Bankint & Ni Act for 3rd Sem Llm Pgcl

8/10/2019 Bankint & Ni Act for 3rd Sem Llm Pgcl

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1. HISTORY AND EVOLUTION OF BANKING SYSTEM

The word Ban! ha" #een der$%ed &ro' (he I(a)$an word #an*o! wh$*h 'ean" a #en*h. In 'ed$e%a)

E+ro,e- 'one)ender" and 'one*han/er"- who *an #e *a))ed (he ear) #aner"- +"ed (o d$",)a (he$r

*o$n" and (ran"a*( #+"$ne"" on (he #en*h. S$n*e a( (ha( ($'e 'one *han/$n/ wa" *on"$dered a" (he 'o"(

$',or(an( &+n*($on o& a #an- (he word #an! *a'e (o #e +"ed $n re",e*( o& (he #+"$ne"" o& #an$n/.

In an*$en( Ind$a- (here were ,er"on" who *arr$ed on (he #+"$ne"" o& 'one0)end$n/ and #an$n/. S($)) $n'odern Ind$a (here e$"( #o(h (he or/an$"ed and +nor/an$"ed "e/'en(" or 'one 'are(. B+( (he

or/an$"ed 'one 'are( $n"($(+($on" ha%e 'ade "+&&$*$en( ,ro/re"" and are ,)a$n/ a /row$n/) $',or(an(

ro)e.

A'on/"( (he $n"($(+($on" $n (he or/an$"ed "e*(or o& (he 'one 'are(- *o''er*$a) #an" and *oo,era($%e

#an" ha%e #een (here &or 'an de*ade".

The En/)$"h (rader" (ha( *a'e (o Ind$a $n (he 12(h *en(+r *o+)d no( 'ae '+*h +"e o& (he $nd$/eno+"#aner"- ow$n/ (o (he$r $/noran*e o& (he )an/+a/e a" we)) a" (he $ne,er$en*e. There&ore- (he En/)$"hA/en* Ho+"e" $n 3a)*+((a and Bo'#a #e/an (o *ond+*( #an$n/ #+"$ne""- #e"$de" (he$r *o''er*$a)#+"$ne""- #a"ed on +n)$'$(ed )$a#$)$(.A (,e o& #+"$ne"" or/an$4a($on re*o/n$4a#)e a" 'ana/$n/ a/en* (oo &or' $n a ,er$od &ro' 1567 (o

1572. The ,r$'ar *on*ern o& (he"e a/en* ho+"e" wa" (rade- #+( (he #ran*hed o+( $n(o #an$n/ a" a "$de)$ne (o &a*$)$(a(e (he o,era($on" o& (he$r 'a$n #+"$ne"". The En/)$"h a/en* ho+"e"- (ha( #e/an (o "er%e a"#aner" (o (he Ea"( Ind$a 3o',an had no *a,$(a) o& (he$r own- and de,ended on de,o"$(" &or (he$r &+nd".The &$nan*ed 'o%e'en(" o& *ro,"- $""+ed ,a,er 'one and e"(a#)$"hed 8o$n( "(o* #an". Ear)$e"( o&(he"e wa" H$nd+"(han Ban- e"(a#)$"hed # one o& (he a/en* ho+"e" $n 3a)*+((a $n 129:.Ban$n/ $n Ind$a or$/$na(ed $n (he )a"( de*ade" o& (he 15(h *en(+r. The &$r"( #an" were The Genera)Ban o& Ind$a- wh$*h "(ar(ed $n 125;- and Ban o& H$nd+"(an- wh$*h "(ar(ed $n 129:< #o(h are nowde&+n*(. The o)de"( #an $n e$"(en*e $n Ind$a $" (he S(a(e Ban o& Ind$a- wh$*h or$/$na(ed a" (he Ban o&3a)*+((a $n =+ne 15:;- wh$*h a)'o"( $''ed$a(e) #e*a'e (he Ban o& Ben/a). Th$" wa" one o& (he (hree,re"$den* #an"- (he o(her (wo #e$n/ (he Ban o& Bo'#a and (he Ban o& Madra"- a)) (hree o& wh$*hwere e"(a#)$"hed +nder *har(er" &ro' (he Br$($"h Ea"( Ind$a 3o',an. For 'an ear" (he >re"$den*#an" a*(ed a" ?+a"$0*en(ra) #an". The (hree #an" 'er/ed $n 19@1 (o &or' (he I',er$a) Ban o& Ind$a-

wh$*h- +,on Ind$a" $nde,enden*e- #e*a'e (he S(a(e Ban o& Ind$aInd$an 'er*han(" $n 3a)*+((a e"(a#)$"hed (he Un$on Ban $n 1569- #+( $( &a$)ed $n 1575 a" a *on"e?+en*eo& (he e*ono'$* *r$"$" o& 1575079. The A))aha#ad Ban- e"(a#)$"hed $n 15; and "($)) &+n*($on$n/ (oda- $"(he o)de"( =o$n( S(o* #an $n Ind$a. Fore$/n #an" (oo "(ar(ed (o arr$%e- ,ar($*+)ar) $n 3a)*+((a- $n (he15;:". The 3o',(o$re dE"*o',(e de >ar$" o,ened a #ran*h $n 3a)*+((a $n 15;:- and ano(her $n Bo'#a$n 15;@. Fo))owed # HSB3 e"(a#)$"hed $("e)& $n Ben/a) $n 15;9. 3a)*+((a wa" (he 'o"( a*($%e (rad$n/,or( $n Ind$a- 'a$n) d+e (o (he (rade o& (he Br$($"h E',$re- and "o #e*a'e a #an$n/ *en(re.The ne( wa" (he >+n8a# Na($ona) Ban- e"(a#)$"hed $n Lahore $n 159- $" now one o& (he )ar/e"( #an" $nInd$a. The ,re"$den* #an" do'$na(ed #an$n/ $n Ind$a #+( (here were a)"o "o'e e*han/e #an" and an+'#er o& Ind$an 8o$n( "(o* #an". A)) (he"e #an" o,era(ed $n d$&&eren( "e/'en(" o& (he e*ono'. Thee*han/e #an"- 'o"() owned # E+ro,ean"- *on*en(ra(ed on &$nan*$n/ &ore$/n (rade. Ind$an 8o$n( "(o*#an" were /enera)) +nder*a,$(a)$4ed and )a*ed (he e,er$en*e and 'a(+r$( (o *o',e(e w$(h (he,re"$den* and e*han/e #an".

SWADESHI MOVEMENT

The ,er$od #e(ween 19:; and 1911- "aw (he e"(a#)$"h'en( o& #an" $n",$red # (he Swade"h$ 'o%e'en(.The Swade"h$ 'o%e'en( $n",$red )o*a) #+"$ne""'en and ,o)$($*a) )eader" (o &o+nd #an" &or (he Ind$an*o''+n$(. A n+'#er o& #an" e"(a#)$"hed (hen ha%e "+r%$%ed (o (he ,re"en( "+*h a" Ban o& Ind$a-3or,ora($on Ban- Ind$an Ban- Ban o& Baroda- 3anara Ban and 3en(ra) Ban o& Ind$a.DEVELOPMENT AFTER INDEPENDENCE

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The "e*ond '$)e"(one $n h$"(or o& Ind$an #an$n/ wa" Ind$a #e*o'$n/ a "o%ere$/n re,+#)$*. TheGo%ern'en( o& Ind$a $n$($a(ed 'ea"+re" (o ,)a an a*($%e ro)e $n (he e*ono'$* )$&e o& (he na($on- and (heInd+"(r$a) >o)$* Re"o)+($on ado,(ed # (he /o%ern'en( $n 1975 en%$"a/ed a '$ed e*ono'. Th$"re"+)(ed $n(o /rea(er $n%o)%e'en( o& (he "(a(e $n d$&&eren( "e/'en(" o& (he e*ono' $n*)+d$n/ #an$n/ and&$nan*e. The #an$n/ "e*(or a)"o w$(ne""ed (he #ene&$("< Go%ern'en( (oo 'a8or "(e,"$n (h$" Ind$an Ban$n/ Se*(or Re&or' a&(er $nde,enden*e.

C F$r"( 'a8or "(e, $n (h$" d$re*($on wa" na($ona)$4a($on o& Re"er%e Ban $n 1979.C Ena*('en( o& Ban$n/ Re/+)a($on A*( $n 1979C Re"er%e Ban o& Ind$a S*hed+)ed Ban" Re/+)a($on"- 191.C Na($ona)$4a($on o& I',er$a) Ban o& Ind$a $n 19- w$(h e(en"$%e #an$n/ &a*$)$($e" on a )ar/e "*a)ee",e*$a)) $n r+ra) and "e'$0+r#an area".C Na($ona)$4a($on o& SBI "+#"$d$ar$e" $n 199.Go%ern'en( o& Ind$a (oo 'an #an$n/ $n$($a($%e". The"e were a$'ed (o ,ro%$de #an$n/ *o%era/e (o a))"e*($on o& (he "o*$e( and e%er "e*(or o& (he e*ono'. The Ind+"(r$a) 3red$( and In%e"('en( 3or,ora($ono& Ind$a L$'$(ed I3I3I wa" $n*or,ora(ed a( (he $n$($a($%e o& or)d Ban- (he Go%ern'en( o& Ind$a andre,re"en(a($%e" o& Ind$an $nd+"(r- w$(h (he o#8e*($%e o& *rea($n/ a de%e)o,'en( &$nan*$a) $n"($(+($on &or,ro%$d$n/ 'ed$+'0(er' and )on/0(er' ,ro8e*( &$nan*$n/ (o Ind$an #+"$ne""e".NATIONALIZATION PROCESS

Na($ona)$4a($on o& #an" $n Ind$a wa" an $',or(an( ,heno'enon. De",$(e (he ,ro%$"$on"- *on(ro) andre/+)a($on" o& Re"er%e Ban o& Ind$a- #an" $n Ind$a e*e,( (he S(a(e Ban o& Ind$a or SBI- *on($n+ed (o#e owned and o,era(ed # ,r$%a(e ,er"on". B (he 19;:"- (he Ind$an #an$n/ $nd+"(r had #e*o'e an$',or(an( (oo) (o &a*$)$(a(e (he de%e)o,'en( o& (he Ind$an e*ono'. A( (he "a'e ($'e- $( had e'er/ed a" a)ar/e e',)oer- and a de#a(e had en"+ed a#o+( (he na($ona)$4a($on o& (he #an$n/ $nd+"(r. Ind$ra Gandh$-(hen >r$'e M$n$"(er o& Ind$a- e,re""ed (he $n(en($on o& (he Go%ern'en( o& Ind$a $n (he ann+a) *on&eren*eo& (he A)) Ind$a 3on/re"" Mee($n/ $n a ,a,er en($()ed "Stray thoughts on Bank Nationalization." The'ee($n/ re*e$%ed (he ,a,er w$(h en(h+"$a"'. The Go%ern'en( o& Ind$a $""+ed an ord$nan*e andna($ona)$4ed (he 17 )ar/e"( *o''er*$a) #an" w$(h e&&e*( &ro' (he '$dn$/h( o& =+) 19- 19;9.A "e*ond do"e o& na($ona)$4a($on o& ; 'ore *o''er*$a) #an" &o))owed $n 195:. The "(a(ed rea"on &or (hena($ona)$4a($on wa" (o /$%e (he /o%ern'en( 'ore *on(ro) o& *red$( de)$%er. $(h (he "e*ond do"e o&na($ona)$4a($on- (he Go%ern'en( o& Ind$a *on(ro))ed aro+nd 91 o& (he #an$n/ #+"$ne"" o& Ind$a. La(er

on- $n (he ear 1996- (he /o%ern'en( 'er/ed New Ban o& Ind$a w$(h >+n8a# Na($ona) Ban. I( wa" (heon) 'er/er #e(ween na($ona)$4ed #an" and re"+)(ed $n (he red+*($on o& (he n+'#er o& na($ona)$4ed #an"&ro' @: (o 19. 3+rren() (here are @2 na($ona)$4ed *o''er*$a) #an".ECONOMIC LIBERALIZATION

The "e*ond 'a8or (+rn$n/ ,o$n( $n (h$" ,ha"e wa" E*ono'$* L$#era)$4a($on $n Ind$a. A&(er Inde,enden*e$n 1972- Ind$a adhered (o "o*$a)$"( ,o)$*$e". The e(en"$%e re/+)a($on wa" "ar*a"($*a)) d+##ed a" (heL$*en"e Ra8. The Go%ern'en( o& Ind$a headed # Nara"$'ha Rao de*$ded (o +"her $n "e%era) re&or'"(ha( are *o))e*($%e) (er'ed a" )$#era)$4a($on. The F$nan*e M$n$"(er Dr. Man'ohan S$n/h- an a**)a$'ede*ono'$"(- ,)aed a *en(ra) ro)e $n $',)e'en($n/ (he"e re&or'".In (he ear) 199:"- (he (hen Nara"$'ha Rao /o%ern'en( e'#ared on a ,o)$* o& )$#era)$4a($on- )$*en"$n/a "'a)) n+'#er o& ,r$%a(e #an". The"e *a'e (o #e nown a" New Generation tech-savvy banks- and$n*)+ded G)o#a) Tr+"( Ban (he &$r"( o& "+*h new /enera($on #an" (o #e "e( +,- wh$*h )a(er

a'a)/a'a(ed w$(h Or$en(a) Ban 'o%e- a)on/ w$(h (he ra,$d /row(h $n (he e*ono' o& Ind$a- re%$(a)$4ed(he #an$n/ "e*(or $n Ind$a- wh$*h ha" "een ra,$d /row(h w$(h "(ron/ *on(r$#+($on &ro' a)) (he (hree"e*(or" o& #an"- na'e)- /o%ern'en( #an"- ,r$%a(e #an" and &ore$/n #an". Ban$n/ $n Ind$a $"/enera)) &a$r) 'a(+re $n (er'" o& "+,,)- ,rod+*( ran/e and (ho+/h rea*h $n r+ra) Ind$a "($)) re'a$n" a*ha))en/e &or (he ,r$%a(e "e*(or and &ore$/n #an". In (er'" o& ?+a)$( o& a""e(" and *a,$(a) ade?+a*-Ind$an #an" are *on"$dered (o ha%e *)ean- "(ron/ and (ran",aren( #a)an*e "hee(" re)a($%e (o o(her #an" $n*o',ara#)e e*ono'$e" $n $(" re/$on. The Re"er%e Ban o& Ind$a $" an a+(ono'o+" #od- w$(h '$n$'a),re""+re &ro' (he /o%ern'en(. The "(a(ed ,o)$* o& (he Ban on (he Ind$an R+,ee $" (o 'ana/e %o)a($)$(#+( w$(ho+( an &$ed e*han/e ra(e0and (h$" ha" 'o"() #een (r+e. $(h (he /row(h $n (he Ind$an

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e*ono' e,e*(ed (o #e "(ron/ &or ?+$(e "o'e ($'e e",e*$a)) $n $(" "er%$*e" "e*(or0(he de'and &or#an$n/ "er%$*e"- e",e*$a)) re(a$) #an$n/- 'or(/a/e" and $n%e"('en( "er%$*e" are e,e*(ed (o #e "(ron/.

@. ROLE OF BANKING IN INDIAS DEVELO>ING E3ONOMY

One o& (he 'a8or *on"$dera($on" (ha( )ed (o (he na($ona)$4a($on o& (he &o+r(een 'a8or *o''er*$a) #an" o&

Ind$a $n 19;9 wa" (he &a*( (ha( #an"- $n /enera)- had #een ne/)$/en( o& (he %$(a) ,r$or$( "e*(or" o& (hee*ono'- %$4.- a/r$*+)(+re and "'a))0"*a)e $nd+"(r$e". The *o''er*$a) #an" had re'a$ned )ar/e)$nd$&&eren( (o (he *red$( need" o& (he &ar'er" &or a/r$*+)(+ra) o,era($on" and )and $',ro%e'en(. A hand&+)o& ,eo,)e were a#)e (o e,)o$( (he #an &$nan*e (o "er%e (he$r own $nd$%$d+a) $n(ere"(" and *on%en$en*e.Ver o&(en- (he +"ed #an &+nd" &or (he hoard$n/ o& e""en($a) ar($*)e" and &or ",e*$a)$4a($on- (h+"n+r(+r$n/ an($0"o*$a) e)e'en(". Na($ona)$4a($on #ro+/h( a#o+( a 'a8or ,o)$* "h$&( $n (he wor$n/ o& (he"e#an".

