, even after your account turns inactive or dormant, interest is still credited to your
saving account regularly. And if a fixed deposit receipt matures and you don't withdraw the
proceeds, the amount left unclaimed in the saving account will attract the rate of interest
applicable to this account.
88
CHAPTER 4
LOAN/ ADVANCE ACCOUNT
4.1 LOAN ACCOUNT OPENING/ CLOSING – FORMALITIES
Applications can be opened by entering module_id = ‘adv’ and a few characters of the
Program Name to be used, in the LOAD APPLICAIONS Menu. Apart from View and Report
programs pertaining to the advances module, the following applications are available to the
Operator (clerical) staff as part of Advance Module:
ADV Interest Posting
ADV Transaction Posting
ADV Transaction Master Creation
ADV Interest Rate Maint - (Includes slab Rates)
ADV Master A/c Opening and Maintenance
ADV Interest Calculation
ADV Transactions Entry - Transferred A/cs
ADV Master Creation (NPA-INTEREST)
ADV Security Details
MASTER MAINTENANCE
ACCOUNT OPENING
All accounts to be opened should have explicit sanction from the Manager or an Officer
authorised by the Manager. Accounts can be opened, modified, viewed and closed by choosing
the options provided. The charge interest field should always be ‘Y’ for all performing accounts.
While opening the advances account the existing customer id is to be given while asked for if he
is the existing customer. If the advance account is opened for a new customer then the customer
id is to be created first from the KYC details, approved by supervisory officials. Then with this
89
customer id the advance account is to be opened. Subsequently when any other credit facility is
granted to the same customer the same customer id, which is already available for this customer,
should alone be used and fresh customer id should not be created.
In CORE environment while opening the advances master the user should provide all
details like Priority/Non Priority, Sector code, BSR Code, Complete Borrower Information,
Security Details if the loan is secured, activity code, purpose code, BSR Borrower Code, Interest
rate as per sanction terms and interest is BPLR based or not, holiday period if any, repayment
start date, repayment end date, EMI values, periodicity of repayment etc.
Since many MIS reports and CIBIL data are taken from the advances master, the values
in all the fields should be filled up error free. In addition to the above, correct details entered by
the Branch will enable the system to provide correct interest and arrival of DP, which is essential
for calculation of overdue interest.
SECURITY MAINTENANCE
In CBS the capturing of security details and allotment of separate security id is a special
feature. So far the security details are filled up as a narrative field. But hereafter the security
details are stored in a security id/s and referred to with respect to the security id in future if the
same security is attached for any advance account. The securities can be attached / detached at
the time of opening or closing of any advance account. Hence branches should not club all types
of securities in one ID.
REPAY PLAN MAINTENANCE
Branches while entering the details of the repay plan it is utmost important to feed the
correct sanction details in respect of the Holiday period [with interest servicing or without
interest servicing], frequency of repayment as to whether monthly, quarterly, half yearly etc,
repayment start date, end date, first repay date, installment amount [EMI]. Branches should go
through the User manuals supplied by ITD in this respect. If the repay plan is not maintained
properly then the interest calculation whether it is regular or overdue will not be correct.
Similarly when there is any rephasement of advances, simultaneous updating should be effected
in the repay plan also.
90
INTEREST RATE MAINTENANCE
The rates as advised by Central Office from time to time should be updated through this
application. Utmost caution should be exercised while updating the interest since the interest
calculation application accesses these rates only for calculation. However in case of accounts
where interest is applicable account-wise or as determined by the sanctioning authority suitable
modifications should be made while opening of account. Change of interest rates will be
effective from the last posted date only. Provision has been made In CBS the system to take care
of the BPLR changes. As such, while entering interest rates, Branch should give correct details
as to whether the advance account attracts BPLR rate or not.
DOCUMENT MAINTENANCE
The document maintenance should be updated regularly to generate a report on
documents due for revival. This will enable the branch to take appropriate steps.
STAGE RELEASE MAINTENANCE
Whenever new advance is granted which attracts release in various stages then the stage
release data entry is to be done by the user and the same is to be approved by any authorized
supervisory official. [eg. Term Loan, Vidya Jyothi Loan ]. This is done to ensure correct
Drawing Power is arrived and interest charged accordingly by the System, based on the amount
so far disbursed and NOT ON THE DOCUMENT AMOUNT in the case of Stage Released
Loans. Whenever a part disbursement is made in the case of any new/old stage Released Loan,
the entry type “DI” to be given at the time of posting the advances transaction and an entry is to
be made in the Stage Release Master for that amount and approved. Even if wrong entry type had
been given at the time of advances transaction posting and if it is actually a part disbursement,
then the entry is to be made in the Stage Release Master without fail. If not done, the DP arrival
and the interest charged on the account will be wrong.
SUBSIDY MASTER MAINTENANCE
The amount of back ended subsidy received from various Government departments in the
case of Govt. Sponsored Schemes like PMRY, SJSRY, DWCUA, TAHDCO, NHB, SGSY,
SLRS is kept in GL Head ‘Subsidy Reserve Fund’. In order to manage this subsidy amount and
to grant interest concession on the subsidy amount to the respective accounts, branches are
91
required to create Subsidy Master with relevant details of the advances account with the amount
of subsidy, whenever a loan is granted under the above Schemes using Subsidy Master Entry
Program. The details are to be approved by a Supervisor using the approval program available
for this purpose. The system, while calculating interest, will take into account the subsidy
amount so long as the subsidy amount is available with the branch.
TRANSACTION POSTING
All postings should be done through the posting menu. All the fields should be filled in
completely since various masters get updated while recording details. Please take care to enter
the “Entry type” correctly. Posting can be done depending on the value date of the transaction.
The value date column should also contain the correct date in order to avoid overdue problem.
CBS branches can receive repayment / installment credits for other CBS branch advance
accounts also. Closure of other branch accounts is not permitted.
Types of transactions in adv module are
1. Cash Payment
2. Cash Receipt
3. Transfer Debit
4. Transfer Credit
5. Clearing Credit
ADVANCES SCA JOBS
ADV Transaction Passing
ADV Master Approval
ADV Bulk Transaction Posting/Passing
ADV Stage Release Transaction Approval
ADV Master View
ADV-Monthly Flash Return on Agricurltural Advances
ADVANCES SUPERVISORY JOBS
92
ADV Transferred to Other Branch
ADV DICGC Maintenance / Approval
ADV Law Suits Maintenance
ADV Consortium Detail Maintenance
ADV Inspection Detail Maintenance
ADV Transaction Verification
ADV Update Advances Accounts after Limit Attachment
ADV Revival Document Maintenance
ADV Lawyer Maintenance
ADV Transaction Master Approval
ADV FA/FL Master opening through floppy data
ADV Document Maintenance
ADV Insurance Detail Maintenance
ADV Transactions Approval - Transferred a/cs
ADV Transfer of interest for NPA A/cs
ADV Staff Perks (on Loans) Calculations
ACCOUNT CLOSURE
When the customer wants to close the advances account, up to date interest is to be
calculated. Charge the calculated interest to the account and then close the account after
liquidating the entire outstanding. The clerical user can do this, in the Loan closure option. The
same should be approved by the Advances Officer / Supervisor. Once the balance in the account
becomes ZERO then the branch should choose for close-account option in advances master
maintenance menu and close the account. NO ACCOUNT WITH ZERO BALANCE
ACCOUNT SHOULD BE KEPT AS ACTIVE.
REPORTS
93
The following reports should be generated as per their periodicity. They should be
authenticated by the concerned supervisory staff and neatly bound and preserved. All master
modifications and exception reports should be authenticated by the Manager or by an Officer
authorised by the Manager.
1. Supplementary — daily
2. Ledger/statement — monthly
3. Balances scheme-wise / glcode-wise for previous date/current date with
breakup details like principal/interest debited/received
4. Exception report — as required
5. Overdue position report — as required
6. Overdue notices — monthly
7. Master modification report — daily
8. Print consolidated list of accounts for one scheme / all schemes amount wise —- Monthly
9. ALIS ASCII data generation — as required
10. HYR Report – half yearly
4.1.1 CONSUMER LOAN:
CATEGORIES OF PRIORITY SECTOR
(i)Agriculture(Direct and Indirect finance)
Direct finance to agriculture shall include short, medium and long term loans given for
agriculture and allied activities (dairy, fishery, piggery, poultry, bee-keeping, etc.) directly to
individual farmers, Self-Help Groups (SHGs) or Joint Liability Groups (JLGs) of individual
farmers without limit and to others (such as corporates, partnership firms and institutions) up to
the limits indicated in Section I, for taking up agriculture/allied activities. Indirect finance to
agriculture shall include loans given for agriculture and allied activities as specified.
(ii) Micro and Small Enterprises (Direct and Indirect Finance)
94
Direct finance to micro and small enterprises shall include all loans given to micro and
small (manufacturing) enterprises engaged in manufacture/ production, processing or
preservation of goods, and micro and small (service) enterprises engaged in providing or
rendering of services, and whose investment in plant and machinery and equipment (original cost
excluding land and building and such items as mentioned therein) respectively, does not exceed
the amounts specified in Section I. The micro and small (service) enterprises shall include small
road &water transport operators, small business, professional &self-employed persons, retail
trade i.e. advances granted to retail traders dealing in essential commodities (fair price shops),
consumer co-operative stores and advances granted to private retail traders with credit limits not
exceeding Rs. 20 lakh and all other service enterprises, as per the definition.
Indirect finance to small enterprises shall include finance to any person providing inputs
to or marketing the output of artisans, village and cottage industries, handlooms and to
cooperatives of producers in this sector.
(iii) Micro Credit
(iv) Educational loans
Educational loans include loans and advances granted to only individuals for educational
purposes up to Rs. 10 lakh for studies in India and Rs. 20 lakh for studies abroad, and do not
include those granted to institutions. Loans granted to educational institutions will be eligible to
be classified as priority sector advances under micro and small (service) enterprises, provided
they satisfy the provisions of MSMED Act, 2006
(v) Housing loans:
Loans up to Rs. 25 lakh to individuals for purchase/construction of dwelling unit per
family (excluding loans granted by banks to their own employees) and loans given for repairs to
the damaged dwelling units of families up to Rs. 1 lakh in rural and semi-urban areas and up to
Rs. 2 lakh in urban and metropolitan areas.
95
4.1.2 INDUSTRIAL LOAN
Advances against goods i.e. produce, commodities, goods and merchandise should be
seasonal or constantly revolving and granted for meeting the genuine requirements of the
working capital of the approved customers of the Bank –
who are entirely trustworthy as the risks of fraud are particularly great in this type of
business;
who are regular dealers in the line of goods against which advances are granted;
who do not overtrade or speculate;
who have adequate resources to pay the shortfall in margins without difficulty if the
prices of goods tend to fall; and
who can be thoroughly relied upon to repay the advances without recourse to forced sale
of goods by the Bank.
Advances against goods are to be granted generally in the form of either as pledge of
goods or as hypothecation of goods depending upon the convenience of the borrower, nature of
goods and their marketability, and the integrity and credit worthiness of the borrower. Pledge of
goods can be in the form of (a)key loan or (b)key cash credit or (c)advances against document of
title to goods. And advances against hypothecation are in the form of open cash credit only.
Goods which are not the sole property of the borrowers should not be accepted as security.
a) In other words, the value of the goods proposed to be offered as security should have
been fully paid for by the borrower to the seller of the goods. The payment for the goods
can well be verified by correlating the cheque number, invoice for goods and the
statement of account. It should be ensured that no “unpaid vendors’ lien” exists on the
goods that are offered as security. However, the fact of possession of goods is the vital
factor in determining whether the seller can have any lien on the goods, which have not
been fully paid for by the borrower.
b) The seller cannot have any lien on the goods when he has given lawful possession of the
goods to the buyer. Similarly, in the case of goods pledged to the Bank and which are in
the possession of the Bank or in the possession of the Bank’s approved Clearing Agents,
the seller cannot exercise his right of lien as an unpaid vendor.
96
c) Branches should grant hypothecation advances, only when the goods are lying in the
custody and possession of the borrowers. These advances should not be granted against
goods which are lying in the possession/premises of the seller.
No advances should be granted against goods for which the quality, quantity and value
cannot be easily ascertained. Goods should be readily marketable. They should not be subject to
violent fluctuations in price and/or rapid deterioration in quality. Perishable goods and goods of
inflammable character should not be accepted as security. Under circumstance of accepting
such goods as security, utmost care should be taken.
Branch should be very careful while accepting the security of export produces which are
held for long time beyond the export season as those goods may likely be unsold forever.
Seasonal agricultural products of more than one year old (from the date of harvest) should not be
retained without the specific sanction of the Central Office, in each instance. Advances granted
against commodities which lose its quality due to seasonal changes must be cleared before the
onset of such season.
The total of any one type of commodity taken as security should not exceed the normal
stock the local market carries. Banks should not encourage or be a party for hoarding of large
stocks by the borrowers for speculative purposes or to assist the borrowers to resist the falling
prices and such other anti-social activities. Branches must, therefore, regularly compare their out
standings with the figures for the previous years and make sure that they are not over-financing
any particular market. Goods accepted, as security should be stored at suitable places in a
manner by which the identification, inspection and monitoring are easier.
VALUATION OF STOCKS/GOODS
Branches should ensure proper valuation of stocks is done before they are accepted as
security. Branches should call for the documentary evidences in all the cases, which can be in the
form of paid invoices/bills. Such documentary evidence must be scrutinised thoroughly
To find out the ownership of the borrower to goods and
To ascertain the basis of valuation of goods. The branch may correlate the invoice, the
details of the cheque by which the invoice was paid, and the statement of the account to
verify that the goods offered are fully paid stocks.
97
The following method can be followed for valuation of goods.
IMPORTED GOODS:
a) Imported through our Bank:
The goods should be valued on the basis of landed cost of the goods or market value of
the goods whichever is less. (Landed costs are the final value of the goods which includes
the cost of the materials, insurance, freight, loading and unloading charges, demurrage,
customs duties, clearing charges, transit, warehousing charges etc.) For the goods for
which the market price is highly volatile and fluctuate, the branch should adopt a very
conservative approach and it may be even the average of the market prices for the past 2
or 3 years/ seasons.
b) Imported through other Banks
Normally, the Bank does not lend against goods imported through other Banks. However,
where specific permission has been obtained from the Regional Office/Regional Office in
this regard, goods should be valued on the landed cost or market value whichever is less.
It should be ensured that the borrower has retired the import document by actual payment
and not taken delivery by either accepting the Usance bill of exchange or executing a
Trust Receipt.
c) Imported Goods purchased in the Open Market
Where the invoice value of the goods is known, the goods should be valued on the basis
of invoice value or market value whichever is less. Where, however, the invoice value is
not known, the market value of the goods may be taken as the basis for valuation of
goods in which case the margin will be similar to that maintained on other indigenous
goods against which advances are made by the Bank.
INDIGENOUS GOODS / MANUFACTURED GOODS :
When the invoice value of the goods is known, the goods should be valued on the basis of
the invoice value or market value, whichever is less. Where, however, the invoice value is not
ascertainable, the market value of the goods may be taken as the basis for valuation. In such
cases, branches should ascertain the market rates at frequent intervals and maintain a record
thereof. In the case of manufactured goods the basis of valuation should be either cost price or
market price, whichever is lower and the manufacturer’s invoice should be produced for
98
verification.
MARKET PRICE REGISTER :
Branches should maintain a Market price Register to record the weekly market prices of
all commodities against which advances could be granted by the bank. Entries’ regarding the
ruling prices of all the commodities available in that locality should be made whether advances
against them have been made or not so that the fluctuations in prices of seasonal commodities
over a period of years are known. This data would enable to regulate the advance rate for a
particular commodity when an advance is actually to be made.
INSPECTION OF STOCKS
Branches must inspect the stocks charged as security to the Bank regularly and as per the
instructions in force. There should be an element of surprise and hence inspection should be
carried out at irregular intervals.
Godown inspections have to be planned during the first week of every month. Branches
should maintain a register for this purpose recording the month-wise details of the nature and
address of the godown, name of the officer who has been assigned the responsibility to inspect
the godown, his initials in token of having noted the allocation of work, date actually inspected
and his initials. Such a register must be held with the Manager/Sr. Deputy Manager/Deputy
Manager as the case may be. The inspection of godown should be carried out meticulously as per
terms of sanction. Normally for all advances unit inspection will be conducted on monthly basis.
In deserving cases, sanctioning authorities can take a view on the periodicity of the inspection,
depending upon the nature of the activity, and can relax periodicity of the unit inspection after
duly documenting the reasons. However, at least once in a quarter, unit inspection will be
conducted. In the case of consortium, where our Bank is leader, the periodicity of unit visit can
be fixed as per the above guidelines. In cases where our Bank is not the leader, the Bank will fall
in line with the leader of the consortium.
In the case of godowns under hypothecation, the Chief Manager/Senior
Manager/Manager should inspect regularly and submit the Godown Inspection Reports to the
controlling offices, as required from time to time. Godown inspection work can be divided
99
among the Chief Managers/Senior Managers/Managers/Senior Deputy Managers/Deputy
Managers and Asst. Managers by rotation so that the same official does not inspect the same
godown(s) repeatedly.
4.1.3 AGRICULTURAL LOAN:
INTRODUCTION
After nationalisation of banks, banks lending to Agriculture and other allied sectors was
given importance. Over the years as the banks gained experience, improvements have taken
place in the methodology of lending and selection of borrowers. Earlier branches were extending
agricultural advances wherever potential existed for growth and in many places due to
competition there were multiple financing. To rectify the situation, the concept of Service Area
Approach (SAA) had been introduced since 1st April 1989 by which branches are required to
provide financial assistance to the villages allotted to them.
Financing Agriculture and allied activities may be of a short term nature or of a long term
nature. While detailed instructions are given in the following Chapters in respect of such
advances, the instructions contained in this Chapter are common for all types of lending to
Agriculture and allied Activities.
AGRICULTURAL FINANCE
DIRECT FINANCE
Finance to individual farmers [including Self Help Groups (SHGs) or Joint Liability
Groups (JLGs), i.e. groups of individual farmers, provided banks maintain disaggregated data on
such finance] for Agriculture and Allied Activities (dairy, fishery, piggery, poultry, bee-keeping,
etc.)
Short-term loans for raising crops, i.e. for crop loans. This will include traditional/non-
traditional plantations and horticulture.
100
Advances up to Rs. 10 lakh against pledge/hypothecation of agricultural
produce(including warehouse receipts) for a period not exceeding 12 months, irrespective
of whether the farmers were given crop loans for raising the produce or not.
Working capital and term loans for financing production and investment requirements for
agriculture and allied activities.
Loans to small and marginal farmers for purchase of land for agricultural purposes.
Loans to distressed farmers indebted to non-institutional lenders, against appropriate
collateral or group security.
Loans granted for pre-harvest and post-harvest activities such as spraying, weeding, sting,
grading, sorting, processing and transporting undertaken by individuals, SHG socio-
operatives in rural areas.
Loans granted for agricultural and allied activities, irrespective of whether the borrowing
entity is engaged in export or otherwise. The export credit granted by banks for
agricultural and allied activities may, however, be reported separately under heading
"Export credit to agricultural sector".
Finance to others [such as corporates, partnership firms and institutions] for Agriculture and
Allied Activities (dairy, fishery, piggery, poultry, bee-keeping, etc.)
Loans granted for pre-harvest and post harvest activities such as spraying, weeding,
harvesting, grading, sorting and transporting.
Finance up to an aggregate amount of Rs. one crore per borrower for the purposes listed
at 1.1.1, 1.1.2, 1.1.3 and 1.2.1 above.
One-third of loans in excess of Rs. one crore in aggregate per borrower for agriculture
and allied activities.
INDIRECT FINANCE
Finance for Agriculture and Allied Activities
Two-third of loans to entities covered under 1.2 above in excess of Rs. one crore in
aggregate per borrower for agriculture and allied activities.
101
Loans to food and agro-based processing units with investments in plant and machinery
up to Rs. 10 crore, undertaken by those other than 1.1.6 above.
(i)Credit for purchase and distribution of fertilisers, pesticides, seeds, etc.
(ii)Loans up to Rs. 40 lakh granted for purchase and distribution of inputs for the allied
activities such as cattle feed, poultry feed, etc.
Finance for setting up of Agri clinics and Agribusiness Centres.
Finance for hire-purchase schemes for distribution of agricultural machinery and
implements.
Loans to farmers through Primary Agricultural Credit Societies (PACS), Farmers’
Service Societies (FSS) and Large-sized Adivasi Multi Purpose Societies (LAMPS).
Loans to cooperative societies of farmers for disposing of the produce of members.
Financing the farmers indirectly through the co-operative system (otherwise than by
subscription to bonds and debenture issues).
Loans for construction and running of storage facilities (warehouse, market yards,
godowns, and silos), including cold storage units designed to store agriculture
produce/products, irrespective of their location. If the storage unit is registered as SSI
unit/micro or small enterprise, the loans granted to such units may be classified under
advances to Micro and Small Enterprises sector.
Advances to Custom Service Units managed by individuals, institutions or organisations
who maintain a fleet of tractors, bulldozers, well-boring equipment, threshers, combines,
etc., and undertake work for farmers on contract basis.
Finance extended to dealers in drip irrigation/sprinkler irrigation system/agricultural
machinery, irrespective of their location, subject to the following conditions:
The dealer should be dealing exclusively in such items or if dealing in other products,
should be maintaining separate and distinct records in respect of such items.
A ceiling of up to Rs. 30 lakh per dealer should be observed.
Loans to Arthias (commission agents in rural/semi-urban areas functioning in
markets/mandies) for extending credit to farmers, for supply of inputs as also for buying
the output from the individual farmers/ SHGs/ JLGs.
Credit outstanding under loans for general purposes under General Credit Cards (GCC).
102
Loans to MFIs for on-lending to agriculture as per the conditions specified in paragraph
3.2.
Loans sanctioned to NGOs which are SHG Promoting Institutions, for on-lending to
members of SHGs under SHG-Bank Linkage Program for agricultural purposes.
Loans granted to RRBs for on-lending to agriculture and allied activities sector.
Overdrafts, up to Rs. 25,000 (per account), granted against 'no-frills' accounts in rural and
semi-urban areas.
Loans not eligible for classification as direct/indirect finance to agriculture
Loans sanctioned w.e.f. April 1, 2011 to NBFCs (other than MFIs which adhere to the
criteria specified in paragraph 3.2) for on-lending. The bank loans extended prior to April
1, 2011 to NBFCs, and classified under Priority Sector will continue to be reckoned
under Priority Sector till maturity of such loans.
Loans sanctioned to NBFCs for on-lending to individuals or other entities against gold
jewellery, investments made by banks in securitised assets originated by NBFCs, where
the underlying assets are loans against gold jewellery, and purchase/ assignment of gold
loan portfolio from NBFCs.
Loans sanctioned to Central/ State Co-operative Marketing Federations and State Civil
Supplies Corporations.
Loans sanctioned to corporate/ private companies/ sugar companies for financing of
receivables of farmers/vendors/traders against their supplies of agricultural produce to
such corporate/ private companies/sugar companies.
4.1.3.1 TERM LOAN FOR MINOR IRRIGATION
Minor Irrigation’ is an activity which deals with the utilisation of ground water which
may be from sources below the ground level or from tanks, ponds, lakes, rivers. In view of the
emphasis made by Government of India to bring more area under irrigated cultivation, financing
for Minor Irrigation Development is undertaken on a priority basis.
The items constituting minor irrigation works are many and their type and size depend
not only on the hydrogeology of the area but also on the size of the farm. Minor Irrigation works
comprise of three parts :
103
Construction of structures (digging or boring of well).
Lifting of water to the ground level.
Conveyance or distribution of water for irrigation.
Financial assistance can be provided on a composite basis covering all the above works
of minor irrigation, or to any one/two purposes alone provided the other is in satisfactory
working condition. Necessary application and documents have to be obtained as detailed in the
following sections depending upon the purposes for which credit facilities are sought for.
Ground Water Development
Branches should be aware of the stage of groundwater development in the service area
before entertaining any credit proposal for digging of wells/Minor Irrigation.
Depending upon the stage of ground water development expressed as a percentage of
available resources, the scheme area (block, watershed etc) is classified as Safe or Semi
Critical or Critical. If the unit is classified as Safe, there is no restriction in financing
minor irrigation schemes till it becomes ‘Semi Critical’.If it is Semi Critical, then
financing can be done so long as it does not become Critical. If it is Critical,then no
financing should be done.
Spacing Norms
NABARD has prescribed minimum spacing norms between two wells block-wise in each
district (circularised by RO from time to time) and the same is to be followed scrupulously.
4.1.3.2 TERM LOAN FOR SINKING / DEEPENING OF WELLS
Purpose
There are different types of wells to tap underground water depending upon hydro
geological situation and soil profile, as listed below:
Dug Wells,
Dug cum bore wells,
Filter points, and
Tube wells.
104
Term Loans can be extended to construct any of these wells, for deepening/renovating the
existing wells and for boring in the existing dug wells to augment water supply.
4.1.3.3 TERM LOAN FOR PURCHASE OF ELECTRIC MOTOR / OIL ENGINE WITH
PUMPSET
Except in the case of flow irrigation, water is to be lifted from its source to the point of
application by some device. Conventional methods of water lifting are less efficient, time
consuming and tiresome too. When pump-sets are fitted, larger area can be covered at a
lesser cost.
Selection of a suitable water lifting device for a particular situation depends on the
characteristics of the source of water and the lifting device, the amount of water to be lifted, the
depth to the pumping water level, type and amount of power available and the economic status of
the farmer.
4.1.3.4 Establishment of NABARD
The National Bank for Agriculture and Rural Development (NABARD) was set up on
12th July, 1982 under an Act of the Parliament. It was established by merging the Agricultural
Credit Department (ACD), Rural Planning and Credit Cell (RPCC) of the Reserve Bank of India
and the Agricultural Refinance and Development Corporation (ARDC).
NABARD is an apex development bank in the country for providing credit for the
promotion of agriculture, tiny industries, artisans, cottage and village industries, handicrafts and
other rural crafts and other economic activities in rural areas with a view to promoting integrated
rural development and securing prosperity to rural areas.
NABARD is engaged in
Providing refinance facility to Commercial Banks (for investment credit i.e. term loans),
Regional Rural Banks and Co-operative Banks.
Strengthening the Credit Delivery System for improving the quality of loans and
supervision over the utilisation of credit.
105
Credit monitoring — by way of stipulating norms in rural lending viz margin, unit cost,
unit size, repayment schedule etc. in order to have uniformity and rationality in rural
lending.
Undertaking field surveys, preparation of potential linked plans, preparation of model
schemes, evaluation of agricultural schemes implemented by banks, conducting District
Oriented Monitoring Study (DOM Study) etc.
Imparting training for the officials of Banks, State Governments and other institutions
concerned.
4.1.4 GOLD LOAN
Advances in the form of Demand Loans may be granted against the security of gold
ornaments and gold coins of 24 carat fineness sold by banks only, to the constituents of the
Bank, for the following purposes :
Productive Purposes-
a) Agricultural Operations – for crop cultivation and maintenance
b) Activities allied to Agriculture – for animal husbandry activities
c) Other Priority Sector activities- for business activities including consumption
purposes.
d) Non priority purposes
Non-Productive Purposes-
e.g.:- Medical expenses, festival celebrations &Unforeseen liabilities etc.
Branches are requested to ensure the following while granting jewel loan.
Commercial Cash Credit against Jewel – a new product:
106
Salient Features
Target Group: Individuals who own jewels, engaged in business activities like small
business/trade/professional and self-employed etc.
Purpose: To meet the business needs for running a commercial activity against the prime
security of jewels.
Type of advance: Business needs will be met in the form of cash credit or over draft with
cheque book facility.
Amount of loan: Minimum finance under the scheme will be Rs.50,000/- and the
maximum will be Rs. 10 lakhs. For limits up to Rs.3 lakhs, the quantum of finance will
be the advance value advised by the Bank from time to time multiplied by the net weight
of the jewels or Rs.3 lakhs whichever is lower. For limits exceeding Rs. 3 lakhs,
quantum of finance will be the Advance value multiplied by the net weight of the jewels
or 20% of the projected turn over whichever is lower, subject to a maximum of
Rs. 10 lakh. Total limit should not exceed 20 % of the projected turn over. Drawing
power is to be regulated based on gold advance value.
End use verification: Branches should verify end use of funds by regular inspection of
stocks to ensure that the funds are utilised for the activity he/she is engaged in.
Margin: Advance rate for gold jewellery as fixed by the Bank takes care of margin.
Hence, no margin.
Interest: Interest has to be charged on fixed rate option and the rates are to be as per
circulars issued by BOD, Central Office. Interest should be serviced regularly.
Repayment: Cash Credit is to be renewed / reviewed every year. DP will be arrived
according to the value of jewels as determined by the rate advised by Priority Credit
Department (Agri), Central Office periodically.
Assessment: Borrower's genuine need is to be ascertained before sanction.
a) For limits up to Rs.3 lakhs, the limit will be assessed based on the quantum of jewels
pledged and no balance sheet is required.
b) For limits above Rs. 3 lakhs, unaudited balance sheet should be obtained and
analysed to assess the quantum of finance and also the capacity of the customer to
liquidate the limit.
107
Security: The advance is fully secured by pledge of gold jewellery (prime security). This
should be appraised by an appraiser authorised by the bank for its fineness. 20 ct to 22 ct
jewellery could be taken as security.
Security Documents: DPN, F.16 (Letter of continuity), Hypothecation agreement, F. 89-
E (Application cum security delivery letter).
