With Best Compliments From Staff Training Centre, Aurangabad

RATIONALE
ACCOUNTING
1) Error book is maintained at the branches
To avoid the recurrence of errors. It could be useful in rectifying the
error. To identify areas of operation where usually errors are limited
and to initiate safeguards to avoid recurrence.
2) Adjusting account is opened/operated in GL at the time of Annual Closing
Our P&L is on accrual basis. Accrued Income, Income earned in advance
and expenses due but not paid and pre-paid expenses for the accounting
year are adjusted through this account.
3) Daily vouchers should be scrutinized with care and intelligence.
To ensure that the vouchers pertain to the day's transactions; they are
in order; passed in accordance with the powers delegated to the
respective officials and are free from errors. This also enables the
Branch Manager to know the flow of funds.
4) Branch Documents Register is revised.
To provide for methodical record and easy retrieval of branch documents.
Verification by inspecting officials is facilitated.
5) LOCUP has been introduced.
Standardized accounting procedures relating to inter-bank and
inter-branch clearing of instruments. To remove the disparities
generally observed in realization times of such instruments.
6) Bank crossing stamp should be branded on all instruments.
Unscrupulous persons may surreptitiously remove the instruments and
deposit it in other bank. To avail of statutory protection under N.I Act
as collecting banker which is available for instruments that are
specially crossed.
7) Double Signature System has been introduced.
An effective counter-check over high value items. It is a safeguard
against frauds. As per RBI guidelines.
8) The credit balance of P&T Charges Recovered A/c. should be transferred to Charges A/c. at the
close of each Friday.
To avoid artificial inflation of DTL and needless maintenance of
statutory reserves on these accounts.
9) We maintain Subsidiary Day Book.

To record instruments received across counter for credit of accounts.
Facilitates writing of transfer scroll and day books.
10) No voucher can be canceled once it has been passed through the Subsidiary Day Book.
Subsidiary Day Book is a book of original entry and an acknowledgement
is given to the depositor. The separate credit and debit (in case of
return) facilitates customer to know exact disposal.
11) When cheques are returned to the constituents, the Bank's crossing stamp and register number,
if any, must be canceled.
This enables the customer to collect the cheque through another bank as
cheques crossed specially to 2 banks are not paid unless one is acting
as agent for collection of the other.
12) Our deposit accounts have a survivorship clause in case of joint accounts.
With best compliments from Staff Training Centre, Aurangabad 1

So that in case of death of any one of the joint account holders, the
Bank is discharged by paying to the survivor(s) and is not liable to the
legal heirs of the deceased.
13) The words "Received Payment" is not to be written on DD Purchase slip (COS. 6).
Otherwise it would become a receipt and would attract stamp duty.
14) Check signal is not applied for TT purchased telegrams.
Check signal is affixed to telegraphic messages on strength of which
payment is made at the other end. TT Purchase telegram involves
receiving funds at the other end.
15) General Ledger Test Check is performed.
It ensures arithmetical accuracy of summations and balances.
16) Transit Voucher Book has been introduced.
To prevent insertion of fake vouchers and manipulation of vouchers in
transit. To fix accountability in case paid vouchers are found to be
missing.
17) Branch Cash Balance is always a debit balance.
Cash Balance Account is a real account in which receipts are debited and
payments credited.
18) While the amount advanced to dispatcher for purchase of stamp is debited to Charges A/c,
advances to Cash Officer for petty expenses, are debited to Suspense A/c.
The sub-heads under which petty expenses would be classified is not
known before hand so treated as a Suspense entry. Advance to dispatcher
are for Postage and Telegrams and can be properly debited to the
correct sub-head under Charges Account.
ADVANCES - GENERAL
19) We do not open the letters sent to borrowers that are returned undelivered.
To preserve an evidence of the fact that such communication has been
sent to the borrower.
20) Trade advances up to Rs 10.00 lacs are classified under SBF
To encourage banks to grant more finance under priority sector thereby
increasing and creating employment opportunities. The earlier ceiling
has become low due to inflationary trend.
21) "Rate of Interest" on Loans is always linked to PLR
It obviates the necessity of sending a notice to the borrower and
obtaining his consent every time the interest rate changes. A
notification in regard to changes in PLR serves the purpose of "Notice”
to the borrowers.
22) Banks adopt "Service Area Approach"
To ensure balanced regional development; avoid multiple and scattered
finance by the Banks; make individual banks responsible for development
of allocated areas and facilitate follow-up.
23) Balance confirmation is obtained in all loan accounts.
It is an acknowledgment of debt due by the borrower that also helps in
extending the period of limitation.
24) Bank’s name plates should be displayed prominently on all goods pledged or hypothecated to
the bank
To give adequate notice to the world at large of our paramount charge
over the goods pledged or hypothecated to the bank. Also, to prevent

possibility of multiple finance and serve as an advertisement of the
bank
25) Under the delegation of financial powers a system of reporting has been introduced
Substantial powers have been granted to the Branch Managers. Reporting
ensures that these financial powers are not put to misuse and to take
remedial steps as and when warranted,
26) Bank has introduced a loan system for delivery of bank credit
For delivery of Bank credit on high value advances of Rs 10 Crores and
above. To bring in financial discipline. To have better control over
flow of credit and to take care of resources management position of
Bank.
27) Opening of letter of Credit is credit decision
It is a contingent liability that gets converted to a liability for the
Bank in case of default by the opener; hence a credit decision.
28) Control returns of advances are to be submitted to next higher authorities
Powers for granting advances are delegated. A review of the use of the
powers has to be done by the next higher authority to ensure that the
powers are judiciously used.
29) Delegation of financial powers in case of advances have been reviewed
In order that credit proposals are sanctioned with the least delay to
meet customers’ expectations.
30) Entrepreneur Development programs are conducted by Bank
Level of entrepreneurship is low in backward areas of the country due to
the lack of knowledge and opportunity. Such programme helps in
development of entrepreneurship. Participants are also made aware of
various schemes under which they can obtain help from the Bank as well
as from Govt. Agency.
31) Bank's branches confine their lending activities within a specified radius only.
To ensure proper and effective control, supervision and follow up over
the advances. To effectively cater to the credit needs of the area under
operation. To avoid possibility of multiple financing.
32) Units covered under Selective Credit Control directives cannot be financed under Equity Fund
Scheme.
One of the directives of Selective Credit Control deals with specific
margins that should be compulsorily maintained. Equity Fund Scheme is
meant to finance borrower's margin, the directives of SCC would be
violated.
33) Bank's own shares cannot be accepted as security.
Prohibited under Sec. 20(1)(A) of Banking Regulations Act and Sec. 34(1)
(h) of SBI Act. It amounts to reduction in the share capital of the Bank.
34) Advances to women can be granted only against the security of her own property in her own
right.
We cannot bind her husband unless it can be proved that the advance is
for her necessities. The recovery of advance is doubtful.
35) While granting advances to married woman, it is advisable to obtain guarantee of her husband.
So as to bind the husband also for the debt. Marriage alone does not
create a responsibility on the husband for payment of wife's debts.
Also, women cannot be arrested for non-payment of a judgment debt.
36) Before selling goods pledged, the Bank has to give due notice to the pledger.

It is a statutory requirement under Sec. 176 of the Indian Contract Act.
In the absence of such a notice - the Bank may be liable for wrongful
sale and damages; the Bank may not have recourse to the borrower in case
of shortfall in sale proceeds.
37) Where a higher authority has sanctioned advance, a lower authority should not sanction any
additional advance.
The aggregate advance would then exceed the discretion of the lower
authority.
38) Person lent under DIR should not be assisted under IRDP and vice versa.
The benefits under both the schemes, viz., lower rate of interest under
DIR and subsidy under IRDP should not accrue to the same person at the
cost of others.
39) Advances against warehouse receipts should be made only to the original depositor.
Warehouse receipts are not negotiable instruments. Bank, as a transferee
cannot get a better title than that of the transferor.
40) Notice is given to the landlord when stocks pledged is stored in rented godowns.
So that the landlord cannot appropriate the goods stored or stocks
pledged towards arrears of rent by exercising a particular lien.
41) RBI has fixed exposure limits for bank loans to individual borrowers and also group of
borrowers.
For better risk management and to minimize concentration of credit risks.
42) RBI has recommended Consortium Advances.
To provide an excellent opportunity to commercial banks to minimize risk
exposures. Some of the smaller banks would not be in a position to meet
thhe credit requirement of their clients due to exposure norms.
43) Right of set off can be exercised only after giving due notice.
It is a requirement of the Indian Contract Act. Otherwise, the bankers
may be held liable for wrongful dishonour of the cheques drawn on such
accounts.
44)In taking possession of the goods hypothecated, no force should be
used by the Bank officials.
Hypothecation charge does not give a right of ownership to the Bank. The
borrower may obstruct lending Bank officials from taking possession and
may file a criminal FIR for breach of peace, trespass, wrongful entry
and wrongful restraint.
45) A search in the Lispendence Register in Court should be made before a mortgage is created.
To ensure that no proceedings in respect of the property offered as
security are pending in the Court.
46) System of back end subsidy introduced under IRDP
Guideline for subsidy management under IRDP as per Mehta Committee
Recommendation, to have better use and follow-up on IRDP, motivate the
beneficiaries to repay the loan to claim subsidy.
47) To improve credit management is top most priority of the Bank
To improve the quality of assets, reduce our NPA to 5 % of our advances
as per budgeted goals and increase profitability.
48) Interest rates are linked to credit rating
Credit rating is done through credit risk evaluation and reflects the
borrower’s expected capability to pay interest and principal in timely
manner based on internal as well as external risks. Better the credit
rating, lower the interest rate.

49) If outstanding is less than INC or Unrealized interest of previous year, excess is booked as
interest.
INC/URIYP cannot be more than outstanding
50) Provisioning is done on government guaranteed accounts also.
In order to strengthen the Bank’s effort to recover such dues
expeditiously as well as to discourage the practice of State
Governments in not paying guaranteed amounts.
AGENCY CLEARING
51) Local transactions are excluded from the purview of Agency Clearing Scheme.
To avoid delay in settlement of transactions, minimize cost of
reconciliation and as such transactions can more quickly and effectively
be settled through Local Clearing.
AGRICULTURAL ADVANCES
52) Agricultural loans are not disbursed at one instance but in stages
Agriculture requires funds at different stages. Ensures end use of funds
and avoids diversion of funds. Also, reduce interest burden on borrowers.
53) Interest on Agricultural loans is applied in May and Nov.
The proceeds of kharif crops are received in November, and those of Rabi
crops in March /April and as such the interest is applied at the time of
harvesting season so that the installment will be recovered with
interest.
54) Interest on agriculture loans are applied only at the time of repayment
As per RBI directives interest on regular agricultural loan is not to be
compounded. An agriculturist is in receipt of funds only after harvest
and marketing. Repayment of loan and application of interest takes place
at that time.
55) Tractor finance need not be restricted to the allocated villages only.
To enable farmers from allocated villages of other bank’s to avail of
finance in case the bank to which the area is allocated is unable to
extend financial assistance. Such loans do not require much follow up
and also helps to increase our business.
56) Comprehensive crop insurance scheme introduced by Government
It provides financial support to farmers in case of crop failure due to
vagaries of nature; restores credit eligibility of the farmer; and
supports and stimulates production of cereals, pulses and oil seeds
57) Loan for cultivation of horticulture and plantation crops are given as ATL
Crop loans are sanctioned for a maximum of 18 months. Horticulture and
plantation crops have long gestation period; the cost of cultivation is
very high. As income accrues over a period of time sanctioned as ATL.
58) Scale of finance per acre is not uniform through out the country.
Due to differences in soil fertility, irrigation facilities, usage of
fertilizers, cropping patterns, methods of cultivation adopted; the cost
of production is different.
59) We encourage financing dug wells in an intensive manner.
The availability of assured irrigation facilities afford safety to the
crops and consequently the crop loans sanctioned. Dug wells reduce
dependence on monsoon.