The e*ono'$* de%e)o,'en( o& o+r *o+n(r de,end" 'ore on rea) &a*(or" )$e (he $nd+"(r$a) de%e)o,'en(-'odern$4a($on o& a/r$*+)(+re- or/an$4a($on o& $n(erna) (rade and e,an"$on o& &ore$/n (rade- e",e*$a))e,or("- and )e"" on (he 'one(ar &a*(or" *on(r$#+(ed # #an$n/J E*ono'$* ,)ann$n/ )$e )a$n/ downo& ",e*$&$* (ar/e(" and a))o*a($n/ ,ar($*+)ar "+'" o& 'one (ha( *on"($(+(e (he e*ono'$* ,o)$* o& (he/o%ern'en( a)"o ,)a" a "$/n$&$*an( ro)e. S($)) we *anno( +nder0e"($'a(e (he $',or(an*e o& #an$n/ and(he 'one(ar 'e*han$"'.

One o& (he 'o"( $',or(an( ,ro#)e'" o& a de%e)o,$n/ e*ono' $" (ha( o& *a,$(a) &or'a($on. There $" a /ooddea) o& d$&&eren*e #e(ween hoard$n/ and "a%$n/ and (he ,eo,)e $n (he *o+n(r"$de ha%e (o #e 'ade (orea)$4e (he d$&&eren*e. Th$" *an #e ea"$) done # #an". The *an +nder(ae (o ed+*a(e (he r+ra) ,o,+)a*eand (h+" 'o#$)$4e (he$r "a%$n/". A n+'#er o& )ead$n/ e*ono'$"(" ha%e *on&$r'ed (he &a*( (ha( (he a'o+n(o& *a,$(a) a%a$)a#)e $n Ind$a &or $n%e"('en( $" "+r,r$"$n/) and $ne,)$*a#) )ar/e. On) we need e,)o$($n/(h$" $d)e *a,$(a). ho e)"e *an e,)o$( $(- $& no( #an" Bo(h $n r+ra) and +r#an area"- h+/e a'o+n(" o&'one are wa"(ed on *e)e#ra($on" )$e 'arr$a/e" and #$r(h". I& #an" *an o&&er hand"o'e $n(ere"( on"a%$n/"- ,eo,)e *an #e $nd+*ed (o d$re*( (he$r "a%$n/" &ro' wa"(e&+) a*($%$($e" (o #an". >ro'o($n/a((ra*($%e de,o"$( "*he'e" need" "o'e %er a*($%e wor on (he ,ar( o& (he #an"- #+( $( *an *er(a$n)'o#$)$4e a )ar/e a'o+n( o& "a%$n/ &or *a,$(a) &or'a($on.

The Go%ern'en( o& Ind$a ha" now +nder(aen a )ar/e n+'#er o& ,ro8e*(" &or (he e*ono'$* re*on"(r+*($ono& (he *o+n(r. Ban" *an /enera(e an ade?+a(e %o)+'e o& *red$( and *ond+*( $( a)on/ +"e&+) ,rod+*($%e*hanne)". The *an d$"($n/+$"h #e(ween (he e""en($a) and non0e""en($a) &a*(or" o& (he e*ono' #e(ween,rod+*($%e and non0,rod+*($%e $n%e"('en(- #e(ween ",e*+)a($%e ar$d non0",e*+)a($%e #orrow$n/ and (h+"he), $n (he /row(h o& (he e*ono'.

Two o(her a*+(e ,ro#)e'" &a*ed # o+r )ow and '$dd)e $n*o'e /ro+," are (he ho+"$n/ ,ro#)e' and/row$n/ +ne',)o'en( ,ro#)e'. I& (he #an" +nder(ae (o he), (he"e /ro+,"- (he w$)) a)"o #e 'a$n/ a"$/n$&$*an( *on(r$#+($on (o o+r e*ono'. I( w$)) a)"o he), $n re'o%$n/ (he e*ono'$* $'#a)an*e o& (he%ar$o+" "e*($on" o& o+r "o*$e(.

Be&ore na($ona)$4a($on- o+r #an" *o+)d no( ,)a (h$" *on"(r+*($%e ro)e e,e*(ed o& (he'. B+( a&(er

na($ona)$4a($on- (he en($re #an$n/ 'a*h$ner ha" now #een /eared (o (he e*ono'$* de%e)o,'en( o& (he*o+n(r. The ha%e "(ar(ed )oo$n/ a&(er (he need" o& (he "'a)) &ar'er and (he new en(re,rene+r. I( $"earne"() ho,ed (ha( (he Go%ern'en( w$)) (ae "o'e 'ore ,o"$($%e "(e," (o en"+re (ha( (he rea) #ene&$(" o&an or/an$4ed #an$n/ ""(e' ,er*o)a(e down (o (he ,oor $))$(era(e 'a""e" o& Ind$a.

ECONOMIC LIBERALIZATION

The "e*ond 'a8or (+rn$n/ ,o$n( $n (h$" ,ha"e a&(er (he na($ona)$4a($on o& #an" wa" E*ono'$*L$#era)$4a($on $n Ind$a. A&(er Inde,enden*e $n 1972- Ind$a adhered (o "o*$a)$"( ,o)$*$e". The e(en"$%e

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re/+)a($on wa" "ar*a"($*a)) d+##ed a" (he L$*en"e Ra8. The Go%ern'en( o& Ind$a headed # Nara"$'haRao de*$ded (o +"her $n "e%era) re&or'" (ha( are *o))e*($%e) (er'ed a" )$#era)$4a($on. The F$nan*eM$n$"(er Dr. Man'ohan S$n/h- an a**)a$'ed e*ono'$"(- ,)aed a *en(ra) ro)e $n $',)e'en($n/ (he"ere&or'".In (he ear) 199:"- (he (hen Nara"$'ha Rao /o%ern'en( e'#ared on a ,o)$* o& )$#era)$4a($on- )$*en"$n/a "'a)) n+'#er o& ,r$%a(e #an". The"e *a'e (o #e nown a" New Generation tech-savvy banks- and

$n*)+ded G)o#a) Tr+"( Ban (he &$r"( o& "+*h new /enera($on #an" (o #e "e( +,- wh$*h )a(era'a)/a'a(ed w$(h Or$en(a) Ban 'o%e- a)on/ w$(h (he ra,$d /row(h $n (he e*ono' o& Ind$a- re%$(a)$4ed(he #an$n/ "e*(or $n Ind$a- wh$*h ha" "een ra,$d /row(h w$(h "(ron/ *on(r$#+($on &ro' a)) (he (hree"e*(or" o& #an"- na'e)- /o%ern'en( #an"- ,r$%a(e #an" and &ore$/n #an". Ban$n/ $n Ind$a $"/enera)) &a$r) 'a(+re $n (er'" o& "+,,)- ,rod+*( ran/e and (ho+/h rea*h $n r+ra) Ind$a "($)) re'a$n" a*ha))en/e &or (he ,r$%a(e "e*(or and &ore$/n #an". In (er'" o& ?+a)$( o& a""e(" and *a,$(a) ade?+a*-Ind$an #an" are *on"$dered (o ha%e *)ean- "(ron/ and (ran",aren( #a)an*e "hee(" re)a($%e (o o(her #an" $n*o',ara#)e e*ono'$e" $n $(" re/$on. The Re"er%e Ban o& Ind$a $" an a+(ono'o+" #od- w$(h '$n$'a),re""+re &ro' (he /o%ern'en(. The "(a(ed ,o)$* o& (he Ban on (he Ind$an R+,ee $" (o 'ana/e %o)a($)$(#+( w$(ho+( an &$ed e*han/e ra(e0and (h$" ha" 'o"() #een (r+e. $(h (he /row(h $n (he Ind$ane*ono' e,e*(ed (o #e "(ron/ &or ?+$(e "o'e ($'e e",e*$a)) $n $(" "er%$*e" "e*(or0(he de'and &or#an$n/ "er%$*e"- e",e*$a)) re(a$) #an$n/- 'or(/a/e" and $n%e"('en( "er%$*e" are e,e*(ed (o #e "(ron/.

6. RE3ENT TRENDS IN BANKING SYSTEM TO GIVE BETTER SERVI3ES TO 3USTOMERSToda- we are ha%$n/ a &a$r) we)) de%e)o,ed #an$n/ ""(e' w$(h d$&&eren( *)a""e" o& #an" ,+#)$*"e*(or #an"- &ore$/n #an"- ,r$%a(e "e*(or #an" #o(h o)d and new /enera($on- re/$ona) r+ra) #an" and*o0o,era($%e #an" w$(h (he Re"er%e Ban o& Ind$a a" (he &o+n(a$n Head o& (he ""(e'. In (he #an$n/&$e)d- (here ha" #een an +n,re*eden(ed /row(h and d$%er"$&$*a($on o& #an$n/ $nd+"(r ha" #een "o"(+,endo+" (ha( $( ha" no ,ara))e) $n (he anna)" o& #an$n/ anwhere $n (he wor)d.The #an$n/ $nd+"(r ha" e,er$en*ed a "er$e" o& "$/n$&$*an( (ran"&or'a($on" $n (he )a"( &ew de*ade".A'on/ (he 'o"( $',or(an( o& (he' $" (he *han/e $n (he (,e o& or/an$4a($on" (ha( do'$na(e (he )and"*a,e.S$n*e (he e$/h($e"- #an" ha%e $n*rea"ed (he "*o,e and "*a)e o& (he$r a*($%$($e" and "e%era) #an" ha%e#e*o'e %er )ar/e $n"($(+($on" w$(h a ,re"en*e $n '+)($,)e re/$on" o& (he *o+n(r.The Ban$n/ "e*(or ha" #een $''en"e) #ene&$(ed &ro' (he $',)e'en(a($on o& "+,er$or (e*hno)o/ d+r$n/

(he re*en( ,a"(- a)'o"( $n e%er na($on $n (he wor)d. >rod+*($%$( enhan*e'en(- $nno%a($%e ,rod+*("-",eed (ran"a*($on" "ea')e"" (ran"&er o& &+nd"- rea) ($'e $n&or'a($on ""(e'- and e&&$*$en( r$"'ana/e'en( are "o'e o& (he ad%an(a/e der$%ed (hro+/h (he (e*hno)o/. In&or'a($on (e*hno)o/ ha" a)"o$',ro%ed (he e&&$*$en* and ro#+"(ne"" o& #+"$ne"" ,ro*e""e" a*ro"" #an$n/ "e*(or. Ind$a" #an$n/"e*(or ha" 'ade ra,$d "(r$de" $n re&or'$n/ $("e)& (o (he new *o',e($($%e #+"$ne"" en%$ron'en(. Ind$an#an$n/ $nd+"(r $" (he '$d"( o& an IT re%o)+($on. Te*hno)o/$*a) $n&ra"(r+*(+re ha" #e*o'e an$nd$",en"a#)e ,ar( o& (he re&or'" ,ro*e"" $n (he #an$n/ ""(e'- w$(h (he /rad+a) de%e)o,'en( o&"o,h$"($*a(ed $n"(r+'en(" and $nno%a($on" $n 'are( ,ra*($*e".INFORMATION TECHNOLOGY IN BANKING

Ind$an #an$n/ $nd+"(r- (oda $" $n (he '$d"( o& an IT re%o)+($on. A *o'#$na($on o& re/+)a(or and*o',e($($%e rea"on" ha" )ed (o $n*rea"$n/ $',or(an*e o& (o(a) #an$n/ a+(o'a($on $n (he Ind$an Ban$n/Ind+"(r. The #an wh$*h +"ed (he r$/h( (e*hno)o/ (o "+,,) ($'e) $n&or'a($on w$)) "ee ,rod+*($%$(

$n*rea"e and (here# /a$n a *o',e($($%e ed/e. To *o',e(e $n an e*ono' wh$*h $" o,en$n/ +,- $( $"$',era($%e &or (he Ind$an Ban" (o o#"er%e (he )a(e"( (e*hno)o/ and 'od$& $( (o "+$( (he$r en%$ron'en(.In&or'a($on (e*hno)o/ o&&er" a *han*e &or #an" (o #+$)d new ""(e'" (ha( addre"" a w$de ran/e o&*+"(o'er need" $n*)+d$n/ 'an (ha( 'a no( #e $'a/$na#)e (oda.Fo))ow$n/ are (he $nno%a($%e "er%$*e" o&&ered # (he $nd+"(r $n (he re*en( ,a"(ELECTRONIC PAYMENT SERVICES- E CHEQUES

Nowada" we are hear$n/ a#o+( e0/o%ernan*e- e0'a$)- e0*o''er*e- e(*. In (he "a'e 'anner- a new(e*hno)o/ $" #e$n/ de%e)o,ed $n US &or $n(rod+*($on o& e0*he?+e- wh$*h w$)) e%en(+a)) re,)a*e (he*on%en($ona) ,a,er *he?+e. Ind$a- a" har#$n/er (o (he $n(rod+*($on o& e0*he?+e- (he Ne/o($a#)e

7


5/69

In"(r+'en(" A*( ha" a)read #een a'ended (o $n*)+de Tr+n*a(ed *he?+e and E0*he?+e $n"(r+'en(" %$deSe*($on 51A.REAL TIME GROSS SETTLEMENT (RTGS)

Rea) T$'e Gro"" Se(()e'en( ""(e'- $n(rod+*ed $n Ind$a "$n*e Mar*h @::7- $" a ""(e' (hro+/h wh$*he)e*(ron$*" $n"(r+*($on" *an #e /$%en # #an" (o (ran"&er &+nd" &ro' (he$r a**o+n( (o (he a**o+n( o&ano(her #an. The RTGS ""(e' $" 'a$n(a$ned and o,era(ed # (he RBI and ,ro%$de" a 'ean" o& e&&$*$en(

and &a"(er &+nd" (ran"&er a'on/ #an" &a*$)$(a($n/ (he$r &$nan*$a) o,era($on". A" (he na'e "+//e"("- &+nd"(ran"&er #e(ween #an" (ae" ,)a*e on a Rea) T$'e #a"$". There&ore- 'one *an rea*h (he #ene&$*$ar$n"(an(aneo+") and (he #ene&$*$ar" #an ha" (he re",on"$#$)$( (o *red$( (he #ene&$*$ar" a**o+n( w$(h$n(wo ho+r".NATIONAL ELECTRONIC FUNDS TRANSFER (NEFT)

E)e*(ron$* F+nd" Tran"&er EFT $" a ""(e' where# anone who wan(" (o 'ae ,a'en( (o ano(her,er"on*o',an e(*. *an a,,roa*h h$" #an and 'ae *a"h ,a'en( or /$%e $n"(r+*($on"a+(hor$4a($on (o(ran"&er &+nd" d$re*() &ro' h$" own a**o+n( (o (he #an a**o+n( o& (he re*e$%er#ene&$*$ar. 3o',)e(ede(a$)" "+*h a" (he re*e$%er" na'e- #an a**o+n( n+'#er- a**o+n( (,e "a%$n/" or *+rren( a**o+n(- #anna'e- *$(- #ran*h na'e e(*. "ho+)d #e &+rn$"hed (o (he #an a( (he ($'e o& re?+e"($n/ &or "+*h (ran"&er" "o(ha( (he a'o+n( rea*he" (he #ene&$*$ar$e" a**o+n( *orre*() and &a"(er. RBI $" (he "er%$*e ,ro%$der o& EFT.ELECTRONIC CLEARING SERVICE(ECS)

E)e*(ron$* 3)ear$n/ Ser%$*e $" a re(a$) ,a'en( ""(e' (ha( *an #e +"ed (o 'ae #+) ,a'en("re*e$,(" o&a "$'$)ar na(+re e",e*$a)) where ea*h $nd$%$d+a) ,a'en( $" o& a re,e($($%e na(+re and o& re)a($%e)"'a))er a'o+n(. Th$" &a*$)$( $" 'ean( &or *o',an$e" and /o%ern'en( de,ar('en(" (o 'aere*e$%e )ar/e%o)+'e" o& ,a'en(" ra(her (han &or &+nd" (ran"&er" # $nd$%$d+a)".AUTOMATIC TELLER MACHINE(ATM)

A+(o'a($* Te))er Ma*h$ne $" (he 'o"( ,o,+)ar de%$"e $n Ind$a- wh$*h ena#)e" (he *+"(o'er" (o w$(hdraw(he$r 'one @7 ho+r" a da 2 da" a wee. I( $" a de%$*e (ha( a))ow" *+"(o'er who ha" an ATM *ard (o,er&or' ro+($ne #an$n/ (ran"a*($on" w$(ho+( $n(era*($n/ w$(h a h+'an (e))er. In add$($on (o *a"hw$(hdrawa)- ATM" *an #e +"ed &or ,a'en( o& +($)$( #$))"- &+nd" (ran"&er #e(ween a**o+n("- de,o"$( o&*he?+e" and *a"h $n(o a**o+n("- #a)an*e en?+$r e(*.POINT OF SALE TERMINAL

