One of the important functions of the Bank is to accept

deposits from the public for the purpose of lending.

Depositors are the major stakeholders of the Banking
System.
The depositors and their interests form the key area of
the regulatory framework for banking in India and this
has been enshrined in the Banking Regulation Act,
1949.
The Reserve Bank of India is empowered to issue
directives / advices on interest rates on deposits and
other aspects regarding conduct of deposit accounts
from time to time.
With liberalization in the financial system and
deregulation of interest rates, banks are now free to
formulate deposit products within the broad guidelines
issued by RBI .
 Deposit Accounts opening
As discussed earlier, various deposit products
offered by the Bank are assigned different
names.
i) "Demand deposits"
ii) "Savings deposits" a form of demand
deposit which is subject to restrictions as to
the number of withdrawals.
iii) "Term deposit" means a deposit received
by the Bank for a fixed period and includes
deposits such as Recurring / Double Benefit
Deposits / Short Deposits / Fixed Deposits
/Monthly Income Certificate /Quarterly Income
Certificate etc.
 iv) Notice Deposit means term deposit for
specific period but withdrawable on
giving at least one complete banking
day's notice;
v) "Current Account-- a form of demand
deposit wherefrom withdrawals are
allowed any number of times depending
upon the balance in the account or up to
a particular agreed amount and will also
include other deposit accounts which are
neither Savings Deposit nor Term Deposit
 For deposit products like Savings Bank Account and Current
Deposit Account, the Bank will normally stipulate certain
minimum balances to be maintained as part of terms and
conditions governing operation of such accounts.
Failure to maintain minimum balance in the account will
attract levy of charges as specified by the Bank from time to
time.
For Saving Bank Account the Bank may also place
restrictions on number of transactions, cash withdrawals,
etc., for given period.
Similarly, the Bank may specify charges for issue of cheques
books, additional statement of accounts, duplicate pass
book, folio charges, etc.
All such details, regarding terms and conditions for
operation of the accounts and schedule of charges for
various services provided will be communicated to the
prospective depositor while opening the account.

Savings Bank Accounts can be opened for eligible
person / persons and certain organizations /
agencies (as advised by Reserve Bank of India (RBI)
from time to time)
Current Accounts can be opened by individuals /
partnership firms / Private and Public Limited
Companies / HUFs / Specified Associates / Societies /
Trusts, etc.
Term Deposits Accounts can be opened by
individuals / partnership firms / Private and Public
Limited Companies / HUFs/ Specified Associates /
Societies / Trusts, etc.
 The due diligence process, while opening a deposit
account will involve satisfying about the identity of
the person, verification of address, satisfying about
his occupation and source of income.
Obtaining introduction of the prospective depositor
from a person acceptable to the Bank and obtaining
recent photograph of the person/s opening /
operating the account are part of due diligence
process.
In addition to the due diligence requirements,
under KYC norms the Bank is required by law to
obtain Permanent Account Number (PAN) or General
Index Register (GIR) Number or alternatively
declaration in Form No. 60 or 61 as specified under
the Income Tax Act / Rules.
 The joint account holders can give any of the following
mandates for the disposal of balance in the above
accounts :
i. Either or Survivor : If the account is held by two
individuals say, A & B, the final balance alongwith
interest, if applicable, will be paid to survivor on death
of anyone of the account holders.
ii. Anyone or Survivor/s : If the account is held by more
than two individuals say, A, B and C, the final balance
alongwith interest, if applicable, will be paid to the
survivor on death of any two account holders.
The above mandates will be applicable to or become
operational only on or after the date of maturity of term
deposits.
This mandate can be modified by the consent of all the
account holders
 Deposit accounts can be opened by an individual in his own
name (status : known as account in single name) or
by more than one individual in their own names (status :
known as Joint Account) .
Savings Bank Account can also be opened by a minor jointly
with natural guardian or with mother as the guardian (Status
: known as Minor's Account).
Minors above the age of 10 will also be allowed to open and
operate saving bank account independently.
Operation of Joint Account - The Joint Account opened by
more than one individual can be operated by single
individual or by more than one individual jointly.
The mandate for operating the account can be modified with
the consent of all account holders.
The Savings Bank Account opened by minor jointly with
natural guardian / guardian can be operated by natural
guardian only.
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INTERNET BANKING FACILITY
 RECURRING DEPOSIT
Want to create a fund for your children's education
or marriage or to buy a car or for a dream holiday?
Whatever may be your financial goals, through our
Recurring Deposit Scheme you can save a little
every month so that at the time of need you have
sufficient funds to achieve your financial goals.