60) We refer to GSDA Report before financing dug-wells in grey water sheds..
To avoid over exploitation of scarce natural resource in a particular
area and obviate the possibility of water not being struck at all.
61) We obtain “No Dues Certificate” from agricultural borrowers.
To ascertain that the borrower was never a willful defaulter and that
there are no dues from him to any bank
62) We should grant advances against warehouse receipts only after acknowledgment of our lien by
the warehouse keeper.
To preclude the possibility of delivery of goods to a third party
against an indemnity on the ground that the receipt has been lost. To
avoid the warehouse keeper from exercising his particular lien on the
goods.
63) Poultry farming should be financed only when there is an immediate assured market.
Eggs, being perishable commodity should find a ready market without loss
of time.
64) Agricultural Term Loans are usually granted under schemes approved by NABARD.
Such schemes are drawn up by Banks and approved by NABARD after
considering all the critical aspects of the loan. In order to avail of
refinance from NABARD under schematic lending.
65) Agricultural advances should as far as possible be disbursed in kind.
To ensure proper end-use of the funds as the chances for diversion of
funds in this field of activity are more.
66) Diesel engines and electrical motors for which Bank finance is provided is to be purchased
should of approved manufacturers only.
Ensures prompt after sales service. A preventive measures against
malpractice by unscrupulous dealers taking advantage of farmers'
ignorance. Ensures supply of standard implements to farmers.
67) Tractor loans are generally granted for 10 years only.
As the estimated working life of a tractor is considered as 10 years
only and the loan is to be repaid within the life of the asset.
68) We encourage installation of gobar gas plants.
To generate cost-effective and alternative source of fuel gas and
conserve scarce conventional natural resources keeping pace with
national priorities. To utilize the cow-dung fully as manure.
69) It is necessary to have a full range of tractor attachments and trailing equipment.
The economy of tractor operations depends upon the range of services. To
generate sufficient surplus income to the farmer by using it for
custom-services. To give a fillip to farm mechanization.
70)We have mortgage/charge by declaration for Rs. 5,000 only in case of tractor loans even though
the loan amount is much higher.
The tractor is available as security; to pre-empt the land available as
security from being offered as security for other borrowings. To reduce
payment of stamps duty.
71) We insist Search Certificate in the land register by an approved advocate for verification of title
deeds.
To ensure that no prior charge exists. Undisturbed possession of
immovable property for 12 years by a person is construed as ownership by
adverse possession; and mortgage created in favour of a third party by
such a person is therefore treated as valid.

It is necessary to obtain extracts from land records in respect of farmlands for the preceding 13
72)
years.
To ensure that there is no charge recorded therein in favour of any
other lending agency and that the applicant is prima facie the owner
(tenant-cultivator of the land).
73) A farmer being financed for diesel / electric pump set should be persuaded to avail of crop loan
facility also.
To ensure adequacy of working capital funds to farmer so that sufficient
surplus or incremental income is generated from cultivating the land for
repayment of term loan installments.
74) Repayment periods and start-up periods stipulated by NABARD should be strictly adhered to.
So that a substantial portion of the incremental income is left with the
small farmer to meet his sustenance needs in addition to the loan
installments and interest.
75) Dairy loans should be sanctioned for purchase of at least two milch animals.
The second animal is purchased when the first is about to enter its dry
period; this ensures continuity of lactation. An uninterrupted flow of
income ensures that the farmer is able to properly feed the animals and
repay the loan.
76) Demand-Collection-Balance Register should be updated regularly.
As recovery percentage of agricultural advances is the basis for
claiming refinance from NABARD. An accurate picture of the recovery
position will help in planning of suitable recovery strategies.
77) Spacing norms for wells are stipulated by NABARD.
Wells constructed too close are likely to interfere with each other,
resulting in lowering of discharge.
78) Inspection of agricultural advances should be more "farmer-oriented" than "farm-oriented".
Considering the similarity in local conditions and cropping pattern,
farm-oriented inspection only will not be purposeful. It is more useful
to be in touch with individual farmers in order to understand their
problems, credit requirement, repayment capacity, etc.
79) Repayment schedule for agricultural advance varies according to the nature of the crops grown.
Agricultural loans are to be repaid out of surplus available to
borrowers after harvesting and marketing of crops. Since, the
harvesting period vary according to the nature of crops grown, repayment
schedule also vary accordingly.
80) Kisan Credit Cards has been introduced.
With a view to ensure adequate and timely flow of rural credit as also
to meet the composite production credit and consumption needs of
farmers.
81) Farm mechanization is given priority in agricultural finance.
The objective is to increase the output by timely and speedy
agricultural operations, and to minimize the cost of agricultural
operations and to maximize the efficiency of other agricultural inputs.
82) "Self Help Group" are promoted and financed by banks.
Self-Help Group is a voluntary group of poor people in a village formed
to save their earnings and lend the same to the group members. This
approach liberates rural poor from the clutches of moneylenders, develop
financial discipline and makes them eligible for bank finance.

83) Banks encourage finance for Drip Irrigation Systems.
In Drip-irrigation method water in required quantity is directly applied
to the root zone of the plants through capillary or sprinkler. The
system helps in conservation of water and reduces
evaporation/percolation losses by way of seepage. It also helps in
increasing crop production.
AUDIT
84) A LISP booklet has been introduced.
Listed Irregularities In Systems and Procedure are computerized to make
meaningful analysis. Creates a self-audit culture. Reduces workload in
typing, Helps the Branch Managers rectify non-compliances easily.
Enables the inspecting officials to audit more critical and gray areas
thoroughly.
85) Management Audit introduced in the Bank.
As an audit to examine, review and appraise the various policies and
actions of management on the basis of certain objective standards with
an attempt to evaluate the performance of various management processes
and functions in achieving the objectives of an organization.
BALANCING
86) Progressive Balance Book is maintained.
Helps to locate difference to a particular ledger and thus facilitates
balancing of individual ledgers.
87) Periodical balancing is a must.
In order to locate and rectify errors at the earliest. For rendering
better and effective customer service.
BANKER’S CHEQUES
88) Simple unstamped letter of indemnity is obtained for issue of duplicate Bankers Cheques.
As Bankers’ Cheques are non-transferable and payable at the issuing end
only the chances of frauds/forgeries and misappropriations or double
payment are rather remote.
BANK GUARANTEES
89) Bankers are prohibited to give guarantee on behalf of non- banking companies to assure their
depositors of refund of deposit when called upon to do so.
It may tantamount to diversion of funds from banking system to
non-banking system.
90) Payment of Bank Guarantee invoked should be made immediately
Our liability is immediate, absolute and unconditional. Any delay in
settling the claim will damage the reputation of the bank and trust
reposed in the bank will be lost
91) Limitation Clause is incorporated in Bank Guarantees.
To notify the beneficiary that the Bank will not be liable and will be
discharged from liability unless a demand/claim is made within the date
specifically mentioned in the guarantee.
92) Accounting System for Bank Guarantees has been revised.

In order to conform to the statutory format of balance sheet. To
ascertain the liability of Bank and applicants on an on-going basis. To
have effective control over BGs.
93) In some cases Deferred Payment Guarantees are issued though the Bank can grant loans.
As it is a contingent facility extended for acquisition of fixed assets
without immediate outflow of funds. Minimizes interest burden on the
borrowing unit. Bank's resources do not get blocked in issuing DPG.
94) The Bank does not issue Performance Guarantees.
In view of the complexity involved in appraising the technical
capabilities of the contractor in regard to his performance of any
non-financial obligation, performance guarantees are not normally
issued. Moreover, they require clearance from RBI.
95) Revised procedure for Bank Guarantees has been introduced.
In the wake of significant growth of guarantees business coupled with
incidence of frauds, a suitable and strict control of this business was
considered necessary. The revised system takes care of the contingent
liabilities on an on-going basis. In order to conform to the statutory
format of the balance sheet.
96) Bank Guarantee Extension form modified by the Bank.
To make the Extension Format more clear by addition of certain essential
information such as amount of Bank Guarantee, and name of beneficiary
etc.
97) Revised "Limitation Clause” is incorporated in Bank Guarantee form.
Govt. has amended Section 28 of Indian Contract Act, which has changed
the Standard Limitation Clause to be adopted by banks on issue of B.G.
BILLS
98) Bill of exchange or DP Note cannot be crossed
Because in case of B.E. and DPN; drawer, drawee or the acceptor need not
necessarily be a bank and crossing is a direction to the drawee bank to
pay the money to a bank.
99) Local Bills discounted must be accepted by the drawee before they are discounted.
Sec. 34(3) of SBI Act stipulates that local bills discounted must bear
two signatures of the parties at the time of discounting, each good for
the amount involved. To enable the Bank to have a recourse to the drawee
in case of necessity.
100) Bills and accompanying documents must not be left blank endorsed while sending for
collection.
To obviate the possibility of any bearer of these instruments taking
delivery of goods detrimental to the interests of the parties entitled
thereto.
101) Party-wise accounts are maintained in the Demand Liability Register.
In order to have effective control, follow-up, regulates the drawings in
the account within the sanctioned limits, and readily ascertains the
liability of each party at any point of time. To avoid the possibilities
of kite flying.
102) Collecting Offices should invariably notify the Railways while collecting documentary
bills purchased by the Bank.

With a view to notify the Bank's interest in the goods. To preclude the
possibility of goods being taken delivery of by third parties against an
indemnity bond.
103) Usance Bills are to be presented for acceptance without loss of time.
As per the provisions of Negotiable Instruments Act to protect the
interest of the Bank as well as the drawer. Financial position of Drawee
might alter on lapse of time, the goods might incur demurrage,
deteriorate, get damaged, drawee may refuse acceptance if not presented
within a reasonable time.
104) It is necessary to send notice of dishonour in case of non-payment of a bill.
Required as per provisions of N.I. Act 1881. In the absence of a
contract to the contrary, failure to give notice of dishonour to all the
parties entitled to receive it will discharge all such parties from
their liability including the maker of the bill.
105) When a BBR is unpaid, the discounting branch is credited and debited with the bill
amount.
At the discounting branch, IBIT is debited and IB account credited on
due date of the bill. Debits to IBIT can be reversed only through a
branch clearing entry. In case bill is unpaid the credit from collecting
branch reverses the IBIT entry and the debit reverses the credit at
collecting branch.
106) While returning the bills to the remitting bank or the drawer, all re-endorsements in
their favour should be followed with the words 'Sans-Recourse'.
To absolve the Bank from incurring any liability as an endorser of the
bill.
107) We normally do not collect bills for non-constituents.
As banker’s we deal only in documents. However, we may get entangled in
litigation on account of quantity, quality of the goods involved.
108) Pro-forma entries are passed when bills are purchased or accepted for collection.
To provide for control on the outstanding bills and reflect the
constituent’s liabilities on the bills.
109) Requests for extension of time received from drawee to pay the Usance bill received
from other Bank are entertained only after reference is made to remitting bank.
A party to a past bill may not as a rule be granted time for payment of
the amount due without the written consent of every party to the bill,
lest the other parties should be released from their liability.
110) Bill/cheque drawn on centres/places where the Bank is not established should be
discouraged for negotiation and should be accepted only on collection basis.
It is because greater risk is involved in realizing the proceeds and
will require more time for which we would be out of funds, the exchange
earnings in this case, may not be commensurate with the loss of interest
to the Bank.
111) When a lorry receipt is accepted while discounting/purchasing a bill, it must be ensured
that the carrier is on the approved list of IBA.
The scheme of Approved Road Transport Operators of IBA, acts as a
deterrent to transport operators who will not release goods without the
consignor’s copy and thus protects Bank's interest.

