DEPOSITS
Demand Liabilities
Demand Liabilities of a bank are liabilities which are payable on demand.
These include current deposits, demand liabilities portion of savings bank deposits, margins
held against letters of credit/guarantees, balances in overdue fixed deposits, cash certificates and cumulative/recurring deposits, Demand Drafts (DDs), unclaimed deposits, credit balances in the Cash Credit account and deposits held as security for advances which are payable on demand.
Time Liabilities
Time Liabilities of a bank are those which are payable otherwise than on demand.
These include fixed deposits, cash certificates, cumulative and recurring deposits, time liabilities portion of savings bank deposits, staff security deposits, margin held against letters of credit, if not payable on demand, deposits held as securities for advances which are not payable on demand and Gold deposits.
Other Demand and Time Liabilities (ODTL)
ODTL include interest accrued on deposits, bills payable, unpaid dividends, suspense account balances representing amounts due to other banks or public, net credit balances in branch adjustment account etc. Participation Certificates issued to other banks, the balances outstanding in the blocked account pertaining to segregated outstanding credit entries for more than 5 years in Inter-branch adjustment account, the margin money on bills purchased / discounted and gold borrowed by banks from abroad, also should be included in ODTL.
CALCULATION OF SB INTEREST ON DAILY PRODUCT BASIS
The revised method of interest calculation on Savings Bank accounts with effect from 01.4.10 as per RBI directive is based on daily product basis as detailed below:
The closing balance on each and every day is taken into account as the factor and based on the number of days the balance outstanding, the product is worked out and the procedure is
followed for the entire month, like wise for all months. The interest accrued based on the
above method is credited into SB account once in six months that is on 31st March and 30th
September respectively into the account of the customer.
DICGC:
- Set up on 01.01.1962, wholly owned by RBI
- Protection to small depositors and guarantee cover to credit facilities extended to
small borrowers belonging to weaker sections
- Deposit protection up to Rs. 1 lac
KYC norms for Term Deposits:
KYC norms are also applicable to Term Deposits. Proper introduction, identity proof and current
address proof are now the statutory requirements as per the Prevention of Money Laundering
Act (POMLA).
This is an area where regulatory authority is now focusing for proper compliance.
i) Proof of address and identity of the depositors must be clearly established before opening
any type of term deposit accounts. However, it may please be noted that Address/Identity
proof need not be insisted for opening a term deposit, wherever the depositor is already
maintaining a KYC compliant Current/Saving/Term deposit account.
(ii) Repayment of proceeds of term deposits (inclusive of the principal amount and the interest)
can be made by way of cash only up to Rs. 20,000/- (Rupees twenty thousand only), per
depositor, per day.
(iii) Repayment of proceeds of term deposits in excess of Rs. 20,000/- (Rupees twenty thousand
only) should be made by way of crossed Pay Order/Demand Draft or to the credit of the
beneficiary’s account only.
(iv) Branches should not, under any circumstances, credit the proceeds of the term deposit to
control account and pay the proceeds by way of cash from there.
(v) Branches should not adopt the practice of issuing pay orders and then pay cash to the
depositor by canceling the crossing.
(vi) As far as possible, all term deposit customers may be requested to open a Savings account
with us which will automatically ensure proper and due Compliance of KYC Norms for term
deposits also.
What is nomination?
Nomination is a facility that enables a deposit account holder(s) or hirer(s) of safe deposit
locker(s) or persons keeping articles in safe custody of the bank to designate an individual, who can claim the proceeds of the deposit account(s) or contents of the safe deposit locker(s), or articles kept in safe custody after the demise of the original depositor(s) or locker holder(s) or depositor(s) of articles.
Who can make a nomination?
• Bank account holders having deposit accounts in their individual name or in joint names (two or more individuals) can appoint a nominee to their account/s.
• A sole proprietor can appoint a nominee to the sole proprietorship account with the bank.
• In the case of a deposit account in the name of a minor, nomination may be made by a person lawfully entitled to act on behalf of the minor in respect of the deposit account.
• Safe deposit locker holder(s) can appoint nominee(s) on their Safe deposit locker(s).
• Individual depositors depositing articles for safe custody.
• A nomination can be made only in respect of a deposit account which is held in the individual capacity of the depositor, and not in any representative capacity such as the holder of an office like Director of a Company, Secretary of an Association, partner of a firm, or Karta of an HUF.
Can an account holder nominate a minor?
Yes, nomination favouring the minor is permitted on the condition that the account/ locker holder(s) while making the nomination, appoints another individual (who is not a minor) to receive the proceeds in the account/ contents of the locker on behalf of the minor.
Does a nomination stand cancelled at the time of renewal of a deposit?
No. A nomination or cancellation of nomination or variation of nomination will not cease to be in force merely by reason of the renewal of the deposit. The nomination recorded for the
deposit will hold good for the renewed deposit too.
Will the nomination facility guarantee the transfer of funds to the nominee?