Recurring Deposit provides you the element of
compulsion to save at high rates of interest
applicable to Term Deposits along with liquidity to
access that savings any time. So set aside a small
amount every month and earn at compounded
rates of interest. WIDE CHOICE IN PERIOD OF
DEPOSIT Flexibility in period of deposit with
maturity ranging from 12 months to 120 months.
 NO FRILLS ACCOUNT
This account comes with very low minimum
balances as well as low/ nil charges, to cater
to the needs of individuals from the vast
sections of population who are, otherwise,
not fulfilling certain conditions of our existing
Savings Bank account requirements. Details
are as under: ELIGIBILITY: Individuals of 18
years and above earning a gross income of
Rs.5000/- p.m or less
 A the request of the depositor, the Bank will
register mandate / power of attorney given
by him authorizing another person to
operate the account on his behalf.
The term deposit account holders at the
time of placing their deposits can give
instructions with regard to closure of
deposit account or renewal of deposit for
further period on the date of maturity.
The deposit as such gets automatically
renewed
at the prevalent rate and for the same period.
 Nomination facility is available on all
deposit accounts opened by the
individuals.
Nomination is also available to a sole
proprietory concern account.
Nomination can be made in favour of one
individual only. Nomination so made can
be cancelled or changed by the account
holder/s any time.
While making nomination, cancellation
or change thereof, it is required to be
witnessed by a third party.
 Nomination can be modified by the consent
of account holder/s.
Nomination can be made in favour of a minor
also.
Bank recommends that all depositors avail
nomination facility.
The nominee, in the event of death of the
depositor/s, would receive the balance
outstanding in the account as a trustee of
legal heirs.
The depositor will be informed of the
advantages of the nomination facility while
opening a deposit account.
 A statement of account will be provided
by the Bank to Savings Bank as well as
Current Deposit Account Holders
periodically as per terms and conditions
of opening of the account..
Alternatively, the Bank may issue a Pass
Book to these account holders.
The deposit accounts may be
transferred to any other branch of the
Bank at the request of the depositor.
Interest Payments
 iii) The rate of interest on
deposits will be prominently
displayed in the branch premises.
Changes, if any, with regard to
the deposit schemes and other
related services shall also be
communicated upfront and shall
be prominently displayed.
.
 iv) The Bank has statutory
obligation to deduct tax at source if
the total interest paid / payable on
all term deposits held by a person
exceeds the amount specified
under the Income Tax Act.The Bank
will issue a tax deduction
certificate (TDS Certificate) for the
amount of tax deducted.
The depositor, if entitled to
exemption from TDS can submit
 MINORS' ACCOUNTS
i) The minor can open Savings Bank Account
and the same can be operated by the natural
guardian or by minor himself / herself, if
he/she is above the age of 10 years. The
account can also be opened jointly.
ii) 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 verified by
the natural guardian would be obtained and
kept on record for all operational purposes.
 ACCOUNT OF ILLITERATE / BLIND PERSON
The Bank may at its discretion open deposit accounts other
than Current Accounts of illiterate person.
The account of such person may be opened provided he/she
calls on the Bank personally along with a witness who is
known to both the depositor and the Bank.
Normally, no cheque book facility is provided for such
Savings Bank Account.
At the time of withdrawal/ repayment of deposit amount
and/or interest, the account holder should affix his / her
thumb impression or mark in the presence of the authorized
officer who should verify the identity of the person.
The Bank will explain the need for proper care and safe
keeping of the passbook etc. given to the account holder.
The Bank official shall explain the terms and conditions
governing the account to the illiterate / blind person.
 ADDITION OR DELETION OF THE NAME/S OF
JOINT ACCOUNT HOLDERS
The bank may at the request of all the joint account
holders allow addition or deletion of name/s of joint
account holder/s if the circumstances so warrant or
allow an individual depositor to add the name of
another person as a joint account holder.
CUSTOMER INFORMATION
The customer information collected from the
customers shall not be used for cross selling of
services or products by the Bank, their subsidiaries
and affiliates.
If the Bank proposes to use such information, it
should be strictly with the consent of the
accountholder
 SECRECY OF CUSTOMER'S ACCOUNTS
The Bank shall not disclose details /
particulars of the customer's account
to a third person or party without the
expressed or implied consent from the
customer.
However, there are some exceptions,
viz. disclosure of information under
compulsion of law, where there is a
duty to public to disclose and where
interest of the Bank requires disclosure .
