BANKING AND INSURANCE PRODUCTS

Savings Bank accounts Current accounts Opening, operation and nature of obligations Legal aspects covering these accounts Marketing of Low cost deposits

Savings bank accounts:

An individual who is more than 18 years of age and capable of entering into a contract can open an account This is purely a personal account for depositing the savings A business unit can not open a savings bank account An account holder may authorize another person to operate his SB account by giving necessary mandate More than two persons may open a SB account jointly All the joint account holders must sign the opening form and lodge specimen signature cards with the bank branch Clear written instructions should be given as to the persons authorized to operate the account( this is known as operation clause)

Survival clause should be incorporated Nomination facility is now available. Account holder can nominate anyone as his nominee. Nominee need not necessarily be the relative of the account holder. SB account can be opened in the name of students who are minors Other than students, natural guardian of the minor should sign the account opening forms Where the minority extends up to 21 years, legal guardian appointed by the court should sign the account opening forms SB accounts can be opened by persons on behalf of others when authority to open and operate is vested by means of power of attorney ( what are the precautions to be taken in the matter of PA?)

Introduction of the person seeking opening of an account: Introduction is required to establish the proper identity of the customer It is the prerequisite for availing protection under section 131 of negotiable instruments Act It is an integral part of KYC requirements which the banks have to comply with Special precautions to be taken in the case of following customers: 1. Illiterate persons 2. Blind persons

3. Lunatics : Under Indian contracts Act, 1872, contacts with persons of unsound mind are void. However there is no bar to open an account in the name of a lunatic, represented by a guardian appointed by a court. 4. Drunkards : If you are a banker, what would you do when a drunkard presents a cheque for payment? 5. Purdanashin ladies: What would be your suggestions when a purdanashin lady presents a cheque? 6. Pensioners: Can a pensioner issue a cheque in favour of others for the purpose of withdrawal? What do SB account holders get? Interest Loans Reference

Collection facilities Discount facilities How is interest on SB calculated? Some reasonable restrictions: o Number of withdrawals can be restricted o Cheques issued in the name of third parties are not collected to the credit of SB accounts o Minimum balance needs to be maintained. Banks can deal with unremunerative SB accounts in their own way o ATM cards are issued as a part of opening the account o Financial inclusion: Banks these days open Sb accounts with an initial deposit as small as Rs. 10, Rs. 20, or even zero balance