112) Railway Receipt accompanying a Bill should not be in the name of the consignee.
This will obviate the possibility of the consignee/third party, taking
delivery of the goods without Bank's endorsement, in case the RR falls
into the hands of consignee/third party, through oversight
BUDGET
113) We have a Budget Exercise
Budget is a plan of Action, a pre-determined schedule of activity of the
Bank in given period of time. It is a system of review and analysis for
the purpose of remedial action and better future planning.
114) Performance Report is submitted every month.
The objective of “P” report is to review the actual performance of a
branch on the background of planned performance. This enables controller
to review the performance of branch and carry out corrections if any.
115) Budget is a two-way communication.
Budgeting is an effective two way communication process because it
enables the business and other goals to be conveyed clearly to every
level and ensure feed back from all levels to the next higher level
right up to the corporate management.
116) AGM and BM do budget exercise by discussion
To make the budget operationally realistic. Ensure and facilitate
involvement with a sense of commitment. Integrates branch budget with
Bank's overall business goal. Eliminate feeling of imposition
117) While preparing branch budgets profitability angle must be kept in mind.
Profitability of operation is needed for assured growth. Mere increase
in business level is not sufficient. Proper mix of business and
efficiency of operations have to be achieved.
118) Branch Dossier is maintained.
To have a proper record of environmental data (pertaining to area of
operation), competition, strengths and weaknesses of our Branch. As an
aid to realistic fixation of budgets and business targets.
119) Inter-bank deposits are not included in the aggregate deposits in the Performance
Report.
No effort is required on the part of the branch in getting such deposits.
CURRENT ACCOUNTS
120) Branches should not open accounts in the name of outstation banks.
As such banks may be tempted to issue cheques on such accounts to
provide remittance facilities to their constituents.
121) A declaration regarding credit facility enjoyed by the applicant is obtained while
opening current accounts
This obviates the possibility of lodging cheques in favour of the
customer by his debtors in the account. This unhealthy practice makes
the outstanding in the lending bank unsecured. RBI directives.
CURRENCY CHEST
122) No entries are passed through the Bank's books of accounts for a remittance between
two currency chests.
As it is nothing but transfer of RBI's money from one of its agent to
another and the necessary adjustments are made in the Currency Chest

Books and RBI is advised through CT slip. Such transfers do not affect
the Branch Cash balance.
The balance in currency chest is not reflected in General Ledger
General Ledger has balances of our assets and liabilities. Currency
chest is property of RBI and neither an asset nor a liability of the
bank.
CASH CREDIT
123) Bank generally grants advances against goods by way of Cash Credits only.
To avoid under or over financing. To ensure that market value of
security is sufficient to cover our outstanding. To avoid obtention of
fresh documents whenever drawing power changes. To check diversion of
funds.
124) Overdrawing in excess of Cash Credit limit sanctioned is restricted
This inculcates financial discipline among borrowers. If overdrawing is
recurring in nature either assessment is to be reviewed or diversion of
funds to be checked.
125) On the death of partner Cash Credit of partnership firm should be closed and new
opened
The death of the partner dissolves the partnership firm unless contrary
is provided. Old account is closed to crystallize the liability of the
deceased partner. A new account is opened to prevent the operation of
the rule in Clayton’s case.
126) Advances for working capital are renewed every year.
Pursuant to Sec.33 of the SBI Act, advances to working capital can be
granted for a period not exceeding 12 months. Working capital is
sanctioned on the basis of projections for the next year. At the end of
the year fresh projections are sought and limit renewed as per
requirement.
127) No interest is paid on credit balance in cash credit accounts.
It is in the form of a demand deposit or a current account.
128) Interest rates chargeable on Cash Credits are higher than that on Demand Loans.
Unlike demand loan accounts, the borrowers in Cash Credit Accounts enjoy
the advantage of drawing according to their needs and deposit back the
surplus. Frequent and unrestricted transactions are allowed in Cash
Credit accounts.
CASH DEPARTMENT
129) Strong Room has to be certified by a qualified engineer every year.
It is necessary in terms of RBI requirements and keeping in view the
safety of the strong room.
130) Shortage of cash detected is debited to Protested Bills Account even though it may be
recoverable fully.
Recalled Debts are meant only for advances, which have been called up.
This is not in the nature of an advance.
131) Notes bearing political slogan are not accepted
Such notes cease to be legal tender under Legal Tender Act 1964.
132) Branding of “Cash Paid Date Stamp” on debit vouchers and cancellation of signature is
a must.

To avoid the possibility of making a second payment of the same
instrument, obviate the possibility of fraudulent use thereof; signify
that the amount mentioned therein is paid in full and irrevocably.
133) Paper Sealing System is introduced.
To increase mobility of cash from one branch to another, reduce time and
labour involved in recounting of notes.
134) Bank conducts periodical verification of currency chest/small coin depot at branches.
As per Bank's agreement with RBI, we are required to conduct periodical
verification once in six months at least so as to ensure that they are
being maintained properly and that there are no cash shortages.
135) Debit vouchers are to be entered in the Cashier's Payment Scroll only after the payment
is made.
Entries made after the payment can be treated as constructive evidence
of payment.
136) Cash remittances from public are not accepted under the Guarantee Bond System.
Currency Chest belongs to RBI and should contain the exact amounts as
stated and no notes can be deposited without examination, except in
accordance with the Guarantee Bond System approved by RBI. The approved
scheme covers only Scheduled Banks and State and Central Co-operative
Banks.
137) Branch Manager signs as Treasury Officer while sending treasures to mint/RBI.
To avail of the concessionary rates offered by the railway authorities;
as also that the charges need not be paid in cash.
138) Currency transfer transactions should invariably be reported to the link office by
telegram.
To facilitate early settlement of transactions with RBI and thereby to
avoid loss of interest or penalty in case of late credits.
139) When un-current coins are remitted to the mint the depot balance will not be affected.
Un-current coins form part of the bank's cash balance and not of small
coin depot.
140) Defective Notes paid at branches are not sent to RBI.
Under Note Refund Rules, all currency chest branches are vested with
full powers to pass the notes and disposal by burning periodically in
the presence of RBI officials after their scrutiny. However, this
disposal is restricted to low denomination only.
CHEQUES
141) Dishonored cheques do not require noting and protesting
The returning memo is sufficient for the purpose. It is constructive evidence and drawer can be sued in the
court of Law on the strength of return memo. Noting and protesting is required only in case of dishonored
bills.
142) Cheque book is generally issued only on production of printed requisition slip
The requisition slip is an added proof that the customer has signed it; as he is required to keep the cheque
book in his custody. To avoid any possibility of unauthorized person acquiring the cheque book fraudulently.
143) Cheque forms issued for drawings on Public Fund Account must be 'To Order' only.
Public Fund Accounts are in the nature of trust accounts. In order to observe precautions in paying such
cheques, which cannot be observed in case of bearer cheques.

144) Whenever a cheque is returned to the depositor because the depositor's signature gives
ground for suspicion, the depositor concerned should be advised directly.
As a measure of abundant precaution to preclude the perpetration of any frauds. To safe guard the interests of
the Bank as well as the depositor.
145) We do not make payment of cheques dated prior to the death of a constituent after
receipt of notice of death.
On the death of an account holder, his mandate ceases.
146) We do not pay cheques out of banking hours.
As it is not a payment in due course. Bank's position will be critical in cases of countermanding of payment,
or death, insanity, insolvency of the depositor, or clamping up of a Garnishee Order or Income Attachment
Order on the account.
147) It is necessary to collect the unused cheque forms lying with the customer when the
account is transferred to PB/RD Accounts.
To overcome the possibility of misuse of unused cheque forms by unauthorized persons.
148) Cheque books should be issued to the constituents in the order in which they are
received in the Bank.
As accumulated cheque forms will loose their protective quality in course of time.
CLEARING
149) Proceeds of a clearing cheque are not credited to Government Account unless the
stipulated return clearing hours is over.
As Government Accounts cannot be debited directly in the event of the cheques being dishonored and a claim
for recovery of the amount from the Government Department has to be taken up separately.
COLLECTIONS
150) Interest is paid on delayed collections
Recommendations of customer service committee; helps to secure customer's loyalty and acts as a
disincentive for delayed collection by the bank.
151) Documents for collection should not be shown to the drawee before payment.
Presentation to the drawee is not a pre-condition for the payment of such bills. To avoid chances of drawee
refusing to honour the bills for one reason or the other. To avoid frauds by tempering of bills. To safeguard
the interests of the Bank and the drawers.
152) Interest to be paid on delayed collections to be debited to Charges Account.
The interest thus payable would be in the form of compensation to the Bank's clients; hence, charged to P&L
Account.
COMPANIES
153) Charge of hypothecation is preferable in case of advance to companies.
As per sec. 125 of companies Act a floating charge on assets should be
registered with Registrar of companies this serves as a notice to the
world and ensures bank is ranked as secured creditors against official
liquidator or other creditors.
154) Periodical search is done with Registrar of company’s office
To ensure that the charge created on the borrowers’ assets to secure the
debt is maintained intact in its nature, priority and scope on an
ongoing basis and safeguarded against any charge created or to be
created to secure his other assets.
155) Hypothecation by a company of its movable properties has to be registered.
As per Sec.125 of Indian Companies Act 1956, such charges must be
registered within 30 days of their creation. To protect the Bank's

interests in case of liquidation of the company. It serves as a
constructive notice to all subsequent parties.
156) Before granting advance in any form to a limited liability company, a search should
immediately be made in the Office of the Registrar of Companies
To ensure that no prior charge exists over the security now offered.
157) A second search is made after our charge is registered.
To ensure that no charge has been created since the first search and to
ensure that our charge is registered.
158) Negative lien does not require registration.
As it is not a charge over the properties of the company, u/s. 125 of
Indian Companies Act, it is only an agreement not to create any charge
over the unencumbered properties without the prior written consent of
the Bank.
CUSTOMER SERVICE
159) Time norms should be displayed at all the Branches