 SETTLEMENT OF DUES IN DECEASED
DEPOSIT ACCOUNT
i) If the depositor has registered nomination
with the Bank; - the balance outstanding in
the account of the deceased depositor will
be transferred to the account of / paid to
the nominee after the Bank satisfies about
the identity of the nominee, etc.
ii) The above procedure will be followed
even in respect of a joint account where
nomination is registered with the Bank.
 iii) In a joint deposit account, when one of the
joint account holders dies, the Bank is required
to make payment jointly to the legal heirs of the
deceased person and the surviving depositor(s).
However, if the joint account holders had given
mandate for disposal of the balance in the
account in the forms such as "either or survivor,
former / latter or survivor, anyone of survivors
or survivor; etc., the payment will be made as
per the mandate to avoid delays in production
of legal papers by the heirs of the deceased.
 iv) In the absence of nomination and when
there are no disputes among the claimants,
the Bank will pay the amount outstanding in
the account of deceased person against
joint application and indemnity by all legal
heirs or the person mandated by the legal
heirs to receive the payment on their behalf
without insisting on legal documents up to
the limit approved by the bank's board.
This is to ensure that the common
depositors are not put hardship on account
of delays in completing legal formalities
 Dormant Accounts
Accounts which are not operated for a
considerable period of time will be
transferred to a separate dormant /
inoperative account status in the interest
of the depositor as well as the Bank.
The depositor will be informed of
charges, if any, which the Bank will levy
on dormant / inoperative accounts.
The depositor can request the Bank to
activate the account for operating it
 Safe Deposit Lockers
This facility is not offered through all
bank branches and wherever the facility
is offered, allotment of safe deposit
vault will be subject to availability and
compliance with other terms and
conditions attached to the service. Safe
deposit lockers may be hired by an
individual ( being not a minor) singly or
jointly with another individual(s), HUFs,
firms, limited companies,
associates,societies, trusts etc.
 Nomination facility is available to individual(s)
holding the lockers singly or jointly.
In respect of lockers held in joint names, up to two
nominees can be appointed.
Joint locker holders can give mandate for access to
the lockers in the event of death of one of the
holders on the lines similar to those for deposit
accounts.
In the absence of nomination or mandate for
disposal of contents of lockers, with a view to
avoid hardship to common persons, the bank will
release the contents of locker to the legal heirs
against indemnity on the lines as applicable to
deposit accounts
 Accounts of Married Women:
Marriage of woman does not affect any
right of her separate property (Streedhan).
Section 14 of the Hindu Succession Act,
1956 provides that property of a Hindu
female shall be her absolute property.
A Married woman has a legal entity of her
own, which is separate from her husband.
According to the Hindu Marriage Act
1956,Hindu married women can have
separate property in her own name.
 A married woman can open accounts in
her own name, operate freely and enjoy
overdraft limit as long as the liabilities
are met out from her own property.
At the time of opening the account in
the name of a married woman the
name and occupation of her husband,
details of his employer is obtained and
recorded.
Some banks also obtain the maiden
name of the married women
 A married woman can make her husband
liable for the overdraft enjoyed by her
If she borrows money for the necessities
of her life,
If she borrows for the necessaries of her
house hold,
If she acts as agent of her husband.
The status of the married women is
governed by the following Acts:-
(a) Hindu Succession Act, 1956
(b) Married Women's Property Act, 1874
(c) Indian Succession Act, 1925
 Account of Pardanasheen Women:
A pardanasheen women is a women who puts a veil
and does not show her face to people /outsiders
and observes complete seclusion.
Even they do not pose for photographs.
Contract entered into by a Pardanasheen Woman is
not a contract free from all defects.
Banks generally refuse to open accounts in the
name of Pardanasheen Women, because identity of
Pardanasheen Women cannot be ascertained as she
observes complete seclusion.
However, if under special circumstances, such an
account is opened, two respectable persons known
to the branch invariably attest the signatures on the
account opening form.
 Accounts opened by Illiterates:Those
who are unable to sign but use thumb
impression are illiterates for banks.
Illiteracy does not make a person
incompetent to contract.
Therefore an illiterate person can open
and operate a bank account.
However, banks do not open current
account of illiterate person.
For opening an account the person has
to come to bank personally along with a
witness who is known both to the
 While opening an account banks obtain left
hand thumb impression of illiterate men and
right hand thumb impression of illiterate
female.
The thumb impression is obtained in the
presence of a person known to the bank and
the depositor.
The thumb impression is to be witnessed by
a customer of the bank and noting to this
effect is done (left/right thumb impression of
Mr./Ms. affixed in my presence). .
Normally, no cheque book is issued to the
account holder
 Opening of accounts by a person who
can not sign due to loss of both hands:A
handicapped person is not barred from
opening an account.
