20 July, 2015

Different Bank Accounts Opening Process

Banking sector is flourishing day by day. Banks are engaging themselves for different types of servicing for their customers. But at the beginning of availing some services, customers have to open account without any lapses in the bank. There are different types of accounts in banks, such as individual account, joint account, clubs & society account, trustee account etc.  I will discus about these account opening procedures which will help bankers for their career and for safety of banks.

Individual account opening 
1. The account opening form and specimen signature card shall be supplied to the customers which shall be filled and signed by him.
2. Suitable introduction shall be obtained from a respectable party known to the bank account holder/bank officer.
3. Manager shall use sufficient intelligence and common sense in ascertaining the genuineness of new accounts.
4. It shall be ascertained from the reference book that the new account is not similar to any other account opened earlier. Note to this effect shall be made on the account opening form and the ledger, if there is any similarity.
5. The signature of the introducer shall be verified by the officer incharge of deposit department.
6. The Manager’s approval shall be obtained on the account opening form. In case of big branches the officer incharge of Deposit Department may also approve the account opening form.
7. In the event of death of the individual, all operations in this account shall be stopped forthwith. A red line shall be drawn just below the balance of the account. As soon as information is received either through news paper per some reliable source about the death of a constituent, the date of death and source of information shall be on the ledger folio of the relevant account.
8. Balance of deceased account may be paid with the approval of Regional Chief/Head Office.
In cases where the Regional Chief/Head Office is satisfied about the bonafied of the beneficiary of the deceased, balance may be paid to clients under a letter of indemnity executed in a non-judicial stamp paper by legal heir(s) of the deceased without succession certificate upto an amount, fixed by the office. In addition, a surety of equivalent amount should be obtained from a respectable person, acceptable to the bank, who should be preferably a known client of the Bank having net worth/balance. Succession certificate will however be obtained for disposal of sasses exceeding the amount, fixed by head office.
9. The balance lying to the credit of a deceased account shall not be a claimant against any will left by that deceased.

Joint Account opening
1. The account opening form and specimen signature card shall be supplied to the customers which shall be filled in and signed by them.
2. Suitable introduction shall be obtained from a respectable party known to the bank.
3. Manager/officer shall use sufficient intelligence and common sense in ascertaining the genuineness of new accounts.
4. The signature of the introducer shall be verified by the officer Incharge of deposit department.
5. At the time of opening the account, clear and specific instructions shall be obtained regarding operation of the account and payment to the surviving member in the event of the death of one or more joint account holders which may be in any of the following forms: (a) The account shall be operated by any joint account holders.
(b) By either or survivors.
(c) By any 2 or more joint account holders or by any 2 or more survivors jointly.
(d) By all the account holders jointly.
(e) By all the survivors jointly.

These instructions, as far as possible, shall be obtained in the handwriting of the parties concerned, preferably under the signature of all the joint account holders.
6. In the event of any of the joint account holders becoming bankrupt all operations in the joint account shall be stopped until fresh instructions are given by remaining solvent account holders jointly signed by them and the official assignee.
7. No overdraft shall be allowed in a joint account, unless it is opened on jointly by all the parties to the account and charge documents in respect thereof are also signed by all of them.

Clubs and Society account opening
Procedure for opening accounts of clubs and society are follows:
1. Before opening an account in the name of clubs or other such societies, the banker must verify that a resolution was passed by the managing committee appointing the bank concerned as the banker of the question. Also information regarding the name of persons set incharge of operating the account be noted.
2. In case of borrowing by the club, the banker should consult the charter or memorandum of the club to find out whether it has the power to borrow, and if ‘yes’ whether there are any limitations in exercise of such a power.
3. In case of death or resignation of the person incharge of operating the account, the banker should stop operations on the account till another person is nominated by the club.
4. The banker should exercise due care to see that proper inquiries are effected in case it is suspected that the money of the club has been transferred to the personal account of the person incharge of the operation.

Trustee account opening
According to the trust Act of 1882, a trust is a obligation annexed to the ownership of property and arising out of a confidence reposed in and accepted by the owner, or declared and accepted by him for the benefit of another, or of another and the owner. The person who reposes the confidence is called the ‘Settlor or another Author of the Trust’ and the person in whom this confidence is reposed is called the ‘trustee’. The person for those benefit the trust is formed is called the beneficiary. A trust is usually formed by means of a document called the ‘trust deed’.
When an account is opened in the name of a person as trustee, the banker has duty to the real owner to see that no trust funds are fraudulently transferred by the trustee to his personal accounts. Besides, a banker should take the following precautions in opening an account of a trustee:
1. The banker should thoroughly examine the trust deed appointing the application as trustees, so as to as certain their powers and functions.
2. Incase of two or more trustees, clear instructions as to the person/persons who shall operate the account must be sought. In the absence of such instructions, no cheque short of the signatures of the entire trustee is honored.
3. While granting loans to trustees, the banker should thoroughly examine their borrowing powers as per the trust deed. Where mortgage or pledged is created, provision in this regard should again be inspected in the trust-deed, because without such a provision on the trust deed, trustees are not allowed to pledge or mortgage the trust properties.
4. in case of death of retirement of a trustee, much depends on the instrument of trust, as to whether the surviving trustees could act without the appointment of a new trustee in place of the deceased. The banker has therefore to carefully look into the trust deed to ascertain the exact position before allowing survivors to operate on the account. Where all the trustees die, the court would naturally appoint a new trustee.
5. Where the trustee becomes ‘insolvent’, the trust property is not affected by such insolvency and belongs to the beneficiaries, and the private creditors of the trustee, therefore, can not claim it.
6. In case of the trustee’s ‘Lunacy’ the banker must not permit operations on the account by such a trustee. In case the trust account is indebt, it must be stopped, and a fresh account opened for future operations by the new trustee.

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