>o$n( o& Sa)e Ter'$na) $" a *o',+(er (er'$na) (ha( $" )$ned on)$ne (o (he *o',+(er$4ed *+"(o'er

$n&or'a($on &$)e" $n a #an and 'a/ne($*a)) en*oded ,)a"($* (ran"a*($on *ard (ha( $den($&$e" (he *+"(o'er(o (he *o',+(er. D+r$n/ a (ran"a*($on- (he *+"(o'er" a**o+n( $" de#$(ed and (he re(a$)er" a**o+n( $"*red$(ed # (he *o',+(er &or (he a'o+n( o& ,+r*ha"e.TELE BANKING

Te)e Ban$n/ &a*$)$(a(e" (he *+"(o'er (o do en($re non0*a"h re)a(ed #an$n/ on (e)e,hone. Under (h$"de%$"e A+(o'a($* Vo$*e Re*order $" +"ed &or "$',)er ?+er$e" and (ran"a*($on". For *o',)$*a(ed ?+er$e"and (ran"a*($on"- 'anned ,hone (er'$na)" are +"ed.NET BANKING

3+"(o'er *an 'ae ,a'en( o& %ar$o+" #$))" )$e e)e*(r$*$(- wa(er- (e)e,hone e(* # +"$n/ $n(erne( w$(h+"er ID and ,a""word $""+ed # (he Baner. E%en (he &+nd" *an #e (ran"&erred (o o(her a**o+n( o& "a'e oro(her #ran*he" or #an".ELECTRONIC DATE INTERCHANGE(EDI)

E)e*(ron$* Da(a In(er*han/e $" (he e)e*(ron$* e*han/e o& #+"$ne"" do*+'en(" )$e ,+r*ha"e order-$n%o$*e"- "h$,,$n/ no($*e"- re*e$%$n/ ad%$*e" e(*. $n a "(andard- *o',+(er ,ro*e""ed- +n$%er"a)) a**e,(ed&or'a( #e(ween (rad$n/ ,ar(ner". EDI *an a)"o #e +"ed (o (ran"'$( &$nan*$a) $n&or'a($on and ,a'en(" $ne)e*(ron$* &or'.CHALLENGES FACED BY BANKS IN IMPLEMENTATION OF IT

I( $" #e*o'$n/ $n*rea"$n/) $',era($%e &or #an" (o a""e"" and a"*er(a$n (he #ene&$(" o& (e*hno)o/$',)e'en(a($on. The &r+$(" o& (e*hno)o/ w$)) *er(a$n) (a"(e a )o( "wee(er when (he re(+rn" *an #e'ea"+red $n a#"o)+(e (er'" #+( $( need" ,re*a+($on" and (he "a&e( ne(". The $n*rea"$n/ +"e o& (e*hno)o/$n #an" ha" a)"o #ro+/h( +, "e*+r$( *on*ern". To a%o$d an '$"ha," on (h$" a**o+n(- #an" o+/h( (o


6/69

ha%e $n ,)a*e a we))0do*+'en(ed "e*+r$( ,o)$* $n*)+d$n/ ne(wor "e*+r$( and $n(erna) "e*+r$(. The,a""$n/ o& (he In&or'a($on Te*hno)o/ A*( ha" *o'e a" a #oon (o (he #an$n/ "e*(or- and #an" "ho+)dnow en"+re (o a#$de "(r$*() # $(" *o%enan(". An e&&or( "ho+)d a)"o #e 'ade (o *o%er e0#+"$ne"" $n (he*o+n(r" *on"+'er )aw". So'e are $n%e"($n/ $n $( (o dr$%e (he #+"$ne"" /row(h- wh$)e o(her" are ha%$n/ noo,($on #+( (o $n%e"(- (o "(a $n #+"$ne"". The *ho$*e o& r$/h( *hanne)- 8+"($&$*a($on o& IT $n%e"('en( onROI- e0/o%ernan*e- *+"(o'er re)a($on"h$, 'ana/e'en(- "e*+r$( *on*ern"- (e*hno)o/$*a) o#"o)e"*en*e-

'er/er" and a*?+$"$($on"- ,ene(ra($on o& IT $n r+ra) area"- and o+("o+r*$n/ o& IT o,era($on" are (he 'a8or*ha))en/e" and $""+e" $n (he +"e o& IT $n #an$n/ o,era($on".

The #an$n/ (oda $" re0de&$ned and re0en/$neered w$(h (he +"e o& In&or'a($on Te*hno)o/ and $( $" "+re(ha( (he &+(+re o& #an$n/ w$)) o&&er 'ore "o,h$"($*a(ed "er%$*e" (o (he *+"(o'er" w$(h (he *on($n+o+",rod+*( and ,ro*e"" $nno%a($on". Th+"- (here $" a ,arad$/' "h$&( &ro' (he "e))er" 'are( (o #+er" 'are($n (he $nd+"(r and &$na)) $( a&&e*(ed a( (he #aner" )e%e) (o *han/e (he$r a,,roa*h &ro' *on%en($ona)#an$n/ (o *on%en$en*e #an$n/ and 'a"" #an$n/ (o *)a"" #an$n/. The "h$&( ha" a)"o $n*rea"ed (hede/ree o& a**e""$#$)$( o& a *o''on 'an.

7. 3ON3E>T OF OVERDRAFT

1.Loanarran/e'en(+nder wh$*h a#ane(end" *red$( +, (o a 'a$'+' a'o+n(*a))edo%erdra&( )$'$(a/a$n"( wh$*h a *+rren(*he*$n/ a**o+n(*+"(o'er*an wr$(e*he*"or 'ae w$(hdrawa)". The'o"( *o''on&or'o+"$ne""#orrow$n/- an o%erdra&( $" a (,e o& re%o)%$n/)oanwherede,o"$("*red$(" are a%a$)a#)e &or re0#orrow$n/-and $n(ere"($" *har/ed on) on(he da$)o%erdra&( de#$(#a)an*e. I( $"- howe%er- a)"o a de'and )oan (he &a*$)$(*an #e *an*e))ed anden($re o+("(and$n/a'o+n( *a))ed a( an ($'e # (he)endera( $("d$"*re($on- w$(ho+(an warn$n/no($*eor e,)ana($on. I& (he o%erdra&( $" "e*+red# an a""e(or,ro,er(- (he )ender ha"(he r$/h((o &ore*)o"e on (he*o))a(era)$n *a"e (hea**o+n( ho)derdoe" no(,a. 3a))" ha,,en +"+a)) where(he 1#orrower"*red$( ra($n/&a))"- @ )ender ha" rea"on (o #e)$e%e (he #orrower 'a /o $n(o de&a+)(- or6 #orrower ha" no( re%o)%ed (he o%erdra&( $n a "a($"&a*(or 'anner and ha" (+rned $( $n(o ahard*ore de#(.An o%erdra&( $" a,,ro%ed on) &or a &$ed,er$od+"+a)) one ear a&(er wh$*h $( $" '+"(#e rene/o($a(ed. In (he US,ra*($*ewhere $( $" *a))ed)$ne o& *red$(or *red$( L$ne- (he #orrower $"

o&(enre?+$red(o 'a$n(a$n1: (o @:,er*en(o& (he a,,ro%ed o%erdra&( )$'$( a" *a"h#a)an*e $n (he a**o+n(-and '+"(de'on"(ra(e$(" *on($n+$n/&$nan*$a) hea)(h# 'ana/$n/w$(ho+( (he o%erdra&( &or a one or (wo0'on(h ,er$od *a))ed*)ean+, ,er$od. A)"o *a))ed#an o%erdra&([email protected])an*e o& a #an a**o+n( $n wh$*h &+nd"w$(hdrawn ha%e e*eeded &+nd" de,o"$(ed.hen a #an /ran(" O%erdra&( &a*$)$( (o a *+"(o'er and d$"hono+r a *he?+e wh$*h wo+)d &a)) w$(h$n (he)$'$( o& o%erdra&( &a*$)$(- (he #an *an #e he)d )$a#)e &or (he d$"hono+r o& (he *he?+e and *an #e re?+$red(o ,a da'a/e" &or (he "a'e. O%erdra&( #e(ween a #an and a *+"(o'er $" a *on(ra*(- $& (he "a'e wa"#e$n/ a%a$)ed # a *+"(o'er &or (he ,a"( &o+r ear"- (he #an *anno( +n$)a(era)) w$(hdraw (ha( &a*$)$(w$(ho+( a no($*e (o $(" *on"($(+en("- and o(herw$"e (he #an *an #e he)d )$a#)e &or wron/&+) d$"hono+r o&(he *+"(o'er" *he?+e.INDIAN OVERSEES BANK- MADRAS % NARAN >RASAD GOVINDLAL >ATELIM>ERIAL BANK OF INDIA % KRISHNAMURTHI

CUSTOMER HAVING TWO DIFFERENT ACCOUNTS

I& a *+"(o'er ha" (wo d$&&eren( a**o+n(" $n a #an- he *anno( +"e *he?+e o& one a**o+n( &or w$(hdrawa) o&'one &ro' (he o(her a**o+n(. I& a *+"(o'er $""+e" a *he?+e o& one a**o+n( $n wh$*h (here $" $n"+&&$*$en(#a)an*e (o 'ee( (he "a'e- (he #an a))ow" o%erdra&( (o hono+r (ha( *he?+e- (he o%erdrawn a'o+n( "er%e"a" a )oan (o (he *+"(o'er wh$*h he *an re?+$red (o ,a a)on/ w$(h $n(ere"(.

5. CONCECPT OF LIEN

;
http://www.businessdictionary.com/definition/loan.htmlhttp://www.businessdictionary.com/definition/arrangement.htmlhttp://www.businessdictionary.com/definition/arrangement.htmlhttp://www.businessdictionary.com/definition/bank.htmlhttp://www.businessdictionary.com/definition/amount.htmlhttp://www.businessdictionary.com/definition/amount.htmlhttp://www.businessdictionary.com/definition/call.htmlhttp://www.businessdictionary.com/definition/overdraft-limit.htmlhttp://www.businessdictionary.com/definition/overdraft-limit.htmlhttp://www.businessdictionary.com/definition/current.htmlhttp://www.businessdictionary.com/definition/current.htmlhttp://www.businessdictionary.com/definition/account.htmlhttp://www.businessdictionary.com/definition/customer.htmlhttp://www.businessdictionary.com/definition/write.htmlhttp://www.businessdictionary.com/definition/write.htmlhttp://www.businessdictionary.com/definition/check.htmlhttp://www.businessdictionary.com/definition/check.htmlhttp://www.businessdictionary.com/definition/common.htmlhttp://www.businessdictionary.com/definition/form.htmlhttp://www.businessdictionary.com/definition/form.htmlhttp://www.businessdictionary.com/definition/business.htmlhttp://www.businessdictionary.com/definition/business.htmlhttp://www.businessdictionary.com/definition/revolving-loan.htmlhttp://www.businessdictionary.com/definition/revolving-loan.htmlhttp://www.businessdictionary.com/definition/deposit.htmlhttp://www.businessdictionary.com/definition/deposit.htmlhttp://www.businessdictionary.com/definition/deposit.htmlhttp://www.businessdictionary.com/definition/credit.htmlhttp://www.businessdictionary.com/definition/and-interest.htmlhttp://www.businessdictionary.com/definition/and-interest.htmlhttp://www.businessdictionary.com/definition/daily.htmlhttp://www.businessdictionary.com/definition/daily.htmlhttp://www.businessdictionary.com/definition/balance.htmlhttp://www.businessdictionary.com/definition/demand-loan.htmlhttp://www.businessdictionary.com/definition/facility.htmlhttp://www.businessdictionary.com/definition/outstanding.htmlhttp://www.businessdictionary.com/definition/lender.htmlhttp://www.businessdictionary.com/definition/lender.htmlhttp://www.businessdictionary.com/definition/discretion.htmlhttp://www.businessdictionary.com/definition/discretion.htmlhttp://www.businessdictionary.com/definition/warning.htmlhttp://www.businessdictionary.com/definition/notice.htmlhttp://www.businessdictionary.com/definition/notice.htmlhttp://www.businessdictionary.com/definition/notice.htmlhttp://www.businessdictionary.com/definition/explanation.htmlhttp://www.businessdictionary.com/definition/explanation.htmlhttp://www.businessdictionary.com/definition/secured.htmlhttp://www.businessdictionary.com/definition/asset.htmlhttp://www.businessdictionary.com/definition/asset.htmlhttp://www.businessdictionary.com/definition/property.htmlhttp://www.businessdictionary.com/definition/property.htmlhttp://www.businessdictionary.com/definition/right.htmlhttp://www.businessdictionary.com/definition/collateral.htmlhttp://www.businessdictionary.com/definition/collateral.htmlhttp://www.businessdictionary.com/definition/collateral.htmlhttp://www.businessdictionary.com/definition/account-holder.htmlhttp://www.businessdictionary.com/definition/account-holder.htmlhttp://www.businessdictionary.com/definition/account-holder.htmlhttp://www.businessdictionary.com/definition/pay.htmlhttp://www.businessdictionary.com/definition/borrower.htmlhttp://www.businessdictionary.com/definition/credit-rating.htmlhttp://www.businessdictionary.com/definition/credit-rating.htmlhttp://www.businessdictionary.com/definition/credit-rating.htmlhttp://www.businessdictionary.com/definition/default.htmlhttp://www.businessdictionary.com/definition/default.htmlhttp://www.businessdictionary.com/definition/debt.htmlhttp://www.businessdictionary.com/definition/debt.htmlhttp://www.businessdictionary.com/definition/period.htmlhttp://www.businessdictionary.com/definition/practice.htmlhttp://www.businessdictionary.com/definition/line-of-credit.htmlhttp://www.businessdictionary.com/definition/line-of-credit.htmlhttp://www.businessdictionary.com/definition/line-of-credit.htmlhttp://www.businessdictionary.com/definition/credit-line.htmlhttp://www.businessdictionary.com/definition/required.htmlhttp://www.businessdictionary.com/definition/required.htmlhttp://www.businessdictionary.com/definition/maintain.htmlhttp://www.businessdictionary.com/definition/percent.htmlhttp://www.businessdictionary.com/definition/percent.htmlhttp://www.businessdictionary.com/definition/cash.htmlhttp://www.businessdictionary.com/definition/cash.htmlhttp://www.businessdictionary.com/definition/demonstrate.htmlhttp://www.businessdictionary.com/definition/demonstrate.htmlhttp://www.businessdictionary.com/definition/continuing.htmlhttp://www.businessdictionary.com/definition/financial-health.htmlhttp://www.businessdictionary.com/definition/management.htmlhttp://www.businessdictionary.com/definition/management.htmlhttp://www.businessdictionary.com/definition/cleanup-period.htmlhttp://www.businessdictionary.com/definition/cleanup-period.htmlhttp://www.businessdictionary.com/definition/bank-overdraft.htmlhttp://www.businessdictionary.com/definition/bank-overdraft.htmlhttp://www.businessdictionary.com/definition/funds.htmlhttp://www.businessdictionary.com/definition/funds.htmlhttp://www.businessdictionary.com/definition/arrangement.htmlhttp://www.businessdictionary.com/definition/bank.htmlhttp://www.businessdictionary.com/definition/amount.htmlhttp://www.businessdictionary.com/definition/call.htmlhttp://www.businessdictionary.com/definition/overdraft-limit.htmlhttp://www.businessdictionary.com/definition/current.htmlhttp://www.businessdictionary.com/definition/account.htmlhttp://www.businessdictionary.com/definition/customer.htmlhttp://www.businessdictionary.com/definition/write.htmlhttp://www.businessdictionary.com/definition/check.htmlhttp://www.businessdictionary.com/definition/common.htmlhttp://www.businessdictionary.com/definition/form.htmlhttp://www.businessdictionary.com/definition/business.htmlhttp://www.businessdictionary.com/definition/revolving-loan.htmlhttp://www.businessdictionary.com/definition/revolving-loan.htmlhttp://www.businessdictionary.com/definition/deposit.htmlhttp://www.businessdictionary.com/definition/credit.htmlhttp://www.businessdictionary.com/definition/and-interest.htmlhttp://www.businessdictionary.com/definition/daily.htmlhttp://www.businessdictionary.com/definition/balance.htmlhttp://www.businessdictionary.com/definition/demand-loan.htmlhttp://www.businessdictionary.com/definition/facility.htmlhttp://www.businessdictionary.com/definition/outstanding.htmlhttp://www.businessdictionary.com/definition/lender.htmlhttp://www.businessdictionary.com/definition/discretion.htmlhttp://www.businessdictionary.com/definition/warning.htmlhttp://www.businessdictionary.com/definition/notice.htmlhttp://www.businessdictionary.com/definition/explanation.htmlhttp://www.businessdictionary.com/definition/secured.htmlhttp://www.businessdictionary.com/definition/asset.htmlhttp://www.businessdictionary.com/definition/property.htmlhttp://www.businessdictionary.com/definition/right.htmlhttp://www.businessdictionary.com/definition/collateral.htmlhttp://www.businessdictionary.com/definition/account-holder.htmlhttp://www.businessdictionary.com/definition/pay.htmlhttp://www.businessdictionary.com/definition/borrower.htmlhttp://www.businessdictionary.com/definition/credit-rating.htmlhttp://www.businessdictionary.com/definition/default.htmlhttp://www.businessdictionary.com/definition/debt.htmlhttp://www.businessdictionary.com/definition/period.htmlhttp://www.businessdictionary.com/definition/practice.htmlhttp://www.businessdictionary.com/definition/line-of-credit.htmlhttp://www.businessdictionary.com/definition/credit-line.htmlhttp://www.businessdictionary.com/definition/required.htmlhttp://www.businessdictionary.com/definition/maintain.htmlhttp://www.businessdictionary.com/definition/percent.htmlhttp://www.businessdictionary.com/definition/cash.htmlhttp://www.businessdictionary.com/definition/demonstrate.htmlhttp://www.businessdictionary.com/definition/continuing.htmlhttp://www.businessdictionary.com/definition/financial-health.htmlhttp://www.businessdictionary.com/definition/management.htmlhttp://www.businessdictionary.com/definition/cleanup-period.htmlhttp://www.businessdictionary.com/definition/bank-overdraft.htmlhttp://www.businessdictionary.com/definition/funds.htmlhttp://www.businessdictionary.com/definition/loan.html