As per Goiporia committee Recommendations. To make the customer aware of
normal time required for putting through a business transaction. It also
provides a time frame for the staff members. It inculcates self-
discipline among the operating staff.
160) Banking ombudsman scheme 1995 has been introduced
To enable resolution of complains pertaining to customer service to
provide for quicker settlement of customer’s complaints. To give justice
to aggrieved customers. To avoid litigation in the court/consumer
forums
DD PURCHASE
161) DD Purchase limit is treated as secured advance while Cash Credit (Outward Bills) limit
is treated as unsecured.
In the former case, the position of the banker is that of holder for
value and in the latter case, the banker is only an agent for collection.
162) We cannot grant DD Purchase limit or Cash Credit limit to constituents who have
special hypothecation limits.
Special Hypothecation limit includes book-debts also (all bills); this
will amount to advancing twice on the same security (double finance).
163) Negotiating branches must send their remittance schedules to the drawee offices
promptly.
DD purchased represent fund outlay by the Bank; minimize the loss of
interest by recovering funds expeditiously; obviate possibilities of
kite flying and facilitate easy and quick reconciliation.
164) DDP (Bills) Account in General Ledger has been introduced.
Advances get reflected in negotiating branch books. Facilitates
effective control and follow-up by the negotiating branch.
DECEASED CONSTITUENTS
165) Standard Register for recording the details of settlement of deceased constituents’ a/c
has been introduced
Standard Register is maintained for ascertaining the completion of
formalities in this regard; more over such register is part of branch

document register to have permanent record and to avoid future
complaints.
166) A Person who has signed the letter of relinquishment need not join the execution of
indemnity letter
As he has totally relinquished his right over the assets in favour of
one or two of the other legal heirs he is not required to indemnify the
Bank.
167) While settling deceased constituent claims, receipt should be obtained from all the
claimants.
Payment by Banker’s Cheque is only an indirect proof of payment while a
receipt gives direct proof of payment.
168) We prefer disposal of deceased constituent assets on affidavit cum indemnity basis
without production of legal representation.
Directives of RBI and Govt. of India; recommendations of Working Group
on Customer Service. Not to cause inconvenience to family members of the
deceased; eliminate expenditure in obtaining legal representation.
169) In case of death of one of the succession certificate holders, we will not pay the balance in
the account of a deceased depositor to the remaining succession certificate holders.
There is no question of survivorship in regard to succession certificate
holders and as such the remaining holders cannot exercise any power
contained in the Succession Certificate.
170) Production of legal representation is not required for disposal of money left with the
Bank in case of deceased army and air force personnel.
The property is governed by the provisions of the Army and Air Force
(Disposal of Private Properties) Act 1950 as serving members of armed
forces can make oral wills.
DOCUMENTATION
171) Copy of the "Arrangement Letter" is kept along with documents
Arrangement letter forms part and parcel of documents as it enumerates
the terms and conditions on which the borrowers have agreed to avail the
loan.
172) Arrangement letter is not stamped
In case it becomes necessary to prove some point on the basis of
arrangement letter, by paying stamp duty and penalty we can get it
stamped. Avoids burden of stamp duty on borrower.
173) Bank obtains confirmation letter in case of equitable mortgage
It evidences voluntary deposit of the title deeds for creation of
equitable mortgage for securing the advance obtained by the borrower
Otherwise at later date he may claim that the has left the document
inadvertently or he was compelled to do so.
174) Bank takes general letter of Lien and set off
According to sect. 176 of Indian Contract Act 1872 surplus proceeds of
sale after liquidating advance have to be refunded to the borrower.
This letter authorizes bank to apply the sales proceeds of securities
towards satisfaction of any other indebtedness of the customer.
175) We should be careful while obtaining documents
Documents once executed, cannot be rectified or altered without the
consent of the borrower. Fresh stamp duty is also to be paid. The
borrower may refuse to sign when account has gone bad.

176) Letter is obtained from the landlord of the godown to the effect that he has no objection
and he will give access to the Bank staff to inspect the godowns.
To preclude the landlord from exercising particular lien on the contents
of the godown for his rent due. To prevent the landlord from resisting
the Bank staff to access the godown.
177) Advance against pledge of goods need not be registered.
Under Sec.125 of Indian Companies Act, pledge is a specific and not a
floating charge; and only floating charges need be registered.
178) A Letter of Authority/Munimship Letter is not stamped.
As these are in the nature of operational instructions arising out of
existing agreements entered into between the bank and the borrower.
179) While Hypothecation Agreements executed by DIR borrowers are exempted from
Stamp Duty, the DP Notes have to be stamped.
D.P Notes are stamped as per Indian Stamp Act; no exemption has been
given under this Act. Exemption is under Bombay Stamp Act.
{All questions relating to stamp duty … for Maharashtra only}
180) Where DP Note becomes time-barred in the absence of Revival Letter, the existing
account may be allowed to continue against execution of fresh DP Note.
In terms of Sec. 25(3) of the Indian Contract Act, an agreement to pay a
time-barred debt is a valid contract and the limitation starts afresh
from the date of such agreement.
181) Two undated transfer forms are taken from the transport operator at the time of
disbursing the term loan.
In case of default, these forms facilitate easy sale of the vehicle if
possession is taken and the borrower refuses to cooperate in the sale
later.
182) Loans under DRI Scheme up to Rs. 500/- should be granted against DP Note only.
As per Government directives. To minimize burden of stamp duty on the
poor borrowers. To expedite disposal of the loan applications.
183) Hypothecation Agreement is signed only by the borrower(s) whereas Form 'C' General
is signed by both the bank and the borrower(s).
The covenants of Form 'C' General are in the nature of an agreement
between the Bank and the borrower(s) whereas those in Hypothecation
Agreement are in the nature of an undertaking by borrower alone.
184) On the DP Note, we take two signatures of the borrowers -one over the Revenue Stamp
and the other by the side of it.
To prove execution of the DP Note by the borrower in the event of loss
of Revenue Stamp.
185) Borrower's signature is obtained below the schedule in Cash Credit Form 'C' General.
In order to obtain confirmation from him as to the quality and quantity
of goods pledged so that he cannot deny at a later date that he was not
aware of the same.
186) DP Note must be delivered to the Bank along with the DP Note Take Delivery Letter.
In order to prove the constructive delivery of DP Note with the
intention of creating a security against the debt.
187) Bank should obtain documents from partners in their capacity as partner of the firm as
well as in their individual capacity.

Partners are jointly and severally liable and their liability is
unlimited, however, the personal property of partners is first charged
to his personal creditors. This ensures that the partners are personally
guaranteeing the loan and make the bank a secured creditor against
personal property.
188) Form I Special is not an agreement.
It is in the form of an undertaking; and only the guarantor signs it and
delivers the same to the Bank along with the DP Note endorsed by him
that was drawn by the borrower.
189) Sanction letter is sent even to the gold loan borrowers.
The terms and conditions of the loan are advised to bring the procedure
in line with other advances.
190) DP Note executed by the borrower is not attested.

Attestation would amount to treating them as bonds which attracts ad-
valorem stamp duty.
191) Verification of the document to the title is not done on the document itself but on a
separate paper.
Otherwise it will be reduced to a legal mortgage - attracting heavy
stamp duty and requiring registration.
192) Vernacular signature on Cash Credit Form 'C' / letter of indemnity are not verified.
Verification changes the nature of the agreement to a bond that attracts
advalorem stamp duty.
193) While obtaining security documents from illiterate borrowers, a separate witness letter
signed by two independent witnesses is taken.
Proof that the contents of the documents have been explained to the
borrower and he has understood the implications of the loan
transactions. If taken on the loan document, it might be construed to be
a bond and require higher stamping.
194) Fresh AB-1 need not be obtained at the time of renewal and only revival letters are to be
obtained once in 3 years.
The personal liability clause in AB-1 attracts the provisions of the
Indian Limitation Act, revival letters on form AB-4 will have to be
taken from the borrowers once in 3 years.
Unstamped indemnities should not be obtained
Obtention of unstamped agreements will be treated as mischief under sec 43 and 62 of Stamp Act and
punishable.
DORMANT
195) The first debit to a Dormant Account should be referred to the Branch Manager.
To enable him to establish the bonafide of the depositor beyond doubt.
Such accounts are fraud prone and more than ordinary care is taken.
DRAFT
196) Bank cannot issue a Demand Draft payable to bearer.
Sec.31 of RBI Act 1934 prohibits issuance of a Bill of Exchange payable
to bearer on demand as this amounts to a currency note.
197) The payment of draft cannot be stopped.

Bank draft carries a promise of the Bank that it would pay "Payee or
order" a sum of money for value received. Stoppage of payment of its own
instrument will affect the commitment.
198) Indemnity is insisted on before issue of a duplicate draft.
The original or the duplicate draft might be negotiated to a holder in
due course and the bank might be obliged to pay them both. In such a
case, reliance has to be placed on the indemnity of the purchaser only.
Bank can recover the money from purchaser on the strength of indemnity.
199) Duplicate draft issued in lieu of original reported lost in transit should not be paid by
cancellation without the specific written consent of the payee concerned.
Once the draft is sent (by the Purchaser) to the Payee, the Bank becomes
a Trustee for the payee. Purchasers or other parties do not have any
right or title to receive the proceeds at this stage.
200) For issuance of duplicate Government draft, stamped indemnity is not insisted.
Government drafts are not negotiable. The applicant being Govt.
Department is exempted from stamp duty.
201) We issue DD even though the person is not maintaining an account with us.
As there is no risk or liability involved in issue. To promote and
popularize remittances. Bank gets benefited with sizable float-funds.
Bank gets income by way of exchange and commission.
202) Loss of draft is required to be reported to the paying branch immediately by telegram.
To enable the paying branch to exercise sufficient caution and in case
of presentation of the draft. and obtain non-payment confirmation for
issuance of duplicate, where necessary.
Number under MICR draft system should not be scored out when used for issue of duplicate draft.
Reader-sorter machine rejects the draft if number is scored out or
tampered.
When a Bank draft is canceled, a receipt on Revenue Stamp is taken from the applicant.
When canceled draft ceases to be a negotiable instrument and the payment
is made in full and final settlement of the purchaser's claim in the
form of receipt.
203) The validity period of a draft is restricted to 6 months.
Avoids circulation for an indefinite period and facilitates easy and
quick reconciliation.
204) After payment of a lost original draft, if the duplicate is presented, it cannot be paid.
After lawful payment of the original draft, no obligatory commitment
remains with the Bank to pay the duplicate.
FOREIGN EXCHANGE
205) Forward contracts are fixed
To avoid risk of exchange rate fluctuations at a future date which would
affect profit margins of importers/exporters. To enable the customer to
determine the exact amount payable or receivable at a future date.
206) Figures of large value purchases of foreign currencies are advised to FD, Calcutta on the same
day.
To enable them to make cover operations and to square up the position so
that the currency is neither over-bought nor over-sold.

