“ Yad bhavam tat bhavati”

We become what we think

Banking -definition

 Banking Regulation Act 1949 sec 5 defines “ Banking as

accepting , for the purpose of lending or investment, of
deposits of money from the public, repayable on demand
or otherwise, and withdrawable by cheque, draft or order
or otherwise”.
Categories of Banks

1. Nationalised Banks

2. Old private banks

3. New generation Private Banks

4. Foreign Banks

5. Regional Rural Banks

6. Co-operative banks
Types of Deposit Accounts

a) Demand deposits

a) Time Deposits
Demand Deposits

 1. Savings Bank deposits/ No frills account

 2. Current Account Deposits/Flexi deposits

 3. Call deposits

 4. Margins held against letter of credit/guarantees

Time Deposits

 1. Fixed deposits

 2. Reinvestment plan deposits

 3. Short term deposits

 4.Senior citizen’s deposits

 5. Overdue deposits

 6. Recurring deposits
Classification of customers

1) Individuals_

 Single

 Joint(two or more severally or jointly, A &B or A,B & C)

 Minors

 Illiterates

 Blind persons
Classification of customers
 Married Women

 Pardanashin Woman

 Lunatics

 Insolvent Persons

 Insane Person

 Intoxicated Person
 Classification of customers

 2) Executors and administrators

 3) Liquidators and receivers

 4) Sole proprietory concerns

 5) Joint Hindu families ( HUF ) ( as per Hindu succession

act 1956 )

 6) Partnership firms ( Indian partnership act 1932 )

Classification of customers

 7) Limited companies, Pvt limited cos /Public limited cos

( companies act 1956 )

 8) Trusts

 9) non-corporate bodies like clubs, committees, associations etc

 10) Schools and colleges

 11) Societies

 12) Govt/ semi govt bodies

Operation of joint accounts

 a) Joint operation

 b) Joint or survivor

 c) Either or survivor

 d) Former or survivor

 e) Anyone or survivors or survivor

 f) Power of attorney or mandate holders

•Facility of nomination

 As per The Banking laws( Amendment) Act, 1983 section

45ZA, in the Banking regulation Act, 1949, nomination
facility is accorded to depositors of banks.

 A single depositor or joint depositors may nominate a

person to whom, in the event of the death of the depositor,
the deposit amount may be paid by the banking company.

 A nomination can be made in favour of individuals only and

not associations, societies, trusts etc.

 The nominee does not become the absolute owner of the

amount received by him. The law of succession will still
prevail.
“If you always do what you’ve always done,
You will always be where you’ve always
been.”
Exercise

1. Mr and Mrs Mathew are having joint account with Yes Bank,
Chennai. Mode of operation “F or S”. Mrs Mathew forges Mr
Mathew’s signature and encashes Rs 50,000/-. Mr Mathew
was well aware of this forgery and deliberately kept quiet.
After Mrs Mathew deserts him, he complains to the Bank that
there was a forgery done on his account by his wife and claims
the amount from the Bank.
Examine the validity of Mr Mathew’s Claim on Yes Bank.
Exercise

2.Gupta, Patil and Roy are maintaining a joint Current account

with SBI, Pune. Gupta and Roy are authorised to operate the
account. They issues a cheque for Rs 100,000.00 in favour of a
charitable trust. Patil issues a letter to the Bank to stop
payment of the cheque.
Discuss whether the bank can comply with the request of patil.
Exercise

3. Gupta, Patil and Roy are maintaining a joint Current account

with SBI, Pune. Gupta and Roy are authorised to operate the
account. They issues a cheque for Rs 75000.00 in favour of
Income Tax Department on 2nd of Dec 2008. The instrument
has come to the bank for payment at 12.30 pm on 5/12/08, but
the bank receives information that Gupta passed away on that
day at 5 am.
Examine the situation and conclude the action to be taken by
the bank.
Exercise

4. Mr and Mrs Gandhi are having a joint SB account , operated

with the mandate of ‘E or S’ with Bank of India, Mumbai. Mr
Gandhi issues a cheque for Rs 50000.00 , favouring Franklin
Mutual Fund. BOI informs Mrs Gandhi that since there is an
alteration in the payee’s name, they are unable to pass the
same without the authentication of the account holder.
Mrs Gandhi informs that she will be authenticating the same
since Mr Gandhi has gone abroad on business tour. Discuss
the banker’s course of action.
Exercise

 A,B,C are joint account holders in a current account with a

bank. C is authorised to operate the account. C, in turn,
authorises D to operate the account, since he is going abroad
for further studies.

 In the above example, a cheque for Rs 50,000.00 is issued by

C. B issues a letter to the bank to stop payment of the cheque.

 The amount in figures is written wrongly as Rs 5000.00.As C

is abroad, A&B are prepared to correct and authenticate.
Exercise

 In a joint account, A and B are account holders, with E or S

mandate. The balance is Rs 50 lacs. A dies suddenly and the
son of A claims 50% of the amount.

 In the above case, C forges A’s signature cleverly and

encashes Rs 5 lacs. A claims the amount from the bank. Bank
argues that the forgery was difficult to identify.

 A issues a cheque for Rs 25000.00 to D or bearer. D endorses

the cheque to E, with remark “pay only to E”. Cheque is
presented for payment by F.
Exercise

 A minor approaches his Bank, along with another minor to

open a savings bank account, jointly. Their ages are 14 and 12,
respectively. What should the Bank manager do?

 As per Indian Contract Act, 1872, a contract entered with a

minor is void.
Exercise

 A married woman opens a SB account with Cosmos bank,

Pune. An inadvertant overdraft is allowed in the account.The
lady argues that the amount was withdrawn to meet the
household expenses and hence should be recovered from the
husband, since she is a homemaker only. Discuss the remedy
available to the banker.