Banks entertain the requests from
handicapped persons for opening their
accounts.
After observing all account opening norms
and obtaining the photograph of the
handicapped person, bank opens account.
In terms of the General Clauses Act, the
term Sign with its grammatical variations
and cognate expressions, shall with reference
 The Supreme Court has held in AIR 1950 Supreme
Court, 265 that there must be physical contact between
the person who is to sign and the signature can be by
means of a mark.
This mark can be placed by the person in any manner. It
could be the toe impression, as suggested. It can be by
means of mark which anybody can put on behalf of the
person who has to sign, the mark being put by an
instrument which has had a physical contact with the
person who has to sign.
In case the person has lost both hands bank obtains
his/her toe impression (either right or left) on the relevant
forms in presence of bank officials and a witness.
As an alternative, the person is also advised to give a
suitable power of attorney to a person of his/her
confidence
 Operations in accounts by blind persons:
o Banks allow the next of kin of a blind customer to
operate his account as a
guardian or a representative of the blind person
In the Case No. 2791/2003, the Honourable Court of
Chief Commissioner for Persons with Disabilities had
passed Orders dated 05.09.2005 that banks should
offer all the banking facilities including cheque book
facility, ATM facility and locker facility to the visually
challenged and also assist them in withdrawal of cash.
In the above Order, the Honorable Court has observed
that visually impaired persons cannot be denied the
facility of cheque book, locker and ATM on the
possibility of risk in operating / using the said facility,
as the element of risk is involved in case of other
customers as well.
 Accounts by Old & Incapacitated Persons
With a view to enabling the old / sick account holders
operate their bank accounts, banks may follow the
procedure as under: -
(a)Wherever thumb or toe impression of the
sick/old/incapacitated account holder is obtained, it
should be identified by two independent witnesses
known to the bank, one of whom should be a
responsible bank official.
(b)Where the customer cannot even put his / her
thumb impression and also would not be able to be
physically present in the bank, a mark can be
obtained on the cheque / withdrawal form which
should be identified by two independent witnesses,
one of whom should be a responsible bank official.
 (c)The customer may also be asked to
indicate to the bank as to who would
withdraw the amount from the bank on
the basis of cheque / withdrawal form
as obtained above and that person
should be identified by two independent
witnesses.
The person who would be actually
drawing the money from the bank
should be asked to furnish his signature
to the bank.
 Accounts of Insolvents:
A person when fails to pay his debts is
declared insolvent by the court.
As soon as a person is declared insolvent,
operations in his existing account is stopped
forthwith and balance of such accounts are
disposed as per the instructions of the Official
Receiver.
Insolvency of an accountholder revokes the
bank's authority to pay the cheques drawn by
him and the balance at credit of the account
and the entire estate of the insolvent vests in
the official receiver appointed by the court.
 Declaration of insolvency renders invalid all the
transactions entered into subsequently and
already entered into within six months.
Banks do not open insolvents account nor
advance money to an un-discharged insolvent.
During the pendency of insolvency proceedings,
no creditor can have any remedy against the
property of the insolvent in respect of his debts
or commence any suit or legal proceedings
against the property without the leave of the
Court.
Insolvency of an agent does not affect the
relationship of the principal and agent
 Accounts of Drunkards:
Intoxicated person cannot take a rational judgment
about his interest.
State of intoxication renders a person incapable of
understanding the nature of his action.
Therefore, the law provides that all the contracts
made by a person in a drunken state are void.

When a drunkard approaches the branch of a bank

for opening an account, the branch if satisfied that
the person is incapable of entering into a contract
refuses to open the account as a precautionary
measure.
In case of an existing account, payment of a cheque
to a drunkard is done after taking proper witness.
 Accounts of Hindu Undivided Families
(HUF):
The Hindu Succession Act 1956 governs HUF.
The HUF carries out ancestral business and
possesses ancestral properties.
The account is opened in the name of the
Karta and family business.
The Karta and all the adult members of the
HUF are required to sign the account opening
form.
Banks do not open Savings Bank account of
HUF engaged in trading and business activities
 Operations in account:
The operations in the account are normally restricted
to Karta of the family.
The Karta can appoint any of the adult coparceners to
operate the bank account as 'Manager' if HUF carries
out business at various places through its branches.
HUF accounts can also be operated by coparcener and
/or other adult members of HUF also, against a letter
of authority and against a stamped letter of indemnity
cum undertaking give by the Karta.
Since female members in an HUF are not coparceners,
they cannot be authorised to operate bank account.