207) Rate applied for purchase of Currency Notes is worse than rate applied for Foreign
Travelers Cheques.
FC Notes are surrendered to RBI at fixed notional rate for which
immediate reimbursement is not available. To compensate the loss of
interest on funds outlay.
208) Revised procedure for Bills of Exchange (Foreign Currency Notes) Account has been
introduced.
To indicate separately in the General Ledger the assets represented by
the holdings of Foreign Currency Notes at the Branch.
209) Encashment certificate is not issued for inward remittances for credit of NRE A/c.
If issued, the depositor will get repatriation facility twice.
210) The service rendered to NRI should be efficient and courteous.
NRI are high net worth individuals accustomed to more automated and
quick banking service abroad.
211) Income on Forex during February and March is not booked by debit to Adjusting
Account
This is done by FD Calcutta
212) FCNB deposits not included as a part of deposits by branches
These deposits are reported by FD Kolkatta and taken in Bank’s
consolidated position.
GENERAL
213) Performance Appraisal System has been introduced.
To enable officials to identify their inner strengths and to set and
achieve better goals. Review of performance helps in placement,
promotions and training decisions.
214) Vouchers cannot be canceled with a pen but with an indelible pencil.
As per Banks’ Books Evidence Act, the voucher loses its character to be
proved as evidence in the Court of Law, if canceled in pen.
215) Personal Banking Branches are opened.
To cater to the needs of high net worth individuals and meet competition
from foreign and private sector banks.
216) Profitability has become concern of the Bank
In the wake of deregulation, interest spreads are shrinking. Although
profits are increasing profitability is declining.
217) SBI Capital Market Ltd established
It undertakes issue of share capital, project counseling, loan
syndication, new issue, floating of companies, which is required for
development of healthy capital market.
218) The Depositors of SBI are called unsecured creditors
No depositor holds any security or has physical, symbolic or
constructive charge over the assets of the bank.
219) Job Rotation should be undertaken at periodical intervals
Part of HRD concept, to avoid monotonous nature of work, for prevention
of frauds, to enrich job knowledge, increase productivity, better
customer service to avoid dependency on a particular employee for
particular work
220) Non Banking Working Day is observed at SAB

To enable the branch staff to have proper follow-up and supervision of
advances, mobilize deposit and establish liaison with customers and
improve house keeping.
221) Visiting faculty scheme has been introduced
To provide on the spot training to branch level and to suggest suitable
solutions which improves productivity and better customer service.
222) Bank encourages progressive use of Hindi in Bank's routine work
Use of Hindi is mandatory in terms of official Languages Act 1963. It is
a customer friendly language, which develops intimacy, reduces
linguistic gap and promotes national integration.
223) Computers are extensively being used in Bank's work
To cope up with heavy work, increase efficiency, accuracy and speed;
giving better customer service. To enable banks to compete with foreign
and private banks. Recommendation of Rangarajan Committee.
224) Authorized and paid up capital of our bank was increased

Capital is the limiting factor for banks to extend credit as capital
adequacy norms were introduced as per recommendations of Narsimhan
Committee.
225) The Bank has set up a subsidiary for mutual fund.
To face the competition arising out of dis-intermediation, mobilize
small savings for investment in stock market and provide technical
expertise to the small investors
226) Passing Powers of JMGS I officers increased.
To give better and effective customer service and relieve the
accountant, divisional manager, branch manager to perform their
vicarious duties more efficiently.
227) CAG branches have been opened.
One of the strategic business units as recommended by McKinsey & Co it
offers a comprehensive range of core banking products and services to
the Bank's top corporate customers in a timely and cost efficient
manner. To face the fierce competition from FI and Private banks and
retain our premier position
228) Quarterly results are published

Consequent to share issue, SEBI guide line provide for this.
229) Bank's books of accounts should be closed at the end of the year.
As per Sec. 39 of SBI Act, all books of accounts should be closed and
balanced as at the end of each financial year to arrive at profit or
loss for the year and to present the balance sheet to the President of
India and the shareholders.
230) RBI allowed setting up of private banks.
To provide competitive, efficient and low-cost financial services to
society.
231) Foreign banks are permitted to open branches freely in India
To fall in line with liberalized economic policy. To have benefit of large resources for building up a
stronger economy. A WTO requirement.

232) Service Branches are established.
To centralize the work relating to clearing operations, enabling

introduction of mechanization, reduce the chances of frauds, improve
operational efficiency by expeditious clearance of inter-branch/bank
instruments and render improved customer service.
233) We maintain our account with RBI.

To meet CRR obligations, facilitate settlement of government, currency
transfer, clearing transactions and for routing through
refinance/rediscounts obtained, etc.
RBI has appointed SBI as an agent.
For conducting government business and providing remittance facilities
to other banks at places where RBI is not established.
234) Lok Pal has been appointed by our Bank.
A grievance redressal machinery; facilitating quick settlement of
disputes independently and impartially. To provide top quality customer
service and enhance customer satisfaction.
235) A Human Resources Development Department has been set up by the Bank.
In order to increase the effectiveness and efficiency of the personnel
function to meet the challenges of anticipated growth of the Bank in the
years to come. To train the staff and make them aware and thorough with
the time to time changes of the banking practices and systems.
236) Branch layout and work flow studies has been initiated in the bank
Improve working environments for the employees and customer, give
appealing look to premises that project better image of the bank,
optimum utilization of infrastructure, speed up movement of vouchers
thereby resulting in better customer services.
237) Banking ombudsman scheme 1995 has been introduced
To enable resolution of complaints pertaining to customer service To
provide for quicker settlement of customers complaints. To avoid
litigation in the court/consumer forums
238) Commercial paper introduced.
To provide easy liquidity from capital market to 1st class companies as
per credit rating given by rating agencies. It is a measure to broaden
money market and helps company to raise short term finance easily.
239) Capital Adequacy Norms are prescribed.
For the purpose of ensuring the financial soundness and safety of
banks in the country.
FIXED ASSETS
240) Depreciation is allowed on Fixed Assets.
To account for notional wear and tear, amortize the value of the asset
over its useful life and charge against profit to avail tax benefits.
GOVERNMENT
241) Difference between Govt. Receipts and Payments over Rs. 1 lac should be advised by
telegram.
For quick settlement of funds with Government to avoid loss of interest
to Bank or levy of penal interest by RBI.
242) We cannot pay an ITRO in the absence of the relative advice.

Signature on the Refund Order is to be compared with that on the
relative advice.
243) Focal Point is introduced for PAO transactions.
To reduce delays in transmission of documents; ensure quick settlement
of funds; facilitate easy reconciliation and to avoid value-dating loss
of interest.
244) The District Magistrate can ask our branch to conduct business even on
Sundays/holidays.
As per the Rule No. 428 of the Compilation of Treasury Rules, he is
empowered to ask banks to conduct essential government business even on
Sundays/holidays.
245) Paid bills and copies of receipted challans are secured in a locked box when sent by the
Bank to Treasury Office.
So that there may be no possibility of any alteration of any paper
before they reach the hands of the Treasury Officer. To ensure against
the cheques/bills falling in the hands of unauthorized persons.
246) No revenue stamp is affixed on Income Tax Refund Order.
ITRO is regarded as a Quasi Negotiable Instrument.
247) RBI Encashment documents of Rs 1 crore and above should be sent by courier to reach
GAD, Mumbai before 10.00 a.m. on the following day.
Substantial amounts are locked up in these Encashment. If these are not
immediately settled and recovered from RBI, loss of income will be very
significant affecting the Bank's profitability.
GOLD LOANS
248) Advance are not granted against the security of gold ornament bearing the initials /
name of a third party other than the borrower
It prima-facie evidences that the ornaments do not belong to the
applicant. The bank's interest will be jeopardized in case the title
proves to be defective at a later stage.
249) Before selling gold ornaments pledged to the Bank notice is given to borrower
It is obligatory on the part of the pledgee to give reasonable notice to
the pledger vide section 176 of Indian Contract Act.
250) Advances against gold ornaments are not looked upon with favour by the Bank.
As they are not of a self-liquidating nature. Risk is involved as to the
genuineness and ownership of the gold ornaments. Security is subject to
market rate fluctuations. They are often availed of for consumption
purposes.
251) When gold loans are partly paid, the Bank insists on borrowers taking proportionate
part delivery of the ornaments.
Otherwise this will amount to keeping the superfluous ornaments in the
Bank's custody without payment of any charge.
252) Borrower's name should not be mentioned in the gold auction notice.
To ensure against the borrower filing defamation suit against the Bank.
253) Gold ornaments pledged to the bank are not delivered to the legal heirs on the basis of
Succession certificates.

Succession certificate covers only debts and securities. Gold ornaments
do not constitute either debt or securities.
254) A DP note is obtained from Gold Loan borrowers in addition to pledge of gold
ornaments.
This will enable the bank to file a suit for recovery in case the
proceeds of sale of ornaments are not adequate to liquidate the loan.

GIFT CHEQUES
255) In case of "Gift Cheques" mere discussion are accepted as introduction
Gift cheques serve the purpose of Bank's advertisement. They are for
gift purpose and have no commercial touch. Issued for specific purpose
and for certain amount. The sentiments attached to it will be hampered
and purpose will be defeated
INTRODUCTION
256) Introductory Reference is absolutely necessary for opening a deposit account.
To avail statutory protection under Sec. 131 of N.I. Act; ascertain the
respectability, genuineness and social standing of the prospective
customer; eliminate benami/black money transactions for tax evasion, and
confirm that the business attracted is a desirable one.
257) We reserve our rights of accepting the introduction of a particular person only.
The onus of proving the identity/integrity of the customer lies with the
Bank only; giving introduction does not in any way bind the introducer;
therefore the person should be acceptable to us.
258) A notice board “Please introduce only persons well known to you” be displayed in the
banking hall
To educate customers about importance of introduction, ensure
introduction of genuine person, obviate possibility of opening of
fictitious a/c as without genuine introduction bank will lose protection
under sec. 131 of N. I. Act.
259) Letter of thanks must be sent to introducer / Customer who open new A/c
To ensure the genuineness of address of the account holder; extend
gesture of goodwill by letter of thanks to introduce and patronage to
customer.
260) A cheque book is not issued unless and until the introduction has been confirmed.
The account is not considered as properly opened until introduction is
obtained. The Bank may become liable to third parties who may be
defrauded by the account holder.
INSURANCE
261) Comprehensive insurance in respect of a vehicle financed by the Bank is obtained in the
name of the borrower only.
In order that the Bank may not be directly involved in claims arising
out of any accident to third parties caused by the vehicle.
262) Full insurance irrespective of amount of loan
The bank gets pro-rata amount of claim amount and not full amount in
case the average clause in the insurance policy operates which is
detrimental to the Bank's interest.
263) Bank does not obtain insurance cover for theft in case of advances against goods.
As per the Letter of Pledge or Hypothecation, the borrower is
responsible for all such losses. Premia payable for theft coverage is
high
264) Due dates of the insurance policies should be properly diarised.
It is not obligatory on the part of the insurance company to send
renewal notices. To effect timely renewal of policies,
265) Insurance Policies must contain the Bank's agreed mortgage clause.
Insertion of this clause makes it obligatory on the part of the
insurance company to pay claim even if the increased risk is not covered
by the payment of additional premia.