If the nomination is not contested and subject to complete submission of documents as per the bank’s requirements, the nominee can claim the funds in the deposit accounts that he has been nominated on. However, in case of any contest or dispute, or another claimant approaching the bank with any legal documentation, the court decision will be binding on the bank.
Can a nominee demand premature payment of a TDR standing in the name of a depositor who had nominated him the nominee and later died i.e. before the maturity of TDR.
The nominee has the same rights as that of a depositor after the death of the depositor.
During the currency of the Term Deposit, the deposit holder/holders can freely add / modify / delete the names of the deposit holder. What precaution we have to exercise in such cases?
The request should be signed by all the deposit holders if it is a joint account. If new person is added as joint account holder to the deposit account, the Branch should comply with due KYC diligence for the new person to be added such as getting the identification, address proof, photo etc. The signature of such new person should be obtained and kept along with the original account opening form.
A and B, two persons opened a joint deposit account with maturity payment instructions as “E or S”. Before maturity of the deposit, A is deceased. Since it is a “E or S” deposit, the deposit amount was paid to the survivor B on maturity. Can the legal heirs of A claim the amount from the Bank?
Even though payment to the survivor will confer a valid discharge to the bank, the survivor will, however, hold the money only as trustee for the legal heirs (who may include the survivor as well) unless he is the sole beneficial owner of the balance in the account or the sole legal heir of the deceased. Thus, the survivor’s right unless he is the sole owner of the balance in the account/sole legal heir of the deceased, is only in the nature of a mere right to collect the money from the bank. If the legal heirs of the deceased lay a claim to the amount in the bank, they should be advised that in terms of the contract applicable to the account, the survivor is the person entitled to payment by the bank and that, unless the bank is restrained by an order of a competent court, the bank would be within its rights to make the payment to the survivors named in the account. The position, briefly, is that a payment to survivor can be made if there are no orders from a competent court restraining the bank from making such payments. In a joint term deposit account which has been opened in the style of either or survivor/any one or survivors or survivor, the bank often receives a request, on the death of one of the joint account holders, from the surviving depositors) to allow premature encashment or the grant of a loan against the term deposit receipt. Can such premature payment of deposit or loan be given? It would be in order to accede to the request of the surviving depositors for premature payment if “either/any one or survivorship” man- date has been obtained from original surviving depositors. Requests for loans from surviving depositor(s) could also be considered in special cases, though in the case of such loans, the bank may face a possible risk if the legal representatives of the deceased depositor lay an effective claim to the deposit before it is paid on maturity. In such an event, the bank will have to look to the borrower(s) for repayment.
Whether banks can refuse premature withdrawal of term deposits?
Banks may not normally refuse premature withdrawal of term deposits of individuals and Hindu Undivided Families (HUF), irrespective of the size of the deposit. However, banks at their discretion, may disallow premature withdrawal of large deposits held by entities other than individuals and Hindu Undivided Families. Banks should notify such depositors of their policy of disallowing premature withdrawals in advance, i.e. at the time of acceptance of deposits.
Whether a probationary / retired employee is eligible to open such joint account and claim additional one per cent interest ?
A member of the bank's staff means a person employed on a regular basis,whether full-time or part-time and includes a person recruited on probation or employed on a contract of a
specified duration or on deputation and an employee taken over in pursuance of any scheme of amalgamation, but does not include a person employed on casual basis. A retired member of the bank's staff means an employee retiring whether on superannuation or otherwise, but does not include an employee retired compulsorily or in consequence of disciplinary action. Hence the probationary / retired employee is also eligible to open such joint account.
A retired employee of the Bank is opening a Joint Term Deposit Account with his wife as first account holder. He is also a Senior Citizen. His wife is not a Senior Citizen. Whether he can claim the benefit of additional 1% applicable for member of staff of the bank and additional 0.5% interest, being a Senior Citizen?
He can claim only 1% additional interest payable to retired member of the staff. Since the first account holder is not a Senior Citizen, additional 0.5% interest eligible for Senior Citizen is not allowed.
Whether the joint account opened by the resigned member of staff is eligible for additional 1% interest?
Requests received from resigned staff members, who have completed 20 years of unblemished service in our bank and also completed fifty years of age at the time of resignation, are to be forwarded to Central Office. PBG will analyse such requests and issue appropriate direction to the concerned branches. Before sending such requests, the branches should get themselves confirmed that the ex employee requesting one percent extra interest on deposits has not joined any other bank / institution for gainful employment.
A member of the staff has opened a joint Term Deposit Account with his family member for a period of 60 months. One month later, he has resigned from the bank and ceased to be a member of the staff. At the time of opening the term deposit account 1% additional interest was given. Can he claim the same benefit after he is ceased to be a member of the staff?
The additional interest shall be payable only so long as the person continues to be eligible for the same and in case of his ceasing to be so eligible, till the maturity of the deposit in the case of a term deposit account. Hence he can claim 1% additional interest benefit till the maturity of the deposit.
Savings Bank Accounts for TASC entities & non-individuals:
1. Societies registered under the Societies Registration Act 1980 or any other corresponding law in State or Union Territory.