If there is no adult coparcener, a mother is allowed to
manage the property of HUF and operate the account
 Account of Sole Proprietary Concerns:
Banks do not open savings bank account in the name of a
proprietorship firm but open current account in the name
of the sole proprietary concerns.
Accounts in the name of a sole proprietary concern are
treated like individual accounts.
The account can be operated either by the proprietor
himself or by a person duly authorised to operate the
account on his behalf.
Banks exercise caution while accepting cheques drawn in
favour of the sole proprietary concern and deposited in
personal account of the proprietor.
When the sole proprietor of the firm deposits cheque
payable to the firm for credit of his personal account bank
obtains a declaration from him to the effect that he is the
sole proprietor of the firm.
 Accounts of registered societies, clubs and
Associations:
A club or a society gets legal entity only when it is
incorporation under Companys Act, 1956 or under
Cooperative Societies Act, 1860.
Byelaws of the society, clubs, and association contain
rules, regulations or conduct and activities of the
association.
While opening account banks obtain:
o Copy of the byelaws;
o Copy of resolution passed by the managing committee
regarding opening and conduct of account,
o Certificate of registration in original,
o A list of the Managing Committee members
o Copies of resolutions electing them as Committee
members duly certified by the Chairman
Bank keeps a copy of the above-mentioned document for
its record.
 Account of Partnership Firms:
According to Section 4 of the Indian Partnership
Act, a partnership is the relationship between
persons who have agreed to share the profits of
a business carried on by all or any of them
acting for all.
The Supreme Court has held that the word
"persons" in Section-4 contemplates only
natural or artificial persons i.e., legal persons.
Since a firm is not a person, is not entitled to
enter into partnership with another firm or
Hindu undivided family or individual.
Therefore, banks do not open account where a
firm is a partner in another firm
 As per the Indian Partnership Act, minimum number
of partners can be two and maximum twenty.
The number of partners is restricted to 10, if the
partnership firm carries out business of banking.
Minors can be admitted as partner only to the
benefits of the partnership
Registration of partnership firm:
A partnership firm can be registered with Registrar of
Firms.
However, as per law, it is not compulsory to register a
partnership firm. Non-registered partnership firm
have certain disabilities. Such firms cannot sue
others to enforce a right arising out of a contract.
A suit filed by an unregistered partnership firm is not
maintainable, even after its subsequent registration
 Opening of Account:A partnership firm can
open all types of accounts except savings
bank account.
Bank opens account of a partnership firm in
the name of the firm and not in the names of
partners individually or jointly.
The account opening form is signed by all the
partners in their individual capacity as well as
in the capacity of a partner to ensure joint
and several liabilities.
While opening the account banks verify the
partnership deed to examine whether any
clause of the deed is detrimental to the
interest of bank.
 Since bank would not like to be bound by
the terms of the partnership deed, banks
do not accept the partnership deed even
if offered.
In case of registered firm, banks obtain
registration certificate.
The account is opened in the name of the
firm and all the partners are required to
sign account opening form.
 Operations in account:
Bank obtains operational instructions i.e. who
will operate the account and how it is to be
operated.
In case a minor is also a partner in the firm
his birth certificate is obtained to ascertain the
date of birth, which is recorded in the account
opening form.
Who can operate?All partners jointly One of
the named partners ,Two / three of the named
partners , A third party under a mandate letter
or a power of attorney signed by all the
partners.
A partner authorised to operate the firm's
 The authority given to operate the
account can be withdrawn by any of
the other partners including dormant or
sleeping partner by giving notice to the
bank.
Each partner, whether he/she is
operating the account or not, has
powers to countermand payment of the
cheques drawn by another partner or
by an attorney on behalf of the firm
 Retirement of a partner:
On notice of retirement of a partner, the bank closes
the existing account and opens a new account of the
firm with the remaining partners or along with the new
partner if admitted to the new firm.
Death of a partner:
o Death of a partner dissolves the partnership.
However, for the purpose of
winding up of the firm, the bank may allow the
surviving partner(s) to
operate the firm's account, if the account is in credit.
o Cheques drawn by a partner before his death and
presented for payment are
honoured after obtaining confirmation of the surviving
partners.
 Dissolution of a partnership firm:
Dissolution of a firm amounts to the breaking up of
relation of partnership between all the partners. In
the event of dissolution banks do not permit
operations in the account. A partnership firm may be
dissolved by any of the following modes
(a) By mutual agreement between all the partners.
(b) By notice of dissolution in case of partnership at
will.
(c) By operation of law or compulsory dissolution of
the firm.