INTEREST
266) Interest on DL is now applied at every calendar quarter
To bring this in line with other advances, reduce work of maintaining
daily list and passing adjusting a/c entries.
267) No interest is charged on "Festival Advances" granted to the members of the staff.
This is treated as an advance salary and not as a loan or advance.
268) Interest rates are linked with credit rating
Credit rating reflects the borrower’s expected capacity to pay interest
and principal in timely manner. Hence, better the credit rating lower
the interest rate.
269) Interest on Cash Credit advances is related to SBAR whereas interest on advances
against TDR/STDR is not related to SBAR.
Rate of interest on Cash Credit advances is decided by the Bank that on
loans against TDR/STDR is governed by RBI directives.
270) Interest rates are now linked to the size of the loan.
As large number of interest rates on advances linked to activity
/segment, etc., had become complex and cumbersome to administer.
INCOME TAX
271) Bank's own payments exceeding Rs. 20, 000/- should be made by crossed BC only.
To claim deduction of such expenses in the Bank's IT assessment;
otherwise, such expenses cannot be allowed as admissible expenses.
272) Request for blanket inspections from tax authorities should not be entertained with
circumspection.
The Income Tax Authorities have powers to seek information; however, we
have also to ensure adequate secrecy regarding the accounts and affairs
of our customers.
JOINT HINDU FAMILY

273) Joint Hindu Family letter is taken while opening their A/C
To ascertain the karta and co-parcenors of the family, establish
personal liability of the co-parceners in case the business undertaken
by the karta proves to be other than that of a family. (Ancestral)
274) The Karta has to execute documents in respect of loans sanctioned to a Joint Hindu
Family.
As per Hindu Law, Karta has an implied authority to obtain a loan,
execute necessary documents and pledge the security on behalf of the
family for the purpose of the ancestral business of the family.
275) Whenever operations on the account by co-parceners other than the karta are permitted
in terms of the provisions of the letter, periodical ratification of the transactions from the karta
is required.
Any transaction by the co-parceners should be done with the knowledge of
the karta who should ratify them in order to bind the family.
JOINT ACCOUNTS
276) Joint a/c cannot be opened for a pensioners
Pension is regarded as an ex-gratia payment by Govt to its retired
employees paid for his sustenance in case of joint accounts, govt. will
not get valid discharge through bank and Govt. does not want this
benefit to go to others

LEGAL ASPECTS
277) Search Report for 30 years on mortgagor's immovable property is obtained from
Bank's Advocate.
To ascertain that the property is free from encumbrances, charges,
doubts and has a clear, absolute, transferable, marketable, legal,
valid, perfect, undisputed and alienable title. To ensure that the
applicant is prima-facie the owner and that land revenue is not in
arrears.
278) Bouncing of a cheque is a crime.
As per Sec. 138 of Negotiable Instruments (Amendment) Act, a cheque
without sufficient funds in the account is a crime and can be punishable
up to twice the amount of cheque or one year’s imprisonment or both.

279) The Banks Books Evidence Act does not apply to police investigations.
This Act applies only in case of legal proceedings and police
investigation or inquiry is not a legal proceeding in as much as no
evidence is required to be given as statements made before a police
officer are not evidence.
280) Photostat copies of the paid cheques for more than Rs. 25,000/- on which the drawer's
signature is alleged to be forged are to be taken before handing them to the police.
In order to protect the Bank's interests in the event of loss of the
cheques and obviate the chances of the signatures on the cheque being
tampered with.
281) Immovable property cannot be pledged.
Pledge is a bailment of goods. Immovable are not classified as goods.
282) We do not accept equitable mortgage of land situated in cantonment area.
Under Cantonment Board Rules, an equitable mortgage of land situated in
cantonment area is not recognized as a valid mortgage.
283) After creation of Equitable Mortgage at the notified centre, the title deeds are now
returned to the financing branch situated at the notified centre.
There is no legal requirement that the title deeds be kept at the
notified centre only after creation of EM and this facilitates easy
verification by the inspecting officials.
284) Whenever a fraud occurs or a suit is filed, all the vital documents connected therein
should be recorded in the Branch Documents Register.
In order to keep proper record of the vital documents.
285) On death of the account holder, all the operations on the account are stopped.
On death, the contract between the Bank and the customer comes to an end
this also helps the Bank from landing into avoidable litigation with the
legal heirs.
286) In the case of overdraft against securities we continue to collect interest/divident despite
death of the customer.
The principle of “Agency Coupled with Interest Operates”; we as agent,
have an interest in the collection in order to recover our debt. This is
allowed as an exception in Principal – Agent relationship.
287) We do not open accounts of purdanashin illiterate ladies.
As they observe seclusion from all except the family members, contract
with them is not free from defects, as there are inherent risks are
involved as regards identification.
288) Garnishee Order is not applicable to items in course of collection.
Garnishee Order issued under Criminal Procedure Code attaches only the
debts actually in the hands of the creditor of the judgment-debtor; and
only the amount of debt actually owed by the bank to the account holder
at the time of receipt of the order is attached.
289) Bank should not pay a crossed cheque tendered for cash payment across the counter
other than to a banker.
As per NI Act payment of crossed cheques may be made only to bankers.
The Bank may loose statutory protection as a paying banker in case this
rule is not followed.
290) In complying with court orders, it should be ensured that the order is complete and
binding on the Bank.
The Bank’s primary duty is towards its customer; in case this is not
observed the customer may sue us.

291) Employees of the bank are required to execute a Fidelity and Secrecy Letter when they
join the Bank's service.
Maintaining secrecy of the customer’s account is a contract with the
customer and paramount duty of a banker. This ensures that staff are
also made a party to this contract.
292) Cheque on which the crossing has been opened should be paid to the drawer or his
known agent.
Opening of crossing is a material alteration. Adequate care is taken or
else the bank might loose protection under NI Act as a paying banker.
293) After receipt of Garnishee Order/IT Attachment Order cheques should be returned with
the remarks “Refer to drawer" and not "Garnishee Order received" or "A/c Garnished".
As it may tantamount to unjustified disclosure of affairs of the
depositor
LIC POLICIES
294) Advances against LIC policies under Married Woman’s Property Act” are not granted
These policies constitute a trust for the benefit of wife of the policy-
holder and the policy holder can not assign the trust property for his
benefit
295) When LIC Policy is reassigned after the advance has been repaid, the policy holder
should be advised to re-nominate.
As the nomination made by the policy-holder in favour of Bank while
taking advance cancels the nominations already made by him.
296) Assignment of LIC Policy should be registered with the Corporation.
To notify Bank's interest in the policy as a creditor; as the
Corporation is not bound by a mere assignment on the LIC Policy itself.
297) Payment of premia on LIC Policies to be arranged by obtaining standing instructions
when advancing against it.
Non-payment of premium will render the policy lapsed rendering the
advance unsecured; to keep the policy alive and in full force.
298) Notice should be sent to the LIC while advancing against policies.
To ensure that the policy is alive and in full force, ascertain that
there exists no prior charge over the security offered, to notify the
Bank's interest in the policy as a creditor and to get our charge
registered with the Corporation.
299) Age of the life insured should be admitted by the LIC in a policy against which overdraft
is to be granted.
The premia is based on age. In case age is not admitted, the LIC may pay
a reduced claim.
300) The assignment of LIC policy is preferably to be typed on the policy itself.
If the assignment is done on a separate paper, it attracts stamp duty.
301) A loan on the security of LIC policy is granted only by way of an overdraft.
As the security is not a “specified security” as per SBI Act.
302) While granting loans against LIC policies it should be ensured that future premiums are
regularly paid.
If this is not done the policy will lapse. The outstanding in the
account increases due to application of interest but surrender value
will not increase.

303) Surrender value is calculated while granting advance against LIC policy.
In case the loan is to be liquidated by surrendering the policy to the
LIC only surrender value and not the entire premium paid is returned by
the LIC.
LETTER OF CREDIT
304) Procedure regarding letters of credit has been revised.

To introduce accounting control over this business; ensure that the
contingent liabilities in respect of LC are correctly recorded; ensure
against these contingent liabilities from reaching huge proportions.
305) We must insist for a full set of bill of lading (all negotiable copies).
As a bill of landing is a mercantile document of title to goods as per
Sec. 2(4) of Sale of Goods Act; and delivery of goods/consignment can be
taken from the shipping company on production/surrender of any part of
the set.
306) All outstanding entries in respect of LC and Guarantees should be verified and expired
LC/Guarantee marked of.
To ensure correct position of contingent liabilities. If not marked of,
it would call for additional capital to meet statutory requirement of
CAR.
MARGINS
307) Margins are maintained for advances.
Margins ensure the borrowers involvement in the project. A cushion to
take care of the fluctuations in the value, deterioration in quality
shrinkage of the securities and loss arising due to a forced sale.
308) Borrower's contribution as margin for affording credit facilities is insisted.
Margin acts as a buffer against price variations, escalation in project
costs or any unforeseen contingencies and as borrower's stake to
inculcate a sense of responsibility and ownership in the enterprise to
the borrower.
309) Lesser margins are stipulated for imported materials compared to local materials.
Imported materials, generally command a premium in the market on account
of better quality; they are easily salable.
310) Margin on Raw Material is less than on Stocks in Process or Finished Goods.
The price of raw material is readily ascertainable and it commands a
better market than finished goods or semi-fininshed goods.
MARKETING
311) The Bank is now paying great deal of attention for marketing of its services
In the days of reducing spread available services are identified as
important source of income and in view of large network of our Bank,
services are paid greater attention.
MINORS
312) Minor admitted to a partnership, should be asked to sign the existing and fresh
partnership letters when he/she attains majority.
To obtain his ratification for transactions put through during his
minority and bind him jointly and severally for the future transactions
of the newly constituted partnership firm.

313) Ceilings are fixed for minors' deposits.
There is a risk in opening accounts of minor as contracts with minors
are void. The ceiling restricts the risk.
314) We do not grant advances to minors although he may be the payee of a cheque.
The minor is not competent to enter into contract and we may find it
difficult to enforce the loan documents against him.
NON-PERFORMING ASSETS
315) Branches have to pay interest @ 4% p.a. on NPA to CO
It is a dis-incentive to the branch. This ensures that branches strive
to keep NPA levels down.
316) Bank should take advantage of Lok Adalats
For settlement of suits by persuasion and social pressures instead of
coercion; avoid litigation that consumes time, energy and money and thus
reduce the NPA
317) An advance is still classified as NPA even after rescheduling is done.
Rescheduling does not automatically upgrade the quality of advance.
318) Income Recognition is introduced.
Income is to be booked only when actually received and not on accrual
basis as per international practices.
319) Asset Classification is made.
To provide a basis for determining provisions for loan assets, taking
into account credit weaknesses and the extent of dependence on
collateral security for realization of dues.
320) In the case of consortium advances members follow asset classification adopted by
leader. To bring about uniformity in classification by all the
participating banks.
321) NPA are a drain on profitability.
No interest income can be booked on NPA, operational charges are high,
added to this are legal charges and insurance premium and finally value
of security deteriorates.
322) Bank has revised the system of accounting of write-off entries.
Entries on account of write-off have gone up and necessary control
mechanism set up to ensure against loss in transit of the debit items
and also to guard against spurious entries entering the system by way of
write-off.
323) Advances Under Collection account is opened.
In order to continue the liability of the borrower once the loan amount
has been written off.
NOMINATION
324) Name of the 'Nominee' should not be mentioned in the ledger accounts.
To maintain secrecy, lest the nominee resort to unfair /criminal acts to
derive the benefit out of nomination; protect the depositor from undue
influence by third parties.
325) Nomination facility is now available for individual deposit accounts, safe deposits, safe
custody and Safe Deposit Lockers.
As per recommendation of Working Group on Customer Service for
expeditious settlement of claims and to minimize hardships to the family
members.