7/69

RIGHT OF LIENThe r$/h( o& a *red$(or Ban (o re(a$n /ood" and "e*+r$($e" owned # (he de#(or #a$)ed a" "e*+r$( (o(he #an +n($) (he )oan d+e &ro' (he de#(or $" re,a$d $" *a))ed (he r$/h( o& )$en. There are (wo (,e" o& )$en"+*h a"

1. >ar($*+)ar L$en@. Genera) L$en

>ar($*+)ar L$en>ar($*+)ar )$en $" one- $n (ha( (he *ra&("'an *an re(a$n (ho"e /ood" on wh$*h he ha" ",en( ($'e- e&&or( and'one +n($) he $" ,a$d.Genera) L$enGenera) )$en /$%e" (he #aner (he r$/h( (o re(a$n /ood" and "e*+r$($e" de)e/a(ed (o h$' $n h$" *a,a*$( a" a#aner.3a"e" $n wh$*h )$en *anno( eer*$"e

1. I& (he /ood" and "e*+r$($e" ha%e #een en(r+"(ed (o (he #aner a" a (r+"(ee or an a/en(@. I& a *on(ra*( e$"(" #e(ween (he #aner and (he *+"(o'er (ha( $" *on(rad$*(or w$(h (he #aner"

r$/h( o& /enera) )$enA #aner" )$en $" 'ore (han a /enera) )$en- $( $" an $',)$ed ,)ed/e and he ha" (he r$/h( (o "e)) (he /ood" $n*a"e o& de&a+)(. The r$/h( o& )$en $" /ran(ed +,on (he #aner # (he Ind$an 3on(ra*( A*( and $( he)," (o

a%o$d (he need o& a "e,ara(e a/ree'en(. To #e $n a "a&e ,o"$($on (he #aner "ho+)d (ae a )e((er o& )$en"(a($n/ (ha( (he /ood" ,ro,er($e" are en(r+"(ed a" "e*+r$( &or a )oan a( ,re"en( and $n &+(+re and (ha( (he#aner *an eer*$"e h$" )$en on (he'. The #aner *an a)"o "e)) (he /ood" $& (he *+"(o'er doe"n( 'ae (he,a'en( de&a+)(".

1. The #aner *an eer*$"e (he r$/h( o& )$en on) on /ood" "(and$n/ $n (he na'e o& (he #orrower andno( 8o$n() w$(h o(her".

@. The #aner *an eer*$"e h$" r$/h( o& )$en on "e*+r$($e" re'a$n$n/ $n h$" ,o""e""$on a&(er (he )oan&or wh$*h (he were )od/ed $" re,a$d # (he *+"(o'er on) $& (here $" no *on(ra*( (o (he *on(rar.

E*e,($on (o (he R$/h( o& )$en 1. The #aner *anno( eer*$"e (he r$/h( o& )$en )$en on %a)+a#)e" en(r+"(ed (o (he #aner a" a #a$)ee

or (r+"(ee.@. R$/h( o& )$en $" no( a,,)$*a#)e on do*+'en(" de,o"$(ed &or a ",e*$a) ,+r,o"e or w$(h ",e*$&$*

$n"(r+*($on (ha( (he earn$n/" are (o #e +($)$4ed &or a ",e*$&$* ,+r,o"e.

6. The #aner" /enera) )$en $" d$",)a*ed # *$r*+'"(an*e" (ha( "how an $',)$ed a/ree'en(

*on(rad$*(or (o (he r$/h( o& /enera) )$en.

7. The #aner ha" no r$/h( o& )$en on "e*+r$($e" )e&( w$(h (he #aner ne/)$/en() or +n$n(en($ona)).

. The #aner doe"n( ha%e (he r$/h( o& )$en on "e*+r$($e" de,o"$(ed a" a (r+"(ee $n re",e*( o& h$"

,er"ona) )oan.

The #aner" r$/h( o& )$en e(end" o%er /ood" and "e*+r$($e" handed o%er (o h$'. Mone de,o"$(ed $n (he

#an and *red$( #a)an*e $n h$"her a**o+n( doe" no( &a)) $n (he *a(e/or o& /ood" and "e*+r$($e". There&ore

(he #aner *an +"e h$" r$/h( o& "e(o&& a" o,,o"ed (o )$en w$(h re/ard (o 'one de,o"$(ed w$(h h$'.

1. The r$/h( *an #e eer*$"ed on) on (he *+"(o'er" ,ro,er( and no( on 8o$n( a**o+n(" (he

*+"(o'er.

@. The #aner *anno( ha%e (he r$/h( (o eer*$"e (he )$en when (he de#( ha" no( 'a(+red.

6. The #aner *anno( eer*$"e (he )$en when he *an eer*$"e "e( o&&.

2


8/69


9/69

In *a"e o& "+",$*$on- (he #an $" "+,,o"ed (o 'ae ,ro,er $n?+$r$e" #e&ore *o))e*($n/ (he *he?+e- $& (he

#an &a$)" (o 'ae "+*h $n?+$r 'ean" (he #an $" no( a*($n/ $n /ood &a$(h.

I& (he a#o%e re?+$re'en(" are no( "a($"&$ed- (hen (he *o))e*($n/ #an *an #e he)d re",on"$#)e (o (he ,er"on

who $" (he (r+e owner o& (he *he?+e

SANYASILINGAM % E3HANGE BANK OF INDIA AND AFRI3A

The Bo'#a H$/h 3o+r( he)d (ha(- (he #an *o))e*($n/ a #an dra&( wa" no( en($()ed (o ,ro(e*($on a" &or

*o))e*($n/ *he?+e" +nder "e*($on 161 # (he a'end'en( A*(- 1972 "e*($on 161 A wa" added (o (he

Ne/o($a#)e In"(r+'en( A*( wh$*h ,ro%$de" (ha( (he "a'e ,ro(e*($on $" a%a$)a#)e (o a #an wh$)e *o))e*($n/

a #an dra&( a" $n (he *a"e o& a *he?+e.

INDIAN BANK % 3ATHOLI3 SYRIAN BANK LIMITED

a. S.M.De"a$ o,ened a *+rren( a**o+n( w$(h (he Ind$an Ban 'a$n o&&$*e on ;(h=+ne 19;9

#. On 16(h=+ne he /a%e a de'and dra( &or *o))e*($on

*. The dra&( a,,eared (o #e $n &a%o+r o& S.M.De"a$ &or R"@9-:::0 drawn on Sa)e' #ran*h o& (he

3a(ho)$* Sr$an Ban

d. The Ind$an #an "en( $( &or *o))e*($on- /o( (he ,a'en( o& R"@9-:::0- *red$(ed $n (he a**o+n( o&

S.M.De"a$ and a))owed (o w$(hdraw.

e. Or$/$na)) (he dra&( wa" &or R"@:-:::0 $n &a%o+r o& Me""er" De"a$ P 3o #+( $( wa" *)e%er) &or/ed

&. On *o'$n/ (o now (ha( (he dra&( wa" &or/ed one- 3a(ho)$* Sr$an Ban #ro+/h( an a*($on a/a$n"( (he

Ind$an Ban (o re*o%er (he a'o+n(.

/. The Ind$an #an *)a$'ed ,ro(e*($on a%a$)a#)e (o (he *o))e*($n/ #an +nder "e*($on 161 and 161A

The *a(ho)$* Sr$an Ban *on(ended (ha( (he Ind$an #an wa" ne/)$/en( $n o,en$n/ a**o+n( $n (he na'e o&

S.M.De"a$ and a)"o ne/)$/en( $n *o))e*($n/ $(" dra&(.

The *o+r( &o+nd (ha( (he Ind$an #an wa" ne/)$/en( $n 'a$n/ ,ro,er %er$&$*a($on wh$)e o,en$n/ #an

*+rren( a**o+n(. The a/en( d$d no( (e"( (he *reden($a)" o& (h$" *+"(o'er #e&ore o,en$n/ (he "a$d a**o+n(.

The Ind$an #an *)a$'ed ,ro(e*($on a%a$)a#)e (o a *o))e*($n/ #an.

I( wa" he)d (ha( (he Ind$an #an wa" ne/)$/en( $n o,en$n/ (he *+"(o'er a**o+n(- and (hen *o))e*($n/ (he

dra&( &or "+*h a h+/e a'o+n(- $( wa" no( en($()ed (o (he ,ro(e*($on wh$*h a #an *an *)a$' +nder "e*($on

161 and 161A. $( wa" a)"o he)d (ha( (here wa" no *on(r$#+(or ne/)$/en( on (he ,ar( o& (he ,a$n/ #an.

The Ind$an #an wa" a" "+*h )$a#)e (o ,a (ha( a'o+n(.

9


10/69

2. RIGHT OF A>>RO>RIATIONI( $" (he r$/h( o& (he *+"(o'er" (o d$re*( h$" #aner a/a$n"( wh$*h de#( when 'ore (han one de#( $"o+("(and$n/ (he ,a'en( 'ade # h$' "ho+)d #e a,,ro,r$a(ed. In *a"e no "+*h d$re*($on $" /$%en- (he#an *an eer*$"e $(" r$/h( o& a,,ro,r$a($on and a,,) $( $n ,a'en( o& an de#(. Se*($on 9-;: and ;1 o&Ind$an 3on(ra*( A*(- 152@ )a" down (he r+)e" o& a,,ro,r$a($on.S!.5*.A++,#!"#$% $ +/0%" 123 4" "$ 4#!2374 # #%4#!"48$.e. A" ,er #orrower" $n"(r+*($on" here a de#(or- ow$n/ "e%era) d$"($n*( de#(" (o one ,er"on- 'ae" a,a'en( (o h$'- e$(her w$(h e,re"" $n($'a($on- or +nder *$r*+'"(an*e" $',)$n/ (ha( (he ,a'en( $" (o #ea,,)$ed (o (he d$"*har/e o& "o'e ,ar($*+)ar de#(- (he ,a'en(- $& a**e,(ed- '+"( #e a,,)$ed a**ord$n/).S!.69. A++,#!"#$% $ +/0%" 123 4" "$ 4#!2374 # %$" #%4#!"48$.e. $n (he a#"en*e o& e,re"" or $',)$ed $n(en($on o& de#(or Se*.;: o& (he Ind$an 3on(ra*( A*( "(a(e" (ha($& (he de#(or doe" no( $n($'a(e or (here $" no *$r*+'"(an*e o& $nd$*a($n/ how (he ,a'en( $" (o #e +"ed- (her$/h( o& a,,ro,r$a($on $" %e"(ed $n (he *red$(or. A**ord$n/ (o (he A*(- here (he de#(or ha" o'$((ed (o$n($'a(e and (here are no o(her *$r*+'"(an*e"- $nd$*a($n/ (o wh$*h de#( (he ,a'en( $" (o #e a,,)$ed- (he*red$(or 'a a,,) $( a( h$" d$"*re($on (o an )aw&+) de#( a*(+a)) d+e and ,aa#)e (o h$' &ro' (he de#(or-whe(her $(" re*o%er $" or $" no( #arred # (he )aw $n &or*e &or (he ($'e #e$n/ a" (o (he )$'$(a($on o& "+$(".!S!.6&.A++,#!"#$% $ +/0%" 123 %#"23 +3"/ ++3$+3#".

here ne$(her ,ar( 'ae" an a,,ro,r$a($on (he ,a'en( "ha)) #e a,,)$ed $n d$"*har/e o& (he de#(" $norder o& ($'e- whe(her (he are or are no( #arred # (he )aw $n &or*e &or (he ($'e #e$n/ a" (o (he )$'$(a($ono& "+$(". I& (he de#(" are o& e?+a) "(and$n/- (he ,a'en( "ha)) #e a,,)$ed $n d$"*har/e o& ea*h,ro,or($ona)).Un)e"" (here $" an a/ree'en( (o (he *on(rar- an ,a'en( 'ade # a de#(or $" a,,)$ed &$r"( (oward"$n(ere"( and (herea&(er (oward" ,r$n*$,a). I& a *+"(o'er ha" on) one a**o+n( and he de,o"$(" andw$(hdraw" 'one &ro' $( re/+)ar)- (he order $n wh$*h (he *red$( en(r w$)) "e( o&& (he de#$( en(r $" $n (he*hrono)o/$*a) order- (h$" $" nown a" 3)a(on" r+)e.

The 3a"e The 3)a(on" *a"e re&er" (o (he *a"e o& De%ane" V" No#)e $n (he ear 151;. Mr. 3)a(on

had an a**o+n( w$(h a Ban$n/ &$r'- o& wh$*h Mr.De%ane" wa" a ,ar(ner. A" $( "o ha,,ened- Mr.

3)a(on w$(hdrew 'ore (han (he a%a$)a#)e #a)an*e $n h$" a**o+n(- (here# *rea($n/ a o%erdra&(.

S+#"e?+en()- he re,a$d (he "a'e- and (hen de,o"$(ed &+r(her a'o+n(" $n h$" a**o+n(- a" ,ar( o& h$"

o,era($on" $n (he "a$d a**o+n(. In (he 'ean($'e- Mr.De%ane" d$ed- #+( (he Ban$n/ &$r'- $n wh$*h he

wa" one o& (he ,ar(ner"- *on($n+ed (o o,era(e a" +"+a). La(er on- (he &$r' wa" de*)ared #anr+,(.

A( (ha( ,o$n( o& ($'e- Mr.3)a(on "o+/h( (o w$(hdraw 'one &ro' h$" a**o+n(- wh$*h wa" de*)$ned- $n

%$ew o& (he de*)ared #anr+,(* o& (he &$r'. The 'a((er (hen wen( (o *o+r(- w$(h Mr. 3)a(on )a$n/

*)a$' (o h$" 'on$e" &ro' (he e"(a(e o& (he de*ea"ed ,ar(ner o& (he Ban$n/ &$r'- Mr. De%ane". The

3o+r(- howe%er r+)ed a/a$n"( h$'- )a$n/ down- wha( *a'e (o #e nown a"- (he R+)e $n 3)a(on" 3a"e!.

The 3o+r( he)d (ha( (he &$r"( *red$( $n a a**o+n( wo+)d /o (oward" ad8+"($n/ (he &$r"( de#$( $n (he "a$d

a**o+n(- and "o on. In (he *a"e o& a Ban$n/ &$r'- +nder ,ar(ner"h$, *on"($(+($on- +,on (he dea(h o& one

,ar(ner- *red$(" 'ade # a *+"(o'er $n h$" a**o+n( wo+)d #e*o'e (he re",on"$#$)$( o& (he re'a$n$n/

,ar(ner"- and *o+)d no( #e re,a$d o+( o& (he e"(a(e o& (he de*ea"ed ,ar(ner.