(d) By happening of certain contingencies such as
death or insolvency of a partner.
(e) Dissolution by Court of Law in cases like insanity,
permanent incapacity,
misconduct of a partner affecting business etc.
 Accounts of Joint Stock Companies:
A joint stock company is constituted under company Act
1956.
Company is an Artificial person with perpetual succession.
It is a voluntary association of persons formed for some
common purpose with capital divisible into parts known as
share.
It has separate legal entity and corporate personality. It is
separate from the shareholders constituting it.
The company can own assets; contract debts and can sue
and be sued in its own name. The property of the
company is not the personal property of its shareholders
nor the company's liability is the liability of its
shareholders/directors, unless they consent to be
personally liable for the company's debts.
 Company can be classified into three
categories:
1.Public Ltd. Co.:
It can issue shares to public.
Minimum number of shareholders required is 7.
There is no restriction in the maximum number
of shareholders.
Shares can be freely transferred.
Minimum number of directors required is 3
Requires certificate of commencement of
business.
.
 2.Private Ltd.Co.:
It can not issues shares to public.
Shares are not freely transferable.
Minimum number of shareholder required 2 and
maximum number of share holders can be 50.
Minimum number of directors required 2.
It does not require certificate of
commencement of business.
3.Government Co.:
A company where not less 51% of the share
capital is held by the government.
Depending upon the liability of shareholders
the Company it may be limited or unlimited
 Documents required for opening an
account:
1. Account opening form
2. Certified copies of memo of association
and articles of association
3. Copy of certificate of incorporation
4. Certificate of commencement of Business
5. Up-to-date list of directors with name and
address
6. Certificated copy of a resolution of the
Board of directors for opening and
conducting the account.
 Documents obtained by bank:For
opening an account of a joint stock
company .
(i) Certificate of incorporation:
It is a conclusive proof that all the
requirements under the Companies Act
have been complied with.
(ii) Certificate of commencement of
business:
This certificate is essential in the case of
public limited companies. A
public limited company cannot borrow
 (iii) Memorandum and Articles of Association:
The bank obtains a certified copy of the
Memorandum and Articles of Association of
the company to satisfy that the conduct of the
account is in conformity with the provisions
Certificates signed by the Chairman or one of
the authorised directors of the company
stating that the Memorandum and Articles of
Association are true and up-to date
(iv) Board Resolution:A copy of the resolution
of the Board of Directors of the company,
certified as true by the Chairman of the
meeting, requesting the Bank to open an
account in its name and specifying the
 Instructions in the resolution regarding
conduct of the account have to be in
strict conformity with the provisions of
companys Articles of Association.
The resolution is to be countersigned
either by the company's secretary or any
of the other directors.
(v) List of the present directors:
A list of the present directors of the
company is obtained under the signature
of the Chairman, accompanied by a
certified copy of the resolution of the
 (vi) Reference to the company's
previous bankers:Banks also
ascertain the names and addresses
of the companys previous bankers,
if any, and get a report on the
company and its directors and keep
it along with the account opening
form.
WhyArticles of Association?
The Articles of Association contain
the rules regulations regarding
 Why Memorandum of Association:?
The memorandum of association contains name and
address of the registered office of the company, name
and addresses of the directors, objectives and powers
of the company.
Any act done or contract entered into by the company,
which is outside the scope of these objectives becomes
ultra vires (i.e. beyond the powers of the company)
and, therefore, is not binding on it.
The Memorandum and Articles of Association of
the company is studied to find out the extent of
the powers of its directors, its powers to borrow
and mortgage property or to give guarantees
and the provisions relating to the conduct of its
bank accounts
 .Accounts of Private Companies:
A private limited company is a
company, which have a minimum 2
and maximum 50 shareholders.
Shares of these companies are not sold
in the public and cannot be transferred.
Banks are cautious while opening
accounts of Pvt. Ltd.Co.
Bank obtains all documents as required
while opening accounts of a joint stock
company.
 Accounts of Trusts:
As per Sec.3 of Indian Contract Act, 1882
A trust is an obligation annexed to the
ownership of property, and arising out of
a confidence in and accepted by the
owner, or declared and accepted by him,
for the benefit of another, or of another
and the owner.
Bank opens trust accounts for good
parties.
A trust can be public or private.
All public trusts are required to be
 Before registering a public trust, the
office of the Charity Commissioner
makes necessary enquiries regarding
the trust, its trustees, the mode of
succession of trusteeship etc., and
after proper enquiries makes entries in
the register, which are final, conclusive
and are binding on all concerned.
Banks open trust accounts after taking
all precautions.