Other Documents: Registration certificate with District Industries Centre / Sales Tax
registration certificate etc. should be obtained as proof of activity of the applicant. An
undertaking letter should be obtained from all the applicants indicating the business
activity and assuring that the funds will not be used for speculative purposes.
Processing charges: To be levied as per Circular in force.
Appraiser commission should be obtained separately from the customer and it is subject to a
maximum of Rs.300/- per limit.
PROCEDURE FOR GRANTING THE JEWEL LOAN
The valuation of the ornaments / gold coins must be based on the weight and fineness of
gold content and the average market price of ornamental gold. So the manager must have
a fair knowledge about the movement of price of the ornamental gold.
The advance rate per gram will be regulated/ determined by C.O. on the basis of the
fineness of the gold and the market price of the gold and will be expressed to the nearest
rupee. Per gram advance rate will be as applicable to 22 carat hallmarked Jewels. The
advance rate per gram of gold will be notified to the branches, by Central Office, from
time to time, on which no margin need be maintained. Branch has no discretion to
increase the advance rate on no account.
Advances against gold coins should not be sanctioned for purchase of new coins and
subsequent / simultaneous pledging of the same.
It should be noted that loans against gold coins should be granted only against the gold
coins which are already purchased and possessed by the customers.
The hall mark jewellery fetches slightly higher rate to jewels with no hall mark.
108
The branch should apply the correct advance rate after ascertaining the exact purpose of
the loan as C.O. advises different advance rates for AJL / Staff members and JL to others
purposes.
Whenever such rates are advised by Central Office, and, if there is any increase in
advance value per gram, branches should not encourage renewal of the existing loans,
under any circumstances.
APPRAISAL OF JEWELS :
Branches in Tamilnadu will ensure that all the weighing instruments and weights are got
stamped and verified once in every twelve months in order to comply with the
requirements under Madras Weights and Measures (Enforcement) Rules, 1967. It is also
necessary that the certificate of verification is exhibited in the branch Notice Board.
Branches in other states will adhere to the rules prevailing in their respective States.
Advances against gold ornaments can be granted only after the ornaments are duly
appraised by the jewel appraiser, engaged by the Bank and only when the Manager and
other Officers who are involved in sanctioning the advances have fully satisfied
themselves as to the weight, fineness and valuation of the ornaments.
Branch Managers and other officers should be competent to value gold ornaments and if
they are not, it is their duty to learn the work without delay. Branches may employ the
services of an approved Jewel Appraiser, where the loan amount is above Rupees One
thousand; but this does not absolve the Managers and other officers of their responsibility
for the correct weight, fineness of gold and the valuation of ornaments.
The weight of all extraneous matter such as wax, string, fastenings and as well as
precious stones, must be deducted/reduced from the gross weight, on a liberal scale and
must be entirely ignored when ornaments containing them are valued. The ornaments
containing wax should be immersed in water together with the side of the weighing
scale,( in case of physical balance ) to ascertain the weight of gold in the ornaments, as
water and wax have same specific gravity. However, it should be noted that this test may
be vitiated if any other base metal is embedded in the wax. Also this test can not be
carried out when electronic balance is used for weighing.
109
Branches should be extremely vigilant against spurious ornaments made of brass with a
coating of gold can be passed off as solid gold ornaments.
Agricultural jewel loans can be issued to farmers who want to specifically avail loans for
agricultural purposes against security of their gold jewellery. It should be ensured that the
borrower is a genuine agriculturist and that the advance is for agricultural operations. It is
enough if the branch manager looks into the genuineness of the farmer and his need by verifying
the available land records like chitta, adangal, patta pass books, kist receipts etc. and the details
incorporated in Form 89 E and these need not be kept along with the AJL application.
Where the loan is for cultivation purposes, the loan amount sanctioned should be with
reference to the approved scale of finance for the crop to be raised and the extent of cultivation.
Agricultural jewel loans can also be considered for other agricultural purposes like dairy, sheep
rearing, purchase of bullocks, pumpsets, etc. The usual norms and disciplines applicable to the
advances as per guidelines should be observed. Keeping the credit requirement in view,
agricultural loans can be granted against gold ornaments and jewellery (within the stipulated
advance value of jewels pledged) so long as the quantum of loan is assessed with reference to the
crop grown or to the investment proposed and the repaying capacity likely to be generated and
not with reference to assessment of eligibility on the basis of value of gold ornaments pledged.
Branches should not refuse credit against the security of gold ornaments and jewellery to
people affected by natural calamities.
4.1.5 MICRO CREDITS
Loans of very small amounts, not exceeding Rs.50,000 per borrower provided by banks
either directly or indirectly through a SHG/JLG mechanism for on-lending up to Rs. 50,000 per
borrower.
Bank credit to Micro Finance Institutions extended on, or after, April 1, 2011 for on-
lending to individuals and also to members of SHGs / JLGs will be eligible for categorisation as
priority sector advance under respective categories viz., agriculture, micro and small enterprise,
and micro credit (for other purposes), as indirect finance, provided not less than 85% of total
assets of MFI (other than cash, balances with banks and financial institutions, government
110
securities and money market instruments) are in the nature of “qualifying assets”. In addition,
aggregate amount of loan, extended for income generating activity, is not less than 75% of the
total loans given by MFIs.
A “qualifying asset” shall mean a loan disbursed by MFI, which satisfies the following
criteria:
a) The loan is to be extended to a borrower whose household annual income in rural
areas does not exceed Rs.60,000/- while for non-rural areas it should not exceed
Rs.1,20,000/-.
b) Loan does not exceed Rs.35,000/- in the first cycle and Rs.50,000/- in the
subsequent cycles
c) Total indebtedness of the borrower does not exceed Rs.50,000/-.
d) Tenure of loan is not less than 24 months when loan amount exceeds Rs.15,000/-
with right to borrower of prepayment without penalty.
e) The loan is without collateral.
f) Loan is repayable by weekly, fortnightly or monthly installments at the choice of
the borrower.
Further, the banks have to ensure that MFIs comply with the following caps on margin
and interest rate as also other ‘pricing guidelines’, to be eligible to classify these loans as
priority sector loans:
a) Margin cap at 12% for all MFIs. The interest cost is to be calculated on average
fortnightly balances of outstanding borrowings and interest income is to be
calculated on average fortnightly balances of outstanding loan portfolio of
qualifying assets.
b) Interest cap on individual loans at 26% per annum for all MFIs to be calculated on
a reducing balance basis.
c) Only three components are to be included in pricing of loansviz., (a) a processing
fee not exceeding 1% of the gross loan amount, (b) the interest charge and (c) the
insurance premium.
d) The processing fee is not to be included in the margin cap or the interest cap of
26%.
111
e) Only the actual cost of insurance i.e. actual cost of group insurance for life, health
and livestock for borrower and spouse can be recovered; administrative charges
maybe recovered as per IRDA guidelines.
f) There should not be any penalty for delayed payment.
g) No Security Deposit/ Margin are to be taken.
The banks should obtain from MFI, at the end of each quarter, a Chartered Accountant’s
Certificate stating, inter-alia, that (i) 85% of total assets of the MFI are in the nature of
“qualifying assets’’, (ii) the aggregate amount of loan, extended for income generation activity,
is not less than 75% of the total loans given by the MFIs, and (iii) pricing guidelines are
followed.
The guidelines relating to categorization of
(i) Investment by banks in securitised assets originated by MFIs
(ii) Outright purchase of loan portfolios of MFIs as priority sector advances in the books of
the banks would be issued in due course. In the meantime, fresh assets would qualify for
priority sector treatment only if they satisfy the criteria of qualifying assets and adhere to
the pricing guidelines as specified above.
Bank loans to MFIs, which do not comply with above conditions will not be reckoned as
priority sector loans w.e.f. April 1, 2011. The bank loans extended prior to April 1, 2011
classified under Priority Sector will continue to be reckoned under Priority Sector till maturity of
such loans.
Micro Finance Institutions to be included in the above regulatory framework have to
initiate requisite organisational capacity building exercise so as to enable them to conform to the
above guidelines. Banks which are lending to MFIs will be one of the important pillars of the
new regulatory framework and, hence, they need to build up necessary criterion of due diligence
while processing loan applications from MFIs. This process should be initiated immediately to
ensure that MFIs availing finance from them are capable enough to put up the systems in terms
of Corporate Governance, Human Resource Management, Customer Protection and other aspects
112
of the proposed regulatoryframework, so as to ensure that once the new regulatory framework is
in place, Micro Finance Institutions can carry out their operations without any major disruption
4.1.5.1 SWARNAJAYANTI GRAM SWAROZGAR YOJANA (SGSY)
The Scheme:
The Scheme aims at establishing a large number of micro enterprises in the rural areas.
The list of Below Poverty Line (BPL) households identified through BPL census duly approved
by Gram Sabha will form the basis for identification of families for assistance under GSY. The
objective of SGSY is to bring the assisted poor families (Swarozgaris) above the poverty line by
ensuring appreciable sustained income over period of time. This objective is to be achieved by
inter alia organising the rural poor into Self Help Groups (SHGs) through the process of social
mobilisation, their training and capacity building and provision of income generating assets. The
rural poor such as those with land, landless labour, educated unemployed, rural artisans and
disabled are covered under the Scheme.
The assisted poor families known as Swarozgaris can be either individuals or groups and
would be selected from BPL families by a three member team consisting of Block Development
Officer (BDO), Banker and Sarpanch. SGSY will focus on vulnerable sections of the rural poor.
Self-Help Groups (SHGs)
The Self Help Groups (SHGs) shall be organised by Swarozgaris drawn from the BPL list
approved by Gram Sabha. The Scheme provides for formation of Self Help Groups (SHGs),
nurturing and their linkages with banks. SHGs may be an informal group or registered under
Societies Act, State Co-operative Act or as a partnership firm. The assistance (loan cum subsidy)
may be extended to individuals in a group or to all members in the group for taking up income
generation activities. Group activities will be given preference and progressively majority of the
funding will be for Self Help Groups. Half the groups formed at block level should be
exclusively women groups.
Self Help Groups go through various stages of evolution viz. Group formation, Group
Stabilization, Micro Credit stage and Micro Enterprise Development stage.
Under the Scheme, generally a Self Help Group may consist of 10-20 persons.
113
However, in difficult areas like deserts, hills and areas with scattered and sparse
population and in case of minor irrigation and disabled persons, this number may vary
from 5-20. The difficult areas have to be identified by the State Level SGSY Committee
and the above relaxation in membership will be permitted only in such areas.
Generally all members of the group should belong to families below the poverty line
(BPL). However, if necessary, a maximum of 20% and in exceptional cases, where
essentially required, up to a maximum of 30% of the members in a group may be taken
from families marginally above the poverty line living contiguously with BPL families
and if they are acceptable to the BPL members of the group.
The Above Poverty Line (APL) members will not be eligible for the subsidy under the
Scheme. The group shall not consist of more than one member from the same family. A
person should not be a member of more than one group. The BPL families must actively
participate in the management and decision making, which should not ordinarily be
entirely in the hands of the APL families. Further, APL members of the SHG shall not
become office bearers (Group leader, Assistant Group leader or Treasurer) of the group.
The group should operate a group account preferably in their service area bank branch, so
as to deposit the balance amounts left with the groups after disbursing loans to its
members.
The group should maintain simple basic records such as minutes book, attendance
register, loan ledger, general ledger, cash book, bank pass book and individual pass
books.
In case of disabled persons, the groups formed should ideally be disability specific,
wherever possible; however, in case sufficient number of people for formation of
disability specific groups are not available, a group may comprise of persons with diverse
disabilities or a group may comprise of both disabled and non disabled persons below the
poverty line.
In cases where the size of the SHG is large {as in the case of Neighbourhood Groups
(NHGs) under the Kudumbashree Programme of Government of Kerala where a
neighbourhood group can comprise up to 40 members}, banks have been expressing
difficulty in extending finance to such large groups. Hence, sub groups within the large
group may be considered for financing by the banks under the SGSY provided they (or
114
the large group) have satisfied the required grading criteria, possess all the characteristics
of a viable and sustainable group and are found credit-worthy by the banks.
In States and Union Territories where the formation of SHGs has not taken root, banks may
continue to extend credit facilities to eligible individual Swarozgaris.
4.1.6 LETTER OF CREDIT/ GUARANTEES/LG
4.1.6.1 LETTER OF CREDIT
Letters of Credit module in CBS provides for both Inland and Foreign letters of Credit
books management. All the manual system of maintaining Letters of Credit have been made
available in the system.
Requirement for going online :
Existing balance in Letters of Credit head to be vouched in gl_sub_cd 1.
Branch should create Master Details of customers enjoying LC facility under sanctioned
limits using ‘Exim Customers Maintenance’ program and also create account numbers
for this facility using ‘Exim Accounts Maintenance’ program.
Branch should Inform RCC / ITD to make the module ONLINE.
ONLINE Programs:
OUTWARD LETTERS OF CREDIT:
Only authorized branches can use the programs for issuance of Letters of Credit. Before
invoking the program to issue, the desk officer in-charge of LC issue should ensure that
the application is filled up in all respects and necessary approval of the Branch Chief has
been obtained to issue the LC.
Once all the values are entered in the system, the system will generate the LC-No and the
same should be noted on the application and other documents.
All the LC issue to be approved by a Supervisory Officer, after verifying that the details
entered in the system is correct. Once an LC is approved, modification is not permitted
115
and any clause can be modified only by way of an Amendment, which should not be
resorted to by branches for the mistakes committed by them.
Any amendments to the LC issued by the branch should be entered in the LC
amendments program and duly approved before communicating the same to the
beneficiary.
Whenever documents have been submitted under the LC, the desk officer should note to
mark necessary utilization entry in the said LC and ensure that the balance available in
the LC reflects the correct position.
Once an LC has been fully utilized and the customer is not likely to use the LC in future,
it should be marked as “Closed” using the program ‘LC Revocation / Closure’ with due
approval of the Branch Chief. Once an LC has been marked as ‘Closed’ it can not be used
further.
On a day to day basis, contra entries for lodgment as well as utilization should be marked
in the system using the ‘LC contra Vouching’ Program without fail.
INWARD LETTERS OF CREDIT:
The programs for registration of Inward Letters of Credit are available to all branches
handling LCs for their customers. All letters of Credit received by the branch should be
entered in the system and the number generated by the system should be marked on the
LC for future use.
Provision is given to generate the LC Advice from the system which should be used to
send the LC to the beneficiary, wherever required.
Any amendment received for the LC should be entered in the system using ‘LC
Amendments’ programs chronologically and duly approved by the Supervisory user. The
amendment should then be advised to the beneficiary for his acceptance. On receipt of
the acceptance from the beneficiary, the same should be marked in the system, using ‘LC
Amendments Application’ in the same order of amendment.
116
FIRM ORDERS:
The Letter of Credit Package provides for registration of documents received as ‘Firm
Orders’ for the purpose of granting Packing Credit against such orders. All firm orders recorded
in the system should be approved by a Supervisory staff duly verifying the details entered.
CHARGES:
All charges required to be recovered from the borrower / customer should be promptly
recovered for which necessary program has been provided.
LIABILITY MAINTENANCE:
The Supervisory Staff in-charge of LC department in the branch should periodically take
liability reports and ensure that the liabilities of various borrowers / customers tally.
NOTIONAL RATES REVISION:
Whenever change in Notional Rates is notified by Central Office, the change should be
applied on the liabilities outstanding in Letters of Credit also, using the relevant program, on the
due date to reflect the correct liability position.
4.1.6.2 LETTER OF GUARANTEE/ LG
Branches are advised to be guided by the instructions provided in Chapter 18 Volume-II
of Book of Instructions as modulated to the computer environment of a branch.
OPENING OF LETTER OF GUARANTEE:
All opening of Letter of Guarantees should be done through the master creation
application. Similarly modifications/ deletions are to be carried out using this application only.
The various options available in each screen are Issue, Extend, Modify, Eliminate and View to
enable opening, extending, modification, elimination and viewing of LGs.
The Letter of Guarantee should be opened through the LG Master Maintenance Program. It also
enables the user to:
1. Modify existing LG
2. Eliminate the entries of LG
117
3. View the LG details in the master
4. Amend the LG amount already issued
5. Extend the validity period of LG
Before the branch user attempts to open a Letter of Guarantee, Beneficiary of the LG
should have been created and approved for all new customers. If the Beneficiary Code for a
customer is already available, branch should note down the Beneficiary Code to create master for
the Letter of Guarantee account. Branches should avoid creating multiple beneficiary codes
for each letter of guarantee account for the same customer. The Application for LG –
Beneficiary Maintenance also enables the branch to modify or Delete the master information.
Opening of Letter of Guarantees should be done through the master creation application.
Similarly modifications/ deletions are to be carried out using this application only. The various
options available in each screen are Issue, Extend, Modify, Eliminate and View to enable
opening, extending, modification, elimination and viewing of LGs.
LETTER OF GUARANTEE CLOSURE:
The account number should be given for which closure is to be affected. Depending on
the type of closure, the system generates requisite vouchers, including margin, and once the user
gives the disposal details, generates the Lot entries. The User at the Branch has to prepare the
vouchers manually for the purpose of records. The system also posts the transaction and gives
the transaction numbers, which have to be noted down on the voucher. For the use of branches, a
new combined voucher has been supplied in pre-printed format, which has to be used for noting
down all the closure details, and respective transaction numbers noted there against.
LETTER OF GUARANTEE APPROVAL:
All Letter of Guarantee opening, modification and closures should be approved by the
supervisory staff simultaneously without keeping the transaction pending till end of day. Before
approving the transactions, the officer-in-charge should verify all the details in the system and
approve only if the details are found to be correct.
118
LETTER OF GUARANTEE – CASH MARGIN MAINTENANCE:
Whenever margin on LG is collected by way of Cash, using this program the details of
margin collected should be entered by the user after the LG is opened in the system. This should
also be approved by Supervisory User.
LETTERS OF GUARANTEE – CONTRA VOUCHING:
Before closure of business for the day, the Supervisory user should ensure that necessary
contra is passed for LGs issued / closed / revoked etc. using the Contra Voucher Generation
program in the system and ensure that the liability balance tallies with the individual LGs issued.
DEFERRED PAYMENT GUARANTEE:
In the case of guarantees under Deferred Payment Guarantee, to account for the DPG
installment payments, the ‘DPG Posting’ and ‘DPG passing’ programs should be used by the
branches.
LETTER OF GUARANTEE SCHEME MAINTENANCE:
Whenever schemes are introduced or modified, necessary changes will be done by
Information Technology Department, C.O. only.
4.1.7 BILL/CHEQUE DISCOUNTING
4.1.7.1 DEMAND BILLS PURCHASED
A demand bill may either be a clean bill or a documentary bill. A demand bill does not attract
stamp duty.
Clean demand bills are unsecured bills and comprise the following :
a) Approved cheques
b) Bank drafts / Bankers’ Cheques
c) Dividend Warrants and Refund Orders
d) Interest Warrants
e) Inland Clean Demand Bills
119
f) Rupee Travellers Cheques issued by other Banks
g) Foreign Cheques / Bank Drafts payable in India .
Documentary Demand bills are secured bills and comprise the following:
Inland Demand bills accompanied by documents of title to goods such as, Railway
Receipts, Lorry Receipts (issued by approved transport operators), Bills of Lading etc.
Inland Documentary Demand Bills drawn under letters of credit opened by another
branch of the Bank or by another Bank calling for, inter alia, document of title to goods as one of
the documents.
USANCE BILLS:
Usance Bills of exchange attract stamp duty. Such bills should be drawn on Hundi paper
of requisite stamp value as payable under the Indian Stamp Act. When two or more sheets of
stamped papers are used in drawing a bill, a portion of the bill must appear on each sheet. A
Usance Bill may be either a clean bill or a documentary bill. It may be payable locally or outside
the place at which it is drawn. A documentary bill of exchange may be either D/A (documents to
be delivered against acceptance) or D/P (documents to be delivered against payment) and made
payable either after sight or after date. A D/A bill becomes an unsecured bill once the documents
are delivered against acceptance. A D/P bill, however, is a secured bill.
4.1.7.2. SANCTION OF CREDIT LIMITS
Branches should ensure that appropriate credit limits are fixed for parties who require
Bills purchased/discounted facilities by following the procedure prescribed for appraisal
of a credit proposition and fixing of credit limits.
However, Branch Managers may allow purchase/discount of bills representing genuine
trade transactions, under their discretion, where regular limits are not sanctioned to
parties, whenever such facility is required occasionally by the Bank’s good customers,
strictly adhering to the instructions laid down in this chapter.
Branches should obtain, inter alia, information relating to the credit facilities, if any, with
other Banks enjoyed by the customers whose proposals for Bills facilities are under
120
consideration. Branches should not allow any bill purchase/bill discounting limits to the
parties without the concurrence of their main/existing Bankers.
Unless specifically permitted in the sanction, the following instruments should not be
purchased/discounted by the branches :
a) clean bills;
b) clean or documentary bills drawn on party’s own branch or sister concerns/associates;
c) cheques drawn by the customer on his branch or associates/sister concerns: As per the
Loan policy Document 2009, where there is no backward / forward integration, house
bills on a single drawee should be restricted to 10% of the bills limit and total of such
bills to associates should not exceed 25% of the bills limit. Relaxations in the above
ceiling of 10%/ 25% may be permitted by the next higher sanctioning authorities.
d) self- cheques;
e) endorsed bills i.e. discounting to an endorsee;
f) Documentary bills accompanied by bills of lading covering foreign shipments and
drawn on inland parties.
While sanctioning/recommending limits for sanction, the branch should note to
sanction/recommend suitable sub-limits/drawee bill limits, wherever necessary.
4.1.7.3. SCRUTINY OF BILLS
The various aspects of the bills/cheques tendered by the customer should be
scrupulously verified to ensure that they are in order in all respects.
The cheques/bills once dishonoured should not be purchased/ discounted again.
Similarly, branches should not evince, any interest in the bills which are drawn on the
drawees who have earlier returned the bills or who have rejected the goods, unless there
are convincing reasons for such rejection/return. Similarly, cheques / bills which have
been already taken for collection should not, normally be transferred to purchase
portfolio unless there is a compelling reason to do so.
Cheques should be scrutinised to ensure that –
a) The cheque is properly drawn as to its date, amount in words and figures, signature
and endorsements, if any
b) The cheque is crossed.
121
c) The cheque is neither stale nor post-dated there is nothing to indicate that it has not
arisen from out of a bonafide business transaction.
Bills should be scrutinised to ensure that –
a) the bills are properly drawn and in order and are made out payable to the Bank or
duly endorsed in the Bank’s favour ;
and
b) the documents said to have been enclosed are actually found enclosed and that each
one of the documents is in order.
If there are any discrepancies in the cheque/bill, it should not be accepted for
purchase/discount.
In the case of documentary bills, the bill of exchange must be accompanied by the
invoice besides the transport documents viz., Railway Receipts, Lorry Receipts, etc.
Branches should verify whether the gap between the date of despatch of goods and the
date of submission of the documents to the Bank for the purpose of discount/purchase, is
long. If the gap is too long, say, 2 days or more, such bills should not be accepted for
purchase/discount unless the customer is able to offer acceptable reasons for the delay.
Branch Managers should satisfy themselves that the goods covered by the bill are not
other than the ones in which the party is dealing in, that the value of the goods mentioned
in the bill and invoice is correct in relation to the market price and that the amount of the
bill is not inflated i.e. the goods have not been over-invoiced.
The invoice and bill should be compared with the document of title to goods (RR/LR) to
ensure that the description of the goods, the quantity and weight of the goods and other
particulars agree.
The transport documents should invariably be consigned to the order of Indian Overseas
Bank. However, in the case of Railway Receipts, the goods should have been consigned
to ‘self’ or order of the consignor-drawer and endorsed in favour of the Bank or order.
This would prevent the consignee from taking delivery of the goods against an indemnity
without the knowledge of the bank.
Branches should accept documents for purchase/discount accompanied by Lorry Receipts
only when such Lorry Receipts are issued by transport operators who are recommended
by the Indian Banks’ Association and placed on the approved list of the Bank. The lorry
122
receipts should be in the special format prescribed by Indian Banks’ Association in this
regard.
When endorsed clean bills are presented for purchase/discount it should be ensured that
the bills are genuine and that the party is not discounting them for accommodating the
drawer who has exhausted his own credit limits.
4.1.7.4. CLEAN DEMAND BILLS :
No clean bill should be purchased if it does not represent genuine trade transaction or
relate to a legitimate movement of funds. Clean Bills drawn by a firm on its own
office/associate/sister concern should be avoided. Purchase of self-cheques should invariably be
subject to prior sanction from the Central Office.
Purchase of Clean Demand bills covering local sale of goods, where bills are not drawn
on parties connected with the borrower or his selling agents/sister concerns/associates,
may be allowed normally to the maximum extent of Rs.5,000/- only. However, where a
higher amount is required, branches should explain the reasons for such higher amounts
and obtain the sanction from the appropriate controlling authority.
Prompt payment on presentation of cheque/demand bill should always be insisted on and
should there be any delay, the advance must be recovered forthwith from the
drawers/endorsers immediately on receipt of non-payment advice. Collecting branches
should be informed to advise non-payment by letter or by telegram if the amount of the
bill is Rs.3,000/- or over.
Every case of non-payment or delay in payment by the drawee of a clean demand bill
should be carefully enquired into and unless a satisfactory explanation is forthcoming, the
fact must be regarded as seriously affecting the relationship of the drawer or endorser
with the Bank. The greatest care must be taken that the Bank is not made the victim of
‘kite flying’ by parties in difficulties. For example, one purely accommodation bill
having been floated, a second one is negotiated in order to meet the first and so on. Once
started, this cycle has a tendency to grow rapidly and prove difficult of recovery. Any
apparent evidence of such manipulation, such as suspicious telegraphic remittance by
123
parties to bills, must be reported immediately by collecting branches. Such kite flying
may be attempted both in the case of bills as well as cheques.
As already stated above, branches should not purchase/discount accommodation
cheques/bills.
Cheques drawn on other branches of the bank or on other banks elsewhere (other than
self cheques), may be purchased for credit of personal accounts of constituents only when
the Branch Manager is fully satisfied that the account holders are good for the amounts
involved. This discretion can be exercised by the Branch Managers only subject to the
discretionary powers vested with the respective branch managers as contained in the
Discretionary powers booklet and as advised by the Central Office from time to time.
However, branches should offer the facility of immediate credit of outstation cheques
upto Rs.15000/- (or such amounts as may be advised from time to time) to all the
customers subject to the guidelines issued from time to time. In all other cases, the
cheques should be accepted only on collection basis.
4.1.7.5. INTEREST / DISCOUNT :
The rates of discount/interest/overdue interest are advised by the Central Office. The
service charges to be collected by the branches are also advised by the Central Office from time
to time. Branches should collect these charges without fail, in addition to the amount of
interest/discount as stipulated in the sanction endorsements Apart from collection charges and
postages for bills/cheques as applicable, branches should collect interest/discount from the date
of purchase/discount till the date of realisation at the time of purchase/discount itself, as under:
Branches should charge normal rate of interest for the first:
a) 15 days in the case of bills accompanied by LRs
b) 30 days in the case of bills accompanied by RRs
c) Upto the predetermined period in case of Supply Bills
d) 7 days in the case of cheques and other clean instruments
e) Branches should charge normal rate of interest till due date in the case of Usance
bills.
124
OVERDUE INTEREST should be charged on bills after the expiry of the normal
period stipulated as above, AT THE TIME OF REALISATION.
Overdue interest should not be charged for cheques purchased and are outstanding
beyond 10 / 14 days, as the case may be, unless the cheques are returned unpaid, in which
case interest is to be charged for the period from the date of purchase to the date of
recovery.
Any excess/shortage of interest should be adjusted at the time of realisation.
The interest should be collected from the date of purchase/discount till the date of
realisation, i.e. crediting of the proceeds in any of our branches. The purchasing branch need not
charge interest for the return transit period of the credit advice i.e. from the date of realisation till
the date advices are received and responded. However, if the bills are realised by another bank
and remitted to our branch, the date of realisation of the bill at the branch is to be taken as the
date of realisation and interest collected upto that date. Branches while calculating interest on
Bills purchased/ discounted should exclude the amount held, if any, in the margin account and
charge interest only on the net amount of the bill credited to party’s account at the time of
purchase/discount. However, if the margin is held in the form of deposit accounts, then the
interest should be charged for the full amount of the bill.
4.1.7.6. FOLLOW-UP :
Branches should follow-up regularly the fate of the bills purchased/discounted by them.
If proceeds of the cheques/bills are not received within a reasonable time, their fate should be
enquired from the collecting branch/Bank by sending a fate enquiry card and where the amount
of the bill purchased/discounted is large such fate enquiry should be done by telephone / telex.
Full particulars of the cheque/bill such as its number, amount, name of the drawee etc. should be
given in this regard. If no reply is received from the collecting branch/Bank, it should be
followed-up by further fate enquiries till receipt of reply/proceeds. The dates of enquiring the
fate should be recorded in the Bills register under the initials of a supervising official. Actual
charges incurred for the telegram / telex in this regard should be recovered from the party
without fail.
125
If advice of non-payment of the bills is received from the collecting branches/Banks, the
customer should be promptly informed of the non-payment of the bill, giving reasons for non
payment, if any, received from the collecting branch / bank and instructions sought for disposal
of the bill. The dates of non-payment advice received from the branch and the non-payment
advice sent to the party should be noted in the bills register under the initials of a supervising
official.
Branch should follow-up with the customer-drawer and obtain disposal instructions in
writing at the earliest and communicate the same to the collecting branch/bank.