326) Minor can be a nominee for Safe Deposit Locker.
As Sec. 45Z of the Banking Regulations Act 1949 does not preclude a
minor from being a nominee for taking delivery of the contents of a
locker.
NRE ACCOUNTS
327) FCNR Deposits are not accepted for more than three years.
The interest rates on these deposits are linked to interest rates in the
international money markets, which are subject to frequent fluctuations.
To minimize the risk taken regard to such deposits for these volatile
deposits.
OPINIONS
328) Opinion reports given to other banks are to be on COS 26
The form contains clause to the effect that neither the Bank nor the
official signing it are responsible/liable for any particulars furnished
by the Bank in respect of the constituents.
329) No opinion is compiled on a limited company.
The Balance-sheet of a company is a public document that discloses the
position of assets and liabilities.
OVERDRAFTS
330) Separate agreement on COS 57 signed by all the account holders should be obtained
when Overdraft is granted on an account payable to 'E' or 'S'.
With a view to establish joint and several liability of all the parties;
otherwise only the person who signs the cheques will be liable for the
overdraft and the Bank will have no recourse to other parties.
331) No documents are obtained for an Overdraft Account..
An overdraft is an informal credit facility which does not require any
documentation yet recoverable under law by production of records as per
Banks' Books Evidence Act 1891
“P” SEGMENT LOANS

332) Various loan schemes have been designed in recent times to cater to the needs of 'P'
segment clientele.
P-segment depositors contribute more than 50% of our deposits. Their
credit needs have to be catered to. Such loans carry a higher rate of
interest and incidence NPA is less.
“P” segment advances are encouraged
With a view to cater to the long felt need of people in this segment,
tap lucrative business with high returns, and as they are easy to
process and do not requiring much follow up.
PARTNERSHIP
333) Partnership letters COS 37 is obtained duly signed by all partners

Partners undertake to advise Bank of any changes in constitution of the
firm, ensures that all partners abide by the terms of opening of a/c and
mode of operation is made explicit.
334) Registration of Partnership Firm need not be insisted.
Registration is not compulsory as per Indian Partnership Act.
Non-registration does not effect the Bank's right to sue the firm or the
partners for the debts due.
335) A cheque payable to a firm cannot be credited into a partner’s account.
Owing to the fiduciary nature of relationship between the partners, Bank
will be held liable for conversion in case of wrong payment.
336) While computing net worth of a partnership firm, the share of a minor should be
excluded.
Minor is not liable for the firm's debts, losses, liabilities or
obligations; and the minor's liability is limited to his share of
undistributed interests/profits only.
337) In case of reconstituted firm goods pledged should not be released without notice of
erstwhile partners.
If no notice is served Bank will be liable for negligence and damages
and such partners will be discharged from their liability to the extent
of the value of goods pledged.
POWER OF ATTORNEY
338) Power of Attorney should be entered in the PA Register.
Power of Attorney granted by the constituents to their agents will not
remain with the Bank. Record is taken to keep a permanent record of the
provisions for future references.
339) Conditional or provisional Power of Attorney is not accepted by the Bank.
It will be difficult for the Bank to ascertain whether the conditions or
provisions have been met.
340) A power of attorney granted by a firm should be executed by all the partners of the firm.
A Partner does not have authority to delegate powers on behalf of the
firm.
PROFITABILITY
Branch Cash Balance should not exceeds stipulated limits
These are idle funds and do not earn any income. Insurance of the cash
balance of is done up to the retention limit only.
REFINANCE
341) We must obtain refinance wherever possible
Augment resources position at less cost. No pre-emption by way of
SLR/CRR. Our schemes get second look by outside experts ensuring better
appraisal. Benefit of lower interest rates can be extended to borrower.
REORGANISATION
342) A new position of "Sales Planner" is introduced at controlling offices.
As per recommendation of McKinsey and Co planning has been integrated
with operation. He will act as friend, philosopher and guide between AGM
and BM and will have direct contact with market.

343) CAG branches have been opened.
One of the strategic business units as recommended by McKinsey and Co to
face the fierce competition from F.I. and Private banks and retain our
premier position. CAG offers a comprehensive range of core banking
products and services to the Bank's top corporate customers in a timely
and cost efficient manner.
344) Restructuring exercise has been undertaken by Bank.
With the policy of Economic Liberalisation followed by Govt. of India
since 1991, the market in which bank functions became highly competitive
and transparent. Implementation of Narsimhan Committee Report increased
dis-intermediation and Globalisation, made present organisational set up
inadequate to meet the emerging challenges and needs.
RTC
345) Stop list in respect of lost RTC are not circulated to Branches
Considering our network the cost of circulation is very high. Calculated
risk is taken by the Bank, counter signature is required at the time of
encashment.
346) RTC are not issued in joint names
It is inconvenient for both the purchasers to come personally for issue
and encashment. Moreover the death, insolvency, insanity of any one of
them may land the Bank in legal complications
347) Revised RTC procedure has been introduced.
The earlier system proved to be inadequate to cope up with the increased
volume of business; to ensure easy, efficient and up-to-date maintenance
of related work at all levels.
348) We charge commission on issue of RTC.
It is a service and not a form of remittance. The float available was
not sufficient to meet handling charges, overheads, cost of stationery
and printing.
349) “This document is valid and negotiable in India only” stamp is affixed on the reverse of
RTC.
To avoid the possibility of it being encashed in bilateral group of
countries which are under Rupee Payment Arrangement with India.
350) Whenever RTC are issued for use outside India, each cheque should invariably be
endorsed indicating the names of the countries where it can be encashed.
Since sale of such RTC constitutes a remittance of funds abroad, the
exchange control regulations have to be complied with meticulously;
otherwise, the Bank will be held liable for violating the regulations.
351) Pictorial scene of the Parliament has been dropped from the RTC.
To comply with the statutory provisions as pictorial presentation of any
monuments, buildings, signs, etc., of Government of India is prohibited
under the Names and Emblems Act 1950.
352) RTC can be paid even after business hours.
RTC are issued for the convenience of the Traveling Public and in almost
all cases the purchasers themselves present the cheques for encashment.
SAFE CUSTODY
353) Bank is liable for any damage caused to articles kept in Safe Custody.
As per Sec. 151 of the Indian Contract Act, the Bank will be held liable
for any damage caused to articles kept in safe custody due to its
negligence, as the relationship is that of bailor and bailee.

354) TDR in Safe Custody should be renewed on due dates.
To avoid loss of interest to the depositor, as the deposits are held by
us as an agent for the depositor.
355) In case of share certificates lodged in Safe Custody and held against advances, entries
such as A/c. No., and lien should be marked in pencil.
As some companies object to extraneous matter being entered in their
share certificates.
356) Constituents should be asked to transfer securities in the name of the Bank if those are
lodged for safe custody.
To facilitate collection of interest on securities transferable by
endorsement.
SAFE DEPOSIT
357) Articles received for safe deposit are not sealed with the Bank's own seal.
To obviate the possibility of the depositor contending that the Bank has
tampered with the contents and resealed.
358) An article in safe deposit is not delivered against a Succession Certificate.
Succession Certificate covers debts and securities only, these articles
do not constitute a debt or security.
SAFE DEPOSIT LOCKERS
359) Visualisers have been introduced.
To simplify the accounting system, record more number of accounts at one
place and improve customer service.
360) We interchange the lock of surrendered SDL with that of another locker before letting it
out to another hirer.
To ensure that at no time the prior hirer has any access to the
surrendered locker by using a duplicate key prepared by him.
361) Persons who intend to hire safe deposit lockers are required to open either a Current
Account or an introduced Savings Bank account.
This establishes the person's respectability and SI on the account can
be taken for recovery of hire charges as and when due.
SECURITIES
362) Securities for sale should be from well known constituents only.
To protect the Bank's interest, as the Bank incurs liability as an
endorsee while selling securities endorsed for the purpose of sale. Bank
will become liable to the true owner, in case of defective title.
363) All GP Notes tendered as security for advance must invariably be sent to Public Debt
Office.
To ensure that - all the endorsements are in order; they are not
confiscated; none is duplicate; and no alterations have been made in the
principal amounts.
SHARES - ADVANCES AGAINST
364) Advances are not granted against partly paid shares of Joint Stock Companies
Partly paid shares carry an element of contingent liability the Bank may
be compelled to pay for the unpaid calls otherwise the shares will be
fortified
365) Undated transfer deed is taken in case of advance against shares .

To safeguard the Bank's interests, as in case of untimely death of the
original transferor, Bank, as transferee, can fill in the necessary
particulars to enforce recovery of its dues.
366) Shares are transferred to Bank's name where advance exceeds laid down limit.
To enable the Bank to have exclusive voting rights which it may use in
an appropriate manner and facilitate easy liquidation of the loan in
case of the account becoming bad.
367) Before granting advance against shares of a company, a reference is to be made to LHO
under area of operation of which the registered office of the company is established.
In order not to violate the provisions of B.R.Act, which stipulates that
no banking company should hold shares as pledgee, mortgagee or absolute
owner for more than 30% of the paid-up capital of the Bank or the
company; and these particulars are available with LHO only.
368) Advances against shares of a company are granted in the form of overdraft.
To enable the Bank to regulate the drawing power in the account
according to the fluctuation in the rates of shares as quoted in stock
exchanges. Moreover, limited liability company shares are unspecified
securities as per SBI Act (General Regulation No. 61).
SAVINGS BANK
Pass Book Retained Overnight Register is maintained
To ensure proper custody of undelivered Pass Books and delivery to the
A/C holder or his representative.
369) Saving Bank A/c are not opened for companies and firms
SB A/Cs are opened to inculcate saving habits among individual where as
C.D. A/c are opened for business purpose which is the requirement of
companies and firms,
370) Savings bank cheque book having 10 leaves have been introduced
It is based on the cheque utilization pattern of customers. It is easy
for handling and avoids cancellation and destruction of unused leaves
and reduces cost.
371) Revised procedure for transfer of Savings Bank Accounts introduced.
To facilitate proper record keeping and minimize delays in transfer of
accounts, strengthen internal controls as regards account opening forms
and specimen signature sheets.
372) Loose Leaf Ledger system has been introduced.
To bring in operational convenience and economy, for easy handling of
ledgers and minimize the work relating to opening of new ledgers
periodically.
373) The pages of SB Pass Books are now serially numbered.
To obviate the chances of frauds at teller counters by tearing off the
pages by unscrupulous persons.
374) We are freely opening savings bank accounts in the name of non-trading companies and
clubs.
RBI has permitted it in respect of Companies that are not required to
pay income tax.
375) New Savings Bank account should be opened in cash only.

To establish banker-customer relationship. Collections are not
entertained in new accounts (as a prudent banking practice). Banker
loses protection, u/s. 131 of NI Act, in the event of collections
proving to be a conversion.
SERVICE CHARGES
376) Ledger Folio Charges are collected.