Th$" ,r$n*$,)e o& &$r"( $n &$r"( o+(- +,he)& # (he En/)$"h 3o+r( $n 151;- $" "($)) $n %o/+e- de",$(e *r$($*$"'

&ro' *er(a$n ?+ar(er" a#o+( $(" &a$rne"" and re)e%an*e. Howe%er- (here are *er(a$n The R+)e $n 3)a(on"3a"e $" a )and'ar 8+d/e'en( $n (he a,,)$*a($on o& Ban$n/ )aw"- and $" e(re'e) +"e&+) $n (ra*$n/

*)a$'" whera &ra+d $" *o''$(ed $n an a**o+n( # a ,er"on- $n a &$d+*$ar ,o"$($on- and a)"o where an

a**o+n( $" +"ed &or "(a"h$n/ awa $))0/o((en wea)(h.

For ea',)e- a (h$e& de,o"$(" %ar$o+" "+'" o& 'on$e" he "(o)e- $n(o h$" Ban a**o+n(- on d$&&eren( da(e"-

and (hen w$(hdraw" *er(a$n a'o+n(" on d$&&eren( da(e". The (h$e& $" *a+/h(- and (he >o)$*e re*e$%e &$%e

*)a$'" &or (he #a)an*e o& *red$( )$n/ $n (he (h$e&" a**o+n(. In a *a"e )$e (h$"- (he 3o+r( wo+)d a,,) (he

3)a(on" r+)e- $n "e(()$n/ (he r$/h(" o& (he &$%e *)a$'an(".

1:


11/69

Ban" "*r+,+)o+") &o))ow (h$" r+)e $n dea)$n/ w$(h *a"e" o& $n"o)%en*- #anr+,(*- dea(h e(*.- o& (he$r

#orrower"- and o(her a**o+n( ho)der"- e",e*$a)) $n ,ar(ner"h$, a**o+n(".

Ban" &o))ow a "$',)e ,ro*ed+re o& "(o,,$n/ (he o,era($on" $n "+*h a**o+n("- where (he 3)a(on" r+)e $"

a,,)$*a#)e. And $n *a"e o& 8o$n( a**o+n("- a "e,ara(e a**o+n( $" o,ened $n (he na'e" o& (he "+r%$%$n/

a**o+n( ho)der".

E:CEPTIONS TO THE RULE.For $n"(an*e- a *a"e where (he 3)a(on" r+)e doe" no( a,,)- re)a(e" (o a Tr+"( A**o+n(- where$n (he

Tr+"(ee *o''$(" #rea*h o& (r+"(- # '$$n/ +, h$" ,er"ona) &+nd" w$(h (ho"e o& (he Tr+"(- and ,ro*eed" (o

+($)$4e "+*h &+nd" &or h$" ,er"ona) e,en"e". In a *a"e )$e (h$"- $( $" a""+'ed (ha( (he a'o+n( de,o"$(ed

# (he &ra+d+)en( (r+"(ee wo+)d /o (oward" ad8+"($n/ (he w$(hdrawa) 'ade # h$' &or h$" ,er"ona) #ene&$(-

$rre",e*($%e o& (he order o& "+*h *red$(" and de#$(". The Tr+"(ee ho)d" a &$d+*$ar ,o"$($on $n a (ran"a*($on

o& (h$" na(+re.

. CLASSIFICATION OF BANKS

Re"er%e Ban o& Ind$a A,e Ban$n/ In"($(+($on"

S'a)) Ind+"(r$e"

De%e)o,'en( Ban

o& Ind$a

SIDBI

Na($ona) Ban &or

A/r$*+)(+ra) and R+ra)

De%e)o,'en(

E,or( and

I',or( Ban

EIM BANK

Ind+"(r$a)

Re*on"(r+*($on Ban

o& Ind$aIRBI

Na($ona)

Ho+"$n/

BanNHB

S'a)) Ind+"(r$a) De%e)o,'en( Ban o& Ind$aSIDBI0 S'a)) Ind+"(r$e" De%e)o,'en( Ban o& Ind$a

SIDBI- "e( +, +nder an A*( o& Ind$an >ar)$a'en(- $" (he >r$n*$,a) F$nan*$a) In"($(+($on &or (he >ro'o($on-

F$nan*$n/ and De%e)o,'en( o& (he M$*ro- S'a)) and Med$+' En(er,r$"e MSME "e*(or and &or 3o0

ord$na($on o& (he &+n*($on" o& (he $n"($(+($on" en/a/ed $n "$'$)ar a*($%$($e".

Na($ona) Ban &or A/r$*+)(+ra) and R+ra) De%e)o,'en(0 A( (he $n"(an*e o& Go%ern'en( o& Ind$a Re"er%e

Ban o& Ind$a RBI- *on"($(+(ed a *o''$((ee +nder (he 3ha$r'an"h$, o& Shr$ B.S$%ara'an- &or'er

'e'#er o& >)ann$n/ 3o''$""$on- Go%ern'en( o& Ind$a re*o''ended (he &or'a($on o& Na($ona) Ban &orA/r$*+)(+re and R+ra) De%e)o,'en(NABARD. The >ar)$a'en(- (hro+/h A*(- ;1 o& 1951- a,,ro%ed (he

"e(($n/ +, o& NABARD. The #an *a'e $n(o e$"(en*e $n 195@ # (ran"&err$n/ (he a/r$*+)(+ra) *red$(

&+n*($on" o& RBI and re&$nan*e &+n*($on" o& (he (hen A/r$*+)(+ra) Re&$nan*e and De%e)o,'en(

3or,ora($on ARD3. I( $" (he 'o"( $',or(an( #an &or a/r$*+)(+re and r+ra) de%e)o,'en(.

E,or( and I',or( Ban EIM BANK0 E,or(0I',or( Ban o& Ind$a $" (he ,re'$er e,or( &$nan*e

$n"($(+($on o& (he *o+n(r. I( *o''en*ed o,era($on" $n 195@ +nder (he E,or(0I',or( Ban o& Ind$a A*(

1951. Go%ern'en( o& Ind$a )a+n*hed (he $n"($(+($on w$(h a 'anda(e (o no( 8+"( enhan*e e,or(" &ro'

Ind$a- #+( a)"o (o $n(e/ra(e (he *o+n(r" &ore$/n (rade and $n%e"('en( w$(h (he o%era)) e*ono'$* /row(h.

Ind+"(r$a) Re*on"(r+*($on Ban o& Ind$aIRBI0 e"(a#)$"hed (hro+/h THE INDUSTRIAL

RE3ONSTRU3TION BANK OF INDIA A3T- 1957. An A*( (o ,ro%$de &or (he e"(a#)$"h'en( o& (he

Ind+"(r$a) Re*on"(r+*($on Ban o& Ind$a- (o &+n*($on a" (he ,r$n*$,a) *red$( and re*on"(r+*($on a/en* &or

$nd+"(r$a) re%$%a) and (o *o0ord$na(e "$'$)ar wor o& (he o(her $n"($(+($on".

Na($ona) Ho+"$n/ BanNHB0 $( wa" e"(a#)$"hed $n 1955 re/+)a(ed +nder (he Na($ona) Ho+"$n/ Board

A*(-52. I( ,ro'o(e" ho+"$n/ &$nan*e a( )o*a) and re/$ona) )e%e)" and ,ro%$de" &$nan*$a) and o(her "+,,or(

(o "+*h $n"($(+($on" &or 'o#$)$"$n/ re"o+r*e" and e(end$n/ *red$( &or ho+"$n/.

BANKING INSTITUTIONS

3OMMER3IAL BANKS REGIONAL RURAL BANKS 3OO>ERATIVE BANKS

11


12/69

>RIVATE

1

>UBLI3@ STATE 3OO>ERATIVE

BANKS

INDIAN

1

FOREIGN1 STATE BANK

GROU> @ a

NATIONALISED

BANKS @ #

DISTRI3T 3OO>ERATIVE

BANK >r$'ar 3red$( So*$e(

SBI and S+#"$d$ar

*o',an$e"@a

S+#"$d$ar #an

SBH- SB@a

S+#"$d$ar

3o',an$e" @ #

COMMERCIAL BANKS

The *o''er*$a) #an" are (he o)de"( $n"($(+($on"- (he ha%e a w$de ne(wor o& #ran*he" and *o''and

+)'o"( #an$n/ *on&$den*e. In (he (o(a) #an$n/ o,era($on" *o''er*$a) #an" ha%e (he #$//e"( "hare.

The"e #an" were e"(a#)$"hed a" *or,ora(e #od$e" w$(h "hareho)d$n/" # ,r$%a(e $nd$%$d+a)". La(er on

(he"e #an" were ,+( +nder "(a(e owner"h$, and *on(ro).(he"e are d$%$ded $n(o ,r$%a(e and ,+#)$* #an".

1. P3#;" B%


13/69

INDUSTRIAL DEVELOPMENT

BANK OF INDIA

Th$" $" "+,re'e #an$n/ $n"($(+($on &or )on/ (er' $nd+"(r$a) &$nan*e wa" e"(a#)$"hed $n 19;7. I( wa" a

who)) "+#"$d$ar o& (he Re"er%e Ban #+( $n 192; $(" en($re "hare *a,$(a) wa" (ran"&erred (o (he 3en(ra)

Go%ern'en(a). Then $( wa" de)$ned &ro' (he Re"er%e Ban. There are "e%era) "+#"$d$ar$e" o& IDBI$n*)+de- S'a)) Ind+"(r$e" De%e)o,'en( Ban o& Ind$a- IDBI Ban L(d- IDBI 3a,$(a) Mare( Ser%$*e" L(d

a n+'#er o& &$nan*$a) $n"($(+($on" ha%e a)"o #een *o ",on"ored # IDBI )$e na($ona) S(o* e*han/e o&

Ind$a- o%er (he *o+n(er E*han/e on Ind$a and D$"*o+n( F$nan*e Ho+"e o& Ind$a L(d.

De%e)o,e'en( Ban" are (wo (,e" 1 A)) Ind$a De%e)o,'en( Ban" $n*)+de Ind+"(r$a) F$nan*e

3or,ora($on o& Ind$a and Ind+"(r$a) 3red$( and In%e"('en( 3or,ora($on o& Ind$a $$ (he S(a(e Le%e)

De%e)o,'en( Ban" wh$*h $n*)+de (he S(a(e F$nan*$a) 3or,ora($on" SF3" and S(a(e Ind+"(r$a)

De%e)o,'en( 3or,ora($on" SID3"

INVESTMENT INSTITUTIONS

L$&e In"+ran*e *or,ora($on o& $nd$a Genera) In"+ran*e *or,ora($on o& $nd$a Un$( (r+"( o& $nd$a

LIC $ I%4#8$( $" (he )ar/e"( $n"($(+($ona) $n%e"(or $n Ind$a and $(" $n%e"('en(" are re/+)a(ed # "e*($on

@2A o& (he In"+ran*e A*(-1965.

GIC $ I%4#8 a&(er na($ona)$"a($on o& Genera) In"+ran*e *o',an$e" $n $nd$a- Genera) In"+ran*e

3or,ora($on wa" e"(a#)$"hed $n 1926- $( o,era(e" "e%era) $n"+ran*e "*he'e" a)on/ w$(h &o+r "+#"$d$ar$e"

U%#" T3=" $ I%4#8$( wa" e"(a#)$"hed +nder (he Un$( (r+"( o& Ind$a A*(- 19;6 . (he &+n*($on o& UTI $" (o

'o#$)$"e (he "a%$n/" o& (he *o''+n$( (hro+/h (he "a)e o& $(" +n$(" +nder $(" %ar$o+" +n$( "*he'e".

CREDIT GUARANTEE INSTITUTIONS

E>ORT 3REDIT GUARANTEE 3OR>ORATION DIS3OUNT AND FINAN3E HOUSE OF

LIMITED

E:PORT CREDIT GUARANTEE CORPORATION(ECGC)8

E3G3 ,)a" a %er $',or(an( ro)e $n e,or( ,ro'o($on and e,or( &$nan*e. I( ,ro%$de" (he $nd$a e,or(er"

&ro' (he r$"" o& "e))$n/ /ood" on *red$( (o /ore$/n #+er".DISCOUNT AND FINANCE HOUSE OF INDIA LIMITED8

I( *a'e $n(o e$"(en*e $n A,r$) 1955 w$(h "hare *a,$(a) "+#"*r$#ed # (he RBI 1 ,+#)$* "e*(or 66

and &$nan*$a) $n"($(+($on" 1;. I( ,ro%$de" )$?+$d$( $n (he 'one 'are( # dea)$n/ $n 'one 'are(

$n"(r+'en(".

Mon(h) In*o'e S*he'e $n >o"( O&&$*e" a Go%ern'en( Sa%$n/" Ban" A*(- 1526.

*. THE FUNCTIONS OF COMMERCIAL BANKS

The 'a$n &+n*($on" o& *o''er*$a) #an" are a**e,($n/ de,o"$(" &ro' (he ,+#)$* and ad%an*$n/ (he'

)oan". Be"$de" (he"e &+n*($on" (here are 'an o(her &+n*($on" wh$*h (he"e #an" ,er&or'. A)) (he"e

&+n*($on" *an #e d$%$ded +nder (he &o))ow$n/ head"

1. A**e,($n/ de,o"$("

@. G$%$n/ )oan"

6. O%erdra&(

16

IF3IA

I3I3I A SF3B SID

3OR>ORATIONS

B


14/69

7. D$"*o+n($n/ o& B$))" o& E*han/e

. In%e"('en( o& F+nd"

;. A/en* F+n*($on"

2. M$"*e))aneo+" F+n*($on"

1. A!!+"#%7 D+$#"8 The 'o"( $',or(an( &+n*($on o& *o''er*$a) #an" $" (o a**e,( de,o"$(" &ro' (he

,+#)$*. Var$o+" "e*($on" o& "o*$e(- a**ord$n/ (o (he$r need" and e*ono'$* *ond$($on- de,o"$( (he$r "a%$n/"

w$(h (he #an".

For ea',)e- &$ed and )ow $n*o'e /ro+, ,eo,)e de,o"$( (he$r "a%$n/" $n "'a)) a'o+n(" &ro' (he ,o$n("

o& %$ew o& "e*+r$(- $n*o'e and "a%$n/ ,ro'o($on. On (he o(her hand- (rader" and #+"$ne""'en de,o"$(

(he$r "a%$n/" $n (he #an" &or (he *on%en$en*e o& ,a'en(.

Kee,$n/ (he need" and $n(ere"(" o& %ar$o+" "e*($on" o& "o*$e(- #an" &or'+)a(e %ar$o+" de,o"$( "*he'e".Genera))- (here are (hree (,e" o& de,o"$(" wh$*h are a" &o))ow"

$ C=33%" D+$#"8 The de,o"$(or" o& "+*h de,o"$(" *an w$(hdraw and de,o"$( 'one whene%er (he

de"$re. S$n*e #an" ha%e (o ee, (he de,o"$(ed a'o+n( o& "+*h a**o+n(" $n *a"h a)wa"- (he *arr e$(her

no $n(ere"( or %er )ow ra(e o& $n(ere"(. The"e de,o"$(" are *a))ed a" De'and De,o"$(" #e*a+"e (he"e *an

#e de'anded or w$(hdrawn # (he de,o"$(or" a( an ($'e (he wan(.

S+*h de,o"$( a**o+n(" are h$/h) +"e&+) &or (rader" and #$/ #+"$ne"" &$r'" #e*a+"e (he ha%e (o 'ae

,a'en(" and a**e,( ,a'en(" 'an ($'e" $n a da.

$$ F#>4 D+$#"8The"e are (he de,o"$(" wh$*h are de,o"$(ed &or a de&$n$(e ,er$od o& ($'e. Th$" ,er$od

$" /enera)) no( )e"" (han one ear and- (here&ore- (he"e are *a))ed a" )on/ (er' de,o"$(". The"e de,o"$("

*anno( #e w$(hdrawn #e&ore (he e,$r o& (he "($,+)a(ed ($'e and- (here&ore- (he"e are a)"o *a))ed a" ($'e

de,o"$(".