4.1.7.7. LOCAL BILLS DISCOUNTED :
These bills are clean Usance bills payable locally and hence this type of business should
be restricted to approved parties who provide finance to small traders in their respective areas.
This form of advance can also be made to the suppliers/manufacturers of material/goods for their
working capital requirements, where the supplies/sales are made locally on credit for which
Usance bills are drawn by them on the retailers.
The parties should be in a position to pay the amounts of the bills discounted on due dates
in the event of the drawees or acceptors failing to retire them. Accommodation bills should not
be accepted for discounting under any circumstances.
When business proposals are submitted for this type of credit facility, branches should
furnish list of probable drawers and/or acceptors together with satisfactory credit reports on them
to enable the sanctioning authority to fix suitable limits for each drawer or acceptor, whose
specimen signature, wherever possible should be obtained for record.
The bills may be either in the form of promissory notes or bills of exchange, as illustrated
hereunder:
126
PROMISSORY NOTE
NINETY DAYS / THREE MONTHS AFTER DATE, I PROMISE TO PAY TO.................... OR
ORDER THE SUM OF RUPEES.........……………………………………………. FOR VALUE
RECEIVED.
DRAWER’S SIGNATURE WITH ADDRESS
BILL OF EXCHANGE
NINETY DAYS / THREE MONTHS AFTER DATE / SIGHT PLEASE PAY
TO........................... OR ORDER THE SUM OF RUPEES ........................
........................................ FOR VALUE RECEIVED.
NAME AND ADDRESS DRAWER’S SIGNATURE/ SIGNATURE OF DRAWEE WITH
ADDRESS (to be attested by the drawer)
4.1.8 DIVERSION OF FUNDS IN LOANS
During the viability study causes for sickness should be investigated and diagnosed. A
major cause of sickness is Diversion of Funds.
OPEN CASH CREDITS - Advances against Hypothecation of goods
The stocks remain in the possession of the borrowers and are merely equitably charged
to the bank under documents signed by them is called hypothecation whereas in the case of a
pledge, (whether it is lock and key or open factory type) the borrower’s goods are in the Bank’s
possession under bank’s own locks. In practice, it may be difficult to take possession of the
goods when it becomes necessary for the bank to do so at the time when the borrowers resist,
even though the bank is empowered to do so under the documents executed by the borrowers,
and under various provisions of the Law, like SARFAESI Act. Therefore, hypothecation
advances should be sanctioned only to those borrowers who are considered good for the amount
on clean basis at all times and whose honesty and integrity are unquestionable.
127
Advances against hypothecation of goods are granted only for financing the working
capital requirements of the borrowers. Branches should take proper care while releasing the
advances and ensure that the Working Capital is released only after completion and
implementation of the project in the case of manufacturing concerns and when the manufacturing
activity has really commenced. Branches should ensure proper end use of the Working Capital
and that diversion of funds is not allowed under any circumstances, say, for acquiring the fixed
assets. Branches should scrupulously adhere to the sanction terms and conditions before
releasing hypothecation advances, as the Bank may face difficulties later if the sanction terms are
not complied with.
Ordinarily goods purchased should be paid for by cheques on the Bank and all sale
proceeds must likewise be credited to the account. Branches should verify whether the cheques
issued are in favour of the suppliers of goods/manufacturers/dealers with which the borrowers
normally have business dealings. Similarly, the receipts in the accounts should represent genuine
sale transactions and branches should ensure that all the sale proceeds are routed through these
accounts. Branches should ensure that only transactions relating to business are routed through
these accounts and mutual transfer of funds for very large amount are not affected among the
accounts of the concerns/family members, which may ultimately lead to diversion of funds.
4.1.9 NON - PERFORMING ASSETS ISSUES
4.1.9.1 MANAGEMENT OF NON - PERFORMING ASSETS
The growing Non Performing Assets (NPAs) of banks adversely affect the profitability of
the Bank. The NPAs are double edged weapons. On the one hand, the banks cannot recognise
interest income on NPAs on accrual basis and on the other hand, the banks have to make
provisions depending on the age of NPA and classification of the asset. The reduced profits on
account of burgeoning NPAs affect the capital adequacy ratio and thereby the capacity of the
banks to expand their credit portfolio. The restriction on increase in advances reduces the
profitability. This vicious circle can be broken only by substantial reduction of NPAs of banks.
Hence the need for proper management of NPAs is required.
128
The first step in NPA Management is to ensure that assets of the bank in the ‘Standard
Assets’ category continue to be retained in the same category. This calls for qualitative credit
appraisal and close monitoring of accounts. Branches should supervise all standard accounts very
closely, recover interest debited periodically, recover installments falling due on term loans
promptly and see to it that ‘Standard Assets’ do not slip down under any circumstances.
Allowing the accounts to become NPA would deprive the branches from recognising interest
income.
Despite best efforts put in, certain accounts would have become NPAs and slipped down
to ‘Sub-Standard’ asset category. The reasons therefore should be studied in detail and corrective
measures should be initiated. The efforts of the branches should be directed to upgrade the asset.
Branches should personally prevail upon the borrowers/guarantors for early
adjustment/regularisation of such accounts. Branches may send registered notices to the
borrowers/guarantors or arrange to issue legal notices to the borrowers/guarantors as
circumstances may warrant and as per the powers vested with them. At this stage, branches may
resort to enforcement of liquid prime/collateral securities held by them after giving due notice to
the borrower/guarantors.
The sub-standard accounts could be reviewed in the Task Force Committee Meetings
held periodically at Branch/Regional Office/Central Office in the presence of the borrowers as
per instructions in force. The minutes of such meetings should be recorded and steps should be
taken as per the decisions taken in such meetings. If the securities now held are found inadequate
to cover the dues of the bank, branches should endeavour to obtain additional securities for the
advance as this would help the bank in reducing the provision requirement should the advance
slip down to ‘Doubtful Asset’ category. Additional provision is to be made even in Sub-
Standard accounts, if there is any security shortfall.
As doubtful assets attract heavy provisioning, effective action should be taken
continuously either to recover the dues fully or to improve the classification by rehabilitating the
unit. Where the doubtful assets cannot be upgraded by partial recovery or rehabilitation and
where the borrowers are sincere and cooperative in adjustment of the dues, negotiated settlement
can be thought of. Where the borrowers are wilful defaulters and adequate securities and
personal guarantees are available to cover the advance, the amount should be recovered by
129
institution of legal proceedings. Immediate steps to be initiated to declare them as willful
defaulters as per RBI guidelines.
As the provision requirement on ‘Doubtful Assets’ depend on the value of security
available to a large extent, branches should ensure that such assets are backed by adequate
security. Branches should conduct Desk Top Valuation and revaluation of the properties as per
instructions in force, which would help the bank in reducing the provision requirements. If an
account remains in doubtful category for three years, irrespective of the security value, the
provision has to be made at the rate of 100% of the balance outstanding. Hence, there is an
urgent need to recover the account within the 4 years of the account becoming NPA.
4.1.9.2 Compromise/Negotiated Settlement:
a) Compromise is an attempt to enter into an agreement superseding all the earlier
agreements. It is an arrangement between the bank and the borrowers where there is an
element of sacrifice on the part of both the parties. The RBI has issued broad guidelines
to banks in regard to compromise/negotiated settlements. Based on these guidelines the
bank has come out with Recovery Policy for NPA accounts. As every account is unique,
it will be difficult to lay down standard guidelines for compromise settlement and as
such, suitable strategies are to evolved for each case. While considering compromise
proposals, proper distinction should be made between willful defaulters and the
borrowers defaulting in repayments due to circumstances beyond their control. Under the
settlement, the bank should recover its dues to the maximum extent possible at minimum
expense.
Eligible Accounts:
All NPA accounts – both Suit filed and Non-Suit filed.
Written-Off Accounts
Accounts under BIFR / AAIFR / CDR.
Accounts under Public Interest litigation (PIL) / External Agency’s Investigation / willful
defaulters / cases of malfeasance / Fraud etc., - However the permission of SAC at
Central Office must be obtained for considering such accounts for compromise
130
settlements by the appropriate layer of authority and after sanction it should be vetted by
Management Committee of the Board as per RBI guidelines.
Any other accounts, which are covered by specific recovery campaign, launched, as per
the terms of such campaign.
Ineligible accounts:
1. A loan account sanctioned earlier by the official, who is the competent authority presently to
consider the compromise settlement of the same account has to be sanctioned only by the next
higher layer of authority.
2. NPA Accounts sold / assigned to ARCs / Banks / FIs / NBFCs.
b) Branches must explore the possibility of negotiated settlement in the following cases.
The account should have been classified as NPA and the recovery of the dues to
the Bank in the normal course is found difficult or would take unduly longer
period depriving the Bank the immediate benefit of recycling of funds.
Efforts for Upgradation either by restructuring or rehabilitation have failed and /
or may not yield desired results.
The securities, income / worth of the borrower / guarantor are not sufficient to
ensure full &early recovery of the dues.
Any other reason in which continuation of relationship with the borrower is
considered not in the interest of the bank. The recovery through legal measures
will take longer time to result in recovery.
4.1.9.3 VALUATION OF THE SECURITIES:
As per the valuation policy of our bank (circular Misc/174 /2007-08 dated 17.11.2007) all
NPA accounts, irrespective of outstanding and limit should be valued by approved panel
Valuer every 3 years.
However, it should be ensured that whenever any OTS proposal is submitted, valuation
of the securities should not be more than ONE year old as on the date of submission of
compromise proposals.
131
If the valuation by the approved panel valuer is more than one year, fresh valuation
should be obtained from approved panel valuer for this purpose.
4.2 KEY ISSUES
4.2.1 OTHER IMPORTANT FEATURES OF THE GUIDELINES
Investments by banks in securitised assets, representing loans to various categories of
priority sector, shall be eligible for classification under respective categories of priority sector
(direct or indirect) depending on the underlying assets, provided the securitised assets are
originated by banks and financial institutions and fulfill the Reserve Bank of India guidelines on
securitisation. This would mean that the banks' investments in the above categories of securitised
assets shall be eligible for classification under the respective categories of priority sector only if
the securitised advances were eligible to be classified as priority sector advances prior to
securitisation.
Outright purchases of any loan asset eligible to be categorised under priority sector, shall
be eligible for classification under the respective categories of priority sector (direct or indirect),
provided the loans purchased are eligible to be categorized under priority sector; the loan assets
are purchased (after due diligence and at fair value) from banks and financial institutions,
without any recourse to the seller; and the eligible loan assets are not disposed of, other than by
way of repayment, within a period of six months from the date of purchase.
Investments by banks in Inter Bank Participation Certificates (IBPCs), on a risk sharing
basis, shall be eligible for classification under respective categories of priority sector, provided
the underlying assets are eligible to be categorised under the respective categories of priority
sector and are held for at least 180 days from the date of investment.
The targets and sub-targets under priority sector lending would be linked to Adjusted Net
Bank Credit (ANBC) (Net Bank Credit plus investments made by banks in non-SLR bonds held
in HTM category) or Credit Equivalent amount of Off-Balance Sheet Exposures (OBE),
whichever is higher, as on March 31 of the previous year. The outstanding FCNR (B) and NRNR
deposits balances will no longer be deducted for computation of ANBC for priority sector
lending purposes. Investments made by banks in the Recapitalization Bonds floated by
132
Government of India will not be taken into account for the purpose. Existing and fresh
investments made by banks in non-SLR bonds held in HTM category will be taken into account
for calculation of ANBC.
Deposits placed by banks with NABARD/SIDBI, as the case may be, in lieu of non-
achievement of priority sector lending targets/sub-targets, though shown under Schedule 8 –
'Investments' in the Balance Sheet at item I (v) – 'Others', will not be treated as investment in
non-SLR bonds held under HTM category. For the purpose of calculation of credit equivalent of
off-balance sheet exposures, banks may use current exposure method. Inter-bank exposures will
not be taken into account for the purpose of priority sector lending targets/sub-targets.
Existing and fresh deposits placed by banks on account of non-achievement of priority
sector lending targets/ sub-targets would not be eligible for classification as indirect finance to
agriculture/ small enterprises sector, as the case may be.
4.2.2 PRECAUTIONS TO BE TAKEN:
Managers must exercise the greatest care and diligence in discounting and purchasing bills and
employ all available means of satisfying themselves of the credit worthiness and the capacity of
the parties thereto.
Branch Managers should not merely rely on the documents of title to goods
accompanying the bills, since, in the case of non-payment of such bills on demand or on
due dates, the advances have to be recovered immediately from the drawers or the
endorsers. In addition, Branch Managers must also make themselves fully conversant
with the provisions of the Negotiable Instruments Act in order that the Bank’s right of
recourse may not at any time be extinguished owing to the neglect of any of the
provisions.
Branch Managers must maintain a close personal touch with the customers and other
parties connected with the bill business, apart from periodically obtaining and recording
opinion on the drawers and drawees.
Branches should invariably obtain satisfactory credit reports on all parties from whom
bills are received for purchase/discount except in the case of stray bills and cheques
purchased from parties well known to the bank. In addition, satisfactory credit reports
133
should be obtained on drawees on whom the bills are drawn frequently or on whom bills
for large amounts are drawn. These credit reports should be obtained and reviewed
periodically, say, once in 12 months, and, should be submitted to the concerned
sanctioning authority with relative renewal proposals. Such reports are particularly
necessary in the case of clean bills and DA bills.
Managers must not advance against bills which do not naturally belong to their respective
areas, unless they are authorised to do so, by the appropriate sanctioning authority.
Particular caution should be exercised when bills are offered by parties who are known to
usually conduct such transactions through other banks. In such cases, branches should not
allow any facilities without the concurrence of those banks with whom the parties operate
their bills limits.
When accepted clean Usance bills are to be discounted, it is necessary that the signatures
of the drawees are verified by the discounting branches by calling for the signatures of
drawees duly attested by their bankers on a separate specimen signature sheet to ensure
the genuineness of the signature.
Branches should purchase/discount instruments arising out of genuine trade transactions
or representing legitimate movement of goods/funds only and should never entertain
accommodation bills/cheques under any circumstances.
a) Branches should also satisfy themselves that the bills discounted/purchased
have arisen out of the actual movement of goods and for this purpose, verify
the relative invoices as also the documents like LR/RR and in respect of local
sales, the bills should be supported by either receipted delivery
orders/Challans or invoices receipted by the drawees concerned.
b) It should be ensured that the drawers/endorsers of the bills are in a position to
repay the amount immediately in the event of the bills being dishonoured by
the drawees against whom the Bank has no recourse. However, in the case of
Usance bills that have been accepted by the drawees, bank has recourse on
both the drawee and the drawer.
134
The parties who have bills limits should normally maintain a Current Account/Cash
Credit account with the Bank and the proceeds of the bills should be credited to that
account. The proceeds should not be paid in cash.
It is not necessary that the trade bills must be drawn on the place to which the relative
goods are consigned; the business connection of the drawers or the flow of money may
render other places more convenient or endorsees who may be shroffs or other
intermediaries, may not be directly interested in the transactions. By closely following the
market and the business operations of borrowers, Managers should however be able to
distinguish between genuine trade bills and bills drawn for accommodation purposes.
135
CHAPTER 5
DELIVERY CHANNELS
5.1 ALL DELIVERY CHANNEL OPERATIONS
5.1.1 DEMAND DRAFTS
ISSUE OF DEMAND DRAFTS:
Demand Drafts can be issued by all branches on another Branch / Extension Counter in
India only. Before entering the details in the Application for issue of Demand Drafts, branches
should ensure to note down the correct branch code on which the customer requires the Demand
Draft to be drawn. In those centres where our Bank has established CCOs, the Demand drafts
should be issued only on the CCOs and not on any other Branch. While issuing the Demand
Drafts appropriate exchange has to be collected from the customers and the transaction should be
attached to the Draft transaction without fail. Wherever local drafts are demanded by the
customers, branches connected to CCO should draw the Draft on the CCO only. Other branches
may draw the drafts on themselves and issue the same to the customers.
CANCELLATION OF DRAFTS:
Once a Demand draft has been issued and printed, it can be deleted only by choosing
‘Cancel Draft’ option in the Issue program and should not be paid through the Payment program.
This will create necessary data for marking contra and reconciliation at IBR.
PAYMENT OF DEMAND DRAFTS:
Before proceeding with debiting the instruments, branches should scrutinize the drafts
thoroughly and ensure that the instrument is in order and is genuine onC. Wherever required,
branches can make use of the ‘View Demand Drafts Details’ facility provided in IOBONLINE /
CBS.
Wherever drafts are drawn in a CBS branch, the system will check for existence of the
issue details and in case not found, will give a warning to the user that ‘No such instrument is
found’. The branch where the payment is being effected should take note of such alerts and make
thorough enquiry before effecting payment.
136
Branches are authorized to make payment of only those drafts drawn on them. Drafts
drawn on CCOs, however, can be paid by the branches connected to the respective CCOs
directly using the payment program given for that purposC. Drafts should not be paid by
branches other than those on which the instrument is drawn on.
PAYMENT OF DRAFTS UNDER AGENCY ARRANGEMENTS:
Regional Rural Banks sponsored by our Bank are having arrangements with our Bank to
draw drafts on specific branches of our bank. When such drafts are received for payment, it
should be paid only by those designated branches on which the Draft has been drawn on and
other branches should not make the payment directly through DDR program. In case the
instruments are received at other branches, it should be sent to the branch on which it is drawn
on for realization of proceeds.
DDR PRINTING :
Branches have been provided with a dedicated printer to print the Demand Drafts.
Branches should note to use this facility and issue the drafts in the Printed form only to ensure
against any data mistake. The pre-printed 9 digit Demand Draft Number on the instrument
should be matched with the data before inserting the draft leaf in the printer. Any mistake in this
regard would pose difficulties when the instrument is presented for payment as the issue details
would not match the instrument on hand. After printing the branch is to enter the C.S.No [i.e. the
Check Sum number] on the voucher also for future reference.
BULK DDR ISSUE :
To use the special program for issuance of Drafts in Bulk for valued customers, branch
should ensure to obtain data in the specific format from the customers using which the system
would generate the drafts. Before using the program, branch is to ensure that adequate number of
draft leaves are available with them to print all the drafts. Once the program has generated the
Draft issue details, using the ‘DDR Printing’ program, the branch users should print the drafts
after duly verifying the draft numbers picked up in the screen and the draft leaf inserted into the
printer are same.
137
BULK DRAFT PAYMENT:
Branches can use this facility to pay drafts in bulk when the drafts are drawn favoring the
same customer of the branch and the drafts are drawn on them only. In case the drafts are drawn
on any other branch, then this program should not be used.
5.1.2 CHEQUES
A cheque is a document that orders a bank to pay money from an account. The person
writing the cheque, the drawer, has a transaction banking account (often called a current, cheque,
chequing or checking account) where their money is held. The drawer writes the various details
including the monetary amount, date, and a payee on the cheque, and signs it, ordering their
bank, known as the drawee, to pay that person or company the amount of money stated.
Cheques are a type of bill of exchange and were developed as a way to make payments
without the need to carry large amounts of money. While paper money evolved from promissory
notes, another form of negotiable instrument, similar to cheques in that they were originally a
written order to pay the given amount to whomever had it in their possession (the "bearer").
Technically, a cheque is a negotiable instrument instructing a financial institution to pay a
specific amount of a specific currency from a specified transactional account held in the drawer's
name with that institution. Both the drawer and payee may be natural persons orlegal entities.
Specifically, cheques are order instruments, and are not in general payable simply to the bearer
(as bearer instruments are) but must be paid to the payee. In some countries, such as the US, the
payee may endorse the cheque, allowing them to specify a third party to whom it should be paid.
Although forms of cheques have been in use since ancient times and at least since the 9th
century, it was during the 20th century that cheques became a highly popular non-cash method
for making payments and the usage of cheques peaked. By the second half of the 20th century, as
cheque processing became automated, billions of cheques were issued annually; these volumes
peaked in or around the early 1990s.[1] Since then cheque usage has fallen, being partly replaced
by electronic payment systems. In an increasing number of countries cheques have either become
a marginal payment system or have been completely phased out.
138
In addition to regular cheques, a number of variations were developed to address specific needs
or to address issues when using a regular cheque.
1. Cashier’s cheques and bank drafts
Cashier's cheques and banker's drafts also known as a bank cheque, treasurer's
cheque or banker's cheque, are cheques issued against the funds of a financial
institution rather than an individual account holder. Typically, the term cashier's cheques
are used in the US and banker's drafts are used in the UK and most of the
Commonwealth. The mechanism differs slightly from country to country but in general
the bank issuing the cashier’s cheque or bankers draft will allocate the funds at the point
the cheque is drawn. This provides a guarantee, save for a failure of the bank, that it will
be honoured. Cashier's cheques are perceived to be as good as cash but they are still a
cheque, a misconception sometimes exploited by scam artists. A lost or stolen cheque can
still be stopped like any other cheque, so payment is not completely guaranteed.
2. Certified cheque
When a certified cheque is drawn, the bank operating the account verifies there
are currently sufficient funds in the drawer's account to honour the cheque. Those funds
are then set aside in the bank's internal account until the cheque is cashed or returned by
the payee. Thus, a certified cheque cannot "bounce", and its liquidity is similar to cash,
absent failure of the bank. The bank indicates this fact by making a notation on the face
of the cheque (technically called an acceptance).
3. Payroll cheque
A cheque used to pay wages may be referred to as a payroll cheque. Even when
the use of cheques for paying wages and salaries became rare, the vocabulary "pay
cheque" still remained commonly used to describe the payment of wages and salaries.
Payroll cheques issued by the military to soldiers, or by some other government entities
to their employees, beneficiants, and creditors, are referred to as warrants.
4. Warrants
Warrants look like cheques and clear through the banking system like cheques,
but are not drawn against cleared funds in a deposit account. A cheque differs from a
139
warrant in that the warrant is not necessarily payable on demand and may not be
negotiable. They are often issued by government entities such as the military to pay
wages or suppliers. In this case they are an instruction to the entity's treasurer department
to pay the warrant holder on demand or after a specified maturity date.
5. Travellers cheque
A traveller's cheque is designed to allow the person signing it to make an
unconditional payment to someone else as a result of paying the account holder for that
privilege. Traveller's cheques can usually be replaced if lost or stolen, and people often
used to use them on vacation instead of cash as many businesses used to accept traveller's
cheques as currency. The use of credit or debit cards has begun to replace the traveller's
cheque as the standard for vacation money due to their convenience and additional
security for the retailer. This has resulted in many businesses no longer accepting
traveller's cheques.
6. Money or postal order
A cheque sold by a post office, bank or merchant such as a grocery store for
payment by a third party for a customer is referred to as a money order or postal order.
These are paid for in advance when the order is drawn and are guaranteed by the
institution that issues them and can only be paid to the named third party. This was a
common way to send low value payments to third parties, avoiding the risks associated
with sending cash via the mail, prior to the advent of electronic payment methods.
7. Oversized cheques
Oversized cheques are often used in public events such as donating money to
charity or giving out prizes such as Publishers Clearing House. The cheques are
commonly 18 by 36 inches (46 cm × 91 cm) in size, however, according to the Guinness
Book of World Records, the largest ever is 12 by 25 metres (39 ft × 82 ft). Regardless of
the size, such cheques can still be redeemed for their cash value as long as they have the
same parts as a normal cheque, although usually the oversized cheque is kept as a
souvenir and a normal cheque is provided. A bank may levy additional charges for
clearing an oversized cheque.
140
8. Payment vouchers
In the US some public assistance programs such as the Special Supplemental Nutrition
Program for Women, Infants and Children, or Aid to Families with Dependent
Children make vouchers available to their beneficiaries, which are good up to a certain
monetary amount for purchase of grocery items deemed eligible under the particular
programme. The voucher can be deposited like any other cheque by a participating
supermarket or other approved business.
Cheque book request facilities available through ATMs
When the customer selects this option the request will be sent to the branch where the
customer is having his/her account. The branch has to necessarily go through the request before
the dayend operations of the day.
CHEQUES REALISATION:
Realisation of cheques under expo module can be made through realisation program by
choosing the non-export option. The system generates either individual or consolidated vouchers
for the cheques realised. The user has to choose options other than normal realization of export
bills, non export bills realisation, advance payment, written off and marking returned bills as
unpaid as applicable.
In case of NAD items, the branch should collect the charges separately from the NAD
branch and credit to P &L heads.
For all other instance, the applicable charges such as commission and PTTR should be
recovered from the related customer account.
The transactions relating to other modules are to be posted and passed before invoking
passing option in the expo module.
Unpaid cheques as well as realisation of collection items designated in foreign currency whose
proceeds is received in Rupees can alse be realised in expo realisation program. For items
designated in foreign currency but whose proceeds is realised in rupees the correspondent code
should be given as ‘MISCIN’.
141
CHEQUE TRUNCATION SYSTEM CLEARING (CTS)
Cheque Truncation System (CTS) is an Image Based clearing system introduced by RBI
(Presently at Delhi), which replaces the existing clearing system of Instrument Based clearing.
The purpose of introducing the new system is to:
Reduce the existing time taken for the clearance of cheques for both the local and the
outstation cheques.
Improve the efficiency and quality of the services offered by banks in the area of the
Cheque Clearing– both to customers of banks and for internal improvements in areas such as
clearing reconciliation, risk management, systemic efficiency etc.
5.1.3 WITHDRAWAL SLIPS
Withdrawals normally required the account holder to visit the branch where the account
was held, where a debit slip or withdrawal slip would be prepared and signed. If the account
holder was not known to the teller, the signature on the slip and the authorities would be checked
against the signature card at the branch, before money was paid out. In the 1960s, banks adopted
the black light signature system for passbooks, which enabled withdrawals to be made from
passbooks at a branch other than the one where an account was opened, unless prior
arrangements were made to transfer the signature card to the other branch. Under this system, the
passbook's owner would sign in the back of the passbook in an invisible ink and the signing
authorities would also be noted. At the paying branch, the signature on the withdrawal slip would
be checked against the signature in the book, which required a special ultraviolet reader to
read. Nowadays, customer verification is more likely to be by PIN and commonly from
an automated teller machine.
MAINTENANCE OF REGISTER FOR CASH REMITTANCE / WITHDRAWAL
A Register in the following form should be maintained to record all cash remittances to
and from local banks, remittances to other branches through staff, remittances from other
branches whether through post or staff. There should be separate openings in this register for
inward and outward remittances with columns as under:
142
REMITTANCE : OUTWARD CASH
Date
&time
To
whom
sent
Through
whom
Amount
(Rs.)
Mode of
transport/
Vehicle
Registration
number /
Name of
Driver
Signatures of
staff attending
remittance
and Officer
Joint
custodian
Signature with date, of
Deputy Manager in
token of his / her having
verified the receipt of
the remittance at the
other end
Remarks
(1) (2) (3) (4) (5) (6) (7) (8)
REMITTANCE : INWARD CASH
Date
&
Time
From
whom
Through
whom
Cheque no.
if drawn on
the Bank’s
Account
with local
banks
Amount
Rs.
Mode of
transport/
Vehicle
Registration
number /
Name of
Driver
Signatures of
staff
attending
remittance
and Officer
Joint
custodian
Signature
with date, of
Cashier for
receipt of
money
Remarks
(1) (2) (3) (4) (5) (6) (7) (8) (9)
143
5.1.4 BANK DRAFTS/ BANKERS CHEQUE
A banker's draft is a cheque (or check) where the funds are taken directly from the
financial institution rather than the individual drawer's account.
A normal cheque represents an instruction to transfer a sum of money from the drawer's
account to the payee's account. When the payee deposits the cheque into their account, the
cheque is verified as genuine (or 'cleared', a process typically taking several days) and the
transfer is performed (usually via a clearing house or similar system). Any individual or
company operating a current account (or checking account) has authority to draw cheques
against the funds stored in that account.
However, it is impossible to predict when the cheque will be deposited after it is drawn.
Because the funds represented by a cheque are not transferred until the cheque is deposited and
cleared, it is possible the drawer's account may not have sufficient funds to honour the cheque
when the transfer finally occurs. This dishonoured or 'bounced' cheque is now worthless and the
payee receives no money, which is why cheques are less secure than cash.
By contrast, when an individual requests a banker's draft they must immediately transfer
the amount of the draft (plus any applicable fees and charges) from their own account to the
bank's account. (An individual without an account at the issuing bank may request a banker's
draft and pay for it in cash, subject to applicable anti-money laundering law and the bank's
issuing policies.)
Because the funds of a banker's draft have already been transferred they are proven to be
available; unless the draft is a forgery or stolen, or the bank issuing the draft goes out of business
before the draft is deposited and cleared, the draft will be honoured. Like other types of cheques,
a draft must still be cleared and so it will take several days for the funds to become available in
the payee's account.
144
5.1.5 DEBIT CARDS/ CREDIT CARD
Debit Card Management
Debit card:
Debit Card gives you global access to one’s account whenever and wherever they want.
The Debit Card allows to purchase goods at Merchant Establishments and also gives the freedom
to withdraw cash from ATMs in India and abroad. The customer need not carry cash anymore to
make his purchase and the purchases will be debited to his account instantly.
The cards which were issued for ATM usage were also used for AWB operations. These
cards could be used in the ATMs of IOB / member banks’ of ‘Cashtree’ and ‘NFS’
consortiums. To facilitate our customers with global acceptance of their cards at ATMs,
Merchant establishments and for e-commerce transactions, the Bank has entered into agreement
with VISA and from October, 2005 the Bank started issuing VISA Debit Cards.