2. Trust /Endowment registered as a Society under Societies Registration Act.
3. Trust/ Endowment registered under Indian Trust Act.
4. Public Trusts for Charitable or Religious Purposes registered with Charity Commissioner or with Sub-Registrar of Assurances (in the states where office of charity commissioner does not exist) or with Commissioner of Endowments/WakfBoard etc.
5. Trust, Society, Association or Club established for philanthropic purposes or Research
Association, University or educational institution existing solely for educational purposes and
not for purpose of profit, hospitals existing solely for philanthropic purposes and not for
purpose of profit [Institutions whose entire income is exempt from payment of Income-tax
under Sec. 10 of the Income-Tax Act, 1961.]
6. Panchayat Samitis and other Government departments / bodies / agencies in respect of
grants / subsidies released for implementation of various programmes / Schemes sponsored by Central Government / State Governments subject to production of an authorization from the respective Central / State Government departments.
7. Government departments/bodies not depending upon budgetary allocations for
performance of their functions.
8. Khadi and Village Industries Boards.
9. Agriculture Produce Market Committees.
10. Development of Women and Children in Rural Areas (DWCRA)
11. Self-help Groups (SHGs), registered or unregistered, which are engaged in promoting
savings habits among their members.
12. Farmers' Clubs - Vikas Volunteer Vahini - VVV.”
13. Companies which have been licensed by the Central Government under Section 25 of the Companies Act, and permitted not to add to their names the words 'Limited' or the words
'Private Limited'.
14. Employee Welfare Trust
15. Temples
16. Church of South India – Trust Association
17. HUF: For their non-business transactions, HUFs can open SB a/c
Apart from the above, the below named non-individuals/entities can also open SB accounts:
1. Official Liquidator/Official Assignee.
2. Executors/Administrators appointed through WILL or by Court
3. Schools, Colleges, and other Educational institutions (including their sub-units such as
departments, hostels, event collection funds etc.) promoted and administered by a
Society/Trust. The constitution of such school or college would be the same as their promoter i.e., Society or Trust if they do not have any separate constitution of their own.
4. Local Chapter of well known International Clubs (e.g. Rotary, Lions and Jaycee)
5. Local chapters of Professional Bodies and professional associations and other institutions
established for control, supervision, regulation or encouragement of professions (like Chapter of CA, CS, ICWA, Medical and Management Association etc.) and well known International Societies, subject to production of Income Tax Exemption certificate.
6. Non Governmental Organizations [NGO]
Who cannot open SB accounts?
1. Unregistered Apartments Owners/Tenants Associations, if IT exemption is not available. They should be advised to register themselves and obtain PAN card not only for opening SB a/cs but also for non deduction of TDS on deposits, if claimed, which may be placed by them.
2. Unregistered Trusts/Societies/clubs, if IT exemption is not available.
3. Primary Co-operative Credit Societies [PACS], unless credit limits are given by our bank.
4. State Housing Co-operative Societies/Land Mortgage Banks and other societies under State Co-operative societies Acts.
5. FCRA Account: FCRA accounts are the designated accounts of an entity entitled to receive donations from foreign sources as per ‘Foreign Contribution Regulation Act, 1976’. If a Trust/ Society or Section 25 Company wants to open FCRA account, they should be registered with theMinistry of Home Affairs, Central Govt. The name of the account should also contain the word.
“FCRA
Features of various Deposit Schemes available for Non-Resident Indians (NRIs)
Particulars Foreign Currency (Non-
Resident) Account (Banks)
Scheme [FCNR (B) Account]
Non-Resident (External)
Rupee Account Scheme
[NRE Account]
Non-Resident Ordinary Rupee
Account Scheme [NRO Account]
Who can open an account
NRIs (individuals / entities of Bangladesh / Pakistan nationality / ownership require prior approval of RBI) NRIs (individuals / entities of Bangladesh / Pakistan nationality/ownership require prior approval of RBI)
Any person resident outside India (other than a person resident in Nepal and Bhutan). Individuals / entities of Bangladesh / Pakistan nationality / ownership as well as erstwhile Overseas Corporate Bodies require prior approval of the Reserve Bank.
Joint account In the names of two or more non-resident individuals provided all the account holders are persons of Indian nationality or origin; Resident close relative (relative as defined in Section 6 of the Companies Act, 1956) on ‘former or survivor’ basis. The resident close relative shall be eligible to operate the account as a Power of Attorney holder in accordance with extant instructions during the life time of the NRI/ PIO account holder.
In the names of two or more non-resident individuals provided all the account holders are persons of Indian nationality or origin; Resident close relative (relative as defined in Section 6 of the Companies Act, 1956) on ‘former or survivor’ basis. The resident close relative shall be eligible to operate the account as a Power of Attorney holder in accordance with extant instructions during the life time of the NRI/ PIO account holder. May be held jointly with residents
Currency in which account is denominated
Any permitted currency i.e. a foreign currency which is freely convertible Indian Rupees
Repatriablity
Not repatriable except for the following:
i) current income
ii) up to USD 1 (one) million per financial year (April-March), for any bonafide purpose, out of the balances in the account, e.g., sale proceeds of assets in India acquired by way of purchase/ inheritance / legacy inclusive of assets acquired out of settlement subject to certain conditions.