 While opening account of a trust bank obtains
o Copy of constitution of the trust
o Trust deed if available,
o Certificate of registration and/or a certified
copy of the entry of the public trusts register
o Public Trust Register No
o A list of the current trustees and the
authority appointing them as trustees.
o The necessary resolution passed by the
trustees for opening the account with the
bank.
o Certified copy of the resolution signed by all
the trustees in regard to the conduct of the
account
 Operations:
Trust accounts must be opened and conducted
strictly in accordance with the terms of the trust
deed.
All the trustees are required to act jointly by the
persons so authorised by the registered trust deed.
Trustees have no powers to delegate their authority
to one or more unless the power of delegation is
authorised by the trust deed or is in accordance with
the directions of the court on an application made
by the trustees.
Trustees have no implied authority to borrow or
pledge trust property, unless so provided for in the
trust deed.
 Death of a trustee:
On the death of one of the trustees, the
trust property passes to the other trustees
as per the provisions of the trust deed.
If the deceased is the sole trustee, his
executor has no right to recover the trust
money.
The executor, however, has the right to
appoint a new trustee, provided the
deceased trustee has in his will specifically
authorised such an appointment
 Accounts of Religious and Charitable
Trusts:
To regulate public religious and charitable
trusts some States have passed Acts.
These charitable trusts are registered with
the Charity Commissioner or the Assistant
Charity Commissioner of the region
concerned.
A Certificate of registration is issued to these
trust by the authorities.
Mostly these trusts do not have a properly
written trust deed.
Bank opens account of religious and
 Opening and operations of account:
While opening account bank obtains following
documents in addition to account opening form duly
signed by the trustees.
A resolution specifying the name of the bank passed
in a proper meeting held by all the trustees.
Indemnity signed by all the trustees, indemnifying
the bank for having
allowed operations on the trust account.
Banks do not permit operations in the account by one
person.
Reasonable number of members is required for
opening and operating the account.
If the number of trustees is larger, then the number
of person operating the account has to be large.
Bank periodically obtains confirmation of balance in
the account, signed by all the trustees.
 GARNISHEE ORDER
AND
ATTACHMENT
ORDER
 The obligation of a banker to honour
his customers cheques is extinguished
on receipt of an order of the Court,
known as the Garnishee order, issued
under Order 21, Rule 46 of the code of
Civil Procedure, 1908.
If a debtor fails to pay the debt
owed by to his creditor,
the later may apply to the Court for the
issue of a Garnishee Order
on the banker of his debtor.
 The Code of Civil Procedure empowers
the court to issue the garnishee order.
Prior to the amendment in 1976,
there was no provision relating to
garnishee order in the code of civil
procedure, 1908.
After the insertion of Amendment by the
way of
Code of civil procedure Amendment Act,
1976,
a direct provision was added to the Code
 It is not mandatory on the courts to issue the
order
every time as and when the application for
its issuance is filed.
It is the discretionary power of the court
to issue a garnishee order and not the
mandatory provision.
The word may in the rule means that the
rule is discretionary
and the court may refuse to act under this
rule
if it inequitable or if it is likely to cause
prejudice to garnishee.
 The court may reject the application
or refuse
to issue such order if suitable
grounds are not found i.e.
if the affidavit filed by the decree
holder is vague
insufficient and ambiguous;
the proceedings would not sustain
and would come at stake.
 The court may, in exercise of sound
discretion
control the use of writs of
garnishment
to the extent of preventing it from
being abused or becoming
oppressive.
If the assets are belonging to the
defaulted member
it cannot be attached in Garnishee
 While Garnishee order is very good
piece of legislation by our
parliamentarians, it has to be used
with caution.
While issuing such order, it is the
duty of the court to check whether
the case is prima facie.
It is also the duty of the court that
while exercising the discretionary
power, the power is not misused and
the innocent is not harassed
 Such order attaches the debts not secured
by a negotiable instrument, by prohibiting
the creditor from recovering the debt and
the debtor from the making payment thereof.
The account of the customer with the banker,
thus,
becomes suspended and
the banker is under an obligation
not to make any payment
from the account concerned after the receipt
of the Garnishee Order.
 The creditor at whose request the order
is issued
is called the
judgement- creditor,
the debtor whose money is frozen is
called
judgement- debtor
and the banker who is the debtor of
the judgement debtor is called
the Garnishee.
 The Garnishee Order is issued in two
parts.
First, the Court directs the banker to
stop payment
out of the account of the judgement-
debtor.
Such order is called Order Nisi,
It also seeks explanation from the banker
As to why the funds in the said account
should not be utilized
for the judgement- creditors claim.