At present the Debit cards are issued free of charge. As per RBI directives, any
cardholder can use other banks’ ATM for financial/non-financial transactions in his SB
accounts, free of charge 5 times a calendar month. Beyond 5 times, he will be charged Rs.20
per additional transaction. However, this redate facility is not available for CD/CC account
Cardholders.
When a Debit Card is used in an ATM, POS or for e-commerce transaction; the customer
is expected to maintain required balance in his account. In a Debit card usage, the transaction
will be authorised only after debit to the customer’s account. The transaction will not be
approved if the balance in the account is not adequate. The debit cards are convenient way of
carrying money instead of carrying physical cash.
Eligibility:
The following account holders are eligible for issuance of debit card.
Savings Bank – Individuals – Single, A or S, Minor accounts operated by guardian and
minor students under SB-STUDENT scheme.
Current Account - – Individuals – Single, A or S CD – Proprietary Firms (Card will be
issued in the name of the Proprietor) CC- Individuals – single, A or S with prescribed
minimum balance.
145
Legal persons like Incorporated Companies, Trusts, Partnership firms are not eligible.
In the case of A or S accounts, separate customer id has to be created for each constituent
and cards can be issued in their name. In the case of Cash credit accounts, the customers who
enjoy cash credit limits against deposits and other readily realizable securities (except shares)
for personal purpose are eligible for Debit Cards.
Earlier, in addition to illiterates, the Bank was not extending the Debit card facility to
visually handicapped persons due to the issues involved in their operation of their account
through ATMs. But recently, pursuant to directives from Government of India, the Bank has
decided to extend the facility to Visually impaired customers subject to certain additional
safeguards (MISC / 242 / 2008-09 dated 9.6.08 issued by Management Services Department).
Other conditions:
The Cardholder should maintain the minimum balance prescribed by the bank and failure
to do so will attract penal or service charges as per bank's rules from time to time or withdrawal
of ATM facility to the Cardholder.
The following services are offered free to the customer for application form, processing, issue
of card, drawal or any other ATM transactions such as balance enquiry, wrong entry, wrong try
etc. Cardholders should be advised that the charges for other services may be varied by the
Bank without reference / notice to them.
When an account is overdrawn by the ATM Cardholder, interest on such overdrafts as
prescribed by the bank should be charged and collected as per the instructions in force for
TODs.
During the currency of the ATM card, the SB/CD account of the Cardholder cannot be
closed or transferred to other branch. If the cardholder wants to close his/her SB/CD account,
he/she should surrender the card and give the bank not less than seven working days time from
the date of surrender of the card, for effective closure of the account.
The bank is entitled to terminate ATM facility with immediate effect and the card shall
be impounded upon occurrence of any of the following events.
a. Failure to adhere to or comply with the terms and conditions of ATM facility.
OR
146
b. An event of default under any agreement of commitment (contingent or otherwise) entered
into with the Bank relating to transactions other than the ATM.
OR
c. On the cardholder being adjudicated as insolvent or on the cardholder filing insolvency
petition.
OR
d. Demise of cardholder or any one of the joint account holders.
OR
e. Any other event by which bank concludes that allowing possession of card with the
cardholder is detrimental to the image / interest of the
Bank.
In the case of joint accounts, the obligations of such executants to the agreement will be
joint and several and notice to any one Joint account holders will be deemed effective
notification to all joint holders.
Any notice sent by post to the last known address of the ATM cardholder by the bank
will be deemed to have been received by the Cardholder on the third day of posting.
The Bank reserves the right to disclose any information as may be necessary or
appropriate in connection with its participation in Electronic Funds Transfer Net Work, in strict
confidence, to any other Institutions, for issuance / cancellation of the card, operations in ATMs
and card holder's account with the bank.
The card holder alone should use the ATM Services and will be responsible for all the
transactions effected by the use of the card, whether authorised by the card holder or not and
shall indemnify the bank for the loss or damage caused to or suffered by the bank by any
unauthorised use of the card or the relative PIN.
The card is and will be at all times the property of the bank and delivered to the
Cardholder in trust and shall be returned by him/her to the bank unconditionally and
immediately upon the bank's request. The bank will not be liable for failure to provide any
service or to perform any obligation where such failure is attributable (whether directly or
147
indirectly) to any malfunction of ATMs or the card, insufficiency of cash held in ATM, failure
of power etc.
Application for Debit Card , Personalized and Instacard
The applicant for the ATM Card should apply to the branch in the prescribed application
form F 604(EH) in duplicate after confirming his/her acceptance to and accepting the terms
conditions applicable for ATM facility. The application should be retained at the branch except
except for Student card for which application affixing the photo should be sent to Central
office) and should record the details of application in the ATM application / issue register.
The Bank is issuing two types of VISA Debit cards, Personalised / customized Cards and
Instacards. Personalised cards are cards where the customer’s name is printed on the card and
the card is customised and issued, at the request of the customer, only after submission of
application by the customer, where as an Instacard is a pre-customised card without customer’s
name which is available in dockets, as stock with the issuing branch. These Instacards, which
are non-personalised cards can be issued for all category of customers of CBS branches. Other
than printing of name the functions and usage of both types of cards are similar. Student Cards
are issued to Students of age 16 and above with Photo.
Branch Operations:
The details provided by the customer in the application form from the customer is entered
at branch level, through card master program, which is a part of awb module and ATM option.
The users should familiar with various options viz., Issue, Modify, Cancel, View, Approve,
Status-Marking and Quit.
After the data is entered, the officer shall approve the entry. The data then will be
automatically sent to Central office for further processing and card customization. Data will not
be transmitted unless it is approved by an officer.
On specific request from the cardholder or at the time of closing the account, the card
should be cancelled. Neither a Replacement card nor a new card will be issued to the customer.
Status Marking – Various options for marking status such as Suspended, Lost, Hotlisting,
Damaged and for issue of New VISA Debit cards are available and the user should use
appropriate options as described in the user manual.
148
Safe custody of Instacard Kits have to be scrupulously followed, on the same lines
stipulated in our circular ITEC/1/2006-07 dated 18.6.2006 and COMLET No:4 /2006-07 dated
23.6.2006.
Insta card :
ATM / Debit cards are to be issued on the day of opening account for all category of
customers of CBS branches, whoever do not insist for personalisation. The customer will be
given the kit containing PIN and the Debit Card immediately after opening of account, and the
card will be activated within 24 hours of opening of the account.
Stock will be supplied to the CBS branches in individual sealed covers (kits) consisting
of the Debit Card, PIN Mailer, Terms & Conditions Booklet, User Manual, etc.
The stock received has to be entered in the CBS System through the ‘InstaCard Stock
Maintenance’ program. The above cards, when delivered to the customer after opening of SB or
CDCC account, will get attached to the account, through entry in the revised Card Master
Program.
On receipt of the stock, the Officer-in-charge of ATM cards has to physically count the
number of Kits received and ensure the correctness of the stock supplied to the branch. The kits
should not be opened by any branch staff, and has to be intact at the time of delivery to the
customer.
The details of the stock received, namely starting kit number, ending kit number, count,
received from branch are to be entered in system by the officer- in-charge of the ATM cards
using ‘InstaCard Stock Maintenance’ option. InstaCard Stock Maintenance application consists
of Receive and View options and user should get familiarized with these options as detailed in
User manual.
In the eventuality of the branch finding any missing kits in the stock received, or any kit
damaged, the user is to use the option ‘Receive’ and enter the number of missing / damaged
cards individually with the respective status as detailed in the user manual.
The branches have to monitor the stock and have to raise the indent well in advance to
Regional Office, with a copy to card division of Transaction Banking Department for getting
149
fresh stock of Instacard Kits. Branches can not take Kits from other nearby branches as it is
validated at the central database.
Customized card:
Once the service provider completes card customisation, the cards relating to each branch
are sent directly from the service provider to the respective branches through courier service.
After dispatch of cards to branches, the individual Pin mailers with the related welcome letter,
Terms & Conditions booklet and charges details are dispatched by the service provider directly
to the customer, through speed-post services.
The customer on receipt of PIN mailer has to collect the Debit Card from the Branch
where he is having his account. In case the customer has not received his pin mailer, branch
should obtain a written request for generation of new pin mailer, deliver the card to the customer
and send his request for re-generation of PIN by lodging complaint in IOBONLINE. On receipt
of the request, ATM section at Central Office will generate a new pin and send it to branch for
delivery to customer.
Receipt of customized cards
On receipt of the Debit cards consignment from the card customising service provider,
the branch has to verify and confirm correctness of the physical cards received with the dispatch
list from the service providers. Immediately after receipt of cards, the branch has to enter the
card details in the related register. The guidelines for reducing operational risks in handling of
ATM / Debit cards is advised vide the Common Letter 4 / 2006 – 07 dated 23.6.2006 issued by
IT Department.
Delivery of card
Branches have to deliver the Debit card to the cardholder after proper identification,
against his acknowledgement in the ATM / Debit card register. Branch has to advise and ensure
that the customer signs his signature at the specified place on the reverse of the card. Branches
should not under any circumstance deliver the card without the customer signing at the reverse of
the card, or, to any other person including the joint account holder.
150
Branch should never ask the customer to hand over the card, except in cases where the
ATM rejects the card immediately on insertion (without even prompting for the PIN). Branches
should collect the card and send it to CARD DIVISION TBD for verification of the encoding on
the magnetic stripe. The status of the card should be marked as Suspended immediately on
receipt of the card from the cardholder and before sending it to TBD.
Branches should not insist on production of evidence for having received the PIN mailer
before handing over the card. A format of the register to record the receipt / delivery of Debit
cards / PIN at the branch is enclosed (Annexure I).
In the case of NRIs where a foreign address is provided, branch should first send the card
through a courier. On receiving their confirmation that card has been despatched, Transaction
Banking Department will send the PIN mailer also to the branch for onward transmission to the
foreign address through a separate courier.
As a precaution, at the time of delivery of Debit Card itself, the customer should be
advised of the importance of the PIN, and should be advised of the safety measures he/she has to
take like
Not retaining PIN with the card, so that anybody other than the customer, who gets
access to both the card and PIN can withdraw cash through any ATM.
Always change the PIN through PIN change option available in the ATM, after the first
transaction using the original PIN.
Always to retain the PIN only in memory and not to retain it in physical format.
Other precautions as per the Terms & Conditions booklet issued with each Debit card.
Activation of Card
In the case of both personalised cards and non-personalised Instacards the customer
should be advised to make the first usage of the card in an ATM of our Bank or a consortium
member Bank. With the first successful PIN verification the card gets activated, and only
thereafter the card can be used for merchant transactions. This precaution is required to ensure
that both the card and PIN mailer are properly received by the applicant customer. Any attempt
151
to use the card at POS machines or for online transactions will fail if the card is not used for the
first time in an ATM.
Card security measures:
The Debit card and PIN mailer for that card should not be held at the branch at the same
point of time under any circumstances, except where specifically authorised by Central Office.
At the time of applying customers should be told to provide their current address and
other contact details including mobile numbers, following all the KYC guidelines. These details
are to be entered, counter-checked and approved in the system and these forms are to be retained
at the branches and filed with the ATM / Account opening forms. This shall address the problem
of PIN mailers being returned undelivered for want of correct / complete mailing address of
customers.
Whenever the VISA Debit Cards / PIN mailers / Instacard Dockets, Student Cards are
received, till delivery of the same, to the customer, they should be preserved under safe and dual
custody at branch level. The cards / PIN / Dockets are equivalent to security items and should be
preserved in the safe room not accessible to anyone other than the custodians of the above items.
Re-issuance of PIN
The PIN generated for a Debit Card is not stored anywhere in the system, and hence in
the event of the customer not receiving / forgetting the PIN, only a fresh PIN has to be generated
in the system and sent to the customer. Such requests are chargeable as prescribed.
Original PIN not received by customer
The PIN dispatched through Speed post is not received by the customer due to the
following reasons.
The branch is not entering the correct and full address of the applicant with pin code
number in the respective fields at the time of entering the application.
The customer has shifted his/her residence and not informed the Bank
152
The customer not available at the time of the visit of the Delivery person and has not left
any information.
Normally the postal authorities leave a notice in the case of speed-post to the addressee
informing the consignment, and the customer has not taken enough care to collect the
same.
In all the above cases the PIN mailer is returned undelivered to Transaction Banking
Department. In such cases branches need not to mark a request for Re-PIN. Instead they should
deliver the card to the customer observing all usual procedures and report to Transaction
Banking Department through IOBONLINE -BRANCH PRODUCTS- CBS/ATM Helpdesk-
ATM Complaints to ensure that at no point of time both the card and PIN mailer remain with the
branch.
On receipt of confirmation from the branch regarding delivery of the card to the
customer, a Re-PIN will be sent to the branch, for delivery to the customer. The branch should
observe prescribed procedures in delivering the PIN-mailer to the customer, against due
acknowledgement.
PIN forgotten by customer
When a customer has forgotten his PIN and has keyed wrong PIN in any ATM for more
than 5 times his card will be blocked temporarily. In the event of the customer being able to
recollect his PIN, then, if taken up with Transaction Banking Department-ATM Help-Desk, the
blocking can be reset.
But, when the customer has forgotten his PIN and is not able to recollect, then only a
New PIN has to be issued to him for further operations. In this case the branch has to mark the
Re-PIN request through the status changing option as detailed in user manual as well as make a
complaint through IOB ONLINE-BRANCH PRODUCTS-CBS/ATM Helpdesk- ATM
Complaints. On receipt of modified data a Re-PIN will be generated to the card and will be sent
to the customer. Once Re-PIN is generated the card status at branch level will get restored to
active. Branch should not keep on marking the status again and again, since this will lead to re-
generation of PIN again and again.
153
Replacement Cards
Replacement cards are issued in lieu of VISA Debit Cards reported Damaged or Lost.
The cards are issued with a different card number and are issued with a revised validity period. A
new PIN also will be generated for the card and the PIN will be sent to the customer while the
card will be dispatched to the branch. On receipt of PIN mailer, the customer has to collect the
Card from the branch. Any status changing process first takes the user to the address columns of
the customer, the correctness of which branch has to ensure before marking the status. This will
avoid any delay in delivery of the PIN mailer to the customer. Even for Instacards the
replacement cards will be only by way of Personalised cards.
Lost card
Whenever a Debit Card or ATM card is reported lost the branch has to act up on the
instructions immediately, by marking the appropriate status as detailed in the user manual to
avoid the lost card being misused in any merchant establishments or for any online transactions.
Even if the customer reports the loss of the card over phone, the branch has to immediately act
on the complaint by marking the status of the card initially as suspended.
In the case of Suspended status, if the customer is able to trace the card, the branch itself
can reactivate the card by changing the status appropriately, and In the case of card being
confirmed Lost, branch has to mark the status as lost as detailed in the user manual. If the
customer calls in person and reports the loss of his / her Card, then the branch can directly mark
the status as Lost as detailed in the user manual. For such cards, where the status is marked as
lost, a replacement card will be issued to the customer. The branch should have a register to
record such cases of card reported Lost or Damaged, and record the date and time of receipt of
such communication from the customer. In the case of written complaints due acknowledgement
should be given to the customer with date and time of receipt of such intimation.
Damaged Card
Whenever a card is reported ‘Damaged’, the branch has to get the damaged card and
destroy it in the presence of the customer, and mark the status as Damaged through the card
master program as detailed in user manual. On receipt of data from branch, the replacement card
and PIN will be generated and the PIN will be sent to the customer and card will be sent to the
branch in usual course and the cards should be delivered as discussed above in A.8.
154
Cancellation of Card
This option to cancel a card should be used by the branch only when the customer wants
to surrender his card once for all, or when the customer is closing his account with the branch.
The account will be permitted to be closed only when the card is cancelled. Once card is
cancelled thereafter the customer is not eligible for any card facility in that particular account.
Suspension of Card and Re-activation
This option to Suspend the card can be used in situations as explained in A.12.1 when
initial oral complaint is received on loss of card. This option can also be used to temporarily stop
the customer withdrawing money from the account. This is the only option where the branch
itself can re-activate the card by changing the status appropriately as detailed in user manual.
Overdraft due to Debit of Charges
The customer is allowed to withdraw the entire balance in his account using his VISA
Debit Card. On rare occasions due to the charges debited to the account if the transaction has
taken place in other bank ATMs, then the balance may result in overdraft when the charges are
debited to the account. In such cases the overdraft has to be treated like regular overdraft and the
branch should take steps as in normal course to contact the customer, to regularise the account,
and advise him to keep adequate balance in his account before withdrawal. In case the customer
is not regularizing the account, the branch is in order in temporarily suspending the card to avoid
further debits due to charges on continued attempts by the customer, in other bank ATMs, for
balance enquiry etc..
Daily limits of card:
Daily limits on the use of the Debit Card at ATMs and Merchant Locations is at present
as follows:
Usage at ATM: between Rs.20,000/- and Rs.50,000/- as recommended by the branch
Usage at merchant establishments & internet (jointly) Rs.50,000/- (per day)
Charges associated with the card.
155
Issue of New Cards No charges
Renewal of Cards No charges
Annual Fee No charges
Re-issue of Lost / Stolen / Damaged Card Rs.100/-
Re-issue of PIN Rs.20/-
For transactions at InstaCash ATMs / VISA /
Plus ATMs / Other shared ATM Network
(Cash Tree and NFS)
For transactions at InstaCash ATMs /
VISA / Plus ATMs / Other shared ATM
Network (Cash Tree and NFS) –
No charges upto 5 transactions for SB
customers
For usage at Merchant Establishments No charges
For usage at Petrol Pumps Surcharge of 2.5% of transaction amount or
Rs.10/- (whichever is higher)
For usage at Railway Stations Surcharge of 2.5% of the transaction amount
For SB Account holders For SB a/c cardholders, First 5 transactions
(Financial and Non-financial txns viz.
Balance enquiry/Pin change etc) in a
calendar month is free of charge. For
subsequent txn charges will be Rs.20/- per
such txn. For CD and CC account
Cardholders, all txns are charged at Rs.20/-
156
per txn from the first txn itself
Renewal of ATM Card:
If the ATM transactions put through by any Card holder is unsatisfactory, viz., frequent
overdrawals, discrepancies in cash deposits etc, the branch concerned should submit a detailed
Report to the ATMCC at Central Office. This information should be given, to ATMCC in
advance at least one month before expiry date.
On expiry of validity period, the ATM Division, ITD, Central Office will renew the card
automatically unless any information of unsatisfactory operations by cardholders is received
from the branches as above.
Help Desk & Complaints
Any complaint regarding ATM is to be lodged with the ATM Help Desk at Transaction
Banking Department on all days through 24/7 basis. Also the complaints can be routed to the
Service Providers Help desk number given in the Debit Card for assistance and marking the
status. Though action will be taken based on oral complaint, in all cases the customer should be
advised to confirm his complaint at the branch, in writing, on the following working day.
5.1.6 INTERNET BANKING
Introduction:
1. Our Bank is offering Internet Banking services since 2000. The services can be accessed from
the site www.iobnet.co.in or by clicking on ‘Internet Banking’ link in www.iob.in
2. The facility enables customers to transact online with the bank. Online transaction can be done
from anywhere at any time of the day through Internet. While it facilitates the customer to
transact online with the bank, the branch staff should take care to ensure that the guidelines,
systems and procedures in activating an account are followed meticulously.
3. The following services are currently offered under Internet Banking:
View of Balance in account
157
View of Last few transactions
Generate statement of Account for SB/CDCC/Liquid Deposit/Civil Pension accounts
Search Cheque Paid Status
Viewing of Recurring Deposit/Loan /PPF Accounts
View of Form 26AS Tax Details
Transfer funds from SB, CD or CC account to another SB, CD, CC, Loan or Deposit
accounts within the bank on the same day or on a future scheduled date within 30 days
Transfer of funds to accounts with other banks through NEFT mechanism on the same
day or on a future scheduled date within 30 days
Block IOB Debit cards
Opening of new Deposits
Pay the following taxes
Indirect taxes (Excise and Service taxes)
Direct tax (TDS and Income Tax dues, etc.)
Customs Duty
Kerala/Maharashtra/Tamilnadu VAT
Pay Tamilnadu Electricity bills
Pay fees for SASTRA college
Port Trust Payments of Kandla/Chennai/Visakapatnam/Cochin ports
Pay the IOB Credit Card dues
Utility Payment facility by tying up with M/s Bill Desk,M/s TechProcess, M/s
CCAvenue, M/s Times of Money Ltd wherein Customer can remit money to utility and
other merchants.
Examples of such remittances are as follows:
1. Insurance dues to LIC of India , HDFC , Max Newyork Life etc
2. Telephone bill payments of BSNL, MTNL, Airtel ,Vodafone, Tataindicom and
most other
3. Cellular companies.
4. Book air tickets, hotel rooms, etc., through popular travel sites like yatra.com etc.
158
5. Purchase of units in select mutual funds
Eligibility
1. Individuals and Corporate customers of networked branches are eligible for availing
Internet Banking services.
2. Proprietary concerns are treated as individuals.
3. Corporate customers will include Limited Companies, Partnership firms, Trust, Society,
Association etc where the operation of the account is entrusted to a specific person/
persons by the Corporate/partnership firm/Trust/society/Association. These customers
should register only through ‘Corporate Banking’ module.
4. The Customer should comply with KYC and AML norms. The Customer should have a
unique Customer id.
5. In the case of individuals (or proprietary concerns) the mode of operation of the account
should be ‘Single’ or ‘E or S’ or ‘Any One or Survivor’.
6. If the account is operated ‘JOINTLY’ or if the account holder is a minor, Internet banking
services cannot be given except for SB-Student accounts.
7. The customer should be aware of the risks involved in operating an account through
Internet. If the customer is ignorant of Internet (for example if he/she is an illiterate), do
not offer the facility to the customer.
8. If an account holder has more than one account, he/she can register all the accounts under
the same login-id. However an account holder cannot add accounts that are not in his
name. Accounts in the names of Minors and jointly operated Accounts are not eligible
for Internet Banking facility.
Individual Customer
1. Individuals and proprietary concerns will come under the category of Individuals.
2. The customer has to register online for the services (through www.iobnet.co.in or
www.iob.in ).
3. The customer can register only the accounts he is authorized to operate in his individual
capacity.
159
4. To operate the account through Internet Banking, each individual will have a unique login
id selected by him during the registration process.
5. The user is expected to have a customer-id in the branch system.
6. Individuals have to submit to the branch the registration form duly signed.
Branch Operations
1. Branch should exercise due caution before activating the accounts for internet banking.
Before approving the login-id /user-id of customer of internet banking, due diligence has
to be done by the branches. Once the internet banking login-id is tagged to an account,
the owner of the login-id will be able to access the details of account over internet and
will also be able to transfer funds from the account.
2. Branch should ensure that at no cost a person is allowed to access an account that he not
entitled to. In the case of corporate accounts it should be ensured that the customer does
not club his personal account under the same login id.
3. Accounts, which need constant monitoring can be extended internet banking facility
without the fund transfer facility. Funds transfer facility can be extended to Corporate
who have good track record.
4. Registration form should be submitted by the applicant. If the applicant is a corporate,
document as stipulated in 3.8 above should be submitted.
The procedure is as follows:
1. Go to IOBONLINE
2. Click on Branch Product
3. Click on Esee-Banking Branch Admin
4. Enter branch code, roll no and password (Used in CBS) and click on submit
5. From the menu displayed, select ‘Individual login’ or Corporate Login’ as the case
may be.
6. From the option displayed below select ‘Approve Account’
160
7. Enter the Login-id/ User-id as given in the application form and submit the request for
the activation.
The login-id /user-id is case sensitive and should be entered exactly as given in the registration
form failing which the account may not be activated. Once the login-id / user-id is entered in the
system and the account is activated, the registration forms and other forms (Resolution, Letter of
Authority, Fund transfer Authorization Form, etc.,) have to preserved as a permanent record and
will be subjected to audit.
Cancellation of Internet Banking Services
1. The Internet banking services offered can be terminated on a request from the customer.
This option will be applicable in cases like when the customer does not require this
facility, when a user operating a corporate account is no longer associated with the
company; and such other cases. The bank may also terminate the facility if it feels that
the customer is misusing the facility.
2. In such cases, the branch has to delete the entry for the account in the branch system by
going through AWB Menu -> Card Master -> Wap option.
3. On Deletion of the entry, the entry in the central system will also be deactivated and the
user will not be able to use Internet Banking services thereafter.
Modification of login-id.
1. The details entered in the CBS system may have to be modified in the following
circumstances
Change of login ID
To be enabled/disabled for funds transfer
2. In case of change to the login id or change of status of funds transfer, branch has to
choose the Modify option under Card Master-> WAP option.
161
5.1.7 MOBILE BANKING
Introduction:
Our Bank is offering Mobile Banking services since July 2009. The services can be
accessed from the mobile by typing www.iobnet.mobi in their mobile browser or by
downloading Java Based Application (J2ME) from www.iobnet.mobi/j2me or by clicking on
‘Mobile Banking’ link in www.iob.in
The facility enables customers to transact online with the bank using their mobile phones.
Online transaction can be done from any where at any time of the day through Mobile phones.
While it facilitates the customer to transact online with the bank, the branch staff should take
care to ensure that the guidelines, systems and procedures in registration process, activating an
account, modification of vital information like mobile number, Reset PIN are followed
meticulously.
The following services are currently offered under Mobile Banking:
View Balance in the account
View Last few transactions
Search Cheque Paid Status
Viewing of Deposit/Loan Accounts Balance
Transfer funds from SB, CD or CC account to another SB, CD, CC, Loan or Recurring
Deposit accounts within their own accounts or within the bank
Transfer of funds to accounts with other banks through NEFT mechanism
Interbank Mobile Payment Service(IMPS) – Instant Interbank Funds transfer
M-Commerce Transactions like Air Ticket Booking and Movie Ticket Booking. After
making the purchase online, the customer is brought to our site for effecting transfer of
funds.
1. Credit Card payments
2. Past 24hrs financial transaction
3. Branch Locator
4. ATM Locator
162
5. Suspend ATM/Debit Card
6. Loan Payment History (last few)
7. DEMAT Registration (IOB)
8. DEMAT Holding Enquiry
9. DEMAT Script Enquiry
10. DEMAT Statement
11. DEMAT Bill Enquiry
12. DEMAT Holding Alerts
Eligibility
Individual customers of branches are eligible for availing Mobile Banking
services.Proprietary concerns are treated as individuals.
Corporate concerns are currently not eligible for availing Mobile Banking Services.
The Customer should comply with KYC and AML norms. The Customer should have
a unique Customer id.
In the case of individuals (or proprietary concerns) the mode of operation of the
account should be ‘Single’ or ‘E or S’ or ‘Any One or Survivor’.
Mobile banking services are not available if the account is operated ‘JOINTLY’ or if
the account holder is a minor.
The customer should be aware of the risks involved in operating an account through Internet or
through SMS or through Mobile(GPRS). If the customer is ignorant of those channels (for
example if he/she is an illiterate), do not offer the facility to the customer. If an account holder
has more than one account, he/she can register all the accounts under the same login-id provided
the customer id is same. However an account holder cannot add accounts that are not of the same
customer id.
163
Registration
Mobile Banking request form is available with the branch or the customer can download
the form from the Bank’s website http://www.iobnet.mobi/customer under the link “How to
Register”.
Customer has to fill in the application form and submit to the branch after duly signing it.
The customer can register only the accounts he is authorized to operate in his individual capacity.
Branch has to make an entry in Mobile Banking Registration menu in CBS Application and the
same has to be approved by another officer in the branch.
On successful registration by the branch, Customer will receive two SMS messages. One
message contains the customer’s User Id (his customer_id by default) and the other message
contains link for Downloadable Java (J2ME) application. User id can be changed by the
customer later on by logging into Mobile Banking site www.iobnet.mobi/customer from their
PC.
After receipt of SMS messages, there are three ways of getting started:
IOBMobile Using text (SMS) message
IOBMobile using GPRS
IOBMobile using J2ME
Mobile PIN (MPIN) will be generated automatically and the PIN mailer will be
despatched to the Customer’s address directly. On receipt of MPIN, Customer can change their
PIN number of their choice for security purpose by logging into Mobile Banking using the User
id and the password provided to him. Where the customer has account in more than one branch,
they can register all the accounts provided they have the same customer id.
Branch Operations
Branch should exercise due caution before activating the accounts for Mobile banking.
Before approving the user-id of customer of Mobile banking, due diligence has to be
done by the branches. Once the Mobile banking User-id is tagged to an account, the
owner of the user-id will be able to access the details of account over mobile and will
also be able to transfer funds from the account.
164
Branch should ensure that at no cost a person is allowed to access an account that he not
entitled to.
Accounts, which need constant monitoring, can be extended Mobile banking facility
without the fund transfer facility.
Registration form should be submitted by the applicant. For Either or Survivor and
Anyone or Survivor accounts, letter of mandate duly signed by the joint holders has to be
submitted by the applicant along with the application form. The letter of mandate for
Mobile Banking form is available in the second page of the application form.
Procedure to make an entry in Mobile Banking Registration is as follows:
Select sb Module
Select Mobile Banking Registration
Select Add option
Enter the customer id of the customer
Account particulars(Branch, Account type, Account number)
Mobile Number
Email Id (optional)
Service Type (Query only, Funds Transfer(own/within bank/full)
Funds Transfer – Daily limit
Fund Transfer
At the time of registration the customer has to mention the total transaction limit for the
day if he requires funds transfer. This information is available in the registration form which is
submitted by the customer to the branch. Branch can then allow or disallow fund transfer in the
branch system after entering the customer id of the customer at the time of registering the
account through CBS Menu.