Type of Account
Term Deposit only Savings, Current, Recurring, Fixed Deposit Savings, Current, Recurring, Fixed Deposit
Period for fixed deposits
For terms not less than 1 year and not more than 5 years. At the discretion of the bank. As applicable to resident accounts.
Rate of Interest
The interest rates are stipulated by the Department of Banking Operations and Development, Reserve Bank of India. From May 4, 2012 onwards , the interest rates on FCNR (B) Deposits will be revised as one year to less than three years LIBOR/SWAP plus 200 basis points, three to five years LIBOR/SWAP plus 400 basis points on floating rate deposits, interest shall be paid within the ceiling of swap rates for the respective currency/maturity plus 200 bps/300 bps as the case may be. For floating rate deposits, the interest reset period shall be six months. Subject to cap as stipulated by the Department of Banking Operations and Development, Reserve Bank of India :
Banks are free to determine the interest rates of saving’s and term deposits of maturity of one year and above. Interest rates offered by banks on NRE deposits cannot be higher than those offered by them on comparable domestic rupee deposits, for deposits upto 3 years maturity. For deposits of period more than 3 years, no ceiling is fixed. Banks are free to determine their interest rates on savings deposits under Ordinary Non-Resident (NRO) Accounts. However, interest rates offered by banks on NRO deposits cannot be higher than those offered by them on comparable domestic rupee deposits.
Operations by Power of Attorney in favour of a resident by the non-resident
account holder
Operations in the account in terms of Power of Attorney is restricted to withdrawals for permissible local payments or remittance to the account holder himself through normal banking channels. Operations in the account in terms of Power of Attorney is restricted to withdrawals for permissible local payments or remittance to the account holder himself through normal banking channels.
Operations in the account in terms of Power of Attorney is restricted to withdrawals for permissible local payments in rupees, remittance of current income to the account holder outside India or remittance to the account holder himself through normal banking channels. Remittance is subject to the ceiling of USD 1 (one) million per financial year.
Purpose of Loan
a. In India
i) to the Account holder
i) Personal purposes or for carrying on business activities *
ii) Direct investment in India on non-repatriation basis by way of contribution to the
capital of Indian firms / companies
iii) Acquisition of flat / house in India for his own residential use.
i) Personal purposes or for carrying on business activities.*
ii) Direct investment in India on non-repatriation basis by way of contribution to the
capital of Indian firms / companies.
iii) Acquisition of flat / house in India for his own residential use.
Personal requirement and / or business purpose.*
ii) to Third Parties
Fund based and / or nonfund based facilities for personal purposes or for
carrying on business activities *. Fund based and / or non-fund based facilities for personal purposes or for carrying on business activities *.
Personal requirement and / or business purpose *
b. Abroad
To the account holder and Third Parties
Fund based and / or nonfund based facilities for bonafide purposes.
Resident Foreign Currency Account:
● Returning NRIs /PIOs may open, hold and maintain with an authorised dealer in India a
Resident Foreign Currency (RFC) Account to transfer balances held in NRE/FCNR(B) accounts.
● Proceeds of assets held outside India at the time of return can be credited to RFC account.
● The funds in RFC accounts are free from all restrictions regarding utilisation of foreign
currency balances including any restriction on investment in any form outside India.
● RFC accounts can be maintained in the form of current or savings or term deposit accounts, where the account holder is an individual and in the form of current or term deposits in all other cases.
RFC accounts are permitted to be held jointly with the resident close relative(s) as defined in
the Companies Act, 1956 as joint holder (s) in their RFC bank account on ‘former or survivor
basis’. However, such resident Indian close relative, now being made eligible to become joint account holder shall not be eligible to operate the account during the life time of the resident account holder.
What is an EEFC Account and what are its benefits?
Exchange Earners' Foreign Currency Account (EEFC) is an account maintained in foreign
currency with an Authorised Dealer i.e. a bank dealing in foreign exchange. It is a facility
provided to the foreign exchange earners, including exporters, to credit 100 per cent of their
foreign exchange earnings to the account, so that the account holders do not have to convert foreign exchange into Rupees and vice versa, thereby minimizing the transaction costs.
How much of one’s foreign exchange earnings can be credited into an EEFC account?
100% foreign exchange earnings can be credited to the EEFC account subject to the condition that the sum total of the accruals in the account during a calendar month should be converted into Rupees on or before the last day of the succeeding calendar month after adjusting for utilization of the balances for approved purposes or forward commitments.
Whether EEFC Account is permitted to be held jointly with a resident close relative?
Resident individuals have been permitted to include resident close relative (s) as defined in the Companies Act, 1956 as a joint holder (s) in this EEFC bank Account. However, they shall not be eligible to operate the account during the life time of the resident account holder.