The"e de,o"$(" /enera)) *arr a h$/her ra(e o& $n(ere"( #e*a+"e #an" *an +"e (he"e de,o"$(" &or a de&$n$(e

($'e w$(ho+( ha%$n/ (he &ear o& #e$n/ w$(hdrawn.

$$$ S;#%7 D+$#"8 In "+*h de,o"$("- 'one +,(o a *er(a$n )$'$( *an #e de,o"$(ed and w$(hdrawn

(hro+/h *he?+ew$(hdrawa) &or'. On "+*h de,o"$("- (he ra(e o& $n(ere"( $" %er )e"". A" $" e%$den( &ro' (he

na'e o& "+*h de,o"$(" (he$r 'a$n o#8e*($%e $" (o 'o#$)$"e "'a)) "a%$n/" $n (he &or' o& de,o"$(". The"ede,o"$(" are /enera)) done # "a)ar$ed ,eo,)e and (he ,eo,)e who ha%e &$ed and )e"" $n*o'e.

@. G#;#%7 L$%8 The "e*ond $',or(an( &+n*($on o& *o''er*$a) #an" $" (o ad%an*e )oan" (o $("

*+"(o'er". Ban" *har/e $n(ere"( &ro' (he #orrower" and (h$" $" (he 'a$n "o+r*e o& (he$r $n*o'e.

17


15/69

Ban" ad%an*e )oan" no( on) on (he #a"$" o& (he de,o"$(" o& (he ,+#)$* ra(her (he a)"o ad%an*e )oan" on

(he #a"$" o& de,o"$($n/ (he 'one $n (he a**o+n(" o& #orrower". In o(her word"- (he *rea(e )oan" o+( o&

de,o"$(" and de,o"$(" o+( o& )oan". Th$" $" *a))ed a" *red$( *rea($on # *o''er*$a) #an".

Modern #an" /$%e 'o"() "e*+red )oan" &or ,rod+*($%e ,+r,o"e". In o(her word"- a( (he ($'e o&

ad%an*$n/ )oan"- (he de'and ,ro,er "e*+r$( or *o))a(era). Genera))- (he %a)+e o& "e*+r$( or *o))a(era) $"e?+a) (o (he a'o+n( o& )oan. Th$" $" done 'a$n) w$(h a %$ew (o re*o%er (he )oan 'one # "e))$n/ (he

"e*+r$( $n (he e%en( o& non0re&+nd o& (he )oan.

A( ($'e"- #an" /$%e )oan on (he #a"$" o& ,er"ona) "e*+r$( a)"o. There&ore- "+*h )oan" are *a))ed a"

+n"e*+red )oan. Ban" /enera)) /$%e &o))ow$n/ (,e" o& )oan" and ad%an*e"

$ C2 C34#"8In (h$" (,e o& *red$( "*he'e- #an" ad%an*e )oan" (o $(" *+"(o'er" on (he #a"$" o& #ond"-

$n%en(or$e" and o(her a,,ro%ed "e*+r$($e". Under (h$" "*he'e- #an" en(er $n(o an a/ree'en( w$(h $("

*+"(o'er" (o wh$*h 'one *an #e w$(hdrawn 'an ($'e" d+r$n/ a ear. Ban" o,en a**o+n(" o& (he$r

*+"(o'er" and de,o"$( (he )oan 'one. $(h (h$" (,e o& )oan- *red$( $" *rea(ed.

$$$ D0%4 ,$%8The"e are "+*h )oan" (ha( *an #e re*a))ed on de'and # (he #an". The en($re )oan

a'o+n( $" ,a$d $n )+', "+' # *red$($n/ $( (o (he )oan a**o+n( o& (he #orrower- and (h+" en($re )oan

#e*o'e" *har/ea#)e (o $n(ere"( w$(h $''ed$a(e e&&e*(.

$% S2$3"-"30 ,$%8The"e )oan" 'a #e /$%en a" ,er"ona) )oan"- )oan" (o &$nan*e wor$n/ *a,$(a) or a"

,r$or$( "e*(or ad%an*e". The"e are 'ade a/a$n"( "o'e "e*+r$( and en($re )oan a'o+n( $" (ran"&erred (o

(he )oan a**o+n( o& (he #orrower.

6. O;3-D3"8Ban" ad%an*e )oan" (o $(" *+"(o'er" +,(o a *er(a$n a'o+n( (hro+/h o%er0dra&("- $& (here

are no de,o"$(" $n (he *+rren( a**o+n(. For (h$" #an" de'and a "e*+r$( &ro' (he *+"(o'er" and *har/e%er h$/h ra(e o& $n(ere"(.

7. D#!$=%"#%7 $ B#,, $ E>!2%78Th$" $" (he 'o"( ,re%a)en( and $',or(an( 'e(hod o& ad%an*$n/

)oan" (o (he (rader" &or "hor(0(er' ,+r,o"e". Under (h$" ""(e'- #an" ad%an*e )oan" (o (he (rader" and

#+"$ne"" &$r'" # d$"*o+n($n/ (he$r #$))". In (h$" wa- #+"$ne""'en /e( )oan" on (he #a"$" o& (he$r #$))" o&

e*han/e #e&ore (he ($'e o& (he$r 'a(+r$(. Se*($on 12@ and 126 o& Re"er%e Ban o& Ind$a A*(- 1967

"($,+)a(e" (he red$"*o+n($n/ o& B$))" o& E*han/e.

. I%;"0%" $ F=%48The #an" $n%e"( (he$r "+r,)+" &+nd" $n (hree (,e" o& "e*+r$($e"JGo%ern'en(

"e*+r$($e"- o(her a,,ro%ed "e*+r$($e" and o(her "e*+r$($e". Go%ern'en( "e*+r$($e" $n*)+de #o(h- *en(ra) and

"(a(e /o%ern'en("- "+*h a" (rea"+r #$))"- na($ona) "a%$n/" *er($&$*a(e e(*.

O(her "e*+r$($e" $n*)+de "e*+r$($e" o& "(a(e a""o*$a(ed #od$e" )$e e)e*(r$*$( #oard"- ho+"$n/ #oard"-

de#en(+re" o& Land De%e)o,'en( Ban" +n$(" o& UTI- "hare" o& Re/$ona) R+ra) #an" e(*.

;. A7%!/ F=%!"#$%8 Ban" &+n*($on $n (he &or' o& a/en(" and re,re"en(a($%e" o& (he$r *+"(o'er".

3+"(o'er" /$%e (he$r *on"en( &or ,er&or'$n/ "+*h &+n*($on". The $',or(an( &+n*($on" o& (he"e (,e" are a"

&o))ow"

1


16/69

$ Ban" *o))e*( *he?+e"- dra&("- #$))" o& e*han/e and d$%$dend" o& (he "hare" &or (he$r *+"(o'er".

$$ Ban" 'ae ,a'en( &or (he$r *)$en(" and a( ($'e" a**e,( (he #$))" o& e*han/e o& (he$r *+"(o'er" &or

wh$*h ,a'en( $" 'ade a( (he &$ed ($'e.

$$$ Ban" ,a $n"+ran*e ,re'$+' o& (he$r *+"(o'er". Be"$de" (h$"- (he a)"o de,o"$( )oan $n"(a))'en("-$n*o'e0(a- $n(ere"( e(*. a" ,er d$re*($on".

$% Ban" ,+r*ha"e and "e)) "e*+r$($e"- "hare" and de#en(+re" on #eha)& o& (he$r *+"(o'er".

% Ban" arran/e (o "end 'one &ro' one ,)a*e (o ano(her &or (he *on%en$en*e o& (he$r *+"(o'er".

2. M#!,,%$= F=%!"#$%8 Be"$de" (he &+n*($on" 'en($oned a#o%e- #an" ,er&or' 'an o(her

&+n*($on" o& /enera) +($)$( wh$*h are a" &o))ow"

$ Ban" 'ae arran/e'en( o& )o*er" &or (he "a&e *+"(od o& %a)+a#)e a""e(" o& (he$r *+"(o'er" "+*h a"

/o)d- "$)%er- )e/a) do*+'en(" e(*.

$$ Ban" /$%e re&eren*e &or (he$r *+"(o'er".

$$$ Ban" *o))e*( ne*e""ar and +"e&+) "(a($"($*" re)a($n/ (o (rade and $nd+"(r.

$% For &a*$)$(a($n/ &ore$/n (rade- #an" +nder(ae (o "e)) and ,+r*ha"e &ore$/n e*han/e.

% Ban" ad%$"e (he$r *)$en(" re)a($n/ (o $n%e"('en( de*$"$on" a" ",e*$a)$"(

%$ Ban doe" (he +nder0wr$($n/ o& "hare" and de#en(+re" a)"o.

%$$ Ban" $""+e )e((er" o& *red$(.

%$$$ D+r$n/ na(+ra) *a)a'$($e"- #an" are h$/h) +"e&+) $n 'o#$)$4$n/ &+nd" and dona($on".

$ Ban" ,ro%$de )oan" &or *on"+'er d+ra#)e" )$e 3ar- A$r0*ond$($oner- and Fr$d/e e(*.

&9. BANKER %4 CUSTOMER AND THEIR RELATIONSHIP8

The Ban$n/ Re/+)a($on" A*( B R A*( 1979 doe" no( de&$ne (he (er' Q#aner #+( de&$ne" wha( #an$n/$"A" ,er Se*. # o& (he BR A*( Ban$n/ 'ean" a**e,($n/- &or (he ,+r,o"e o& )end$n/ or $n%e"('en(- o&de,o"$(" o& 'one &ro' (he ,+#)$* re,aa#)e on de'and or o(herw$"e and w$(hdrawa#)e # *he?+e- dra&(-order or o(herw$"e.A" ,er Se*. 6 o& (he Ind$an Ne/o($a#)e In"(r+'en(" A*( 1551- (he word #aner $n*)+de" an ,er"on a*($n/a" #aner and an ,o"( o&&$*e "a%$n/" #an!.A**ord$n/ (o Se*. @ o& (he B$)) o& E*han/e A*(- 155@- Q#aner $n*)+de" a #od o& ,er"on"- whe(her$n*or,ora(ed or no( who *arr on (he #+"$ne"" o& #an$n/.

1;


17/69

Se*.* o& BR A*( de&$ne" #an$n/ *o',an a" a *o',an (ha( (ran"a*(" (he #+"$ne"" o& #an$n/ $nInd$a.A**e,($n/ de,o"$(" &ro' (he Q,+#)$* 'ean" (ha( a #an a**e,(" de,o"$(" &ro' anone who o&&er" 'one&or (he ,+r,o"e. Un)e"" a ,er"on ha" an a**o+n( w$(h (he #an- $( doe" no( a**e,( de,o"$(. For de,o"$($n/or #orrow$n/ 'one (here ha" (o #e an a**o+n( re)a($on"h$, w$(h (he #an. A #an *an re&+"e (o o,en ana**o+n( &or +nde"$ra#)e ,er"on". I( $" #an" r$/h( (o o,en an a**o+n(.

Re"er%e Ban o& Ind$a ha" "($,+)a(ed *er(a$n nor'" Know Yo+r 3+"(o'er! KY3 /+$de)$ne" &oro,en$n/ a**o+n( and #an" ha%e (o "(r$*() &o))ow (he'.Re*en() RBI ,ena)$"ed 1@ Ban" $n*)+d$n/ I3I3I- A$" Ban &or no( &o))ow$n/ KY3 Nor'".In add$($on (o (he a*($%$($e" 'en($oned $n Se*. # o& B R A*(- #an" *an a)"o *arr o+( a*($%$($e"'en($oned $n Se*. ; o& (he A*(.HART $% "2 ,1 $ %


18/69

3)a""$&$*a($on o& Re)a($on"h$,The re)a($on"h$, #e(ween a #an and $(" *+"(o'er" *an #e #road) *a(e/or$4ed $n (o Genera) Re)a($on"h$,and S,e*$a) Re)a($on"h$,.G%3, R,"#$%2#+8

&. D"$3-C34#"$38hen a *+"(o'er o,en" an a**o+n( w$(h a #an- he &$))" $n and "$/n" (he a**o+n(o,en$n/ &or'. B "$/n$n/ (he &or' he en(er" $n(o an a/ree'en(*on(ra*( w$(h (he #an. hen *+"(o'er

de,o"$(" 'one $n h$" a**o+n( (he #an #e*o'e" a de#(or o& (he *+"(o'er and *+"(o'er a *red$(or.'. C34#"$3@D"$38Lend$n/ 'one $" (he 'o"( $',or(an( a*($%$($e" o& a #an. The re"o+r*e" 'o#$)$4ed# #an" are +($)$4ed &or )end$n/ o,era($on". 3+"(o'er who #orrow" 'one &ro' #an own" 'one (o (he#an. In (he *a"e o& an )oanad%an*e" a**o+n(- (he #aner $" (he *red$(or and (he *+"(o'er $" (he de#(or.S+!#, R,"#$%2#+8

&. B%< T3="8

In *a"e o& (r+"( #aner *+"(o'er re)a($on"h$, $" a ",e*$a) *on(ra*(. 3+"(o'er" ee, *er(a$n %a)+a#)e" or"e*+r$($e" w$(h (he #an &or "a&eee,$n/ or de,o"$(" *er(a$n 'one &or a ",e*$&$* ,+r,o"e E"*rowa**o+n(" (he #aner $n "+*h *a"e" a*(" a" a (r+"(ee. Ban" *har/e &ee &or "a&eee,$n/ %a)+a#)e".NE BANK OF INDIA LTD % >EARAYLAL $n (h$" *a"e (he S+,re'e 3o+r( he)d on (he (r+"(ee"h$, o&(he Baner $n (he a#"en*e o& o(her e%$den*e a ,er"on ,a$n/ $n(o a Ban whe(her he $" a *on"($(+en( o&(he #an or no( 'a #e ,re"+'ed (o ha%e ,a$d (he 'one (o #e he)d a" a #aner ord$nar$) he)d (he 'one

o& (he$r *on"($(+en(. I& no ",e*$&$* $n"(r+*($on" are /$%en a( (he ($'e o& ,a'en( or (herea&(er and e%en (he'one $" he)d $n (he "+",en"e A**o+n( (he #an doe"n( (here # #e*o'e a (r+"(ee &or (he a'o+n( ,a$d!.'. B#, @ B#,$38

Ban" a)"o ee," ar($*)e"- %a)+a#)e"- "e*+r$($e" e(*.- o& $(" *+"(o'er" $n Sa&e 3+"(od and a*(" a" a Ba$)ee.A" a #a$)ee (he #an $" re?+$red (o (ae *are o& (he /ood" #a$)ed..L$3 %4 L8

The re)a($on"h$, #e(ween (he #an and (he *+"(o'er $" (ha( o& )e""or and )e""ee. Ban" )ea"e h$re )o*er"(o (he$r *+"(o'er" (he$r $''o%a#)e ,ro,er( (o (he *+"(o'er and /$%e (he' (he r$/h( (o en8o "+*h,ro,er( d+r$n/ (he ",e*$&$ed ,er$od o&&$*e #an$n/ ho+r" and *har/e ren(a)". Ban ha" (he r$/h( (o#rea0o,en (he )o*er $n *a"e (he )o*er ho)der de&a+)(" $n ,a'en( o& ren(. Ban" do no( a""+'e an)$a#$)$( or re",on"$#$)$( $n *a"e o& an da'a/e (o (he *on(en(" e,( $n (he )o*er. Ban" do no( $n"+re (he*on(en(" e,( $n (he )o*er" # *+"(o'er".

.A7%" %4 P3#%!#+,8Ban" *o))e*( *he?+e"- #$))"- and 'ae" ,a'en( (o %ar$o+" a+(hor$($e" %$4.- ren(- (e)e,hone #$))"-$n"+ran*e ,re'$+' e(*.- on #eha)& o& *+"(o'er". . Ban" a)"o a#$de" # (he "(and$n/ $n"(r+*($on" /$%en #$(" *+"(o'er". In a)) "+*h *a"e" #an a*(" a" an a/en( o& $(" *+"(o'er- and *har/e" &or (he"e "er%$*e".5.A C="$4#%8A *+"(od$an $" a ,er"on who a*(" a" a *are(aer o& "o'e (h$n/. Ban" (ae )e/a) re",on"$#$)$( &or a*+"(o'er" "e*+r$($e". h$)e o,en$n/ a d'a( a**o+n( #an #e*o'e" a *+"(od$an.6.A G=3%"$38

Ban" /$%e /+aran(ee on #eha)& o& (he$r *+"(o'er" and en(er $n (o (he$r "hoe". I( wo+)d (h+" #e o#"er%ed(ha( #aner *+"(o'er re)a($on"h$, $" (ran"a*($ona) re)a($on"h$,.Ter'$na($on o& re)a($on"h$, #e(ween a #aner and a *+"(o'erThe re)a($on"h$, #e(ween a #an and a *+"(o'er *ea"e" on

a The dea(h- $n"o)%en*- )+na* o& (he *+"(o'er.# The *+"(o'er *)o"$n/ (he a**o+n( $.e. Vo)+n(ar (er'$na($on* L$?+$da($on o& (he *o',and The *)o"$n/ o& (he a**o+n( # (he #an a&(er /$%$n/ d+e no($*e.e The *o',)e($on o& (he *on(ra*( or (he ",e*$&$* (ran"a*($on.