A customer opting for the fund transfer will be get a daily limit of upto `50,000/- per day
and `2,50,000 per month for SB and CDCC accounts. The customer can transfer funds upto this
amount each day. Branch can use its discretion and increase this amount if requested by the
customer. To increase or decrease the daily limit, branch has to use the Mobile Banking
165
Registration menu given in CBS on written request from the customers. But Reserve Bank of
India has prescribed a maximum daily limit of Rs.50000/-.
Funds transfer option can be enabled at the discretion of the branch. Depending on
circumstances, (like a CC account under watch category account), branch can deny fund transfer
facility to the customer.
Unsubscribe Mobile Banking Services
The Mobile banking services offered can be terminated/unsubscribed/Withdrawal upon a
request from the customer. This option will be applicable in cases like when the customer does
not require this facility, and such other cases. The bank may also terminate the facility if it feels
that the customer is misusing the facility.
In such cases, the branch has to unsubscribe the registration for the account in the branch
system by going through Mobile Banking Registration menu in CBS with option “Withdraw
Facility”.
On Withdrawal of the entry, the entry in the Mobile Banking system will also be
unsubscribed and the user will not be able to use Mobile Banking services there after.
Modification of login-id.
The details entered in the CBS system may have to be modified in the following circumstances
Change of Mobile number
Change of Email-id
To be enabled/disabled for funds transfer
In the case of any change 0f the mobile number or change of status of funds transfer,
branch has to choose the Modify option under Mobile Banking registration menu in CBS.
166
5.2 KEY ISSUES
Common errors to be avoided by the branches / Customers
During registration, branch should check whether the customer has chosen the correct branch,
account type and account number as well as daily transaction limit with the application form.
The branch officer who processes the forms should sign them.
Branch should
Verify that the customer fills up and indicate the per day limit for funds transfer. If the
per day limit is blank or entered as zero, then only Query services should be enabled for
the customer.
Request the users to get their account normalized before requesting for Mobile Banking
services as dormant/inoperative accounts cannot be enabled for Mobile Banking.
Verify that customer has signed the application form.
Select the customer-id of the person who has registered for Mobile Banking and the
wrong customer-id should not be selected while enabling Mobile banking.
The Letter of Mandate for mobile banking should be signed by all the joint holders.
Branch should disapprove the accounts which do not belong to the customer in his
individual capacity
Discourage having multiple user id for same mobile number
Branch should educate the customers of the facilities available and to keep their MPIN
secret and change MPIN periodically.
Administration activities for Mobile Banking Help Desk at Transaction Banking
Department
Mobile Banking Help Desk has been provided with Mobile Banking Administration module
using which the following activities can be performed by the officers of the Help Desk.
Activate/Deactivate Mobile Banking
Resetting MPIN on customer’s request. MPIN will be generated and PIN mailer will be
sent to the customer’s address.
167
Approval of Payees (Within IOB, Interbank(NEFT), IMPS)
Reactivation of J2ME (Java Based Application)
Creation of new Operators in Administration module.
Monitoring of transactions
Master Maintenance(Branch/ATM/IFSC etc)
Campaign Management (SMS/Email)
DEMAT Account – Authorise/Approve (by Depository)
Pushing the mobile banking registrations from CBS to Mobile Banking Server
Monitoring SMS delivery
168
CHAPTER- 6
AGENCY SERVICES
6.1. PAYMENT AND SETTLEMENT
CASH PAYMENT / RECEIPT
The cash balance will ordinarily consist of nothing but notes and coin. In the event of any
cash payment being made or any cash deposit being received after the cash books have been
closed for the day , the relative vouchers must be entered the same day in a Register labeled as
''Late Payment and Receipt Reference Register". The entries in this Register should be made by
the Cashier and each such entry should be authenticated both by the cashier and the Deputy
Manager or an Officer not below the rank of Deputy Manager authorized by the First Line
Manager who is verifying the closing cash for the day. Any deviation from this instruction will
be regarded as a serious offence.
6.2. RTGS AND NEFT
6.2.1. RTGS (Real Time Gross Settlement)
RTGS is a funds transfer mechanism where transfer of money takes place from one bank
to another on a 'real time' and on 'gross' basis. This is the fastest possible money transfer system
through the banking channel. It is operated and supervised by the Reserve Bank of India and the
payment is taken as final and irrevocable. Settlement in 'real time' means payment transaction is
not subjected to any waiting period. The transactions are settled as soon as they are processed.
'Gross settlement' means the transaction is settled on one to one basis without bunching with any
other transaction. The settlements are on real-time basis for gross amounts (as different from
“net” amounts) viz., transaction-by- transaction, that are in queue for a given day.
169
OPERATIONAL INSTRUCTIONS
The functional process of RTGS System involves the roles of Remitting / Receiving
branch of our Bank, Paying / Receiving Branch of other bank and Treasury Domestic
Department /ITB.
Concepts of RTGS
In order to send / receive a RTGS message the remitting bank / branch and the receiving
bank / branch should be participating in RTGS.
Under RTGS, the settlement is on Real Time basis G.C., instant credit for the Gross
amount (as against “net” balance method).
The payment instructions between banks are processed and settled individually and
continuously throughout the day by computer-enabled processing and messaging system.
The Payee banks (and their customers) receive funds with certainty and such credits are
insulated fully against the risk of “return” due to insufficient funds, etc.
Both bank-related and customer-related transfer of funds (remittances) between banks
takes place by way of exchange of messages through RBI who will operate the RTGS
transactions on day-to-day basis through a special “Settlement Account” of each
participating bank.
The RTGS system is primarily for large value transactions. The minimum amount to be
remitted through RTGS is Rs.2 lakh. There is no upper ceiling for RTGS transactions.
The transaction messages exchanged between banks are encrypted by digital signatures
ensuring a high level of security in transmission ensuring confidentiality and authenticity.
Remittances to accounts of beneficiaries/ NRE accounts Maintained in India
Since a good number of cross border remittances are also routed through RTGS, the
following guidelines are applicable to enable smooth flow of remittances to accounts of
beneficiaries/ NRE accounts maintained in India.
Only foreign inward remittances and debits originated from NRE accounts in India are
eligible for credits in NRE accounts.
170
Thus, while Branches originate such a transaction, the originator must ensure that funds
are either received from abroad or a NRE account maintained in India is debited before
the transaction is originated.
For appropriate AML/KYC related due diligence, the receiving bank may request sender
details from the sending bank on a later date for a proper audit trail and the sending bank
must provide the sender details to the receiving bank.
6.2.2. NEFT (National Electronic Funds Transfer)
National Electronic Funds Transfer (NEFT) system is a nationwide funds transfer system
to facilitate transfer of funds from any bank branch to any other bank branch and was introduced
by Reserve Bank of India.
NEFT is complementary to Real Time Gross Settlement (RTGS). The main functional
difference between RTGS and NEFT is that the settlement in RTGS is on a gross basis while that
of NEFT will be on a net basis in batches.
The system uses the concept of centralized accounting system and the bank's account,
which is sending or receiving the funds transfer instructions, gets operated at one centre, viz,
Mumbai only. The individual branches participating in NEFT could be located anywhere across
the country. The detailed list of branches of various banks participating in NEFT system is
available on RBI’s website.
The beneficiary gets the credit on the same Day or the next Day depending on the time of
settlement
The work flow of NEFT REMITTANCE
The parties to a funds transfer under NEFT system are the sending bank, the sending
branch, the sending Service Branch viz. RTGS/NEFT cell under Transaction Banking
Department, C.O., the NEFT Centre (at RBI, Mumbai), the receiving Service Branch and
the beneficiary branch.
The remitting customer shall submit an NEFT Application Form authorizing the sending
bank to debit the sender’s account and transfer funds to the beneficiary specified in the
171
NEFT Application Form. The sending branch will prepare an electronic message and
send it to its Service branch.
All such messages are consolidated and submitted to NEFT Centre (National Clearing
Cell of RBI at Mumbai) through SFMS. NEFT Centre consolidates all NEFT Data Files
received from the participant Banks and shall process the data and generate SFMS
Messages to the beneficiary Banks. The SFMS messages generated will be sent to the
Service Centre of the destination banks by NEFT Centre.
On receipt of SFMS messages from NEFT Centre, the receiving Service Branch shall
credit the beneficiaries account through SFMS or through some other Straight Through
Processing (STP) mechanism.
Upon credit to beneficiary account the other bank will send an acknowledgement
message (N10) based on that our bank will send a SMS/Email to the mobile number or
ID given at the time of originating outward NEFT. A message which is neither
acknowledged nor returned unaffected within subsequent two batches is treated to have
been completed. Hence, it is vital that branches have to either accept or return the
transaction within two hours of receipt itself.
If the beneficiary specified in the sender’s payment order fails to get payment through
NEFT system for some valid reasons, and then the sender shall be informed immediately
after the sending bank gets the returned NEFT. The amount should be re-credited to the
account of the sender.
Presently, NEFT is settled in ELEVEN batches at 0900, 1000, 1100, 1200, 1300, 1400,
1500, 1600, 1700, 1800 and 1900 hours on weekdays and 0900, 1000, 1100, 1200 and
1300 hours on (FIVE batches) Saturdays. Each batch will be settled on a net basis by
RBG. The net credit / debit will be accounted for in the individual Banks’ RTGS
Settlement account. RTGS Cell, Transaction Banking Department, Central Office will
monitor the transactions made through NEFT system.
The beneficiary gets the credit on the same Day or the next Day depending on the time of
settlement. Where the batch settlement is not the last batch of the day, the amount will get
credited to the beneficiary’s account on the same day. Where the settlement is done on
the last batch of the day, the amount may be credited on the same day itself or latest
before 11.00 AM of next day.
172
NEFT is a PKI-enabled (Public Key Infrastructure) application which ensures that the
messages are transmitted in a highly secure mode with features of Privacy, Authenticity,
Integrity and Non-repudiation built in.
There is no value limit for individual transactions.
Any transaction initiated after a designated settlement time would have to wait till the
next designated settlement time.
Operational Instructions for branches
The branches should exercise utmost care in putting transactions through NEFT as funds
can be transferred to any Bank, anywhere in the country in near Real Time.
All networked branches are enabled for NEFT. Customers having SB or CD or CC
accounts in these branches will be able to transfer to or receive funds from other NEFT
participant Banks.
Each NEFT enabled branch will be identified by a unique code called as ‘Indian
Financial System Code (IFSC). The branch should verify that the IFSC Code of the Bank
branch, name of customer, account type, account number of the remitter is filled in the
prescribed application as given in annexure.
An outward remittance instruction given by the customer cannot be revoked once it is
executed by the branch.
Remittances can’t be sent abroad using NEFT except Indo-Nepal remittance system.
Transactions can’t be originated to receive funds from another account.
Funds can be sent / received from / to NRI accounts, subject to applicability of provisions
of FEMA.
The remitting customer can track the remitting transaction through the remitting branch
only, as the remitting branch is aware about the status of the remitted transactions.
173
General
Before ‘day-end’ Branches to ensure that all outgoing and incoming entries have been
properly accounted for.
Branch should indicate the reasons for NEFT returns properly citing the exact reasons.
Branch should confirm that NEFT returns should be processed in the system only and
sent back by the very next settlement. Returns outside the NEFT system should be strictly
avoided.
Once the customer account is debited, the transactions should leave the branch for the
next available settlement.
Any transactions originated after the last settlement batch should be settled in the first
batch of the next working day.
All the inward transactions should be credited to the customer’s account within two hours
of the settlement.
Branches should make arrangements to inform customers on the NEFT credit through
some means such as SMS alert or e mail.
Branches should ensure credit to beneficiary's account on the same day of NEFT
settlement in respect settlement taking place up to 6p.m. With regard to 6 p.m. to 7 p.m.
batch settlement, the credit should be afforded to the accounts of beneficiaries latest by
next day morning 11.00a.m without any delay.
Branch should note to exercise utmost care on an on-going basis in adhering to the
mandatory time-schedule prescribed by RBI for transmitting NEFT credits to the
accounts of beneficiaries.
In the event of delay beyond two hours in crediting funds received through NEFT to the
beneficiary-customer's account, branches are required to arrange for payment of
compensation at the current REPO + 2% interest rate without waiting for receipt of claim.
In the case outgoing NEFT remittance, branches should ensure that the Customer's
account is debited only on the day our Bank's account gets debited at RBI and not earlier.
174
Reports
At the end of the day, Branch has to generate Reports of outward transactions, inward
transactions, and outward rescheduled transactions. These reports should be verified with the
day’s vouchers.
The branch should also ensure that the status of all the transactions is ‘Completed’ and if
any transaction is in any other status, branch has to immediately take up with RTGS Cell,
Transaction Banking Department, Central office and satisfy themselves about the correctness of
the transaction.
Branches are aware that in respect of inward NEFT/NECS/ECS remittances, wherever 15
digit account number is available, system will credit the account through straight through
processing (STP).
In this process, branches are required to do post-credit verification of the credits
processed through STP and ensure correction. For this purpose, separate report is available in
“awb” menu (Success STP) which should be generated by the branches daily at the end of the
day. The said report can also be generated by branch staff as and when required during the day.
This report contains the list of accounts, name of the beneficiaries as received from the
originating branch and the names of the beneficiaries as available in our system/books. This data
has to be verified by the Officer-in-charge of RTGS/NEFT/NECS/ECS sections on the same day
as post credit-checking.
If at the time of post-credit checking, it is found that credit has been afforded to a wrong
account, branch must reverse such credits and set right the mistake and/or return the transactions
to the originating bank branch.
This particularly needs to function very efficiently and pro-actively till such time
customers are comfortable with the new arrangements/procedure. A facility to generate report on
failed STP transactions is also available in the system which can be generated by the branch to
verify the failed transactions.
175
6.3. CLEARING SERVICES
CHEQUE TRUNCATION SYSTEM CLEARING (CTS)
Cheque Truncation System (CTS) is an Image Based clearing system introduced by RBI
(Presently at Delhi), which replaces the existing clearing system of Instrument Based clearing.
The purpose of introducing the new system is to:
Reduce the existing time taken for the clearance of cheques for both the local and the
outstation cheques.
Improve the efficiency and quality of the services offered by banks in the area of the
Cheque Clearing– both to customers of banks and for internal improvements in areas
such as clearing reconciliation, risk management, systemic efficiency etc.
6.3.1. LODGMENTS
Under CTS lodgment is to be done in 2 stages.
a) Lodgments of cheques in CBS environment. Lodgments are to be done by clerical staff.
Approvals are to be done by Supervisory staff.
b) Once the approval of instruments is done, the Branch user shall generate and upload the data
of lodgment to the CTS system available in the branch.
c) Scanning of cheques to be done in a stand-alone machine provided for the purpose and to be
done by clerical staff. Approval is to be done by Supervisory staff by logging in as Supervisor in
the Stand-alone machine provided for this purpose. The system will balance the amount lodged
in CBS with the amount of the scanned instruments and also attach the digital signature to the
images as required by RBI..
For lodging the instruments, branches should use the CTS lodgment programs only.
While lodging cheques, the branches should enter the MICR details of the cheque only. For
example, for lodging of a cheque drawn on IOB, Jan path, New Delhi, enter ‘110’ (micro city
code for New Delhi),’020’ (micro bank code for IOB), 004(micro branch code for Jan path
branch) instead of entering the alpha codes as done in MICR clearing.
Branch should ensure that all cheques that are entered in CBS system are scanned without
fail. Under CTS system collecting branches are responsible for the genuineness of the cheque.
176
The onus of proving the genuineness of the cheque lies with the collecting bank and not the
paying bank.
In respect of cheques issued by Government Departments (‘B’ type cheques), branches
should note to send the instrument also to CCO, besides the image, in the respective clearing
zone.
Presentation
There is no change in the existing Presentation procedure.
Release
No change in the existing Release procedure.
Returns
CCO will inform the branches about the dishonored cheques presented by them.
Regularization
Branch has to release the vouchers after ascertaining the fate of the cheques sent for
collection in clearing.
Extensions
Under CTS clearing, RBI may grant extension to participating banks to upload scanned
images in clearing or to inform the fate of the inward images presented to them. Branches
participating in CTS clearing have to take into account the extension granted to participating
banks before regularizing the presentments of previous dates. The details of extensions given to
banks can be obtained from CCO. Branches needing extension either to present or to inform the
fate of images should take it up with CCO concerned who in turn will take up with RBI. The
decision to grant extension is at the sole discretion of RBI.
Handling of Inward Cheques
Branches have been provided with a stand-alone PC loaded with the image viewing
software, for the purpose of viewing the Inward images received under CTS system. Normally,
177
under CTS the clearing takes place the same day of presentment and settlement done
immediately. As such the fate of cheques on any day is known the next day unless there is any
extension granted to any bank by RBI. The Inward Images are available early in the morning on
any working day. Branches are to view the images choosing the Document Identification
Number (DIN) and process the same.
Return marking of the Inward cheques
The branch can mark payment/return of the images as they desire to pay / return.
Cancellation of Outward Returns
When they want to cancel any return already marked they can mark it themselves. If the
system does not permit them to do so then they should contact CCO and get their confirmation
that the fate of the instrument has not been conveyed to RBI and then proceed for cancellation of
return marking.
Preservation of Cheques
Branches participating in CTS clearing are responsible for preserving the cheques
deposited by their customers. Since only the image is travelling to RBI, the physical cheques are
to be kept under the custody of the presenting branch. These cheques are to be preserved for a
period of 8 years.
System Maintenance
Branches are to take proper care of the CTS systems available with them like scanners,
stand-alone machine with the CTS software etc. Also they should, in coordination with RCC
should maintain these CTS related systems.
Role and Responsibilities of CCO
Central Clearing Office of the CTS centre plays a major role in the smooth functioning of
the CTS system. CCO is the main link between RBI and the branches and is responsible for
178
timely uploading /downloading of images to/from RBI. They have to make these images
available to branches at the earliest on the succeeding working day after the date of presentation.
Technical Role
All the images are processed at CCO, who is responsible to ensure that the images are
processed on time and uploaded to RBI before the presentation time. CCO has to be more
cautious and ensure that the process is completed on time for each session since RBI simply
publishes a notice in its website about the end of the session.
Similarly, once the inward images are received, CCO should process the same at the
earliest and upload the images for branches to process at their end.
Administrative Role
CCO should coordinate with RBI for the smooth functioning of CTS system. It should
take up with RBI for any extension required by any of the branches for presenting the cheques or
for informing the fate of the inward images received. It should take up with RBI for blocking the
branches under its jurisdiction, which may not be in a position to participate in CTS clearing due
to circumstances beyond their control.
Holiday Marking
It is the responsibility of CCO to intimate RBI about the branches not working on any
day due to declaration of holiday in that area for whatever reason. They should liaison with RBI
in such eventualities and ensure that these branches are blocked and no images are presented to
them on holidays.
MAGNETIC MEDIA BASED CLEARING SYSTEM (MMBCS)
Magnetic Media Based Clearing System (MMBCS) has been introduced in many clearing
centres by RBI / SBI / PNB etc. who are running the clearing house. All branches covered in the
respective centres are required to furnish data in a specific format to the clearing house along
179
with the instruments presented by them. Regional Office/ RCC should take up ITD, CO along
with full particulars required for inclusion of branch(s) in MMBCS clearing. On receipt of
information, ITD will bring the branch under MMBCS system which will enable them to use the
special programs developed for MMBCS clearing.
Outward Clearing
Lodgment of Cheques
The Clerical staff at Branches covered by MMBCS clearing should note to use the
Special Program ‘CTS/MMBCS Clearing Lodgment’ only and should not use the normal
clearing lodgment program. While entering the details of instruments care should be taken to
enter the bank code, branch code, city code etc. as available in the instrument’s MICR bank. Any
mistake committed by the branches in this regard would create problem at the time of approval /
generation of data.
Similarly the Supervisory users should note to use the specific program for approval
‘CTS / MMBCS Clearing Lodgment Approval’ only and approve the voucher / instruments after
verifying the details.
Generation of Data
Once the approval is completed for all the instruments for the day, the branch should
generate the required data file from the system and copy the same in a floppy to be sent to the
branch which is participating in the clearing on behalf of all the branches in the centre.
Nodal branch
The branch which is participating in the clearing house on behalf of all the branches of
the Bank in the centre should collect floppies from the branches and note to merge the data using
the Merger Program given by the respective clearing house bank, as per instructions.
180
MICR / NON MICR Clearing Systems
Outward Clearing
Lodgment of Instruments
All the instruments received for clearing through Local clearing house should be lodged
in the ‘Clearing Lodgment’ program by the branch users without fail. While doing the data entry,
care should be taken to ensure that the details are entered correctly without any error, especially
in the case of accounts relating to other CBS branches. Care also should be taken to enter the
details of instruments individually and correctly so as to enable generation of Data files/ report/
Patta required at various Clearing Centres.
Approval of Lodgment
All the instruments lodged in the clearing module should be approved by the authorized
official well before the scheduled time for presentation.
Clearing Presentation
Before sending the instruments to the Clearing house, branch users should invoke the
Presentation Application to prepare presentation vouchers for all those instruments lodged in
clearing and approved by them. The total of number of instruments presented should tally with
the physical instruments on hand.
Clearing Release and Regularization Dates
Branches should note to enter the correct date for credit of the proceeds to the respective
accounts (Release) taking into account the clearing cycle as prevalent in the respective centres /
zones. Similarly the regularization date also should be fixed at the time of presentation based on
the return clearing discipline for the respective zone / centre.
181
Modify Clearing Release / Regularization Dates
This option should be chosen as and when there is change in the clearing process as
advised by the local Clearing House Bank and the revised date should be entered before the
release or regularization is done. Once the activity is completed, the dates cannot be changed.
Release of Clearing Instruments
On the due date for release, branches should note to release the clearing vouchers to the
respective accounts using the relevant program. During this process the credits to SB and CDCC
Accounts will be made by the system as ‘Under Clearing’ as per extant guidelines in force. The
transactions have to be verified by a Senior Manager level user along with the vouchers and
authenticated duly in the vouchers.
Regularization of Clearing Credits
On receipt of Inward Clearing Return instruments, branches should to first debit the
accounts for returns received for the day. Once the returns are accounted for, the application for
regularization of under clearing balances kept in various Savings Bank and Current Accounts
should be invoked and the balance made as ‘clear balance’.
Branches to use Inward Return Entry, Approval program for this purpose (clg37_1, 2, 3)
Inward Clearing
Payment of Instruments received in Inward Clearing
Branches to strictly adhere to the guidelines spelt out for handling of Clearing
Transactions/ Cheques in Volume IV of Book of Instructions without fail. To debit the
instruments received in clearing, branches should use the normal posting / passing programs
given under various modules and complete the transactions within the time limit specified.
182
Refer to Manger
Wherever the debit cannot be passed in normal course and require to be referred to the
Manager for approval / return, it should be done well within the time specified for Return
Clearing Discipline.
Branches to use Clg Return Data Entry Program to record the return details in the system
(clg36_1, 2, 3)
Inward Clearing Vouching
Once all the transactions have been accounted for, the officer in-charge of clearing
operations should use the Inward Clearing Vouching option and pass the transaction for credit to
CCO / Main branch as the case may be and tally the clearing lot. Programs are available for the
use of the branches to tally the inward clearing before completing the vouching.
6.4 CUSTODIAN
JOINT CUSTODY
The Cash must be kept in the strong-room in the joint custody of the Head cashier/cashier
and an authorized supervising official, who will be the Deputy Manager or an Officer not below
the rank of Deputy Manager authorized by the First Line Manager. Any other arrangement
should have the prior approval of Regional Office.
DISPLAY OF NOTICE
Deputy Manager or an Officer authorized by the First Line Manager should ensure that
no member of staff other than the Cashier / Teller receives money over the counter from
depositors and that Notices as appended are prominently displayed in Regional language Hindi
/ English in two places, one near the cash department and the other near the branch entrance.
The Teller is authorized to receive cash up to 15,000/- (Rupees Fifteen Thousand only)
for deposit into Savings Bank Account. The public are also advised to be present till the
counting of the cash by the cashier is over and found by him to be in order.
183
RELEASING THE COUNTERFOIL
The Cashier/Teller on receiving cash should refer the entire Chelan along with the
counterfoil to the officer concerned to be countersigned by him /her and only the officer
concerned should release the counterfoil after verifying the figures and ensuring that necessary
entries were made in the system.
LOCKING ARRANGEMENTS
DOUBLE LOCK
The strong-room or safe must be under the double lock of the Head cashier/cashier
and the supervising official in charge of cash (herein after referred to as the "supervising
official"). Both officials must be present when the strong-room /safe is opened and as far as
possible, all receptacles in the strong-room which are used for storing cash must also be under
the double lock of the Head cashier/cashier and the supervising official, with the exception of
the receptacle used for the Head cashier’s/cashier’s hand balance which should be under his /
her single lock. It must be ensured that the locking mechanism of all receptacles is effective
and that the doors of all cupboards etc., are securely fastened before being locked.
CASH-CABIN DOORS
Locking arrangements should be provided for cash cabin doors and also cash counter
drawer. The door of the cash cabins should remain locked/or bolted when the cashiers are inside
the cash cabins. It should also be kept locked from outside whenever the cashiers leave their
cabins for any other work. The officers in charge of Cash Department should ensure that the
cashiers keep their cabins locked at all times.
STRONG-ROOM
The arrangements in the strong-room shall depend upon the accommodation available
and shall be subject to detailed orders from Central Office in each case. The following general
184
instructions must, however, should be invariably observed.
All receptacles must be locked by the joint custodians, the utmost care being taken to
prevent the possibility of any notes being stolen or pilfered when the strong room is open.
Adequate precautions should also be taken to prevent loss through ventilators or other apertures
when the strong room is closed.
CASH BALANCE
The bulk of the cash balance should always be in the strong-room/safe under joint
custody, while remainder (cashier’s hand balance) which will be kept as low as conveniently
possible, will be left with the Head cashier/cashier during the day for the day’s transactions. Only
cash sufficient for the day’s requirements should be withdrawn in the morning from joint
custody.
VAULT REGISTER
The amounts of all notes and coins withdrawn from, or deposited in, the joint custody
portion of the Bank cash balance (i.e. excluding the Head cashier’s/ cashier’s hand balance) will
be entered immediately in the Vault Register under the initials of the joint custodians. The Vault
Register must always remain in the strong-room. From it the withdrawals and deposits will be
entered in the cash analysis book in which the resultant balances will be struck, the entries being
checked and the balances initialed by the head cashier/cashier and the supervising official. At
branches where transactions in the "joint custody" portion of the Bank cash balance are few, a
cash analysis book may be dispensed with, the relative entries being checked from the Vault
Register and the incurrent coin register.
DAY-END CONSOLIDATION
Before consolidating the cash at the end of the day, the following points have to be
observed. It is the primary duty and responsibility of the Cashiers / Tellers / Special Assistants /
Officials attending to cash related schedule of work to ensure strict compliance to the operational
instructions put in place by Central Office under Clean Note Policy. The said Policy which was
185
framed by our Central Office in the light of Notification under Section 35A of Banking
Regulation Act issued by Reserve Bank of India. Copies of related circulars (MISC/96/2003-04
dated 28th April 2003 and Government Accounts Department Circular No:5 / 2003-04 dated 3rd
January 2004) are appended to this Chapter for ready reference of Branches and Controlling
Offices.
Cashiers have to segregate note into soiled/cut and re-issuable including ATM-fit and
prepare sections separately for soiled / cut notes and re-issuable notes.
Notes of the same denominations have to be bundled together into books of one hundred
pieces each and bank's currency bundle label has to be placed on the section to go round
the note packet on the left side to cover a major portion of the front and rear of the note
packet and tied firmly with twine. Thereafter, the packet must be secured with twine /
paper band / rubber band / polymer band firmly to ensure that all the notes inside the
paper band packet remains intact.
It should be borne in mind that using stapler / sticker / gummed labels / stitching-needle
or any method which tend to damage the currency notes, is prohibited in terms of the
provisions of Clean Note Policy implemented in our Bank. As compliance to the said
provisions is legal requirement, utmost care should be taken by the staff members
handling cash.
The branch round rubberstamp must be affixed on the label ends and the label must be
signed by the cashier who has prepared the packet. The band must thereafter be placed in
such a manner that it covers a part of the branch round stamp and cashier’s signature.
Every ten such books must be tied up into a bundle of one thousand pieces.
Before taking notes in joint custody and depositing them in the Currency Chest, both
officials in joint charge should personally count all notes of denominations above Rupees
Ten and will verify, as large a proportion as possible, of all other notes on the "Clip
186
system". Under this system, a few notes in each book of notes are clipped together at the
top and the remainder is counted by a cashier other than the two cashiers responsible for
their correctness.
The checking officer must ensure that all the leaves are firmly held in the packet and
the security paper band is fixed in the manner as mentioned above.
Branches can retain the reissuable note packets for transactions and remit the non-
issuable note packets into the currency chest. If the branch holds surplus cash, reissuable
note sections can also be remitted into the currency chest.
CASH SHORTAGE
In terms of instructions currently in force (Circular - Government Accounts Department,
Central Office Circular No: 6/2003-04 dated 5th January 2004) the Cashier shall be solely
responsible for the quality of the notes from Rupee one to Rupees fifty. In respect of
denominations above Rupees fifty (i.e. Rupees one hundred, five hundred and one thousand) the
cashier shall remain responsible only jointly for the quantity of notes prepared by him / her along
with Officer / Special Assistant.