Demand Liabilities
Demand Liabilities of a bank are liabilities which are payable on demand.
These include current deposits, demand liabilities portion of savings bank deposits, margins
held against letters of credit/guarantees, balances in overdue fixed deposits, cash certificates and cumulative/recurring deposits, Demand Drafts (DDs), unclaimed deposits, credit balances in the Cash Credit account and deposits held as security for advances which are payable on demand.
Time Liabilities
Time Liabilities of a bank are those which are payable otherwise than on demand.
These include fixed deposits, cash certificates, cumulative and recurring deposits, time liabilities portion of savings bank deposits, staff security deposits, margin held against letters of credit, if not payable on demand, deposits held as securities for advances which are not payable on demand and Gold deposits.
Other Demand and Time Liabilities (ODTL)
ODTL include interest accrued on deposits, bills payable, unpaid dividends, suspense account balances representing amounts due to other banks or public, net credit balances in branch adjustment account etc. Participation Certificates issued to other banks, the balances outstanding in the blocked account pertaining to segregated outstanding credit entries for more than 5 years in Inter-branch adjustment account, the margin money on bills purchased / discounted and gold borrowed by banks from abroad, also should be included in ODTL.
CALCULATION OF SB INTEREST ON DAILY PRODUCT BASIS
The revised method of interest calculation on Savings Bank accounts with effect from 01.4.10 as per RBI directive is based on daily product basis as detailed below:
The closing balance on each and every day is taken into account as the factor and based on the number of days the balance outstanding, the product is worked out and the procedure is
followed for the entire month, like wise for all months. The interest accrued based on the
above method is credited into SB account once in six months that is on 31st March and 30th
September respectively into the account of the customer.
DICGC:
- Set up on 01.01.1962, wholly owned by RBI
- Protection to small depositors and guarantee cover to credit facilities extended to
small borrowers belonging to weaker sections
- Deposit protection up to Rs. 1 lac
KYC norms for Term Deposits:
KYC norms are also applicable to Term Deposits. Proper introduction, identity proof and current
address proof are now the statutory requirements as per the Prevention of Money Laundering
Act (POMLA).
This is an area where regulatory authority is now focusing for proper compliance.
i) Proof of address and identity of the depositors must be clearly established before opening
any type of term deposit accounts. However, it may please be noted that Address/Identity
proof need not be insisted for opening a term deposit, wherever the depositor is already
maintaining a KYC compliant Current/Saving/Term deposit account.
(ii) Repayment of proceeds of term deposits (inclusive of the principal amount and the interest)
can be made by way of cash only up to Rs. 20,000/- (Rupees twenty thousand only), per
depositor, per day.
(iii) Repayment of proceeds of term deposits in excess of Rs. 20,000/- (Rupees twenty thousand
only) should be made by way of crossed Pay Order/Demand Draft or to the credit of the
beneficiary’s account only.
(iv) Branches should not, under any circumstances, credit the proceeds of the term deposit to
control account and pay the proceeds by way of cash from there.
(v) Branches should not adopt the practice of issuing pay orders and then pay cash to the
depositor by canceling the crossing.
(vi) As far as possible, all term deposit customers may be requested to open a Savings account
with us which will automatically ensure proper and due Compliance of KYC Norms for term
deposits also.
What is nomination?
Nomination is a facility that enables a deposit account holder(s) or hirer(s) of safe deposit
locker(s) or persons keeping articles in safe custody of the bank to designate an individual, who can claim the proceeds of the deposit account(s) or contents of the safe deposit locker(s), or articles kept in safe custody after the demise of the original depositor(s) or locker holder(s) or depositor(s) of articles.
Who can make a nomination?
• Bank account holders having deposit accounts in their individual name or in joint names (two or more individuals) can appoint a nominee to their account/s.
• A sole proprietor can appoint a nominee to the sole proprietorship account with the bank.
• In the case of a deposit account in the name of a minor, nomination may be made by a person lawfully entitled to act on behalf of the minor in respect of the deposit account.
• Safe deposit locker holder(s) can appoint nominee(s) on their Safe deposit locker(s).
• Individual depositors depositing articles for safe custody.
• A nomination can be made only in respect of a deposit account which is held in the individual capacity of the depositor, and not in any representative capacity such as the holder of an office like Director of a Company, Secretary of an Association, partner of a firm, or Karta of an HUF.
Can an account holder nominate a minor?
Yes, nomination favouring the minor is permitted on the condition that the account/ locker holder(s) while making the nomination, appoints another individual (who is not a minor) to receive the proceeds in the account/ contents of the locker on behalf of the minor.
Does a nomination stand cancelled at the time of renewal of a deposit?
No. A nomination or cancellation of nomination or variation of nomination will not cease to be in force merely by reason of the renewal of the deposit. The nomination recorded for the
deposit will hold good for the renewed deposit too.
Will the nomination facility guarantee the transfer of funds to the nominee?
