Bank’s Policy

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Bank’s Policy

Prof. S. Thilak, Assistant Professor, Department of MBA, Sankara College of Science and Commerce

MINOR’S ACCOUNT:

  1. Savings Bank/ RD account can also be opened by a minor jointly with natural guardian or with mother as the guardian.
  2. Minors, above 10 years will also be allowed to open and function savings account independently. However, bank can fix the limit in terms of minimum age and the amount upto which the minors are allowed to operate the deposit accounts.
  3. No overdraft will grant to these minors.
  4. On attaining majority, the erstwhile minor should confirm the balance in his/her account and if the account is operated by the natural guardian/ guardian, fresh specimen signature of erstwhile minor duly confirmed by the guardian would be attained and kept on record for all functioning purposes.
  5. A cushion of 6 months is given to such accounts to complete the KYC formalities, after attaining the majority.

 VISUALLY IMPAIRED PERSONS:

  1. Visually Impaired Persons may be allowed to open all types of a accounts, except current accounts, either singly or jointly with other persons.
  2. Opening of current account for visually impaired persons at the branch level requires prior permission from higher authorities.
  3. The terms and conditions governing the accounts including special conditions if any, should be read and explained to the visually impaired person by the bank official in the presence of a witness in sight of his physical infirmity.
  4. Branch should obtain witness signature (known to the bank) on personal data form and the Account Opening form along with specimen signature of the depositor at the time of opening of the account.

 GARNISHEE ORDERS:

  1. It is a court attachment order.
  2. Initially, Order for freezing the operations on the account called Order Nisi is obtained. On receiving of final order called Order Absolute.
  3. In case specific amount is mentioned then excess balance is transferred to a new account and operation in the new account is continued.
  4. Attaches credit balance in the account, TDR playable at a future date.

5.Future credit, collection items/clearing credits realized after the receipt of the order are not attached.

  1. Order in single name then joint deposit & partnership deposit not attached.
  2. Order in joint names/name of partnership then deposit in single name attached.
  3. Does not attach balances in the account of deceased/ insolvent.

 REVENUE ATTACHMENT ORDER:

  1. Issued by Income tax, sales tax and wealth Tax dept.
  2. Specific amount has to be mentioned.
  3. Attaches credit balance, TDR payable at a future date.
  4. Also attaches future credit, collection items/ clearing credit realized after the receipt of the order.
  5. Joint deposit attached proportionately but partnership deposit not attached.
  6. Also attaches balance in the account of deceased/ insolvent.

 PAYMENT OF A BANK DRAFT CANNOT BE STOPPED BY THE BUYER:

  1. While issuing the drafts the Bank receives value well in advance.
  2. Hence, the bank cannot go back on its own promise to pay the money, which was received as consideration.
  3. Once a draft is issued, the bank becomes trustee of the funds for the payee. Hence payment of draft cannot be countermanded.

 NOMINEE’S SIGNATURE IS NOT ATTAINED ON THE NOMINATION FORM.

  1. Nomination comes into picture only on the death of the original depositor.
  2. There is no contract with the nominee.
  3. To enable the account holder to change the nomination at his will in favour of any person without any legal problems, created by the earlier nominee and to maintain Secrecy.

 PAYMENT OF CHEQUE BEYOND BUSINESS HOURS IS NOT MADE TO ANYONE OTHER THAN THE DRAWER:

  1. Bank will be liable for loss caused on account of wrongful payment outside banking hours, in case of death / insolvency/insanity of depositor/stopping payment of cheque/receipt of Garnishee or IT attachment order.
  2. Payment outside business hours may be made only to the drawer as he cannot countermand/stop payment of such cheques.

     3.Such payments are not considered as payments in due course under Sec. 10 of              NI act.

  1. Sec 65 of NI act provides for payment of negotiate instruments during banking hours.

 PLEDGE:

  1. It is a charge where the borrower hands over possession of asset to the bank. For eg. Loan against gold jewellery, warehouse receipts etc.
  2. The relationship between borrower and the bank is “Pledger” and “Pledgee”.
  3. Under this the ownership of the goods remains with the borrower but the possession of goods is in the hands of the bank.
  4. The bank enjoys Right of Sale in case the loan is not repaid and the bank can sell the pledged goods after giving adequate notice of sale to the borrower.
  5. When the loan is fully paid, it is the responsibility of the bank to handover the possession of the goods back to the borrower.

  PLEDGE VS HYPOTHECATION:

 Under pledge the ownership remains with the borrower but the possession passes on to the bank, under hypothecation both ownership and possession remains with the borrower.

  1. Under pledge the bank can sell the asset without going to the Court, under hypothecation it can be done only through the legal process.
  2. Hypothecation creates “floating charge” on assets created out of bank funds. Though hypothecation is the maximum predominant form of charge for bank, it is lesser to pledge. To protect their assets, bank need to review the hypothecated assets occasionally.

 

 

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