In the light of the above, the responsibility in case of shortage detected in the packets (no
matter when it is detected) will be fixed equally on the cashier and the checking officer whose
signatures appear on the label. In other words, the cashier and officer who have originally
made/checked the packet will be accountable for any discrepancy even if they are not the
custodians at the time of detection so long as the seal is intact. If the security bands have not been
disturbed and there is no evidence on the face of the packet to indicate that it has been tampered
with, then in such cases, where a shortage is detected (this can take place when one or more notes
are physically torn out of the section leaving a part of the note stuck inside the stitched packet)
the responsibility for such shortage will be decided on a case to case basis.
CURRENCY SLIPS
Currency slips of other banks/parties must be removed by the receiving cashier after due
187
counting and the same replaced with our Bank’s currency slip and pasted with the security sticker
and checked, initialed/signed by the joint custodians.
LATE CASH PAYMENT / RECEIPT
The cash balance will ordinarily consist of nothing but notes and coin. In the event of any
cash payment being made or any cash deposit being received after the cash books have been
closed for the day , the relative vouchers must be entered the same day in a Register labeled as
''Late Payment and Receipt Reference Register". The entries in this Register should be made by
the Casher and each such entry should be authenticated both by the cashier and the Deputy
Manager or an Officer not below the rank of Deputy Manager authorized by the First Line
Manager who is verifying the closing cash for the day.
CHECKING OF CASH BALANCE
Before taking notes and coins into the ‘joint custody’ balance, the supervising official
should check their correctness in the following manner:
He/ She will personally count all notes of denominations of above Rupees Ten and will
verify a portion of all other notes on the "clip system". Under this system a few notes in
each book of notes are clipped together at the top and the remainder is counted by an
employee other than the one responsible for its correctness in the presence of the
supervising official who verifies the total by counting the clipped notes (Notes of the
same denomination are bundled together into books of one hundred pieces each, every ten
such books being tied up into a section of one thousand pieces).
He/ She will have all bags of rupees weighed in his presence and a number of bags
emptied to show that the contents are genuine coins. Out of a few bags he will take and
count a few pieces and leave the remainder counted in front of him as a similar check to
the "Clip System" for notes, verifying the relative denomination slips in the bags at the
same time; he will also occasionally get this done in the case of small and un current
coins.
188
CHECKING HAND-BALANCE AND CLOSING CASH
The supervising official should satisfy himself each evening that the joint custody balance
corresponds exactly with the entries in the system-generated cash balance printout. He will also
invariably check the entire Head Cashier’s / Cashier’s hand balance of loose notes and also check
the loose packets in hand balance by clip system and initial against the items checked in the cash
balance printout. After the closing cash is checked by the supervising official, he /she must
ensure that the notes and coins held in the Head cashier’s/cashier’s hand balance are kept in the
cash box and locked in his/her presence. He should accompany the Head cashier/cashier to the
safe room when the cash box is kept under joint custody. Before the safe is closed, he/she should
also check the bundles kept in the vault and verify the same with the vault register.
Periodically preferably once a week on different days the officer holding charge of cash
should check the whole of the branch cash balance by test check of different denominations and
register evidence of such check in the cash balance book under his/her signature and date. The
First Line Manager, if he is not in joint custody of cash, should on a surprise date in a month
check in detail all the notes of denominations above Rupees Ten and verify all the other notes on
the clip system.
EXCESS IN CASH
Any excess in the cash balance must be credited to Sundry Creditors Account on the same
day after the preparation of a credit voucher bearing complete particulars of such excess cash.
Such instances of excess cash should be reported to Regional Office on the same day. Amounts
which have been lying unclaimed for more than six months will be transferred to Central Office
every half year by March and September.
REMITTANCE OF CASH
When remittances of currency notes are sent by post from one office to another, the
189
following instructions must be strictly complied with :
a) Remittances should be in full currency notes.
b) The remitting branch should keep a proper record in a separate register maintained for this
purpose.
The registered and insured covers should be sent to the post office through the cashier in
whose presence the currency notes were enclosed and sealed and he/she should be accompanied
by a messenger or preferably a guard if the branch has one.
ADVICE OF REMITTANCE
Remittances sent by post or under escort, should be advised to the addressee detailing the
particulars and the amount thereof. The advice should be made out in duplicate, the original
being sent along with the remittance and the duplicate by separate mail.
CURRENCY NOTES RECEIVED BY POST
Remittances of currency notes received by post should be counted by the cashier in the
presence of the Deputy Manager of an Officer who is holding joint charge of cash. They should
be entered in the Inward Remittance Register and should be promptly acknowledged to the
remitting branch.
Any discrepancy should be immediately brought to the notice of the remitting
branch. As the denomination memos affixed to the bundles in question would be required in
fixing up responsibility for shortage, if any, they should be forwarded to the remitting branch.
Physical cash remittances to branches outside the town should be undertaken only if
transfers cannot be effected through the State Bank of India or another Nationalized Bank.
PACKING
Remittances must be packed in the presence of the secured employee accompanying the
remittance. They must be conveyed in a strong wooden or iron box locked with a padlock which
should be sealed. Under no circumstances should the keys of the remittance box accompany the
190
remittance. For this purpose, the box should be locked with a padlock having duplicate keys. One
set of keys should be held by remitting branch and the other set by the receiving branch or bank.
Branches having regular drawing arrangements with the Reserve Bank of India or State Bank of
India or any of their subsidiaries or any other bank under prior permission from Regional Office /
Central Office , should arrange with the offices concerned to hold one set of keys of the
remittance boxes.
CASH BOX TO BE CHAINED
Where branch has a motor car or van of its own, the remittance box should always be
conveyed in the car or van. The box should be securely chained and locked to a stable or other
fixed object in the car, van, bus, cart or train by which the remittance is carried.
MAINTENANCE OF REGISTER FOR CASH REMITTANCE / WITHDRAWAL
A Register in the following form should be maintained to record all cash remittances to
and from local banks, remittances to other branches through staff, remittances from other
branches whether through post or staff. There should be separate openings in this register for
inward and outward remittances with columns as under:
SHROFFING OF COIN
The Rules for the issue and acceptance of coins, laid down in Part XIV, Chapter III of the
Central Government Compilation of Treasury Rules, Volume I (herein after referred to as the
Treasury Rules), must be strictly observed and branch Managers should l ensure that the
instructions contained therein are fully understood by all concerned. Pressure of work will not be
accepted as an excuse for inefficient shroffing.
UNCURRENT COIN REGISTER
DETAILS OF ALL UNCURRENT COIN
Details of all uncurrent coin, i.e. defaced, light weight and defective coins and other coins
withdrawn from circulation which are included in the Bank’s cash balance must be set forth in an
191
Uncurrent Coin Register under various categories. The respective totals should be checked and
initialed daily by the Head cashier/cashier and the supervising officials, who shall then agree the
relative items with those in the cash balance book.
PLACEMENT OF UNCURRENT COIN
Uncurrent coin may not ordinarily be placed in the currency chest or small coin depot
balances, and will therefore be retained in the Bank’s cash balance pending a remittance to the
Mint. The Reserve Bank of India may, however, authorise exceptions to this Rule and allow the
deposit of certain designated uncurrent coins in the currency chest or small coin depot. Coins so
held need not be entered in the uncurrent coin Register.
In order to expedite the examination of large remittances of coins when the shroffs
accompanying such remittances are unable to watch the work of shroffing effectively, they
should be asked to agree to each bag being weighed in their presence and its weight recorded, on
the understanding that if any shortage is reported, the bag will be reweighed and that if it
conforms to the recorded weight, the shortage will be accepted as correct. The bags should be
weighed against a checked and sealed bag of similar coin, additional coins being added to the
lighter scale and the weight of the bags recorded in number of coins.
CURRENCY NOTES
The Rules for the receipt and issue of Government of India and Reserve Bank of India
currency notes are contained in Part XIV, Chapter IV of the Treasury Rules. Instructions
contained in Treasury Rules regarding forged, defective and lost notes are furnished in Para 37of
this chapter. Notes disfigured by oil or other substances should be scrutinised with special care as
forged notes are sometimes intentionally thus disfigured to render detection difficult.
LOCKING OF STRONG-ROOM
The Strong-rooms must at all times be under the double lock of the Cashier and the
supervising official jointly in charge of cash. Both officials must be present when any strong-
room is opened and neither may enter it except in the presence of the other.
192
ENTRY IN VAULT REGISTER
The amounts of all notes withdrawn from, or deposited in the currency chest will be
entered immediately in the Vault Register under the initials of the joint custodians. The Vault
Register will be the primary check on the deposits and withdrawals made and must always
remain in the strong room. Withdrawals made for the purpose of shroffing or examination must
also be entered in the Vault Register in the same manner as other withdrawals.
CURRENCY CHEST JOTTING BOOK
After the day’s transactions have been closed and the individual cashiers have agreed
their balances, notes intended for deposit into the currency chest will be made up and the
amounts entered in the Currency Chest Jotting Book from which the net amount of deposit or
withdrawal is arrived at and accounted for by debit or credit to our account with the Reserve
Bank of India maintained at the main/link branch under advice to them.
CERTIFICATE OF CASH HOLDING AND VERIFICATION
CHANGE OF OFFICIALS
Branches should l submit to Regional Office a certificate of their cash, currency chest and
small coin depot (if any) balances at the close of business on the last weekly balance day of the
month (as per Specimen Tenclosed).
VERIFICATION OF CASH BALANCE
At branches where the First Line Managers are not in charge of cash, they will verify the
Bank cash balances, if any, held by the branch at intervals to be stipulated by Central Office; at
large branches the verification is to be performed by the Deputy Manager or other senior official
who himself is not in joint charge of the cash. In other cases, Central Office will depute officials
from elsewhere to verify the balances at intervals. The verification should l be carried out in
193
accordance with the directions contained in Para A.12.At the time of such verification, the
verifying official will also check :
a)Articles in safe custody
b)Foreign currency notes
c)any other bearer securities
When the post of the supervising official in joint charge of the cash changes hands or a
branch Manager is permanently relieved the official taking over will carry out the verifications as
laid down above.
On the occasion of every verification, the verifying official will submit to Regional
Office a Cash Verification Report (as per specimen enclosed)
CHANGE OF CASHIER – CERTIFICATE
Whenever the post of a Head cashier/cashier changes hands, the outgoing and the
incoming officials will sign a Certificate for record at Regional Office:
"We, the undersigned __________ and ___________ advise having respectively made over and
assumed joint charge, with the Manager/Deputy Manager of this branch, of gold ornaments
under lien to the Bank and of the Bank’s cash, currency chest/small coin depot balances held at
the branch as from the close of business on the ___________20__."
Signature of Relieved Head Cashier/Cashier ................................................
Signature of Relieving Head Cashier/Cashier ................................................"
Both Head Cashiers/Cashiers should be required to sign the Cash Balance Book, (the
currency chest book and small coin depot book if any) on the date of relief. The incoming
official will also initial in the Jewel Movement Register after satisfying himself/herself that the
total number of packets as mentioned in the Register tallies with the packets in the Jewel Safe.
194
LEAVE / DEPUTATION
Whenever a cashier or Assistant Manager/Deputy Manager/Manager who hold custody of
keys is to proceed on leave/deputation or to hand-over charge under any other circumstances,
he/she must personally hand over possession of such keys to the next authorised officer/cashier
(as decided by Branch Management from time to time) against the latter’s acknowledgment in
the key movement register.
When situations arise where it is not possible for such key holder to personally hand over
possession of keys as mentioned above, he/she should send the keys in a closed cover through a
person whom he /she considers reliable for the purpose. It must be ensured that the sticking flap
of the cover is signed across by the key holder before sending the same to the branch. Such
deliveries of keys in a closed cover must be accompanied by a letter signed by the key holder as
per the format provided in Annexure IXto this Chapter. Even if the letter is not sent or the letter
sent is not in the prescribed format, the key holder is bound by the provisions contained in the
format. Such covers should be opened by the Branch Manager/official holding charge in the
presence of the person to whom the keys are to be delivered and the fact of transfer of custody of
the keys must be duly recorded in the Key Movement Register.
RELIEVING CASHIER
The relieving cashier should check the "Hand Balance" in the presence of the joint
custodian before he takes over and also the bundles of notes taken out from the vault balance for
the day’s transaction. Whenever the keys relating to the cash safe are handed over to another
officer/cashier, the officer/cashier assuming joint custody must check the entire vault balance by
counting the number of bundles and packets and checking such numbers with the entries in the
Vault Balance Book. Such checking must be done in the presence of the other joint custodian.
6.5 SAFE CUSTODY
CUSTODY OF KEYS - KEY REGISTER
Particulars of all important keys, including those of the Head cashier/cashier, must be
entered in the branch Key Register. The Register should show what originals and duplicates exist
195
and where they are to be found and must be initialled by every incoming Manager. Whenever
important keys change hands from Supervising Official/ Head Cashier/ Cashier holding the keys
of the strong room/safe room and safes/ cup-boards containing cash, gold ornaments under
pledge to the Bank and other securities, the same should be recorded then and there in the Key
Register with dates under the signatures of all the persons concerned (i.e. the persons who are
handing over the keys and who are taking over the keys).
The main keys of the branch may on no account leave the possession of the officials to
whose charge they have been entrusted except as provided in paragraph A.32 or in the case of
incapacitation for duty when they will be taken over by another Official deputed by Central
Office/Regional office. The grave consequences that may result from any slackness in the
observance of this instruction cannot be too strongly impressed on officials, particularly those
responsible for the safe custody of cash, gold ornaments, securities and other valuables.
When the keys of the strong-room or cash safe are kept in the personal safe of the Deputy
Manager or an Officer authorised by the First Line Manager , the key of the safe in which they
are lodged must not leave his/her custody.
Subordinate employees or other unauthorised persons must never be allowed to handle
the keys of the strong room and safes for any purpose whatsoever. Should this by any chance
occur, the circumstances must be immediately reported to Regional Office / Central Office so
that necessary steps may be taken to safeguard the Bank’s interest.
The above instructions apply with equal force to the head cashier/cashiers in joint charge
of cash and valuables.
LOSS OF KEYS / CHANGING OF LOCKS
Whenever a key of the Safe/Safe room is lost, it should be reported to concerned
Regional Office / Central Office immediately. On receipt of information, Regional Office should
instruct the branch to replace the concerned locking system and fifty percent of the cost of such
replacement must be recovered from the member (in whose possession, the key should have
been) in one lump sum before making payment to the company towards replacement charges.
196
The remaining fifty percent of the cost of replacement must be debited to branch Suspense
Account under advice to Regional Office.
The bank has taken an Insurance Policy to cover the loss of keys. The policy is subject to
an excess of Rupees one thousand five hundred for any one claim. Hence, in the event of any
loss of keys, the branch must send the claim form to the concerned Regional Office along with
First Information Report (FIR) issued by the Police, Original bills towards replacement, original
receipt and non-traceability certificate from the police authorities. Regional Office after due
verification should in turn forward the claim form and other documents to Overheads Section,
Personnel Administration Department, Central Office, for preferring a claim with the insurance
company.
After settlement of the claim by the insurance company, Central Office shall advise
Regional Office regarding settlement who in turn shall advise the branch to eliminate the related
Suspense entry by debiting their Profit and Loss account under advice to Central Office. After
complying with the instructions of Regional Office branch should immediately submit a
Compliance Report to Regional Office.
DUPLICATE KEYS
The officials holding the keys of the strong room/safe room and safes/cupboards
containing cash, gold ornaments under pledge to the Bank and other securities, should pack their
duplicate keys individually in a strong cloth lined envelope which should be sealed by them with
their own personal seals. Before they are packed, the keys must be greased and labelled (the label
indicating the lock to which the key relates and the designation of the official who holds the
original).
The sealed packets must be placed in a strong wooden or tin box locked or otherwise
secured and wrapped in waterproof cloth. It must then be sealed in the presence of the officials
concerned and the sealed box should be labelled with the name of the branch and should bear a
docket reading as under:
197
"This packet contains duplicate keys of ....................branch of the Indian Overseas Bank
and is deliverable against the joint signature of the Manager/Deputy Manager and Cashier of the
branch for the time being".
The said docket should be signed by the Cashier and First Line Manager or Deputy
Manager or other supervising official whose keys are deposited therein. These instructions
should also be conveyed to the branch of the Bank holding the box in safe custody by means of a
letter signed by all the officials holding the keys.
The box should be deposited with the nearest branch of the Bank at places where we have
more than one branch. If we do not have another branch locally, it must be deposited with the
local branch of the State Bank of India. At places where we do not have another branch and the
State Bank of India are not established, the box may be despatched to our nearest branch,
wrapped in a separate cover by registered post, duly insured for rupees one hundred and advice
of despatch being sent to them separately.
Overseas branches may deposit their duplicate keys with the local branches of any well
established exchange bank after obtaining Central Office approval.
SAFE DEPOSIT RECEIPT
In all cases, the relative safe deposit receipt will be entered in the Branch Documents
Register and kept in the personal custody of the Manager in his personal safe or cabinet. Under
no circumstances should the receipt be kept in any safe, the duplicate key of which is held in safe
custody with another branch or bank, as in the event of the loss of the original key or keys the
duplicates may not be available without the production of the safe custody receipt.
DRAWAL AND REDEPOSIT OF KEYS
Duplicate keys must be withdrawn from safe deposit at every inspection of the branch
and whenever there is a change of First Line Manager, Head Cashier/Cashier or supervising
official jointly in charge of cash. The reason for and the duration of their withdrawal should be
recorded in the key Register. The box must be opened by the Manager in the presence of the
cashier and the supervising official concerned, and Inspector who should themselves break the
198
seals on the parcels containing their keys. When the keys have been examined and tested, they
will, unless they are more worn than the originals, be taken into use and the originals deposited
in the box otherwise the duplicates may be re-deposited.
REPORTING TO REGIONAL OFFICE
The fact of withdrawal and redeposit of duplicate keys must be reported to Regional
Office, unless such operation was made in connection with the inspection of the branch. When
the box is held by another branch, the dates of its withdrawal and re-deposit should also be
advised to Regional Office by that safe custodian branch, if it is not received back promptly, a
reminder must be sent and Regional Office informed.
The packet should be returned to safe deposit the same day and in the event of delay,
adequate precautions should be taken for its safe keeping until its despatch the following day and
the fact should be reported to Regional Office.
BANK GUARDS
All branches where Police guards are stationed, First Line Managers should arrange with
the local police authorities for definite orders to be issued to the guards regarding their duties and
responsibilities. Where the bank’s own guards are employed, orders should be drawn up by the
Managers themselves. In all cases, a copy of the orders should be hung up in the guard room.
In drafting orders for the Bank’s own guards, Managers shall be guided by the following
general rules, the details of which may be adopted to meet local conditions:
The hours of duty will ordinarily be from 20.00 hours to 09.00 hours but these hours need
not be rigidly adhered to provide at least one guard is invariably on duty between 22.00
hours and 06.00 hours. One guard must be present when the strong room is closed in the
evening and when it is opened in the morning, if this precaution is considered necessary.
On Sundays and holidays a twenty four hour watch must be maintained, if the Manager is
not residing in the premises.
199
Guards will come on duty fully dressed in uniform and must not divest themselves of
their uniforms and equipment at any time during the period of duty.
When he comes on watch, the guard will examine all doors, windows and locks and
satisfy himself, that these are properly secured. He will also examine the strong room
door and all safes in the Office and see that these are locked.
The guard on watch will patrol the Bank premises in such a way, that the strong
room/cash safe is not out of sight for longer periods than are necessary and he must not
leave his seat until he is relieved. Where necessary a tell-tale clock may be used.
In case of any untoward incident the guard on watch will immediately arouse other
guards, if any, and will, if necessary, send one of them to the police and/or the Manager.
Guards will be provided with fire arms when this is considered necessary by Central
Office. Sirens and/or brass gongs or police type whistles should be provided for calling
the police in an emergency. The actual method by which the police would be called in an
emergency should be arranged in consultation with the local police authorities.
On no account should the guard allow any persons including members of the branch staff
to have access to the Bank premises outside office hours without the Manager’s
permission. He should not accept any food or drink offered by anybody while on duty.
Should a guard on duty become indisposed and unable to perform his duties he should
arouse another guard if there is one and if necessary arrange for the Manager to be
informed.
The First Line Manager or Deputy Manager will inspect the guard at irregular intervals to
see that proper watch is maintained. A guard inspection book will be kept in which the
date and time of each inspection will be recorded. Arrangements should also be made for
200
a police officer to visit the Bank while on his rounds and report any slackness on the part
of the guard to the Manager.
Branches provided with Armed Guards are advised to take note of the following for their
immediate compliance:
a) Gun licence should be registered in the name of First Line Manager and the retainer’s licence
should be obtained in the name of all persons allowed to hold the gun.
b) The date of expiry of licence should be properly diarised and licence should be renewed in
time.
c) The Rifle provided to the branch should be tested and ensured to be in working condition. All
formalities thereof should be ascertained from the licensing authorities for compliance.
d) The cartridges which are old should be destroyed and new cartridges should be purchased. All
formalities thereof should be ascertained from licensing Authorities, for compliance. A record of
such events should be maintained.
e) Branches provided with guns should note to keep the gun loaded at the opening of business
hours of the branch.
f) All the branches should have the main grill doors locked after the Banking hours and
customers are to be allowed only after identification.
6.6 NOMINATION FACILITIES
NOMINATION AND SETTLEMENT OF CLAIMS IN ACCOUNTS
Banks are permitted to accept nomination in Deposit accounts, Locker facility and Safe
custody of articles facility with effect from 29th March, 1985 by introduction of new sections
45ZA to 45ZF in the Banking Regulation Act and framing of the Banking Companies
(Nomination) Rules, 1985.
201
Individual customers enjoy the facility of making nominations in favor of individuals in respect
of
a) deposits standing in their names
b) contents of Safe Deposit Lockers hired by them and
c) items left by them in Safe Custody
Branches should ensure that all customers are aware of this facility and give nominations
at the time of opening the accounts. Necessary provisions have been made in the account
opening forms for this purpose. Branches should ensure that the existing account holders also
give their nominations. Where there is no nomination, branch should write to the customers and
ensure ostentation of nomination.
If any customer does not wish to make nomination for any personal reasons, inspite of the
advantages explained by the branch, an endorsement may be made in the Nomination form
attached to the account opening form or in the account opening form itself reading “I/We ..........
do not require Nomination facility” under the signature(s) of the account holder(s).
In the case of death of a depositor, or a customer who has kept articles in safe custody
with the Bank or a hirer of a safe deposit locker, the nomination facility enables the Bank to
release to the nominee, the deposit amount or the articles left in safe custody or the articles kept
in the safe deposit lockers, as the case may be, without insistence on a Succession certificate or a
Probate of the Will of the deceased customer.
DEPOSIT ACCOUNTS
While accepting nominations in deposit accounts branches should observe the following
conditions/formalities.
Nominations should be obtained on form DA-1(Annexure – 1)for all deposit accounts
standing in the name(s) of individual depositor(s).
202
Branches shall accept nominations only in deposits held in the personal names of the
constituents. Branches should not accept nominations in respect of deposits held in any
representative capacity such as, director of a company, secretary in an association,
partner of a firm, karta of a Hindu Undivided Family and the like.
In the case of proprietary concern branches shall extend nomination facility as the deposit
held by a proprietary concern is construed as the one standing in the name of individual
viz. the sole proprietor. (RBI Manual of Instructions-1998 para.18.6.g)
Branches can accept nominations in the following types of deposit accounts standing in
the name(s) of individual depositor(s).
a) Savings Bank accounts
b) Current accounts
c) Term Deposit accounts including Multiple Deposit, Multiple Investment
Scheme and Recurring Deposit accounts
d) Non-resident (ordinary),non-resident (external) and Foreign Currency
Non-resident accounts
e) Accounts of Pensioners
Branches shall obtain a separate nomination in respect of each deposit account.
In respect of Multiple Deposit accounts, Multiple Investment Scheme accounts, and
Recurring Deposits where the deposits made at various intervals are credited into the
same account, branches need not obtain a separate nomination every time a deposit is
made. The nomination made in the account at the time of the first deposit will be valid for
the subsequent deposits made in the same account.
In respect of term deposits, the nomination made during the currency of a deposit will
continue to be valid even after renewal of that deposit.
Branches should note that only one individual in his/her personal capacity can be made as
a nominee in respect of a particular deposit account.
Acceptance of more than one nominee in any particular deposit account is prohibited.
Hence, branches should, under no circumstance, accede to the requests from depositors
for nominating more than one person for any deposit account.
203
Where the depositor has more than one deposit account, branches should accept separate
nominations in respect of each deposit account, even though all the deposits stand in the
name of the same depositor.
Where the depositor(s) wish (es) to nominate more than one person for a single deposit,
branches may permit splitting of the deposit in the proportion desired by the depositor(s),
subject to the period and the aggregate amount of the deposit not undergoing any change
as a result of such splitting. Branches may permit such splitting for the purpose of
nomination, without any loss of interest to the depositor.
For each of the resultant deposits, branch should obtain a separate nomination.
WHO CAN NOMINATE
Every depositor having a deposit in his/her individual name either singly or jointly with
other individual(s) can give a nomination for each one of the deposits standing in
his/her/their name(s).
Branches may accept nominations in various deposit accounts in the following manner:
a) Accounts in the name of an individual
*nomination should be given by that individual alone.
b) Accounts in the joint names of two or more individuals
* nomination should be made jointly by all the joint account holders.
c) Accounts in the joint names of individuals with “Either or Survivor”, Anyone or
Survivor” or Former or Survivor” mandate
* nominations should be made jointly by all the joint account holders irrespective
of the operational instructions.
d) Accounts of minors operated by guardian on behalf of the minors
*nomination should be made only by the guardian authorized to operate the
account of the minor (natural guardian or the guardian appointed by the Court)
e) Accounts of minors operated by guardian held jointly with the guardian
*nomination should be made only by the guardian both on behalf of the minor and
the guardian himself/herself.
f) Minor’s Special Deposit accounts
*Branches should not accept any nomination in Minor’s Special Fixed deposit
204
accounts and Minor’s Special Savings Bank accounts operated by the minor
alone.
g) Accounts of Non-resident Indians
*nominations can be made by the non-resident Indians in their non-resident
(ordinary), non-resident (external) and Foreign Currency Non-resident accounts in
the same manner as in sub para (a) to (f) above.
Accounts of pensioners
Nomination may be made by a pensioner in the account to which the pension amount is
credited. Since the pension rules prohibit joint accounts being opened by the pensioner for credit
of pension, it is desirable that in every pension account nomination is obtained by the branches.
Branches should persuade the pensioner to give nomination. This nomination will be apart from
the nomination made by him/her under “Arrears of Pension (nomination) Rules 1983” which will
be applicable for payment of pension arrears.
The nomination in respect of arrears of pension payable is made to the government for
payment of arrears after the death of the pensioner, whereas the nomination obtained for the bank
account (under Banking Companies (nomination) rules, 1985) of the pensioner is to cover the
credits already made into the account of the pensioner before the death of the pensioner.
WHO CAN BE NOMINATED
Branches shall ensure that only individuals in their personal capacity are nominated in
respect of deposit accounts.
The nominee may be
a) any individual who is a resident of India, in his/her personal capacity, named by
the depositor(s)
b) a minor represented by the guardian (natural or appointed by Court)
c) a non-resident Indian of Indian Origin
d) a foreign national of Indian origin
e) a foreign national of non-Indian origin
205
A non-resident Indian can nominate a resident as a nominee and a resident Indian can
nominate a non-resident as a nominee. However, remittance of funds from the account of
the deceased depositor to the non-resident nominee will be subject to the Exchange
Control Regulations, prevailing at the time of remittance.
Where a nominee is a minor, the sole depositor or all the depositors as the case may be,
should appoint another individual, not being a minor, to receive the amount of the deposit
on behalf of the minor, during the latter’s minority. Such individual need not necessarily
be the natural guardian of the minor-nominee.
OBTENTION OF NOMINATIONS
While obtaining nominations in respect of any deposit account, branches should follow the
procedure detailed hereunder:
Branches should provide the customers with form DA-1(which is annexed to the account
opening forms). If old account opening forms are used, branches should use the form
DA-1 supplied for use by existing account holders.
Upon receipt of the duly filled nomination letter (DA-1) from the depositor(s) branch
should examine the same carefully to ensure that
a) All columns are duly filled in and the account number and name(s) of the
depositor(s) and the name, address and date of birth (if the nominee is a minor) of
the nominee are clearly written
b) It is signed by all the depositors
c) Only one nominee is appointed on the nomination letter
d) The eligibility criteria as prescribed in Para. A.2, A.3 and A.4are satisfied.
After verifying the nomination letter as above, the officer-in-charge of the department
should verify the signature(s) of the depositor(s) on the nomination letter and thereafter
sign on the acknowledgment slip attached to the nomination letter under the branch round
stamp.
The acknowledgment slip should be dated and handed over to the depositor in token of
having registered the nomination.
206
The relative ledger folio/entry of the particular deposit account and also the
Savings/Recurring Deposit pass book/term deposit receipt should be branded with the
rubber-stamp reading “Nomination Registered”.
The nomination letter should be retained with the relative account opening form.
While obtaining nominations, branch need not obtain the signature of the nominee.
CANCELLATION OR VARIATION OF A NOMINATION
A nomination once made can be changed or cancelled by the depositor(s) any time during
the currency of the deposit.
Instructions for cancellation of nomination should be given in form DA-2(annexure-
2)and change or variation of nomination should be made using form DA-3.(annexure-3)
Where the deposit is in joint names, branch should obtain the form DA-2 and/or DA-3
duly signed by all the joint account holders irrespective of the operational instructions
(like Either or survivor, anyone or survivor etc.)