If the nomination is not contested and subject to complete submission of documents as per the bank’s requirements, the nominee can claim the funds in the deposit accounts that he has been nominated on. However, in case of any contest or dispute, or another claimant approaching the bank with any legal documentation, the court decision will be binding on the bank.
Can a nominee demand premature payment of a TDR standing in the name of a depositor who had nominated him the nominee and later died i.e. before the maturity of TDR.
The nominee has the same rights as that of a depositor after the death of the depositor.
During the currency of the Term Deposit, the deposit holder/holders can freely add / modify / delete the names of the deposit holder. What precaution we have to exercise in such cases?
The request should be signed by all the deposit holders if it is a joint account. If new person is added as joint account holder to the deposit account, the Branch should comply with due KYC diligence for the new person to be added such as getting the identification, address proof, photo etc. The signature of such new person should be obtained and kept along with the original account opening form.
A and B, two persons opened a joint deposit account with maturity payment instructions as “E or S”. Before maturity of the deposit, A is deceased. Since it is a “E or S” deposit, the deposit amount was paid to the survivor B on maturity. Can the legal heirs of A claim the amount from the Bank?
Even though payment to the survivor will confer a valid discharge to the bank, the survivor will, however, hold the money only as trustee for the legal heirs (who may include the survivor as well) unless he is the sole beneficial owner of the balance in the account or the sole legal heir of the deceased. Thus, the survivor’s right unless he is the sole owner of the balance in the account/sole legal heir of the deceased, is only in the nature of a mere right to collect the money from the bank. If the legal heirs of the deceased lay a claim to the amount in the bank, they should be advised that in terms of the contract applicable to the account, the survivor is the person entitled to payment by the bank and that, unless the bank is restrained by an order of a competent court, the bank would be within its rights to make the payment to the survivors named in the account. The position, briefly, is that a payment to survivor can be made if there are no orders from a competent court restraining the bank from making such payments. In a joint term deposit account which has been opened in the style of either or survivor/any one or survivors or survivor, the bank often receives a request, on the death of one of the joint account holders, from the surviving depositors) to allow premature encashment or the grant of a loan against the term deposit receipt. Can such premature payment of deposit or loan be given? It would be in order to accede to the request of the surviving depositors for premature payment if “either/any one or survivorship” man- date has been obtained from original surviving depositors. Requests for loans from surviving depositor(s) could also be considered in special cases, though in the case of such loans, the bank may face a possible risk if the legal representatives of the deceased depositor lay an effective claim to the deposit before it is paid on maturity. In such an event, the bank will have to look to the borrower(s) for repayment.
Whether banks can refuse premature withdrawal of term deposits?
Banks may not normally refuse premature withdrawal of term deposits of individuals and Hindu Undivided Families (HUF), irrespective of the size of the deposit. However, banks at their discretion, may disallow premature withdrawal of large deposits held by entities other than individuals and Hindu Undivided Families. Banks should notify such depositors of their policy of disallowing premature withdrawals in advance, i.e. at the time of acceptance of deposits.
Whether a probationary / retired employee is eligible to open such joint account and claim additional one per cent interest ?
A member of the bank's staff means a person employed on a regular basis,whether full-time or part-time and includes a person recruited on probation or employed on a contract of a
specified duration or on deputation and an employee taken over in pursuance of any scheme of amalgamation, but does not include a person employed on casual basis. A retired member of the bank's staff means an employee retiring whether on superannuation or otherwise, but does not include an employee retired compulsorily or in consequence of disciplinary action. Hence the probationary / retired employee is also eligible to open such joint account.
A retired employee of the Bank is opening a Joint Term Deposit Account with his wife as first account holder. He is also a Senior Citizen. His wife is not a Senior Citizen. Whether he can claim the benefit of additional 1% applicable for member of staff of the bank and additional 0.5% interest, being a Senior Citizen?
He can claim only 1% additional interest payable to retired member of the staff. Since the first account holder is not a Senior Citizen, additional 0.5% interest eligible for Senior Citizen is not allowed.
Whether the joint account opened by the resigned member of staff is eligible for additional 1% interest?
Requests received from resigned staff members, who have completed 20 years of unblemished service in our bank and also completed fifty years of age at the time of resignation, are to be forwarded to Central Office. PBG will analyse such requests and issue appropriate direction to the concerned branches. Before sending such requests, the branches should get themselves confirmed that the ex employee requesting one percent extra interest on deposits has not joined any other bank / institution for gainful employment.
A member of the staff has opened a joint Term Deposit Account with his family member for a period of 60 months. One month later, he has resigned from the bank and ceased to be a member of the staff. At the time of opening the term deposit account 1% additional interest was given. Can he claim the same benefit after he is ceased to be a member of the staff?
The additional interest shall be payable only so long as the person continues to be eligible for the same and in case of his ceasing to be so eligible, till the maturity of the deposit in the case of a term deposit account. Hence he can claim 1% additional interest benefit till the maturity of the deposit.
Savings Bank Accounts for TASC entities & non-individuals:
1. Societies registered under the Societies Registration Act 1980 or any other corresponding law in State or Union Territory.