 The banker is prohibited from
paying the amount
due to his customer on the date of
receipt of the Order Nisi.
He should, therefore,
immediately inform the customer
so that dishonour of any cheque
issued by him may be avoided.
 After the banker files his explanation, if
any,
the Court may issue the financial order,
called
Order Absolute
where the entire balance in the account
or a
specified amount is attached
to be handed over to the
judgement- creditor.
 On receipt of such an order to the
banker is
bound to pay the garnished funds
to the judgement- creditor
Thereafter, the bankers liabilities
towards his customer are
discharged to that extent.
The suspended account may be
revived
after payment has been made to
 The following points are to be noted in this
connection:
A garnishee order may attach either the amount of
the judgement debtor with the banker irrespective of
the amount which the judgement- debtor owes to the
creditor or a specified amount only which is sufficient
to meet the creditor claim from the judgement-
debtor.
In the first case, the entire amount in the account of
the customer in the bank is garnished or attached and
if banker pays any amount out of the same which is
in excess of the amount of the debt of the creditor
plus cost of the legal proceedings, he will render
himself liable for such payment.
 For example, the amt. to the credit of X,
the principal debtor,`Rs 10,000 is attached
by the Court while the debt owed by him to
his creditor Y is only ` 6,000.
If the banker honors the cheque of the
customer X to the extent of ` 5,000 and
thus reducing the balance to ` 5,000 he will
be liable for defying the order of the Court.
On the other hand, if he dishonors all
cheques, subsequent to the receipt of the
Garnishee Order, he will not be liable to the
customer for dishonoring his cheques.
 under Order 21 Rule 46 CPC. The Honble
Supreme Court held that Order 21 Rule 46
deals with the garnishee proceedings.
These apply when monies of judgment debtor
are in the hands of the third parties.
In cases of Letter of Credit the liability of the
issuing bank is an entirely independent liability.
It cannot be said that the monies payable by
the issuing bank are monies belonging to the
judgment-debtor.
Thus, the claim, if any, can only be decided in
independent proceedings which should have
been adopted by the Appellants.
 Bank Account
In the case of a bank account which is in the joint
names of two persons their shares are taken as
equal in the absence of evidence to the contrary
Banker has the right to set off one account
against another account of the same person.
Where there is existing debt, payment whereof is
deferred and the case where the debt and its
payment rests in future.
In the former case, the debt is attachable and in
the latter it is not .
The fact that the amount of the debt due or
accruing is not ascertained does not prevent a
garnishee order nisi being made
 In Syndicate Bank v. Vijay Kumar, while
furnishing bank guarantee in favor of high Court,
the customer furnished two fixed deposit
receipts duly discharged to the bank and
authorized the bank the custody of the receipts
and renewals thereof.
The Honble Supreme Court held that it becomes
a general lien.
Bank can set off liability of the party against the
receipts.
If the fixed deposits are attached to bank
garnishee has to go to the court. The balance
after adjustments of banks claim shall be
available to satisfy the decree.
 Lien-Section 171 of the Indian
Contract Act,1872 gives to the
banker an absolute right of general
lien on all goods and securities
received by the banker.
The banker has general lien on all
deposits.
If the deposit receipt is given as a
security for raising a loan or
discharging an obligation then the
 Lien Important aspects:
General lien covers the entire amount due
to the bank from the borrower/ debtor.
Bankers General Lien:
This is applicable in the following situations:
when a banker receives goods and
securities for a purpose
lien is applicable for the goods and/or
securities which are belonging to a person
who has delivered them to the banker
there is no contract to the contrary and
the debt is not barred by limitation.
 A bankers lien is also called as an
implied pledge.
A banker has the right to retain
and if necessary
can also sell the goods and/or
securities charged in his favor.
As pledgee,
a banker can sell the
goods/securites pledged to him
 A banker cannot exercise his right of lien in
following situations:
1. In case when goods and securities are
not obtained by him in the ordinary course
of business:
2. In case of Safe Custody, when a banker
accepts goods/securites of a customer to
be kept in safe custody.
In this case the relationship of banker and
customer is that of the bailee and bailer.
Here the banker acts as a trustee and not
as a lender/creditor.
 3. When the goods or security are left
inadvertently or through oversight in the
bank premises,
the banker cannot exercise his right of lien
on them.
4. When money is deposited by a customer
with a request to transfer to another branch,
the banker cannot exercise the right of lien.
This is applicable even when the applicant
for the transfer of funds is a borrower .
5. The banker cannot have the right of lien
and right of set off at the same time.
THANK
YOU