In the case of accounts in joint names irrespective of the mandate such as “Jointly”,
“Either or Survivor”, “Both or Survivor”, “Anyone or Survivor” or “Former or Survivor”
on the death of one of the depositors, branch may allow cancellation and/or variation of
nomination during the currency of the account.
Branches should ensure that, such cancellation or variation of nomination is made jointly
by all the depositors surviving at the time of cancellation or variation of the nomination.
Before accepting an application for cancellation or variation of a nomination, the officer-
in-charge of the department should examine the application form DA-2 or DA-3 as the
case may be, and ensure that it is complete in all respects and is signed by all
the depositors as stated in paras 6.1 to 6.3 above.
207
In addition, when a nominee is to be changed, branch should ensure that the new
nominee satisfies the eligibility criteria provided in para A.3and A.4 of this Chapter.
The officer-in-charge of the department should compare the signatures of the depositors
on the application for cancellation/variation of the nomination, with the specimen
signatures on record.
After ensuring that the application for cancellation/variation of a nomination is in order,
the officer-in-charge of the department must sign on the acknowledgment slip attached to
the form, under the branch round stamp and date and return the acknowledgment slip to
the depositor(s).
In the case of an application for cancellation of a nomination, the officer-in-charge of the
department must cancel the nomination letter given earlier, by drawing a line across the
face and entering the remark “nomination cancelled vide DA-2 dated ...........(date)”under
his/her initials and date.
The application for cancellation of the nomination must be attached to the relative
account opening form and kept on record. The nomination letter which was cancelled
should also be retained with the relative account opening form.
In the case of an application for variation of a nomination in form DA-3, the officer-in-
charge of the department must cancel the nomination letter given earlier, by drawing a
line across the face and entering the remark “nomination changed vide DA-3 dated
.......”under his/her initials and date.
The application for variation of the nomination must be attached with the relative account
opening form and kept on record. The nomination letter which was cancelled should also
be retained with the relative account opening form.
208
Whenever a particular account is carried forward to a fresh folio/register, the details of
the nomination should also be carried forward without fail.
A nomination/change of nomination or cancellation of nomination will be deemed to be
in force even when the relative deposit is renewed, unless the nomination is changed, in
which case, a fresh nomination is required.
Upon the death of the sole depositor in the case of deposit in the name of an individual,
or upon the death of one or all of the depositors in a deposit in the names of two or more
individuals, the name(s) of the deceased depositor(s) in the deposit cannot be substituted
by the name of the nominee.
The name of the nominee cannot also be added to the name(s) of the surviving
depositor(s). In other words, under no circumstance, can a branch permit the nominee to
become the depositor under the same account.
The role of the nominee is only to receive the proceeds of the deposit in the event of
death of all the depositor(s).
Similarly, granting of a loan to a nominee against the deposit standing in the name of the
deceased depositor(s) is not permissible. Whenever, a nominee makes a request for a loan
against the deposit standing in the name(s) of the deceased depositor(s), it should not be
conceded but the claims should be settled first in favor of the nominee by following the
procedure laid in para: A.9 below.
By making payment of the deposit amount to the nominee, the bank gets a good and valid
discharge. It is entirely the responsibility of the nominee to account the money with the legal
heir(s) of the deceased and bank is in no way concerned with it.
209
If the nominee so desires, a deposit can be accepted from him/her, even though such
deposit may be made by the nominee out of the proceeds of the deposit of the deceased
customer, after the claim has been settled in favor of the nominee.
Such deposits should not be construed as the funds of the deceased depositor and hence
loans can be granted by the bank against the security of such deposits in the name of the
nominee, (now turned depositor).
NOMINATION IN RESPECT OF ARTICLES HELD IN SAFE CUSTODY
Branches shall accept nominations for items held in safe custody only if they are held in
personal name of a single individual and not in any representative capacity, as holder of
an office or otherwise.
Branches should not accept nomination in respect of persons jointly depositing articles
for safe custody.
Branches shall accept only one individual, not in any representative capacity as holder of
an office or otherwise, as nominee in respect of items covered by a safe custody receipt.
Where such a nominee is a minor, the person who makes the nomination may appoint
another individual, not being a minor, to receive the items on behalf of the minor during
the latter’s minority.
Branches should note to obtain a separate nomination in respect of each lodgment
covered by a safe custody receipt. Such nomination should be obtained on formSC-1.
(Annexure – 6)
Branches shall accept a nomination in favor of a non-resident person of Indian or non-
Indian origin or a foreign citizen or national, for articles deposited in safe custody.
However, application of non-resident nominee for taking out of India, the articles in safe
210
custody of the deceased persons, should be referred to Reserve Bank of India for prior
permission.
Branches may permit cancellation/variation or change of nomination at any time during
the currency of the safe custody agreement. Requests for cancellation of nomination
should be made using form SC-2(annexure-7)and variation or change of nomination
should be made using form SC-3(annexure-8).
After due acknowledgment of nomination/cancellation or variation of the nomination the
officer-in-charge of the department should attach the original nomination form and the
forms for cancellation and/or variation, to the relative agreement/account opening form
and hold the same safely.
SAFE DEPOSIT LOCKERS
Branches shall permit nominations only in respect of Safe Deposit Lockers hired by
persons in their individual capacity and not in any other representative capacity.
Only individuals, not in any representative capacity, can be made nominees in respect of
Safe Deposit Lockers
In the case of joint hirers, branch may accept more than one nominee. However, at any
time the total number of nominees must not exceed the total number of joint hirers.
Branch should obtain separate nomination in respect of each locker account.
For making nomination in respect of lockers hired in the name of sole hirers, branches
should use Form SL-1(annexure-9) and in respect of lockers hired jointly by more than
one hirer, Form SL-1A(annexure-10) should be used.
211
Branches can permit cancellation or variation of nomination in the case of lockers hired
by sole hirers or by joint hirers. However, in the case of joint hirers, branch should permit
cancellation/variation of nomination only if such request is made jointly by all the hirers,
irrespective of the operational instructions such as “Either or Survivor”, “Anyone or
Survivor” etc. Since Safe Deposit Lockers should not be rented out with “Former or
Survivor” mandate nomination by such hirers cannot arise.
Requests for cancellation of nomination should be made using Form SL-2(annexure-11)
irrespective of whether the locker is hired in single name or joint names. Variation of
nomination should be made by using Form SL-3 (annexure-12) for single hirers and
Form SL-3A (annexure-13) for joint hirers.
“If the sole locker hirer nominates a person, Bank should give to such nominee access of
the locker and liberty to remove the contents of the locker in the event of the death of the
sole locker hirer.
In case the locker was hired jointly with the instructions to operate it under joint
signatures, and the locker hirer(s) nominates person(s), in the event of death of any of the
locker hirers, the bank should give access of the locker and the liberty to remove the
contents jointly to the survivor(s) and the nominee(s).
In case the locker was hired jointly with survivorship clause and the hirers instructed that
the access of the locker should be given over to ‘either or survivor’, ‘anyone or survivor’
or according to any other survivorship clause, Branch should follow the mandate in the
event of the death of one or more of the locker-hirers. Where, however, all the joint hirers
(with E or S / Anyone or Survivor Clause) have died, the nominee or the nominees
jointly, (if there are more than one nominee), should be permitted to withdraw the
contents of the locker.
Nomination in respect of lockers can be cancelled or varied by the sole hirer or all the
joint hirers as the case may be but, in the case of nominations made by the joint hirers,
212
branch should not permit the surviving hirers to cancel or vary the nomination upon the
death of one or more of the hirers, unlike the position in Deposit Accounts.
The contents of the lockers have to be necessarily withdrawn by the surviving hirer(s)
jointly with the nominee(s).
All other formalities for abstention of nomination, cancellation or variation of
nomination, recording of the same, acknowledgment and preservation of records are
same as those applicable to Deposit Accounts.
SETTLEMENT OF CLAIMS WHERE NOMINATION HAS BEEN OBTAINED
If nomination had been obtained in the accounts of the deceased constituent, claim should
be settled in favor of the nominee as per the procedure detailed in the following paras.
SETTLEMENT OF CLAIMS UNDER NOMINATION — DEPOSIT ACCOUNTS
Claims from a nominee must be entertained only upon the death of the depositor (or all
the depositors). Branches may inform the nominee on receipt of notice of death of the
depositor if after a reasonable time it is found that the nominee does not come forward to
claim the deposit.
Satisfactory proof evidencing the death of the depositor(s) must be tendered along with
the claim papers.
An announcement of death in a newspaper, production of a death certificate or a report
from a reliable person etc., is sufficient notice of death to act upon, subject to the
ostentation of Death Certificate before settling the claim.
Upon receipt of the notice of death, the officer in charge of the department should record
the same immediately in the relative ledger folio/registers with the date and source of
213
information in red ink under his initials. A suitable note should also be made in red ink in
the relative account opening form and specimen signature sheet under the initials of the
officer-in-charge.
A claim made by a nominee in an account in respect of which he has been nominated
must be settled only by closure of the account and payment of the balance together with
interest, where applicable, to the nominee.
Such payments can be made in cash, only if the aggregate amount of the claim including
interest is below Rupees Twenty thousand only. If the amount of claim is Rupees Twenty
thousand and above, as per Section 269(T) of Income Tax Act, the payment should be
made only by an Account Payee crossed Bankers Cheque or Demand Draft or by credit to
a bank account of the nominee.
This would constitute full and valid discharge of the Bank’s liability. The nominee
should not be allowed to operate the account of the deceased depositor(s) under any
circumstance. Similarly, no loan should be granted to the nominee against the security of
the deposit in the name of the deceased customer.
The nominee can prefer a claim only in respect of the account/deposit in which he has
been nominated. For example, if the deceased depositors had made nomination in one
deposit and left another without nomination, the former deposit should be settled with the
nominee and the latter should be settled with the legal heirs of the deceased.
When a claim is received from a nominee it should be verified that the nomination is in
force in the concerned account and that it has not been varied or cancelled.
Where the nominee is a minor, the balance in the account must be paid to the person
authorized to receive the monies on behalf of the minor in the nomination letter and the
receipt obtained from him for the payment.
214
In a minor account, if a guardian, (say father)nominates a third person for the deposit
account in the name of his minor son/daughter and if the minor expires during the
currency of deposit, the deposit amount is payable to nominee only and not to the natural
guardian (in this case the father).
Where, however, the minor account is operated by a guardian appointed by a Court, upon
the death of the minor, the branch should take up with Regional Office for a decision on a
case to case basis.
Where the nominee is not a resident of India and it is sought to repatriate abroad the
monies in the account of the deceased depositor(s), branches should be guided by the
following:
a) Claims from a nominee who is a non-resident Indian / Person of Indian Origin,
the monies standing to the credit of deceased depositor(s), should be credited to
the nominee’s NRO account only. Repatriation of such balances up to USD one
million per financial year from the NRO accounts may be permitted subject to
compliance with the following, as stated by RBI, vide their Master Circular
No.3/2007-08 dated 02.07.2007 as below :
NRI/PIO may remit an amount, not exceeding USD 1,000,000 per
financial year, out of the balances held in NRO accounts / sale proceeds of
assets / the assets in India acquired by him by way of inheritance / legacy,
on production of documentary evidence in support of acquisition,
inheritance or legacy of assets by the remitter, and an undertaking by the
remitter and certificate by a Chartered Accountant in the formats
prescribed by the Central Board of Direct Taxes.
NRI/PIO may, within the overall limit of USD one million as stated above, remit sale
proceeds of assets acquired under a deed of settlement made by either of his parents or a close
relative (as defined in Section 6 of the Companies Act, 1956) and the settlement taking effect on
the death of the settler, on production of the original deed of settlement and an undertaking by
215
the remitter and certificate by a Chartered Accountant in the formats prescribed by the Central
Board of Direct Taxes.
In case, the amount to be repatriated is more than one million US dollars, the application
should be made to Reserve Bank of India.
Where a non-resident nominee happens to be a foreign national of non-Indian origin, the
balances standing to the credit of the deceased depositor would have to be credited to NRO
account.
Instructions of the Exchange Control Department of Reserve Bank of India must be
sought when request for repatriation of funds is received in such cases. Utilization of such funds
in India is also subject to the current provisions of FEMA.
In all cases of claims by the nominee, the branch should request the nominee to produce
the death certificate or any other acceptable proof of death of the depositor in respect of whose
account the claim is being made.
In addition, the nominee must surrender the pass book and cheque book relating to the
account or the deposit receipt as applicable. If the pass book, cheque book or deposit receipt is
not available with the nominee and the branch is convinced about the bonafides of the nominee,
the same may be waived.
“Upon the information of death of the customer, the nominee should be provided with the
Claim Form as per specimen in Annexure 14 (Revised) and be instructed to submit the same duly
completed. Branches are required to identify the nominee-claimant with Ration Card (with
Photo), Voters Photo ID Card, and Passport, etc., and satisfy themselves about the genuineness
of the claim / nominee. Branches are also advised to obtain the original as well as a copy of death
certificate and the proof of identity from the claimant and return the original after verification
while retaining the copy for branch records”.
The Claim Form duly completed as indicated in para: 9.13above together with the death
certificate and documents mentioned in para: 9.12above must be tendered by the nominee to the
branch for settlement of the claim.
216
After verifying the documents submitted by the nominee, the officer in charge of the department
must ensure that:
a) The nomination in favor of the claimant is in force and there is no variation or
cancellation.
b) That there is no lien on the monies claimed and that there is no liability
outstanding against the deceased customer that would necessitate the exercise of
the Bank’s right of set-off against the monies claimed. However, it should be
borne in mind that the Bank cannot exercise its right of set-off or lien on the
money payable to the nominee for his viz. nominee’s individual dues. The branch
should, in such a case, refer the matter to the respective Regional Office for
guidance.
c) That no order of any court has been received restraining payment of the amount to
the nominee.
d) If the claim is for amounts lying in a Savings Bank Account of a deceased
pensioner, branch should ensure that no pension payment has been made for the
period subsequent to the death of the pensioner.
These details should be recorded under the signature of the department officer on the
reverse of the claim form. In case of any doubt, the matter must be referred to the Regional
Office for guidance.
If the claim is in order, the officer-in-charge of the department must place the Claim
Form together with his noting to the Manager of the branch for closure of the account.
After obtaining the Manager’s permission, the department may proceed to close the
account.
Amounts held in Term Deposits may be paid to the nominee (after satisfying the
above formalities for the claim) by foreclosing the deposit before maturity if the
nominee so desires without applying the penalty applicable for premature closure. If
the nominee wants the money to be paid on maturity, the branch can do so.
217
Interest on amounts held in term deposit accounts in the name(s) of the deceased
depositor(s) may be paid to the nominee in the manner indicated below:
a) At the contracted rate up to the date of maturity of the deposit if paid on the date
of maturity.
b) Where the claim is made before the date of maturity of the deposit, interest should
be paid at the appropriate rate for the period for which the deposit has remained
with the bank, without charging penalty for premature closure.
c) Where the deposit amount is claimed by the nominee after the date of maturity of
the deposit, interest should be paid at the contracted rate up to the date of maturity
and thereafter, simple interest should be paid at the appropriate rate applicable as
on the date of maturity for the period from the date of maturity till the date of
settlement without treating the deposit as being renewed.
d) In the case of FCNR and NRE deposits, where the deposit is claimed after the
date of maturity of the deposit, interest should be paid at the contracted rate till
the date of maturity. From the date of maturity till the date of settlement of the
claim, interest as permissible under the directives of interest rate on FCNR/NRE
deposits operative on the date of maturity of the deposit should be paid. Branches
should follow the changes notified by Central Office from time to time and apply
the ruling rates.
Interest should be paid at the rate of interest applicable in respect of Savings Bank
accounts, from the date of death till the date of settlement of claim in the following cases
a) Credit balances lying in the Savings Bank accounts of individual depositors
b) Credit balances lying in the Current Account and Cash Credit Accounts of
individuals
After computing the amount due, including interest, to the nominee, a receipt as per
Annexure 14must be prepared for the amount to be paid in settling of the claim. The
218
nominee must be asked to sign this receipt and return to the branch. Where the amount of
payment is Rupees Five hundred and above, the nominee must be asked to give a
discharge on a Rupee One revenue stamp.
The account in the Ledger or Register must be closed. The relative ledger folio or register
folio entry should additionally carry the following remark in red ink under the full
signature of the official of the department.
The details of the closure must be recorded in the Register of Accounts Opened and
Closed with the remarks “claim paid to nominee” made in the “remarks” column.
The account opening form, specimen signature card, nomination letter, letter of
variation/cancellation of nomination (wherever applicable), death certificate, or any other
proof of death and claim form, receipt from nominee and any other related document
must be preserved in a separate file titled “Claims paid File” and retained in the custody
of the Deputy Manager as a permanent record. The account should be removed from the
Index to the relative ledger.
Branch need not refer the matter to Regional Office or Central Office but settle the claim
at the branch level, if otherwise in order. The claim of the nominee should be settled
irrespective of any claim from the legal heirs or anybody else except in case of receipt of
a Court Order prohibiting such payment.
SETTLEMENT OF CLAIMS IN THE ACCOUNTS OF DECEASED DEPOSITORS
UNDER CAPITAL GAINS ACCOUNT SCHEME, 1988
Claims by the nominees or in their absence the legal heirs who claim the amounts should
apply in Form-H (annexure-15)with prior approval of the concerned Assessing Officer.
Legal heirs will have to produce documentary evidence such as
Relative Pass Book (for account A), Term Deposit receipt (for Account B) etc. as specified by
the above Authority
or
b) Letter of disclaimer or authorization in favor of one of the legal heirs by other legal heirs
219
or
c) Succession Certificate
or
d) Letter of Administration in the absence of a registered Will/Probate of the Will
And
The payments made as above shall not affect the right or claim which any person
may have against the person to whom any payment has been made. Branches should refer all
claims under Capital Gains Accounts Scheme, 1988, to respective Regional/Central Office as
appropriate depending on the amount of claim. Payment should be made only on receipt of
specific approval from Regional Office/Central Office.
220
CHAPTER 7
BRANCH MAINTENANCE
7.1. MAINTENANCE OF BRANCH PREMISES
DEAD STOCK , FURNITURE &FIXTURES, PREMISES AND STATIONERY
FURNITURE & FIXTURES
As per new Policy decision implemented with effect from 1st October 1998, the entries
relating to Furniture &Fixtures account hitherto held in the books of branches, have been taken
over by respective Regional Offices. As such, no accounting entries in respect of Furniture
&Fixtures Account shall be held in General Ledger by branches.
However, branches should maintain an Inventory Register or system generated history
printouts of Furniture &Fixtures items with details like name and description of item, date of
purchase, original cost, distinctive number etc. to enable physical verification by Branch,
Inspectors of Regional Office/Central Office and Statutory Auditors.
Purchase of New Furniture Branch shall purchase new furniture items as per
discretionary powers and where it is beyond First Line Manager’s discretion, prior approval of
Regional Office / Central Office must be obtained.
Branch should effect payment to the supplier to the debit of their Suspense Account and
seek reimbursement from Regional Office with a detailed Report confirming receipt of the
furniture item. If original instructions from Regional Office are otherwise, branch should
scrupulously follow the same and confirm compliance.
Disposal of old Furniture items After getting prior permission from Regional Office /
Central Office for disposal of old items, branch should take necessary steps for sale / auction as
per norms prescribed by Regional Office. The entire sale proceeds should be credited to
Regional Office on the same day of realisation and a detailed Report should be sent.
221
Depreciation on Furniture and Fixtures Depreciation will be provided by Regional Office
at the stipulated rates at the end of each half year viz. 30th September and 31st March of each
Financial Year.
Regional Office should forward the consolidated Furniture &Fixtures statement every
half year viz., September and March to Accounts Department, Central Office. It is the
responsibility of branch to ensure that no balance is held in the following heads of accounts in its
General Ledger.
PHYSICAL VERIFICATION OF FURNITURE AND FIXTURES
Once in six months in a Financial Year the branch Deputy Manager an Officer authorised
by the First Line Manager should physically verify the bank’s furniture at the various quarters of
officers attached to the Branch and also the furniture in the branch premises and furnish an
Inspection Certificate to the effect that all the furniture as per Inventory Register are available.
If there is any shortfall, it must be reported to Regional Office / Central Office
immediately. Records pertaining to such inspection should be maintained by the branch for the
verification of Auditors / Inspectors. Care should be taken by such Inspecting Official to furnish
factual position as this portfolio constitutes an important segment in the bank's Balance Sheet.
Wherever Bank’s own residential blocks are occupied by officers of various branches/
Controlling Offices, Regional Office must, once in six months in a Financial Year, verify
physically about the availability of Furniture and Fixtures supplied and if any item is missing, it
must be brought to the notice of Central Office for appropriate action. Records thereon should be
maintained by Regional Office for the verification of Officials during the course of Management
Audit.
7.2. MAINTENANCE OF FILES
CORRESPONDENCE, RETURNS AND RECORDS
Branches should bear in mind that the Returns/Statements are the effective medium
through which the working of the branch in the primary functional areas is brought to the
222
knowledge of Controlling Office and it is the most reliable tool for Regional Office/Central
Office to exercise effective and adequate supervision. Branches and Controlling Offices should
sensitize themselves to the requirements of MIS Policy put in place by Central Office in our
Bank.
Branches should ensure prompt submission of various Returns and incorporate the
correct data/information in line with the related instructions. In small branches, First Line
Manager / Deputy Manager should oversee submission of Returns.
However, in medium and large branches, the Officer-in-charge of Advances or any
other Officer should be entrusted with the responsibility of ensuring timely submission of
Returns under the overall supervision of Manager/Deputy Manager.
Branches should maintain Register labeled as "Returns submitted Register" and the
entries are to be made month-wise. As and when a Return is compiled and submitted to
Regional Office / Central Office, the details should be entered in this Register under the initials
of Manager/Deputy Manager or an authorised official. All the Returns relating to various areas
of branch functioning viz., Deposits, Advances, Foreign Exchange, Customer Service, must be
recorded in this Register.
In terms of the provisions MIS Policy, Departments at Central Office and Regional
Offices are under instructions to display a comprehensive updated list of Returns to be
submitted by branches and Controlling Offices for the compliance and guidance of operational
staff. Branches are required to note the changes / additions notified and ensure prompt
submission of Returns / Statements / Certificates / Data to the Regional Offices, Central Office,
other Competent Authorities specified.
It should be the responsibility of the Branch Manager to maintain a Register titled
"Trade, Industries and Agriculture" wherein reliable information relating to volume and value
of Industrial Production and Agricultural Minerals and also the Imports and Exports of the area
of operation should be recorded.
The information recorded should be reviewed annually from independent enquiries,
223
official statistics and other literature published from time to time. Up-to-date information
relating to Population and any Scheme of Agriculture or Industrial development should also be
included in this Register for a proper Appraisal of business potential of the area served by the
Branch.
Branch Statistics Register should be carefully compiled each half year to watch the
comparative progress of the Branch. Any unusual item which affects the amounts or rates for
purposes of comparison between the different years should be mentioned therein.
In the said Register, Managers shall maintain a record of what imports represents their
Sales and Collections and what exports represents their Purchases and encashment. Items
which cannot be related to any particular commodity such as Personal Cheques etc. should be
grouped together as miscellaneous.
7.3. MAINTENANCE OF CARD/ DEMAND/ CHEQUE
CARD SCHEMES
Our Bank had launched our own credit cards (Classic and Gold ) in affiliation with Visa
International with effect from 01.04.2006. Our credit card is a global card, valid not only in India
and Nepal, but also throughout the world. The card will be accepted at over 1.18 lakh outlets in
India and over 130 lakh outlets worldwide. The facility to draw cash using the card is available at
nearly 15000 ATMs in India and over 8.7 lakh ATMs worldwide.
Type of Credit Cards:
Our credit cards are affiliated to Visa International. The following types of cards are issued at
present.
1. Classic Cards: The cards issued with the limit slabs of Rs.10000/-, Rs.25000/- and Rs.50000/-
2. Gold Cards: The cards issued with the limits of Rs.60000/- and above and up to Rs.500000/-
(maximum credit limit)
224
DEMAND DRAFTS
DRAFT LEAVES
All Demand Draft (DD) leaves should be kept in the dual custody of the Deputy
Manager and an Officer authorised by the first line Manager.
At the end of each day the joint custodians should ensure that all the DD leaves
utilised for the day have been properly accounted for and further verify that all the
unutilised leaves are intact.
Operational staffs are advised to note that our bank's DD leaves are designed with
certain in-built security features to ensure operational efficiency and also to take care
of the preventive vigilance requirements.
The salient features are furnished here below for the guidance of branches and Regional Offices.
A single new design DD format has been introduced with effect from 1st February
2009 with the following features. Since then issue of Demand Drafts in the old format
of leaves is prohibited.
The existing prefix reading as 98/MDD/O stands deleted. Column hitherto existed for
incorporating details of remittance i.e., Cash/Transfer/Clearing on the face of DD leaf
is dispensed with.
Issue branch name with code number, EC type and check digit are preprinted.
DD number consisting of nine digits is printed horizontally on the top with the font of
the digits in the MICR format.
225
Water mark of our bank’s name viz. Indian Overseas Bank followed by bank’s logo
has been inscribed and such water mark will be visible when viewed through light
rays.
Our bank's name viz. Indian Overseas Bank appears at six places in two rows (three
in each row in Hindi and English alternately) with bank’s logo in middle encircled by
a special animation design in yellow colour and the same can be viewed through ultra
violet lamp.
The cages for OT, TT, OL and TL are positioned on the left side just above the MICR
band.
The line appearing just above the authorised signature is having a security check i.e.,
Indian Overseas Bank repeated in micro types and will be visible when viewed
through magnifying glass.
Since February 2007, a circular hologram was hot stamped by security printers at the
printing stage itself. The hologram is affixed in the lower middle portion of the DD
just above the MICR band.
The name of drawee branch of our Bank in Hindi and English is printed on the top
left side on the face of DD and positioned one below the other to provide space for
hot stamping the Hologram. Thus, Bank's name in Hindi is shifted upwards so as to
be in line with the word 'To' and Bank's name in English is printed just below the
Hindi version.
THE HOLOGRAM CONTAINS FOLLOWING FEATURES
“INDIAN OVERSEAS BANK” written in English and Hindi with Bank’s logo in the
centre.
A picture of our Central Office main building is printed at the centre.
226
“Indian Overseas Bank” and: Good People to Grow With” printed in slanting position at
the bottom.
‘Indian Overseas Bank’ written in circles away from the core centre.
A spiral design is positioned in the centre.
‘IOB’ written in English and Hindi in Micro text inside Bank’s logo.
Three flying birds at the top right side.
Chain like design in semi circular shape at the top.
The diameter of the hot stamped hologram is fifteen mm.
Branches, Extension Counters, Regional Offices and Departments at Central Office
should use the new Demand Drafts with hologram. Branches, Extension Counters and all other
offices are prohibited from borrowing/ supplying DD leaves from/ to other Branches/ Extension
Counters/offices. Branches/ Extension counters and other offices are advised to place their indent
depending upon their consumption pattern well in advance say six months to their respective
Regional Office.
APPLICATION FOR DD/MT/TT
An application for a Demand Draft in F.46A or Mail Transfer in F.40 shall be taken as
per the requirement of the purchaser. If an application is received by letter, the date of the letter
will be entered in the form, all particulars of which will be authenticated by a supervising
official, the letter then being pasted to the voucher on record. Applicants for Telegraphic
Transfer should however be required to sign the standard form whenever possible, but action on
written instruction should not be delayed on this account.
Branches while accepting applications for purchase of DDs of smaller value (particularly
by cash) are required to make enquiry and satisfy themselves as to the genuineness of the
purchaser and the purpose of purchasing of small value DDs.
227
TRANSFER FROM CONSTITUENT’S ACCOUNT
In order to affect debit to a constituent’s Account, the application must be accompanied
by a cheque in favor of our bank or a letter authorizing to debit the account towards the amount
of Demand Draft/ Mail Transfer/ Telegraphic Transfer and the Bank charges. The cheque or the
letter of authority should be signed by the person(s) authorised to operate the Account.
Where a cheque is not enclosed to Request-cum-Authority Letter for DD/TT/MT but
DD/TT/MT application (F.46A or F.40) is available, after due verification of the authenticity of
such letter, branch should prepare a separate debit voucher with advice and the Request-cum-
Authority Letter should be marked and preserved securely attached with the voucher so prepared.
A Demand Draft/Mail Transfer/Telegraphic Transfer may also be issued against a Letter
of Request authorizing to debit the account towards the amount of Demand Draft/Mail
Transfer/Telegraphic Transfer and the Bank’s charges even if not accompanied by an application
in F.46A or F.40 and in such a case the Demand Draft/Mail Transfer/Telegraphic Transfer
voucher also shall be prepared by the branch.
In exceptional cases, however, a Demand Draft/Mail Transfer/Telegraphic Transfer shall
be issued as per complete details furnished on the cheque itself (duly authenticated by the
Drawer), even if the application is not signed by all the authorised person(s).
The tendering of a cheque in favor of the Bank is no authority to make remittance on the
instruction of a third party by the debit to the drawer’s account and it follows that, when two or
more signatures are necessary for operation on an account, the application must be signed by the
requisite number of parties authorised to operate even if it is accompanied by a cheque which is
properly signed.
228
ADVICE TO CONSTITUENTS
Particulars of all DDs which are issued by debit to constituents’ accounts and handed-over or
despatched to third parties must be immediately advised directly to the constituents and not
through their messengers.
DELIVERY OF DRAFTS
Drafts should be delivered against the recipients’ acknowledgment on the reverse of the
relative application forms and delivered on the same day. In other cases, the acknowledgment
should be taken either on the reverse of the form or in a local delivery book specially maintained
for the purpose.