To compensate the cost of rendering services.
SPECIMEN SIGNATURES
377) While returning the cheque with reason of "Signature differs" drawer is advised
separately
To put the customer on guard in case of forgery, to obtain fresh
signature if it has been changed and avoid recurrence of such incident
378) Specimen Signature sheets must be kept under lock and key.
To preclude the chances of any signature thereon being tampered with and
prevent unauthorized signatures being placed on record.
379) Specimen signature should be individually attested.
In order to avoid insertion of forged signatures.
380) SS no of attesting official should be written.
So that the attesting officials signature could be verified in case of
need.
381) Specimen signatures pertaining to Inoperative accounts should be held in personal
custody of Manager of Division or Branch Manager.
Inoperative accounts are a fraud prone area. This is an added measure of
precaution to prevent access to the specimen signatures.
SSI
382) High priority is given to rehabilitation of sick units.
To help such units to generate internal surplus and ultimately to
increase the national productivity. To better the chances of recovery.
383) A carpenter carrying on his profession in a city can be financed as a village industry.
As per the definition of village industries by Tambe Committee, an
artisan can be financed as a village industry irrespective of the
location of the unit.
384) New small industrial undertakings with inadequate equity are provided with interest
free loans under Equity Fund Scheme.
To strengthen their equity base, reduce the cost of borrowings. As
inadequacy of equity has been found to be a major cause of SSI sickness.
385) Repayment period of advances under Village Industries Scheme is 7 to 10 years or even
more with an initial moratorium period of 12 to 18 months.
This has become necessary because of the small amount of income
generated and keeping in view the continuous essential subsistence needs
of the borrower.
STOCK STATEMENTS
386) Submission of Stock Statements up to Rs. 25,000/- is waived.
There are no regular transactions in the account; borrowers are unable
to submit stock statements.
SUNDRY/SUSPENSE
387) Close follow-up of outstanding entries in Sundry Deposits Account is necessary.

To avoid artificial inflation of DTL and needless maintenance of
statutory reserves thereon, better upkeep of internal house-keeping and
to have a better control and supervision over un-reconciled entries.
388) Suspense Account should not be used for temporary accommodation.
Suspense A/c. is meant for those items that cannot be put through their
proper accounts immediately, also, it involves outlay of funds and loss
of interest to the Bank.
389) Standardized formats for drawing advances from Suspense Account have been
introduced.
To assess the genuine requirements, quantum of advance and purpose,
avoid misuse of this account for temporary accommodation and for better
scrutiny and control.
SCHEMES
390) Money Box Deposit Scheme introduced.
To offer a unique savings option to individuals desirous of building up
savings with high returns while providing convenience and flexibility in
installments and maturity periods.
391) SBI Education Loan Scheme introduced.
An integrated package for more efficient handling of educational loans;
covering tuition and other fees, maintenance costs, books and equipment,
etc.
392) NR - NR - RDS introduced.
To provide further incentives and give wider options and opportunities
to NRI and OCB for making investments in India. To augment forex inflows
into the country as per RBI guidelines
393) SCOOM has been introduced.
To meet the long felt needs of middle class salaried employees for
acquiring an economic and convenient means of transport.
394) Loans to pensioners to meet medical expenses launched.

To provide a facility to pensioners to relieve their hardships and as a
specialized tool to attract more number of pension accounts into the
Bank's books.
395) Non-Resident (Special) Rupee accounts are opened.
As a further step in liberalization, RBI intends to provide incentives
and give wider options and opportunities to Non-Resident Indians.
SYSTEMS
396) Register for recording undelivered BC and draft introduced
To ensure proper custody of undelivered BC and drafts to prevent
perpetration of frauds and improve customer service.
397) Postal covers containing Notices to borrowers which are returned back are not opened
but kept intact in the borrowers' file.
Section 114 of Indian evidence Act necessitates serving of notice to
borrower To obviate the possibility of any borrower contending that the
Bank has tampered with the contents of the envelope.
398) Duplicate keys of the branches are deposited with another Branch

Ensures safe custody of the keys. If kept at the same branch purpose is
defeated as strong room cannot be opened without the original set of
keys.
399) Quarterly verification of staff Accounts at the branch must be made by the Branch
Manager.
In order to peruse the transactions put through the account and ensure
that these are within the means of the staff member. Helps avoid/detect
frauds.
400) Only one photographs should be obtained for all the A/Cs of depositor
To reduce the hardship faced by our customers and to reduce their
unnecessary expenditure. One set suffices the purpose by making cross-
references of a/c no.
401) MICR Technology introduced.
For an accurate and expeditious sorting of instruments by Reader Sorter
Machines. To reduce the time involved in realization of local and
outstation clearing instruments. To minimize the chances of frauds
through clearing. To handle the workload at these centres easily.
402) COS 49 is revised
To enable the staff to readily verify the signature of the recipient
without omission.
403) Branch telephone number should be branded along with name and code number.
This will help other branches to seek clarifications if any from the
issuing branch.
404) Withdrawal form modified to mention “Account Holder” instead of “Depositor”

Withdrawal form is meant for withdrawal and not for deposits.
405) Teller Register has been modified
Columns for recording denomination of cash paid/received helps in
focusing attention to a particular transaction in case of discrepancy
in payment or receipts.
406) Stop Payment instructions received by Fax/Telex are acted upon.
With the advent of technology these modes of communication have become
common. The Supreme Court has held that such instructions are valid.
407) Procedure for destruction of obsolete stationery has been changed.
The procedure was laid down in 1986 Changed to disassociate inspecting
officials from identification and destruction which is purely
operational in nature/
408) RD ledger sheet has been modified..
To give longer life to ledger sheets.
409) Relaxations granted to RNW branches to handle CAAS (Commercial Advance
Accounts)
With a view to achieve purity of network and at the same time ensure
that no good business goes past us.
410) SBI Helpline set up
In the deregulated and highly competitive environment cuustomers’
expectations are very high. Survival depends on reaching out to
customers to attract new and retain existing ones.
411) A Demand Draft (Cheques) Purchased Account Register is maintained.
To enter the daily Dr and Cr transactions to the General Ledger
account and balance with the General Ledger.

TERM DEPOSITS
412) While granting advance against Bank's own TDR, discharge of the depositor is obtained
on the back of the TDR.
To obtain equitable charge in favour of the Bank, absolve the Bank from
any litigation in case of untimely death of the depositor during the
currency of the TDR and the legal heirs claiming the amount of TDR.
413) We obtain plain discharge of the depositor while granting advance against TDR.
A dated discharge amounts to premature payment. Discharge over Revenue
Stamp creates an equitable assignment in favour of the Bank.
414) Revised Accounting Procedure for Bank TDR introduced.

As the old procedure resulted in operational problems due to
multiplicity of interest rates periodical interest payment, etc.
415) Term deposits cannot be accepted for more than ten years.
Rates of interest fluctuate widely; and it may be detrimental to the
interests of either the Bank or the depositors. As per RBI Directives.
416) Interest is payable @ 1% below the rate applicable in case of premature payment of
TDR/STDR over Rs 10 lacs.
To discourage premature withdrawals as Asset-Liability Management is
upset by such withdrawals.
417) Interest Test Checks conducted for TDR, RD, STDR, NRNR.
To detect short or excess payment of interest and adjust the same so as
to reflect a true position in the P&L Account.
418) TDR issued by banks are not receipted over a Revenue Stamp.
TDR are exempted from stamp duty vide Sec. 53 of Indian Stamp Act, being
receipts issued in the ordinary course of business.
419) In the event of loss of a TDR, we do not insist on indemnity for issuing a duplicate.
TDR is in the form of a receipt and is not transferable and it is
payable at the issuing end only, chances of double payment or a holder-
in-due-course claiming payment are rather remote.
420) Minimum balance in STDR/TDR raised upward.
In view of the increasing cost of operations and to facilitate
maintenance and balancing of account.
421) Monthly provision of R.D. Account rationalized.

To correct the imbalance created by the existing system which resulted
in either excess or short provision leading to objection by Income Tax
Authority and Statutory Auditors.
422) Branches accept new term deposits from date revised rates of interest have come into
force on the press publication issued by the Bank.
With the deregulation of interest, the authority to fix interest rates
now vests with the Bank.
Only STDR can be issued on NRNR MODS linked to Savings Bank
Repatriation of only interest is permissible. Possibility that units may
be broken.
TELLER
423) Teller is not required to pay withdrawal forms bearing thumb impressions.

Payment of withdrawal of illiterate persons require following of laid
down norms by a supervising official and hence does not fit in teller
duties.
424) Teller services should not be withdrawn even in case of acute shortage of staff.
As teller system is an important facility available to the 'P' segment
clientele for instant service. As Bank's image will be affected if the
teller counter is kept closed for want of staff.
425) Tellers/Relief Tellers should sign a stamped letter of undertaking at the time of initial
appointment as such.
In order to make them responsible towards their duties and functions and
to make them unconditionally liable for any losses which may be
sustained by the Bank because of negligence, omission or default on
their part.
TERM LOANS
426) To arrive at cash accruals, depreciation is added back to net profit.

As depreciation is not cash expenditure and only a notional expenditure.
TOKENS
427) Token should be collected before effecting payment.
So that a plea may not be made at a later time that the payment has not
been made. Possession of the token prima-facie constitutes evidence of
non-payment.
428) Token comes in different series.
This gives an indication to the paying cashier of the upper limit of the
cheque and avoids raising of amount of a passed cheque.
TELEGRAPHIC TRANSFERS
429) Overdue interest on TT purchases is now recovered and accounted for in the books of
the realizing offices only.
For exercising effective control on recovery and plug income leakage
centralized at realizing branches. This eliminates avoidable
correspondence between discounting and realizing offices regarding
charging of interest.
430) Application for a telegraphic transfer should be obtained on the prescribed form COS.
165.
The indemnity clause embodied in this form affords protection to the
Bank against any loss/injury/damage arising or resulting from
omissions/delays/errors in transmission/delivery or non-delivery of
telegraphic message or deciphering the message.
431) When a T.T. Purchased telegram is received from a branch, the relative amount is
debited to DDRR a/c and credited to IBIT A/c.
This entry is passed with a view to have a control over the receivable
on account of TT purchased by the Bank.

With Best Compliments From Staff Training Centre, Aurangabad

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RATIONALE

9) We maintain Subsidiary Day Book.

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With best compliments from Staff Training Centre, Aurangabad 12

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With best compliments from Staff Training Centre, Aurangabad 14

159) Time norms should be displayed at all the Branches

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With best compliments from Staff Training Centre, Aurangabad 17

190) DP Note executed by the borrower is not attested.

With best compliments from Staff Training Centre, Aurangabad 18

With best compliments from Staff Training Centre, Aurangabad 19

With best compliments from Staff Training Centre, Aurangabad 20

224) Authorized and paid up capital of our bank was increased

228) Quarterly results are published

With best compliments from Staff Training Centre, Aurangabad 21

To centralize the work relating to clearing operations, enabling

233) We maintain our account with RBI.

With best compliments from Staff Training Centre, Aurangabad 22

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With best compliments from Staff Training Centre, Aurangabad 24

With best compliments from Staff Training Centre, Aurangabad 25

JOINT HINDU FAMILY

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With best compliments from Staff Training Centre, Aurangabad 29

304) Procedure regarding letters of credit has been revised.

With best compliments from Staff Training Centre, Aurangabad 30

With best compliments from Staff Training Centre, Aurangabad 31

“P” SEGMENT LOANS

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375) New Savings Bank account should be opened in cash only.

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376) Ledger Folio Charges are collected.

With best compliments from Staff Training Centre, Aurangabad 37

394) Loans to pensioners to meet medical expenses launched.

With best compliments from Staff Training Centre, Aurangabad 38

404) Withdrawal form modified to mention “Account Holder” instead of “Depositor”

With best compliments from Staff Training Centre, Aurangabad 39

414) Revised Accounting Procedure for Bank TDR introduced.

421) Monthly provision of R.D. Account rationalized.

With best compliments from Staff Training Centre, Aurangabad 40

426) To arrive at cash accruals, depreciation is added back to net profit.

With best compliments from Staff Training Centre, Aurangabad 41

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