&&. DUTIES OF A BANKER8

The re)a($on"h$, de%e)o,ed #e(ween a #aner and *+"(o'er $n%o)%e" "o'e d+($e" on (he ,ar( o& #o(h.

15


19/69

A Baner ha" *er(a$n d+($e" %$"00%$" h$" *+"(o'er. The"e areaD+( (o 'a$n(a$n "e*re**on&$den($a)$( o& *+"(o'er" a**o+n(".#D+( (o hono+r *he?+e" drawn # *+"(o'er" on (he$r a**o+n(" and *o))e*( *he?+e- #$))" on h$" #eha)&.*D+( (o ,a #$))" e(*.- a" ,er "(and$n/ $n"(r+*($on" o& (he *+"(o'er.dD+( (o ,ro%$de ,ro,er "er%$*e".eD+( (o a*( a" ,er (he d$re*($on" /$%en # (he *+"(o'er. I& d$re*($on" are no( /$%en (he #aner ha" (o a*(

a**ord$n/ (o how he $" e,e*(ed (o a*(.&D+( (o "+#'$( ,er$od$*a) "(a(e'en(" $.e. $n&or'$n/ *+"(o'er" o& (he "(a(e o& (he a**o+n(/Ar($*)e"$(e'" e,( "ho+)d no( #e re)ea"ed (o a (h$rd ,ar( w$(ho+( d+e a+(hor$4a($on # (he *+"(o'er

. DUTY TO MAINTAIN SECRECY

Baner ha" a d+( (o 'a$n(a$n "e*re* o& *+"(o'er" a**o+n(". Ma$n(a$n$n/ "e*re* $" no( on) a 'ora)d+( #+( #an $" )e/a)) #o+nd (o ee, (he a&&a$r" o& (he *+"(o'er "e*re(. The ,r$n*$,)e #eh$nd (h$" d+( $"(ha( d$"*)o"+re a#o+( (he dea)$n/" o& (he *+"(o'er (o an +na+(hor$4ed ,er"on 'a har' (he re,+(a($on o&*+"(o'er and (he #an 'a #e he)d )$a#)e. The d+( o& 'a$n(a$n$n/ "e*re* doe" no( *ea"e w$(h (he*)o"$n/ o& a**o+n( or on (he dea(h o& (he a**o+n( ho)der.A" ,er Se*. 16 o& Ban$n/ 3o',an$e" A*?+$"$($on and Tran"&er o& Under(a$n/" A*( 192:!0E%er *orre",ond$n/ new #an "ha)) o#"er%e- e*e,( a" o(herw$"e re?+$red # )aw- (he ,ra*($*e" and+"a/e" *+"(o'ar a'on/ #aner"- and- $n ,ar($*+)ar- $( "ha)) no( d$%+)/e an $n&or'a($on re)a($n/ (o or (o

(he a&&a$r" o& $(" *on"($(+en(" e*e,( $n *$r*+'"(an*e" $n wh$*h $( $"- $n a**ordan*e w$(h )aw or ,ra*($*e"and +"a/e" *+"(o'ar a'on/ #aner"- ne*e""ar or a,,ro,r$a(e &or (he *orre",ond$n/ new #an (od$%+)/e "+*h $n&or'a($on.! Ma$n(a$n$n/ "e*re* $" $',)$ed (er'" o& (he *on(ra*( w$(h (he *+"(o'er wh$*h#an en(er" $n(o w$(h (he *+"(o'er a( (he ($'e o& o,en$n/ an a**o+n(.Ban ha" no( on) (o 'a$n(a$n "e*re* o& (ran"a*($on"- #+( "e*re* $" a)"o (o #e 'a$n(a$ned $n re",e*( o&o,era($on" (hro+/h ATM de#$( *ard". Ban ha" a)"o (o 'a$n(a$n "e*re* o& +"er ID ,$n" w$(h d+e *are "o(ha( $( doe" &a)) $n wron/ hand".

&.F#,=3 "$ 0#%"#% !3!/8

Ban $" )$a#)e (o ,a da'a/e" (o (he a**o+n( ho)der &or )o"" o& 'one and re,+(a($on $& $( &a$)" $n $(" d+((o 'a$n(a$n "e*re* and d$"*)o"e" $n&or'a($on re)a($n/ (o a *+"(o'er" a**o+n( or *ond+*( o& (he a**o+n(

(o an +na+(hor$4ed ,er"on.Ban *an a)"o #e )$a#)e (o (he (h$rd ,ar( $& $(" wron/&+) d$"*)o"+re har'" (he $n(ere"( o& (he (h$rd ,ar(. Ian now$n/) &+rn$"he" wron/ $n&or'a($on.There ha" #een a '$"re,re"en(a($on. The Baner $" ,ro(e*(ed &or $nno*en( '$"re,re"en(a($onHed)e Br)e P 3o V He))er He))er P >ar(ner" L$'$(ed.0A *o',an ha" /o( a #aner0Baner re,)$ed (o (he &$r' o& ad%an*e a/en* o,$n$on a#o+( (he *o',an0(he *o',an wa" a re",e*(a#)e *on"($(+(ed *o',an *on*erned /ood &or $(" ord$nar #+"$ne""en/a/e'en("- (he #aner a)"o added o,$n$on- (ha( (he 1 )ah ,o+nd" 'en($oned wa" )ar/er (han (he werea**+"(o'ed (o (he #aner &+r(her "(a(ed (ha( (he #aner $" no( re",on"$#)e.0(he *o',an #e*o'e #anr+,( and wen( &or )$?+$da($on0(hen (he "+ed (he #aner &or re*o%er

0(he ha%e (aen a /ro+nd (ha( (he #aner ne/)$/en() $n&or'ed.0(ho+/h (he #aner wa" ne/)$/en( $n d$"*)o"+re o&Lord Morr$"0 An $nno*en( and ne/)$/en( '$"re,re"en(a($on /$%e" # $("e)& no *a+"e o& a*($on and (ha( (here'+"( #e "o'e(h$n/ 'ore (han 'ere '$""(a(e'en( $n order (o &a"(en )$a#$)$( on (he ,er"on 'a$n/ o&- (ha((he #aner (he re&eren*e wa" 'ade wa" no( e,e*(ed (o 'ae a de(a$)ed en?+$r and ,rod+*e a we))#a)an*ed re,or(. A)) wa" e,e*( wa" (ha( he "ho+)d an"wer hone"() (he ?+e"($on" ,+( (o h$' &ro' wha( henow &ro' (he #oo" and a**o+n(".G%3, P3#%!#+,8 (T23 #0+$3"%" !$%!,=#$%)

19


20/69

o A #aner an"wer$n/ a re&eren*e &ro' ano(her #aner on #eha)& o& (he *on"($(+en( wa" a

d+( o& hone"( (o (he "a$d *on"($(+en(.

o I& a #aner /$%e" a re&eren*e $n (he &or' o& #r$e& e,re""$on o& o,$n$on $n re/ard (o *red$(

wor(h$ne""- he doe"no( a**e,( and (here $" no( e,e*(ed o& an h$/her d+( (han (ha( o& /$%$n/ anhone"( an"wer.

o The #aner "($,+)a(e" $n h$" re,) (ha( $( $" w$(ho+( re",on"$#$)$(- he *anno( #e he)d )$a#)e

&or ne/)$/en*e $n re",e*( o& (he re&eren*e.'.C#3!=0"%! =%43 12#!2 %


21/69

The *he?+e "ho+)d #e drawn on (he #ran*h where (he a**o+n( $" 'a$n(a$ned. D+e (o $',)e'en(a($on o&(e*hno)o/ and *ore #an$n/ "o)+($on a *+"(o'er *an ,re"en( *he?+e" on an #ran*h o& a #an. RBI ha"ad%$"ed #an" (o $""+e '+)($ *$( *he?+e" (o a**o+n( ho)der".aThere $" "+&&$*$en( #a)an*e $n (he a**o+n( and (he #a)an*e $" ,ro,er) a,,)$*a#)e &or ,a'en( o& (he*he?+e.#The *he?+e $" ,re"en(ed &or ,a'en( on a wor$n/ da and d+r$n/ (he #+"$ne"" ho+r" o& (he #ran*h.

*Endor"e'en(" on (he *he?+e are re/+)ar and ,ro,er.dThe ,a'en( o& (he *he?+e $" no( *o+n(er'anded # (he drawer

*. D="/ "$ 2$%$=3 !2= ! $% 3!#+" $8aS(o, ,a'en( $n"(r+*($on" &ro' (he a**o+n( ho)der.#No($*e a#o+( (he dea(h o& (he drawer.*A /arn$"hee order a((a*h$n/ (he #a)an*e $n (he a**o+n( or an $n*o'e0(aa((a*h'en( order re*e$%ed # (he #aner.dDrawer o& (he *he?+e #e*o'$n/ $n"o)%en( andor a )+na($* a( (he ($'e o& draw$n/(he *he?+e.;. Ban *an re&+"e (o hono+r (he *he?+e" $& There $" $n"+&&$*$en( #a)an*e $n (he a**o+n( (o 'ae ,a'en(o& (he *he?+e. 3he?+e $""+ed doe" no( ,er(a$n (o (he a**o+n( on wh$*h $( ha" #een drawn.1.I& (he *he?+e $" no( $n order ,o"( da(ed- "(a)e- ,a'en( *o+n(er'anded- a'o+n( $n word" and &$/+re

d$&&er"- e(*[email protected] #a)an*e" he)d $n a**o+n( are ear'ared &or "o'e ",e*$&$* ,+r,o"e and (he re'a$n$n/ #a)an*e $" no("+&&$*$en( (o hono+r (he *he?+e.

&'. RIGHTS OF A BANKER

I( $" no( (ha( (he #an ha" on) d+($e" (oward" $(" *+"(o'er"- $( (oo ha" *er(a$n r$/h(" %$"00%$" h$"*+"(o'er". The r$/h(" *an #road) #e *)a""$&$ed a"a R$/h( o& Genera) L$en# R$/h( o& Se(0O&&* R$/h( o& A,,ro,r$a($ond A*( a" ,er (he 'anda(e o& *+"(o'ere R$/h( (o 3har/e In(ere"(- 3o''$""$on- In*$den(a) 3har/e" e(*.

) LIENA )$en $" (he r$/h( o& a *red$(or $n ,o""e""$on o& /ood"- "e*+r$($e" or an o(her a""e(" #e)on/$n/ (o (hede#(or (o re(a$n (he' +n($) (he de#( $" re,a$d- ,ro%$ded (ha( (here $" no *on(ra*( e,re"" or $',)$ed- (o (he*on(rar. I( $" a r$/h( (o re(a$n ,o""e""$on o& ",e*$&$* /ood" or "e*+r$($e" or o(her 'o%a#)e" o& wh$*h (heowner"h$, %e"(" $n "o'e o(her ,er"on and (he ,o""e""$on *an #e re(a$ned ($)) (he owner d$"*har/e" (he de#(or o#)$/a($on (o (he ,o""e""or. The *red$(or #an ha" (he r$/h( (o 'a$n(a$n (he "e*+r$( o& (he de#(or #+(no( (o "e)) $(. There are (wo (,e" o& )$en %$4.1.>ar($*+)ar L$en [email protected]$/h( o& Genera) L$en() P3"#!=,3 L#%8

A ,ar($*+)ar )$en /$%e" (he r$/h( (o re(a$n ,o""e""$on on) o& (ho"e /ood" $n re",e*( o& wh$*h (he d+e"ha%e ar$"en. I( $" a)"o (er'ed a" ord$nar )$en. I& (he #an ha" o#(a$ned a ,ar($*+)ar "e*+r$( &or a ,ar($*+)ar

de#(- (hen (he #aner" r$/h( /e(" *on%er(ed $n(o a ,ar($*+)ar )$en.() R#72" $ G%3, L#%8

Baner ha" a r$/h( o& /enera) )$en a/a$n"( h$" #orrower. Genera) )$en *on&er" #an" r$/h( $n re",e*( o& a))d+e" and no( &or a ,ar($*+)ar d+e. I( $" a "(a(+(or r$/h( o& (he #an and $" a%a$)a#)e e%en $n a#"en*e o& ana/ree'en( #+( $( doe" no( *on&er (he r$/h( (o ,)ed/e. A /enera) )$en /$%e" (he r$/h( (o re(a$n ,o""e""$on o&an /ood" $n (he )e/a) ,o""e""$on o& (he *red$(or +n($) (he who)e o& (he de#( d+e &ro' (he de#(or $" ,a$d.Se*($on 121 o& Ind$an 3on(ra*( A*(- 152@ *on&er" (he r$/h( o& /enera) )$en (o #an". A" ,er (he "e*($on Baner"- &a*(or"- whar&$n/er"- a((orne" o& a H$/h 3o+r( and ,o)$*0#roer" 'a- $n (he a#"en*e o& a*on(ra*( (o (he *on(rar- re(a$n- a" a "e*+r$( &or a /enera) #a)an*e o& a**o+n( an /ood" #a$)ed (o (he'ower a((orne 'a #e e$(her ",e*$a) or /enera)SPECIAL POWER OF ATTORNEY

The ,er"on" "o a+(hor$4ed /e(" ,ower on) &or "o'e )$'$(ed ,+r,o"e 'en($onedGENERAL POWER OF ATTORNEY

@;


27/69

The /ran(or o& ,ower a+(hor$4e" (he o(her ,er"on (o a*( on h$" #eha)& $n a)) 'a((er" *on*ern$n/ (he#+"$ne"".PRECUTIONARY MEASURES

1. Baner /e(" a *o, o& (he re/$"(ered do*+'en( a((e"(ed # a no(ar ,+#)$* and ee, $( &or h$" ownre*ord.@. I& ",e*$&$* ,er$od $" 'en($oned - $( '+"( #e no(ed on (he (o, o& (he a**o+n(" - "o (ha( (he a**o+n( doe"

no( *on($n+e #eond "+*h ,er$od.6. The #aner "ho+)d (ae no(e o& a)) (he (er'" o& ,ower o& a((orne .7. S,e*$&$* ,ower $" /ran(ed &or o,en$n/ and o,era($n/ a #an a**o+n( # a((orne h$'"e)& .. The #aner "ho+)d no(e down (he na'e and addre"" o& (he a((orne.;. S$/na(+re (o #e (aen &ro' #o(h ,r$n*$,a) and a((orne # (he #aner.2. The #aner "ho+)d no( a**e,( *ond$($ona) ,ower o& a((orne .5. A((orne a" (he a/en( o& (he ,r$n*$,a).9. I& (he ,r$n*$,a) de&e*(" $n"o)%en* - dea(h or $n"an$( -(he a+(hor$( $" %e"(ed w$(h (he a/en(.I:. CLUBS SOCIETIES AND CHARITABLE INSTITUTIONS

1. Render "er%$*e (o (he ,+#)$*@. The"e are re/$"(ered +nder "o*$e($e" re/$"(ra($on a*( or (he Ind$an *o',an$e" a*( or (he *oo,era($%e"o*$e($e" a*( or Ind$an (r+"( a*(

PRECAUTIONARY MEASURES&. INCORPORATION8

a. A "o*$e( /e(" )e/a) re*o/n$($on#. I( $" a ,ro,er( $n*or,ora(ed #od*. No( re/$"(ered


28/69

1:.The )aw /enera)) ,re"*r$#e" wha( "ho+)d #e done and ,ena)($e" are )e%$ed &or (he $n&r$n/e'en( o& )aw-#+( (he )aw o& (he *o',an ,re"*r$#e" wha( "ho+)d #e done.PRECAUTIONARY MEASURES

1. The *o',an ha" (o #e $n*or,ora(ed@. 2 ,er"on" '+"( "$/n (he 'e'orand+' o& a""o*$a($on and ar($*)e" o& a""o*$a($on and "+#'$( (he' (o (here/$"(rar o& 8o$n( "(o* *o',an$e"

6. Me'orand+' o& a""o*$a($on 'en($oned (he na'e o& (he *o',an -,)a*e o& (he re/$"(ered o&&$*e -o#8e*(" - *a,$(a)- )$a#$)$( o& (he "hareho)der" w$))$n/ne"" (o a**e,( 2 'e'#er"7. Ar($*)e" o& a""o*$a($on $" no( "+#'$((ed # (he *o',an - (he ,ro%$"$on" o& (a#)e0A -a,,) here.. The #aner '+"( ea'$ne (he *er($&$*a(e o& $n*or,ora($on #e&ore o,en$n/ an a**o+n(;. Baner a" (he re"o)+($on o& (he #oard o& d$re*(or" a,,o$n($n/ h$' (he #aner o& (he *o',an2. He "ho+)d #e an a+(hor$4ed ,er"on (o *ond+*( #an (ran"a*($on" -(o "$/n *he?+e" -(o a**e,( #$)) o&e*han/e - (o en(r+"( %a)+a#)e" &or "a&e *+"(od5. Baner '+"( a)"o ea'$ne (he *er($&$*a(e o& *o''en*e'en( o& #+"$ne"". A&(er /e(($n/ (h$" *er($&$*a(e(he *o',an *an $""+e (he ,ro",e*(+"9. A&(er (he '$n$'+' "+#"*r$,($on $" *o))e*(ed and (he d$re*(or" ha%e ,a$d (he$r &+)) d+e" - (he re/$"(rar$""+e" (he *er($&$*a(e o& *o''en*e'en( o& #+"$ne"" .A *o',an *anno( #e/$n w$(ho+( /e(($n/ (h$"*er($&$*a(e .