ISSUE BRANCH NAME AND CODE NUMBER
A hole in the relevant digit-cage on both the right and left side of the instrument should
be punched with the help of punching plier. Under no circumstances, the digit-cage should
simply be crossed with pen. Particular care must be taken to see that all the draft forms in use are
branded with the name of the branch with code number before issue, if it is not already printed
thereon.
SPOILT DRAFT LEAF
When a form is spoilt in preparation, the fact must be noted in the office copy of Demand
Drafts Issued Register (DDR 1) under the authentication of the Deputy Manager or an Officer
authorised by the First Line Manager who will himself / herself destroy the spoilt form. The
portion bearing the printed serial number of the spoilt draft in question, should be neatly cut and
pasted in DDR 1 of date.
DDR SYSTEM
Under Demand Drafts Reconciliation (DDR) System, DDs should be issued to the credit
of the DDR account (GL Code 2005). Particulars of all DDs issued on a particular day should be
229
recorded in Demand Drafts Issued Register (DDR-1).Regarding payment of DDs the same
should be paid to the debit of DDR account after recording the particulars in Demand Drafts Paid
Register (DDR.2).
Before authenticating a DD, the signing official should check the recordings in DDR-1,
verify the DD on hand and ensure that, the DD number, paying branch name and code, issuing
branch name and code, date of issue and amount both in words and figures are correctly
recorded, the appropriate security cages both on the left hand and right hand side of the drafts are
properly punched and they are as per DD application form.
DDs of value less than Rupees Fifty thousand only are to be issued under one authorised
signature. The single signatory to the DD for value less than Rupees Fifty Thousand should
block-out the space meant for the second signatory (in relevant column of "Authorised
Signatories" on the DD leaf) by means of a square rubber-stamp (of Revenue-stamp size) reading
as X .
This is a preventive vigilance measure and the single signatory's compliance is required
prior to the delivery of DD to the purchaser. DDs for amounts of rupees Fifty thousand and
above, should bear two authorised signatures.
As regards drafts issued by Extension Counter Officer and other branches having single
officer, each draft should be less than rupees Fifty thousand only.
NO DRAFT ADVICE REQUIRED
Under New DDR System, no advice need be prepared. The draft should be prepared with
carbon impression on the reverse of it. Care should be taken to record correct code number and
name of the paying branch both in the draft and in DDR-1. Regarding branches coming under the
CCO centres, DDs must be drawn on the respective Central Clearing Office.
Branches are not permitted to draw DDs on any of the branches coming under the CCO
centres. The DDs so drawn on CCOs are payable at all local branches attached to the respective
CCO.
In case customer wants the DD to be issued on a specific branch within such CCO
centre, issuing-branch should draw DD draft on CCO and also incorporate on the DD the name
230
of such specified branch. For this purpose, the issuing branch should indicate the name of the
branch in red ink on the top right-hand side of the draft as "Also payable at ..............................
branch". The paying branch should follow the usual procedure laid down for payment of drafts.
DDS/MT’s/TT’s BY OVERSEAS BRANCHES
Payment of DDs/MTs/TTs issued by our overseas branches is delinked from FETS from
1st October 2001. The procedure is the same as in the case of payment of DDs/MTs/TTs drawn
by Indian branches. Overseas Branches (except Colombo) will issue Indian Rupee DDs and MTs
on CCOs only in CCO centres.
PAYMENT OF DD’s DRAWN ON CCO’s
Core Branches located in Core CCO centres have to pay DDs / MTs by accessing their
CCO / DDR module through core net work. In such cases branches should not debit Local DD
Reimbursement Account (GL Code.2520).
PAYMENT OF DRAFTS DRAWN ON BRANCHES
a) The paying / drawee branches functioning in non-CCO centres should pay the DDs
drawn on them only to the debit of DDR account in their books and ensure that the debit
is recorded in DDR Paid Summary DDR 2.
b) In case of rupee TT received from our overseas branches, the concerned branch should
debit their TT Payable account after ensuring that the cipher is tallied and credit
beneficiary's account and wait for IBSA from Treasury (Foreign) Department, Central
Office. The paying branch need not submit any claim. If TT payable entry is not
eliminated within seven days, branch should contact Treasury (Foreign) Department,
Central Office for obtaining IBSA/CMP-4.
231
ISSUE OF DEMAND DRAFTS
The Officer assigned with the role function of issue of DDs should authenticate a DD
after ensuring the compliance to the following essential particulars:
a) Name of drawee- branch and code number thereof
b) DDR running serial number
c) Date
d) Specimen signature number is entered correctly. DDs should not be signed by officers on
probation who do not hold Power of Attorney as their signatures are not circulated and
not available for verification. The authorised signing officials must put their Specimen
Signature Number beneath the signatures on the DD and desist from indicating their
names below the signature on the DD.
e) Punching of appropriate cages is done meticulously with the plier and the punched holes
are clear and without any hinges to check fraudster from meddling with the cages as also
to prevent giving scope for inflating the value of the DD. Branches are cautioned that
marking of cages with pen (or by any other method other than punching by plier) should
never be resorted to, lest it defeats the very purpose of cage mechanism.
f) Amount in words and figures are written legibly and correctly.
The DD Issuing-branch should arrange to paste transparent self- adhesive tape of
standard quality on the figures of value of DD written on each DD issued. The tape should be
securely pasted by the clerical-staff who writes the DD (both manually and through system) in
the manner specified, before placing the same i.e. the Demand Draft instrument to the
Authorised Signatory for his / her verification and signature.
Such affixing of adhesive tape should never be done on the Payee's name, amount of DD
in words and other features of DD. The Authorised signatories to the DD should ensure the
pasting of tape on the figure of value of DD before putting their signatures.
The single signatory to the DD for value of less than rupees Fifty thousand should block-
out the space meant for the second signatory ( in relevant column of "Authorised Signatories" on
the DD leaf ) by means of a square rubber-stamp of Revenue stamp size reading as X .
232
Issuing branch should exercise vigilant caution when requests for multiple drafts of small
values are received (particularly by cash ) and ensure verification of the identity of the purchaser.
Computerized branch having DDR package, while issuing drafts should ensure that the
checksum is generated by the system.
Branches should not issue drafts on Administrative Offices. However, Administrative
Offices are permitted to issue DDs on their CCO/Local Branch for making payments.
Demand Drafts / Mail Transfers / Telegraphic Transfers for Rupees Fifty thousand and
above should be issued by branches only to the debit of concerned customer’s account and not
against cash payment. Similarly payment of Drafts / Mail Transfers / Telegraphic Transfers for
Rupees Fifty thousand and above should be routed through the account maintained by the
beneficiary with a bank and not in cash.
Single draft for value less than rupees ten lakhs only may be issued by branches headed
by Chief Manager. Regarding issue of single DD of value rupees ten lakhs to less than rupees ten
crores, branches should take up with IBR Division, Central Office through their respective
Regional Office furnishing the details and obtain prior permission.
Branches headed by AGM and above cadre are authorised to issue single DD of value
less than rupees ten crores. In other words, at branches, no single DD can be issued for the value
of rupees ten crores and above.
Branches are advised to note that for DDs of Rupees Fifty thousand and above, the
applicant must furnish Income Tax Permanent Account Number and it should ensured that this
information is provided in the DD application form.
The Drafts should invariably be crossed before handing over to the customer except in
cases where specific request has been made for an uncrossed draft.
233
DDR.1-DD Issue summary
The system generated DDR-1should be compiled for each day. The day’s total of DDs
issued should be made at the end of the day and recorded. Unused space of DD issue column, if
any, in DDR-1 for the day should be blocked for security reasons by drawing two parallel lines.
The day-end total of DDs issued as reported in DDR-1 through system generated report should
be taken to Day Book as credit for DDR Account in General Ledger.
PROCEDURE AT PAYING BRANCH
When our Bank’s draft is presented at the paying branch for payment it should be verified
for safety checks by the officer-in-charge and handed over to the clerk for necessary
accounting.
The safety checks are
a) The draft whether issued in the new design format and has the name of the issuing branch
and code number.
b) the DD should have a preprinted nine digit number
c) Punching at the right hand side for the correct digit code and at the correct security cage
on the left hand side of the DD.
d) Signatures of the officers of the issuing branch must tally with the specimen on records
e) Draft must have the carbon copy impression on the back. However this not applicable for
a computer generated draft.
f) words and figures of the amount of DD must tally
g) DD is neither post/anti dated nor out of date and bear the date of issue
Utility Programme for viewing DD issue details.
All branches covered by the network and Central Clearing Offices will be able to use this
utility programme named ‘DDR ISSUE’ which is available in IOBONLINE under "Product
234
Links". A detailed user manual for using the program is available in the "User Manuals from
Information Technology Department, Central Office" on IOBONLINE.
Whenever a draft is presented for payment, the Supervisory staff should use this facility
and cross-check the DD details. The actual transaction for effecting the payment has to be done
in the system as per instructions in force. After the payment of DD the user at the paying
Branches / CCOs should note to opt "Mark Paid" to enable alert mode to the subsequent enquiry
for the same DD by other users.
Usage of DD view programme
User-staff are advised to note that this facility is an additional supporting tool. The details
available to the user through this utility programme will facilitate verification of issue details.
The decision to honour or otherwise pertaining the DDs shall be taken based on such verification
and other guidelines relating to safeguards to be taken at the time of payment of drafts put in
place by Central Office.
Branches in CCO Centres while making payment of drafts drawn on their CCOs should
also opt the "Mark Paid" button to indicate the draft as paid. When these drafts are processed at
CCO, the user at CCO will get a message "CAUTION: Draft Already Marked as Paid by
…………….. (Branch name)", if the draft was processed already and paid by a branch.
This utility programme is available only to Supervisory Staff of branches / Central
Clearing Offices. To enable the login, branches should contact their respective RCCs with the
roll number of the Supervisory Staff attached to their branch. Once the RCC registers the users,
authorized supervisory staff can login to the system. Users logging in for the first time should
change their password immediately and then proceed for enquiry of draft details or else the
system will not allow them to proceed further. This password should be kept secret and should
not be divulged to anybody under any circumstances.
In as much as the utility entirely relies upon the data received from all the networked
branches, it is the responsibility of all Networked branches to ensure that the "data file" transfer
at the time of "Application Shutdown" is successful every day. In case of failure, branches
235
should send the data through the utility specifically provided for File Transfer to Regional Office
/ Central Office.
It is reiterated that this programme is a supplemental tool (like checksum) available to
networked branches which would enable them to cross-check the details of a particular DD when
the same is presented for payment and satisfy them as to its genuineness.
Branches are advised to note that non-availability of this facility as well as the data, for
any reason whatsoever (like loss of connectivity) cannot be a basis for non-honoring of DDs if
they are otherwise found to be in order.
Networked branches/Extension counters and CCOs are required to make best use of this
facility to guard against payment of fake/fraudulent drafts.
Branches are advised note the additional Preventive Vigilance measures as detailed
below. Operational staffs while handling DDs at branches / offices are required to meticulously
comply with the following instructions.
a) Paying branch should continue to ensure scrupulous observance to the operational
instructions governing payment of DDs put in place by Central Office while effecting
payment of DDs.
b) Paying branch should verify whether the transparent tape affixed on the Figures' of the
value of DD by the issuing branch is intact and that it does not contain additional tape
one on the other.
c) Paying branch should continue to verify the issue details on-line or contact the branch
over phone wherever necessary.
d) The Passing Authority at the Paying branch should ensure strict adherence to the
following instructions pertaining to Pre Passing and Post-passing procedures.
236
PAYMENT OF DEMAND DRAFTS: PRE PASSING COMPLIANCE
The Passing Authority should subject all the Demand Drafts to ultra violet lamp scrutiny.
In respect of Demand Draft of value more than Rupees Twenty Five Thousand, as a record for
having verified under ultra violet lamp, the Passing Authority should affix, after due verification,
a rubber-stamp reading as ”UV Verified” on the reverse side of the Demand Draft under
authentication with date.
On getting warning messages if any, prompted by the computer system while verifying
checksum of a Demand Draft, the Passing Authority should make discreet enquiries about the
discrepancy and ensure the genuineness of Demand Draft. A comprehensive record of such
enquiries should be incorporated on the reverse side of the Demand Draft by the Passing
Authority under authentication with date. It should be noted that tallying or non-tallying of
checksum alone cannot be the deciding factor for paying or rejecting a draft.
The appearance of security-band in the form of wavy-boxes with the words “Indian
Overseas Bank” inscribed, on the body of Demand Draft leaf should be ensured by the Passing
Authority.
Passing Authority should continue to verify the ‘issue particulars’ in all cases of Demand
Drafts of value exceeding Rupees One Lac and such other Demand Drafts as deemed fit through
‘IOBONLINE’ wherever available and record such verification details on the reverse side of the
Demand Draft under authentication with date.
PAYMENT OF DEMAND DRAFTS: POST PASSING COMPLIANCE
Passing Authority is required to follow-up and obtain written confirmation within forty
eight hours of transaction wherever any oral clarification has been obtained from the DD issuing-
branch on a reference made while effecting payment.
237
Passing Authority should record the details of enquiries made and the response of
Demand Draft issuing branch, on the reverse side of Demand Draft under reference, without
omission, under authentication with date.
Branches and Controlling Offices are required to note that the Pre-Passing and Post-
Passing procedures put in place as Preventive Vigilance measures are to help the Operational
Staff to strengthen the process of verification of the day-to-day transactions, and to ensure the
correctness / genuineness of the Demand Drafts while processing them for payment.
Regional Offices are advised to verify during branch visits, compliance to the Pre-
Passing and Post-Passing procedures by branches through random checks and ensure that the
above instructions are adhered to by all the branches under their control on an on-going basis.
The Paying authority at branch should exercise due alertness to pick-up any warning-
signals while verifying the Demand Draft presented for payment and should never hesitate to
seek clarification if need be, from the issuing branch. Paying branches are cautioned not to
overlook the Preventive Vigilance measures both in-built and manual, put in place by Central
Office as any dilution in compliance is likely to lead to serious operational risks besides putting
the bank to financial loss.
In terms of the software devised by our Information Technology Department, Central
Office, under DDR package while issuing each DD a unique check-sum arrived by the system is
incorporated on the DD with the prefix "CS”. At the time of making payment, the system would
cross-verify the check-sum.
During branch visits, Officials from Regional Office should undertake test-check of few
paid Demand Drafts to verify branch compliance to the Systems and Procedures including
Preventive Vigilance measures put in place by Central Office for payment of Demand Drafts.
Deficiencies observed should be brought to the immediate attention of branch for rectification.
Branches, CCOs and Regional Offices are reminded that the degree of sophistication and
complexities of frauds in DD related instances are alarming and the fraudsters continue to be on
prowl to encase the complacency of operational staff. The fraudsters should never be allowed to
pursue and they should be jettisoned. Operational staff should respond to the requirements of the
frauds prone environ and weed out the fraudsters through strict adherence to the Systems and
238
Procedures as also the Preventive Vigilance measures put in place by Central Office.
PAYING BRANCH - DDR.2
After verifying in the manner stipulated by Central Office and satisfying himself / herself
about the correctness the Paying Authority should hand-over the DD received for
payment to the clerk who is authorised to handle the same.
The clerk should then record the details of the DD in DDR.2 (Demand Drafts Paid
Register) in the system exercising due care to enter all the details correctly especially
with regard to the draft nine digit number, issuing branch code, date of issue, date of
payment and amount.
The authorised Paying authority at the branch should check the entries in the system
maintained DDR-2and ensure that the details are recorded correctly before releasing the
DD for payment.
The DD should then be entered in the cash / transfer module in the system and passed by
the officer for payment. Utmost caution should be exercised in paying the draft as no draft advice
will be received.
Punching in the digit cage should invariably be verified before payment. Branches may
accept and record Passports/Postal Identity Cards or Identity Cards of Armed Forces personnel
for the purpose of identification of payees of Demand Drafts up to Rupees Twenty five thousand
only.
On payment of draft, cash or transfer paid stamp with date as appropriate should marked
on the face of the DD with cancellation of signatures as done for passing of cheques.
The system generated day’s total of our Bank’s DDs paid should be made at the end of
day and authenticated by the Paying authority after verification. The unused space of DDs paid
column in DDR-2for the day should be blocked for security reasons, by drawing two parallel
lines. The total of DDs paid as reflected in DDR-2 should be taken to Day Book as Debit to DDR
Account in General Ledger.
239
Payment of drafts drawn on CCOs Core Branches located in Core CCO centres should
effect payment of DDs / MTs by accessing their CCO / DDR through core network and should
not debit Local DD Reimbursement Account (GL Code.2520).
DDR SUMMARY
The daily transactions in DDR account should be reported in respect of ‘Drafts Issued’ in
DDR-1 and ‘Drafts Paid’ in DDR-2. At the close of business, the summated total of DDR-1 and
DDR-2 and the total amounts of rectification passed, if any, should be incorporated in the
relevant columns of the covering summary viz. DDR-3. The details of rectification should be
recorded in DDR-5 and be annexed to DDR-3 summary together with DDR-1 and DDR-2.
The closing balance of the previous working day in the covering summary should be
taken as the opening balance to arrive at the closing balance of the current day. Branches should
transmit their DDR summaries / data to their respective Regional Offices on the same day.
It is the responsibility of the Officer-in-charge of DD Section at the branch under the
guidance of Deputy Manager, to ensure that the day-end system generated printouts of DDR are
extracted, verified, authenticated and neatly filed in a separate file for verification by the
Auditors / Inspectors.
DDR Rectification
If errors are noticed after the relevant summaries have been mailed, the correction of
entries should be advised using the Rectification Summary.
The Rectification Summary should contain all the relevant details of the draft/summary in
question, with a suitable narration as to how the correction was effected. Totals of the
rectification entries should be shown on the debit/credit side at the appropriate place in the DDR
covering summary, and should be supported by the rectification summary.
240
REVALIDATION OF DRAFTS
A draft on expiry of six months from the date of issue becomes stale and requires
revalidation. Drafts should be revalidated invariably at the written request of the applicant of the
draft.
Application for revalidation from the payee may be considered only if it is forwarded
through the payee’s banker. The issuing branch should also ensure that the duplicate of the draft
to be revalidated has not been issued by it in the meanwhile.
The Officer-in-charge of DD section at the issuing branch should mark in red ink as
"Revalidated for six months from .................. (date)"on the face of the DD and authenticate the
same. The revalidation should be noted against the relative entry in DDR-1 of that date and in the
relative original voucher under advice to drawee branch.
REPLACEMENT DRAFTS
Revalidation of DD should be restricted to one occasion only. After first revalidation, if
the draft still remains outstanding for more than six months, the draft should be surrendered for
cancellation. Branches are prohibited from revalidating DDs which are more than three years
old.
Prior approval of IBR division, Central Office is required for payment of stale DDs over
three years from the date of issue. In such cases branches are required to forward their request to
their Regional Office for onward transmission to IBR Division, Central Office with their
recommendations.
At the request of applicant of the draft and against surrender of original draft, branch may
issue a fresh DD in the name of the same payee only, subject to recovery of applicable charges.
ATTESTATION OF SIGNATURES
Sometimes, customers while purchasing drafts in their own interest request branches to
attest their signatures so as to avoid difficulties in encashment of DDs at the drawee-branches.
Such request when received from well-known customers, the DD issuing branch may obtain
241
his/her signature on the reverse side of the draft, attest such signature and return to customer
cautioning against misplacement.
In case where the drafts are drawn on Central Clearing Offices, the customer must be
requested to identify the branch through which he / she would like to encase the draft for
payment. After ascertaining his/her preference the draft will be marked with the words "Also
payable at ................ branch" indicating the name of the branch where the draft is to be presented
for payment. Branches are advised to note that the attestation under reference is not applicable
for non-individual payees.
NO REFUSAL OF PAYMENT OF DRAFT
The payment of genuine DD cannot be refused. By issuing DD, the Bank undertakes a
liability which it is bound to discharge at the instance of the person on whose favor it has issued
the DD. Hence by refusing payment of a DD on the grounds like payment countermanded by the
drawer, drawer’s signature needs confirmation, draft not drawn on correct form etc., the Bank is
exposed to risk of claim of damages and unnecessary legal action.
If the drawee branch finds any discrepancy in DD, they should immediately contact the
drawer branch over phone or through Telegram / Fax and ascertain the position. In the meantime,
they could explain the difficulty to the payee or the collecting Bank orally and request them to
present it a day or two later. If the payee or the collecting bank insists on written return-memo,
drafts can be returned with the remark "Clarification awaited. Please present again".
The draft issuing branches on their part should give top priority to answer queries from
drawee branches pointing out the discrepancies in the draft and such clarification should be sent
by Telephone/Telegram/Fax on the same day followed by dispatch of confirmation copy of
communication.
CANCELLATION OF DRAFT
At the request of the applicant of the DD, the amount of DD may be refunded to him/her
by cancellation, against his/her receipt on the back of the DD under words “Received payment
by cancellation”.
242
If the amount is over Rupees Five thousand, such receipt should be obtained on a revenue
stamp from the applicant of the DD. The cancellation should be noted on the face of the related
original DD application under full signature of officer with date of cancellation.
Before payment is made, any endorsement on the DD must be cancelled by the endorser
and any special crossing by bank concerned must have been cancelled. If a draft bears
negotiation marks, stamp or crossing, branch should ask the applicant to get the consent of the
payee before cancelling the same.
The drawee branch should be advised of such cancellation by a letter. The exchange
collected at the time of issue of a draft should not be refunded.
Cancelled DD should be paid in cash or through credit to original applicant’s account subject to
the amount of ceiling in force.
The cancelled DD should be debited to the DDR account through DDR-2of the issuing
branch. A cancelled draft is to be treated as being paid by the issuing branch which should record
its own code number and name as paying branch in DDR-2. Proceeds of cancelled DD of value
of Rupees Fifty thousand and above should be credited to the concerned customer’s account and
should never be paid in cash.
When an application requesting cancellation of demand draft is received without
enclosing the original draft or the replacement draft (where it has been issued already) the
cancellation should be treated as if branch is issuing a new replacement draft and necessary
formalities including obtention of Indemnity, clearance from drawee-branch and IBR Division ,
Central Office should be followed.
REPLACEMENT OF LOST DRAFT
When a draft is reported lost and a replacement draft is asked for, issuing office should
immediately notify by Letter/Telegram/Telex, the branch on which the draft is drawn and
enquire whether it is paid or not. Full particulars of the draft must be furnished in the
letter/Telegram/Telex.
243
CHEQUE TRUNCATION SYSTEM CLEARING (CTS)
Cheque Truncation System (CTS) is an Image Based clearing system introduced by RBI
(Presently at Delhi), which replaces the existing clearing system of Instrument Based clearing.
The purpose of introducing the new system is to:
Reduce the existing time taken for the clearance of cheques for both the local and the
outstation cheques.
Improve the efficiency and quality of the services offered by banks in the area of the
Cheque Clearing– both to customers of banks and for internal improvements in areas
such as clearing reconciliation, risk management, systemic efficiency etc.
Lodgments
Under CTS lodgment is to be done in 2 stages.
a) Lodgments of cheques in CBS environment. Lodgments are to be done by clerical staff.
Approvals are to be done by Supervisory staff.
b) Once the approval of instruments is done, the Branch user shall generate and upload the
data of lodgment to the CTS system available in the branch.
c) Scanning of cheques to be done in a stand-alone machine provided for the purpose and to
be done by clerical staff. Approval is to be done by Supervisory staff by logging in as
Supervisor in the Stand-alone machine provided for this purpose.
d) The system will balance the amount lodged in CBS with the amount of the scanned
instruments and also attach the digital signature to the images as required by RBI.
For lodging the instruments, branches should use the CTS lodgment programs only.
While lodging cheques, the branches should enter the MICR details of the cheque only. For
example, for lodging of a cheque drawn on IOB, Jan path, New Delhi, enter ‘110’ (micro city
code for New Delhi),’020’ (micro bank code for IOB), 004(micro branch code for Jan path
branch) instead of entering the alpha codes as done in MICR clearing.
244
Branch should ensure that all cheques that are entered in CBS system are scanned without
fail. Under CTS system collecting branches are responsible for the genuineness of the cheque.
The onus of proving the genuineness of the cheque lies with the collecting bank and not the
paying bank.
In respect of cheques issued by Government Departments (‘B’ type cheques), branches
should note to send the instrument also to CCO, besides the image, in the respective clearing
zone.
RETURN MARKING OF THE INWARD CHEQUES
The branch can mark payment/return of the images as they desire to pay / return.
CANCELLATION OF OUTWARD RETURNS
When they want to cancel any return already marked they can mark it themselves. If the
system does not permit them to do so then they should contact CCO and get their confirmation
that the fate of the instrument has not been conveyed to RBI and then proceed for cancellation of
return marking.
PRESERVATION OF CHEQUES
Branches participating in CTS clearing are responsible for preserving the cheques
deposited by their customers. Since only the image is travelling to RBI, the physical cheques are
to be kept under the custody of the presenting branch. These cheques are to be preserved for a
period of 8 years.
SYSTEM MAINTENANCE
Branches are to take proper care of the CTS systems available with them like scanners,
stand-alone machine with the CTS software etc. Also they should, in coordination with RCC
should maintain these CTS related systems.
ADMINISTRATIVE ROLE
CCO should coordinate with RBI for the smooth functioning of CTS system. It should
take up with RBI for any extension required by any of the branches for presenting the cheques or
for informing the fate of the inward images received. It should take up with RBI for blocking the
245
branches under its jurisdiction, which may not be in a position to participate in CTS clearing due
to circumstances beyond their control.
7.4 PASSWORD MAINTENANCE AND ADMINISTRATION
All login to the CBS server are controlled by two level authentication, viz. User-id and
Password. Every user should create his/her own password as prompted by the system which
should NOT be revealed to any other person under any circumstances. The password should be
of minimum 5 characters with a maximum of 8 chars and should consist of Alphabet and
Numbers. The password should be changed at frequent intervals but not later than 7 days. As and
when the password is due for change, the system would prompt the user to enter a new password.
Every user should remember the password created by him / her.
At times, users may forget the password created by them as a result they would not be
able to login to CBS system and worI. In such instances, the user should make a written request
to the Branch Chief and request for password change. The Branch Chief should record the letter
in a separate register as per format given in annexures before deleting the existing password of
the user using the ‘del_passwd’ option in user maintenance. Under no other circumstances, this
option should be used by the Branch Officials. Once the existing password is deleted, the user
should login and give a new password. Then the user-id has to be approved by the Senior
Manager / System Administrator before the user would be allowed to login to CBS for working.
Users should use only those terminals authorized by ITD to get connected to CBS
system. Whenever a user has completed his/her work and does not want the use of the terminal,
he / she has to log out from the programs gracefully (using 0 or Q as the case may be) so that any
other user who might require the terminal can use the same using his/her user-id and password.
In case of the user wants to temporarily log out for a very short duration of time, using ‘F4’ key
the terminal should be locked by the user before leaving his/her seat. To re login, the user should
enter his/her password once more and enter the system. Every user is responsible for the
transactions put through under their User-id and hence the users should ensure that others do not
have access to their password.
246
7.5. CORE BANKING SYSTEM (CBS)
CENTRAL CLEARING OFFICE PACKAGES IN CBS
For the exclusive use of Central Clearing Offices which are part of Core Banking
Solution, separate set of programs have been provided in CBS. Users at CCO should ensure that
they use the specific program only for their daily routine. Though the nature of job at CCOs
generally covers clearing lodgment, realization, collection cheques and realization, payment of
Drafts etc. taking into view the volume and other accounting system, specific programs have
been provided.
Generally the following modules are implemented for Central Clearing offices:
‘awb’, ‘clg’, ‘ddr’, ‘gl’, ‘ibsa’, ‘lba’ and ‘sc’
Wherever, speed clearing system is in vogue, besides the above modules ‘sb’ and ‘cdcc’
will also be implemented to enable the central clearing offices to post, pass the Cheques as per
extant guidelines. The Clerical staff as well as the Supervisory Staff handling Speed clearing
should ensure that the guidelines are followed.
Local Branches Account (‘lba’) is specific module exclusive for Central Clearing Offices
to put clearing related transactions related of the local branches. CCOs have to advise ITD, the
IBR code and MICR code of all the branches coming under their jurisdiction for maintenance in
the system.
Provision is given to branches to view their account transactions with CCO. Using this
program, branches should take necessary steps to ensure that reconciliation of their books with
CCO is done on a regular basis and the LBA account is always tallied.
The balance available in the LBA against each branch will be initialized whenever the
program is invoked by CCO and the related E-ibsa and Funds transfer entries will be posted and
passed automatically. Central Clearing Offices should send the Funds transfer advices to
branches and follow it up for earlier elimination of the entries. Branches receiving E-ibsa should
note to respond the same on the next day.
247
7.6. NETWORK FAILURE
MAINTENANCE OF HARDWARE / SOFTWARE
Under computerized environment proper upkeep of computer systems, maintenance of
network and backup and Business Continuity plan play a major role to ensure the smooth
functioning of the system.
CCO is responsible for the hardware / software of CHI as well as CH available at CCO.
CCO should take utmost care to maintain the systems at peak performance level always as the
entire clearing operations are now done through CTS at the centres where it has been
implemented. They should also take care of the Scanners provided to them.
CCO should ensure that the network connection between CCO and RBI as well as CCO
and branches are working properly.
Backup and Business Continuity Plan
CCO should ensure backing up of data and programs daily and preserving the same. Also
they should, in coordination with RCC should maintain the DRS at their centre with the latest
backup being available there.