2. Trust /Endowment registered as a Society under Societies Registration Act.
3. Trust/ Endowment registered under Indian Trust Act.
4. Public Trusts for Charitable or Religious Purposes registered with Charity Commissioner or with Sub-Registrar of Assurances (in the states where office of charity commissioner does not exist) or with Commissioner of Endowments/WakfBoard etc.
5. Trust, Society, Association or Club established for philanthropic purposes or Research
Association, University or educational institution existing solely for educational purposes and
not for purpose of profit, hospitals existing solely for philanthropic purposes and not for
purpose of profit [Institutions whose entire income is exempt from payment of Income-tax
under Sec. 10 of the Income-Tax Act, 1961.]
6. Panchayat Samitis and other Government departments / bodies / agencies in respect of
grants / subsidies released for implementation of various programmes / Schemes sponsored by Central Government / State Governments subject to production of an authorization from the respective Central / State Government departments.
7. Government departments/bodies not depending upon budgetary allocations for
performance of their functions.
8. Khadi and Village Industries Boards.
9. Agriculture Produce Market Committees.
10. Development of Women and Children in Rural Areas (DWCRA)
11. Self-help Groups (SHGs), registered or unregistered, which are engaged in promoting
savings habits among their members.
12. Farmers' Clubs - Vikas Volunteer Vahini - VVV.”
13. Companies which have been licensed by the Central Government under Section 25 of the Companies Act, and permitted not to add to their names the words 'Limited' or the words
'Private Limited'.
14. Employee Welfare Trust
15. Temples
16. Church of South India – Trust Association
17. HUF: For their non-business transactions, HUFs can open SB a/c
Apart from the above, the below named non-individuals/entities can also open SB accounts:
1. Official Liquidator/Official Assignee.
2. Executors/Administrators appointed through WILL or by Court
3. Schools, Colleges, and other Educational institutions (including their sub-units such as
departments, hostels, event collection funds etc.) promoted and administered by a
Society/Trust. The constitution of such school or college would be the same as their promoter i.e., Society or Trust if they do not have any separate constitution of their own.
4. Local Chapter of well known International Clubs (e.g. Rotary, Lions and Jaycee)
5. Local chapters of Professional Bodies and professional associations and other institutions
established for control, supervision, regulation or encouragement of professions (like Chapter of CA, CS, ICWA, Medical and Management Association etc.) and well known International Societies, subject to production of Income Tax Exemption certificate.
6. Non Governmental Organizations [NGO]
Who cannot open SB accounts?
1. Unregistered Apartments Owners/Tenants Associations, if IT exemption is not available. They should be advised to register themselves and obtain PAN card not only for opening SB a/cs but also for non deduction of TDS on deposits, if claimed, which may be placed by them.
2. Unregistered Trusts/Societies/clubs, if IT exemption is not available.
3. Primary Co-operative Credit Societies [PACS], unless credit limits are given by our bank.
4. State Housing Co-operative Societies/Land Mortgage Banks and other societies under State Co-operative societies Acts.
5. FCRA Account: FCRA accounts are the designated accounts of an entity entitled to receive donations from foreign sources as per ‘Foreign Contribution Regulation Act, 1976’. If a Trust/ Society or Section 25 Company wants to open FCRA account, they should be registered with theMinistry of Home Affairs, Central Govt. The name of the account should also contain the word.
“FCRA
Features of various Deposit Schemes available for Non-Resident Indians (NRIs)
Particulars Foreign Currency (Non-
Resident) Account (Banks)
Scheme [FCNR (B) Account]
Non-Resident (External)
Rupee Account Scheme
[NRE Account]
Non-Resident Ordinary Rupee
Account Scheme [NRO Account]
Who can open an account
NRIs (individuals / entities of Bangladesh / Pakistan nationality / ownership require prior approval of RBI) NRIs (individuals / entities of Bangladesh / Pakistan nationality/ownership require prior approval of RBI)
Any person resident outside India (other than a person resident in Nepal and Bhutan). Individuals / entities of Bangladesh / Pakistan nationality / ownership as well as erstwhile Overseas Corporate Bodies require prior approval of the Reserve Bank.
Joint account In the names of two or more non-resident individuals provided all the account holders are persons of Indian nationality or origin; Resident close relative (relative as defined in Section 6 of the Companies Act, 1956) on ‘former or survivor’ basis. The resident close relative shall be eligible to operate the account as a Power of Attorney holder in accordance with extant instructions during the life time of the NRI/ PIO account holder.
In the names of two or more non-resident individuals provided all the account holders are persons of Indian nationality or origin; Resident close relative (relative as defined in Section 6 of the Companies Act, 1956) on ‘former or survivor’ basis. The resident close relative shall be eligible to operate the account as a Power of Attorney holder in accordance with extant instructions during the life time of the NRI/ PIO account holder. May be held jointly with residents
Currency in which account is denominated
Any permitted currency i.e. a foreign currency which is freely convertible Indian Rupees
Repatriablity
Not repatriable except for the following:
i) current income
ii) up to USD 1 (one) million per financial year (April-March), for any bonafide purpose, out of the balances in the account, e.g., sale proceeds of assets in India acquired by way of purchase/ inheritance / legacy inclusive of assets acquired out of settlement subject to certain conditions.