1:. The #aner '+"( a)"o ea'$ne (he #a)an*e "hee("- ,ro&$(" and )o"" a**o+n(" o& (he *o',an &or (he )a"((wo or (hree ear"

&. NOMINATION FACILITY

No'$na($on $" e,re""$on o& w$"h o& a ,er"on a#o+( (ran"&er o& h$" a""e(" a&(er h$" dea(h (o a na'ed,er"on. No'$na($on $" no( a w$)) #+( $( "er%e" (he ,+r,o"e o& w$)). In (er'" o& Se*($on" 7A (o 7 F o&(he Ban$n/ Re/+)a($on A*(- 1979- Ban$n/ 3o',an$e" No'$na($on R+)e"- 195 ha%e #een &ra'ed.No'$na($on &a*$)$( "$',)$&$e" (he ,ro*ed+re &or "e(()e'en( o& *)a$'" o& de*ea"ed de,o"$(or" and )o*erho)der". In an +n&or(+na(e e%en( o& (he dea(h o& a de,o"$(or- no'$na($on ena#)e" (he #an (o 'ae ,a'en((o (he no'$nee o& a de*ea"ed de,o"$(or- o& (he a'o+n( "(and$n/ (o (he *red$( o& (he de,o"$(orre(+rn (hear($*)e" )e&( # a de*ea"ed ,er"on $n (he #an" "a&e *+"(od (o (he no'$nee w$(ho+( a"$n/ &or "+**e""$on*er($&$*a(e or %er$&$n/ *)a$'" o& )e/a) he$r".

No'$na($on doe" no( (ae awa (he r$/h(" o& )e/a) he$r" on (he e"(a(e o& (he de*ea"ed. The no'$neere*e$%e" (he 'one &ro' (he #an a" a (r+"(ee o& (he )e/a) he$r". In (he *a"e o& a 8o$n( de,o"$( a**o+n( (heno'$nee" r$/h( ar$"e" on) a&(er (he dea(h o& a)) (he de,o"$(or". No'$na($on &a*$)$( $" $n(ended &or$nd$%$d+a)" and "o)e ,ro,r$e(ar *on*ern". here (he no'$nee $" a '$nor- (he de,o"$(or 'a$n/ (heno'$na($on a,,o$n(" an ,er"on (o re*e$%e (he a'o+n( o& de,o"$( $n (he e%en( o& h$" dea(h d+r$n/ (he'$nor$( o& (he no'$nee. A ,er"on )e/a)) e',owered (o o,era(e a '$nor" a**o+n( *an &$)e a no'$na($onon #eha)& o& (he '$nor.No'$na($on *an #e 'ade $n a**o+n( o,en$n/ &or' $("e)& or on a "e,ara(e &or' $nd$*a($n/ (he na'e andaddre"" o& (he no'$nee. The a**o+n( ho)der" *an *han/e (he no'$na($on an ($'e. There *an #e on) oneNo'$nee &or a de,o"$( a**o+n( whe(her he)d "$n/) or 8o$n(). There *an #e (wo no'$nee" &or a 8o$n()he)d )o*er.

AVAILABILITY OF NOMINATION FA3ILITYNo'$na($on &a*$)$( $" a%a$)a#)e &or a)) (,e" o& #an de,o"$("- "a&e de,o"$( )o*er"- and "a&e *+"(odar($*)e". Th$" $" a)"o a,,)$*a#)e (o de,o"$(" ha%$n/ o,era($n/ $n"(r+*($on" E$(her or S+r%$%or.No'$na($on *an #e 'ade $n &a%o+r o& one ,er"on on).In *a"e o& a 8o$n( a**o+n(- no'$na($on $" (o #e 'ade # a)) de,o"$(or" 8o$n().No'$na($on *anno( #e 'ade $n a**o+n(" where de,o"$(" are he)d $n a re,re"en(a($%e *a,a*$( e./. (r+"(a**o+n(" e(*. and $n a**o+n(" o& ,ar(ner"h$, &$r'"- H.U.F.- *o',an$e"- a""o*$a($on"- *)+#" e(*.No'$na($on *an #e 'ade $n &a%o+r o& a '$nor. Howe%er wh$)e 'a$n/ (he no'$na($on- (he no'$nee ha" (oa,,o$n( ano(her ,er"on no( a '$nor- (o re*e$%e (he a'o+n( o& (he de,o"$( on #eha)& o& (he no'$nee $n (he

@5


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e%en( o& (he dea(h o& (he de,o"$(or d+r$n/ (he '$nor$( o& (he no'$nee. Da(e o& #$r(h o& '$nor #e o#(a$nedand no(ed.A no'$na($on w$)) *on($n+e (o #e $n &or*e e%en on renewa) o& (er' de,o"$(- +n)e"" ",e*$&$*a)) *an*e))edor *han/ed.Ban" o#(a$n "e,ara(e no'$na($on &or' &or ea*h (er' de,o"$( re*e$,(A non0re"$den( *an #e no'$na(ed a" a no'$nee $n a re"$den( a**o+n(

In *a"e o& non0re"$den( no'$nee"- (he a'o+n( en($()ed (o h$' &ro' (he a**o+n(" de,o"$("" o& ade*ea"ed ,er"on- w$)) #e *red$(ed (o h$" NRO a**o+n(. The a'o+n( "o *red$(ed *anno( #e re'$((ed o+("$deInd$a.

&5. INSURANCE OF BANK DEPOSITS

The De,o"$( In"+ran*e and 3red$( G+aran(ee 3or,ora($on o& Ind$a- a ,+#)$* )$'$(ed *o',an ,ro'o(ed #Re"er%e Ban o& Ind$a- $n"+re #an de,o"$(". The a+(hor$"ed *a,$(a) o& (he 3or,ora($on $" R".: *rore-wh$*h $" &+)) $""+ed and "+#"*r$#ed # (he Re"er%e Ban o& Ind$a RBI. The 'ana/e'en( o& (he3or,ora($on %e"(" $n a Board o& D$re*(or" o& wh$*h a De,+( Go%ernor- Re"er%e #an o& Ind$a- $" (he3ha$r'an.The 3or,ora($on ,ro(e*(" (he $n(ere"( o& de,o"$(or" and $n&+"e" *on&$den*e # ,ro%$d$n/ de,o"$( $n"+ran*eon a**o+n( o& &a$)+re o& #an". A)) *o''er*$a) #an" $n*)+d$n/ (he #ran*he" o& &ore$/n #an" &+n*($on$n/$n Ind$a- )o*a) area #an"- re/$ona) r+ra) #an"- a)) e)$/$#)e *o0o,era($%e #an" are *o%ered +nder (he

De,o"$( In"+ran*e S*he'e. The $n"+ran*e *o%er" (he )o"" o& a)) or ,ar( o& (he$r de,o"$(" $n a)) #ran*he" o&a #an (o a 'a$'+' o& R".1- ::-:::. I( $n"+re" a)) de,o"$(" "+*h a" "a%$n/"- &$ed- *+rren(- re*+rr$n/- e(*e*e,( (he &o))ow$n/ (,e" o& de,o"$(".$ De,o"$(" o& &ore$/n Go%ern'en("-$$ De,o"$(" o& 3en(ra)S(a(e Go%ern'en("-$$$ In(er0#an de,o"$("-$% De,o"$(" o& (he S(a(e Land De%e)o,'en( Ban" w$(h (he S(a(e *o0o,era($%e #aner'anen( In*o'e Ta A**o+n( N+'#er >AN on (hea,,)$*a($on.$$ The #an" are re?+$red (o ee, a *)o"e wa(*h o& *a"h w$(hdrawa)" and de,o"$(" &or R".1: )ah" anda#o%e $n de,o"$(- *a"h *red$( or o%erdra&( a**o+n(" and ee, re*ord o& de(a$)" o& (he"e )ar/e *a"h(ran"a*($on" $n a "e,ara(e re/$"(er. Bran*he" o& #an" are re?+$red (o re,or( a)) *a"h de,o"$(" andw$(hdrawa)" o& R".1: )ah" and a#o%e a" we)) a" (ran"a*($on" o& "+",$*$o+" na(+re w$(h &+)) de(a$)" $n

&or(n$/h() "(a(e'en(" (o (he$r *on(ro))$n/ o&&$*e".Baner" Fa$r >ra*($*e 3odeInd$an Ban" A""o*$a($on ha" ,re,ared a *ode- wh$*h "e(" "(andard" o& &a$r #an$n/ ,ra*($*e". Th$"do*+'en( $" a #road &ra'ewor +nder wh$*h (he r$/h(" o& *o''on de,o"$(or" are re*o/n$4ed. I( $" a%o)+n(ar 3ode (ha( ,ro'o(e" *o',e($($on and en*o+ra/e" 'are( &or*e" (o a*h$e%e h$/her o,era($n/"(andard" &or (he #ene&$( o& *+"(o'er". The 3ode a,,)$e" (o *+rren(- "a%$n/" and a)) o(her de,o"$(a**o+n("- *o))e*($on and re'$((an*e "er%$*e" o&&ered # (he #an"- )oan" and o%erdra&("- &ore$/n0e*han/e"er%$*e"- *ard ,rod+*(" and (h$rd ,ar( ,rod+*(" o&&ered # #an".

&. DUTY TO HONOUR CHEQUES

A" #an$n/ 'ean" a**e,($n/ o& de,o"$(" w$(hdrawa#)e # *he?+e- dra&(- order or o(herw$"e- (he #aner $"d+( #o+nd (o hono+r *he?+e" $""+ed # (he *+"(o'er" on (he$r a**o+n(".

3he?+e Se*($on ; o& (he A*( de&$ne" A *he?+e $" a #$)) o& e*han/e drawn on a ",e*$&$ed #aner- and no(e,re""ed (o #e ,aa#)e o(herw$"e (han on de'and!.Ten "e*($on" *o',r$"$n/ (he *ha,(er o& (he A*(- "e*($on 165 *rea(e" "(a(+(or o&&en*e $n (he 'a((er o&d$"hono+r o& *he?+e" on (he /ro+nd o& $n"+&&$*$en* o& &+nd" $n (he a**o+n( 'a$n(a$ned # a ,er"on w$(h(he #aner.Se*. 61o& Ne/o($a#)e In"(r+'en(" A*(- 1551 ",e*$&$e" (he )$a#$)$( o& drawee o& *he?+e. There&ore $( $" (hed+( o& a #an (o hono+r (he *he?+e" $""+ed # (he a**o+n( ho)der $&The *he?+e ha" #een ,ro,er) drawnand $" $n order $n a)) re",e*(" $.e. $( $" ,ro,er) da(ed- a'o+n( $n word" and &$/+re" ha%e #een e,re""ed,ro,er)- $" ne$(her "(a)e nor ,o"( da(ed nor '+($)a(ed and (he "$/na(+re o& a**o+n(ho)der (a))$e" w$(h (he",e*$'en re*orded w$(h (he #an.The *he?+e "ho+)d #e drawn on (he #ran*h where (he a**o+n( $" 'a$n(a$ned. D+e (o $',)e'en(a($on o&(e*hno)o/ and *ore #an$n/ "o)+($on a *+"(o'er *an ,re"en( *he?+e" on an #ran*h o& a #an. RBI ha"

ad%$"ed #an" (o $""+e '+)($ *$( *he?+e" (o a**o+n( ho)der".aThere $" "+&&$*$en( #a)an*e $n (he a**o+n( and (he #a)an*e $" ,ro,er) a,,)$*a#)e &or ,a'en( o& (he*he?+e.#The *he?+e $" ,re"en(ed &or ,a'en( on a wor$n/ da and d+r$n/ (he #+"$ne"" ho+r" o& (he #ran*h.*Endor"e'en(" on (he *he?+e are re/+)ar and ,ro,er.dThe ,a'en( o& (he *he?+e $" no( *o+n(er'anded # (he drawer3he?+e" are +"ed $n a)'o"( a)) (ran"a*($on" "+*h a" re0,a'en( o& )oan- ,a'en( o& "a)ar- #$))"- &ee"- e(*.A %a"( 'a8or$( o& *he?+e" are ,ro*e""ed and *)eared # #an" on da$) #a"$". 3he?+e" are $""+ed &or (herea"on o& "e*+r$n/ ,roo& o& ,a'en(. Ne%er(he)e""- *he?+e" re'a$n a re)$a#)e 'e(hod o& ,a'en( &or

6:


31/69

'an ,eo,)e. On (he o(her hand- $( $" a)wa" ad%$"a#)e (o $""+e *ro""ed A**o+n( >aee On)! *he?+e" $norder (o a%o$d $(" '$"+"e.A *he?+e $" a ne/o($a#)e $n"(r+'en(. 3ro""ed and a**o+n( ,aee *he?+e" are no( ne/o($a#)e # an ,er"ono(her (han (he ,aee. The *he?+e" ha%e (o #e de,o"$(ed $n(o (he ,aee" #an a**o+n(.Le/a))- (he a+(hor o& (he *he?+e $" *a))ed Qdrawer- (he ,er"on $n who"e &a%o+r- (he *he?+e $" drawn $"*a))ed Q,aee- and (he #an who $" d$re*(ed (o ,a (he a'o+n( $" nown a" Qdrawee.

Howe%er- *a"e" o& *he?+e #o+n*e are *o''on (he"e da". So'e($'e" *he?+e" #ear$n/ )ar/e a'o+n("re'a$n +n,a$d and are re(+rned # (he #an on wh$*h (he are drawn.The #e)ow ar($*)e ,ro%$de" $n&or'a($on on wha( o+ 'a do $& o+r *he?+e $" d$"hono+red Here" a "(e,0#0"(e, /+$de (o (he )e/a) ,ro*ed+re (ha( $" a%a$)a#)e (o o+.I& a *he?+e $" d$"hono+redhen a *he?+e $" d$"hono+red- (he drawee #an $''ed$a(e) $""+e" a Q3he?+e Re(+rn Me'o (o (he#aner o& (he ,aee 'en($on$n/ (he rea"on &or non0,a'en(. The ,aee" #aner (hen /$%e" (hed$"hono+red *he?+e and (he 'e'o (o (he ,aee. The ho)der or ,aee *an re"+#'$( (he *he?+e w$(h$n(hree 'on(h" o& (he da(e on $(- $& he #e)$e%e" $( w$)) #e hono+red (he "e*ond ($'e. Howe%er- $& (he *he?+e$""+er &a$)" (o 'ae a ,a'en(- (hen (he ,aee ha" (he r$/h( (o ,ro"e*+(e (he drawer )e/a)).The ,aee 'a )e/a)) "+e (he de&a+)(er drawer &or d$"hono+r o& *he?+e on) $& (he a'o+n( 'en($oned $n(he *he?+e $" (oward" d$"*har/e o& a de#( or an o(her )$a#$)$( o& (he de&a+)(er (oward" ,aee.

I& (he *he?+e wa" $""+ed a" a /$&(- (oward" )end$n/ a )oan or &or +n)aw&+) ,+r,o"e"- (hen (he drawer *anno(#e ,ro"e*+(ed $n "+*h *a"e".LEGAL ACTION

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