Type of Account
Term Deposit only Savings, Current, Recurring, Fixed Deposit Savings, Current, Recurring, Fixed Deposit
Period for fixed deposits
For terms not less than 1 year and not more than 5 years. At the discretion of the bank. As applicable to resident accounts.
Rate of Interest
The interest rates are stipulated by the Department of Banking Operations and Development, Reserve Bank of India. From May 4, 2012 onwards , the interest rates on FCNR (B) Deposits will be revised as one year to less than three years LIBOR/SWAP plus 200 basis points, three to five years LIBOR/SWAP plus 400 basis points on floating rate deposits, interest shall be paid within the ceiling of swap rates for the respective currency/maturity plus 200 bps/300 bps as the case may be. For floating rate deposits, the interest reset period shall be six months. Subject to cap as stipulated by the Department of Banking Operations and Development, Reserve Bank of India :
Banks are free to determine the interest rates of saving’s and term deposits of maturity of one year and above. Interest rates offered by banks on NRE deposits cannot be higher than those offered by them on comparable domestic rupee deposits, for deposits upto 3 years maturity. For deposits of period more than 3 years, no ceiling is fixed. Banks are free to determine their interest rates on savings deposits under Ordinary Non-Resident (NRO) Accounts. However, interest rates offered by banks on NRO deposits cannot be higher than those offered by them on comparable domestic rupee deposits.
Operations by Power of Attorney in favour of a resident by the non-resident
account holder
Operations in the account in terms of Power of Attorney is restricted to withdrawals for permissible local payments or remittance to the account holder himself through normal banking channels. Operations in the account in terms of Power of Attorney is restricted to withdrawals for permissible local payments or remittance to the account holder himself through normal banking channels.
Operations in the account in terms of Power of Attorney is restricted to withdrawals for permissible local payments in rupees, remittance of current income to the account holder outside India or remittance to the account holder himself through normal banking channels. Remittance is subject to the ceiling of USD 1 (one) million per financial year.
Purpose of Loan
a. In India
i) to the Account holder
i) Personal purposes or for carrying on business activities *
ii) Direct investment in India on non-repatriation basis by way of contribution to the
capital of Indian firms / companies
iii) Acquisition of flat / house in India for his own residential use.
i) Personal purposes or for carrying on business activities.*
ii) Direct investment in India on non-repatriation basis by way of contribution to the
capital of Indian firms / companies.
iii) Acquisition of flat / house in India for his own residential use.
Personal requirement and / or business purpose.*
ii) to Third Parties
Fund based and / or nonfund based facilities for personal purposes or for
carrying on business activities *. Fund based and / or non-fund based facilities for personal purposes or for carrying on business activities *.
Personal requirement and / or business purpose *
b. Abroad
To the account holder and Third Parties
Fund based and / or nonfund based facilities for bonafide purposes.
Resident Foreign Currency Account:
● Returning NRIs /PIOs may open, hold and maintain with an authorised dealer in India a
Resident Foreign Currency (RFC) Account to transfer balances held in NRE/FCNR(B) accounts.
● Proceeds of assets held outside India at the time of return can be credited to RFC account.
● The funds in RFC accounts are free from all restrictions regarding utilisation of foreign
currency balances including any restriction on investment in any form outside India.
● RFC accounts can be maintained in the form of current or savings or term deposit accounts, where the account holder is an individual and in the form of current or term deposits in all other cases.
RFC accounts are permitted to be held jointly with the resident close relative(s) as defined in
the Companies Act, 1956 as joint holder (s) in their RFC bank account on ‘former or survivor
basis’. However, such resident Indian close relative, now being made eligible to become joint account holder shall not be eligible to operate the account during the life time of the resident account holder.
What is an EEFC Account and what are its benefits?
Exchange Earners' Foreign Currency Account (EEFC) is an account maintained in foreign
currency with an Authorised Dealer i.e. a bank dealing in foreign exchange. It is a facility
provided to the foreign exchange earners, including exporters, to credit 100 per cent of their
foreign exchange earnings to the account, so that the account holders do not have to convert foreign exchange into Rupees and vice versa, thereby minimizing the transaction costs.
How much of one’s foreign exchange earnings can be credited into an EEFC account?
100% foreign exchange earnings can be credited to the EEFC account subject to the condition that the sum total of the accruals in the account during a calendar month should be converted into Rupees on or before the last day of the succeeding calendar month after adjusting for utilization of the balances for approved purposes or forward commitments.
Whether EEFC Account is permitted to be held jointly with a resident close relative?
Resident individuals have been permitted to include resident close relative (s) as defined in the Companies Act, 1956 as a joint holder (s) in this EEFC bank Account. However, they shall not be eligible to operate the account during the life time of the resident account holder.