Banking Opr. Manual - Welcome to APCOB - The Andhra Pradesh State

162 Pages·2011·0.73 MB·English

Banking Operations Manual

Banking Operations Manual

THE A.P. STATE CO.OPERATIVE BANK LTD
TROOP BAZAR :: HYDERABAD

_________________________________________________
Vol. I

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Banking Operations Manual
P R E F A C E

This Banking Operations Manual is prepared with a view to provide a
ready guide to the officers and staff of the Bank – Andhra Pradesh State
Cooperative Bank (APCOB) - in day-to-day banking operations. The Manual is
prepared based on the extant banking law, practices and is an attempt to
provide guidance to the front office functionaries in the Banking operation of
the Bank. It is compiled in January - March 2008 and mainly covers the aspects
which are currently relevant to the Andhra Pradesh State Co-operative Bank
(APCOB). The Manual is to be used keeping in view any changes in rules and
practices over time. This is also not a document to provide any full fledged
legal framework of banking operations and is in the nature of a guide to
operatives and not a rigorous substitute for extant circular instructions,
directives etc. The language used is also one to facilitate understanding rather
than being legalistic.

Throughout this Manual, based on the context, the reference to Masculine
gender is to be read as reference to Feminine gender also and similarly the
usage of singular be read contextually to include the plural. In compiling this
document, use has extensively been made of the Operational Manual for Co-
operative Banks [2004 edition] brought out by the National Federation of State
Co-operative Banks, Mumbai, which is gratefully acknowledged.

This Manual has been gone through in detail and vetted by various senior
officers of Head Office and the Co-operative Training Institute of the Bank.
The final version is brought out after detailed consultations with well-
experienced officers at the Head Office and Branches.

Over a period of time it is expected that this manual will be vastly
improved based on inputs from the functionaries at different levels based on
their active feedback. Further volumes of this Manual are expected to be
brought out covering various other areas in due course.

It is hoped that this volume will be useful as a basic guide for the Front
Office operations in Banking in the Bank.

M.S. Rama Rao
Chief General Manager
Centralised Monitoring, Inspection
& Audit Dept
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Banking Operations Manual

FOREWORD

A Banking Operations Manual for the Head Office main branch and
branches of the Bank has been a long felt need. The present ‘Banking
Operations Manual’ is a team effort by the senior officers of the Bank in
consultation with the front office functionaries. The effort has been co-
ordinated by the Centralised Monitoring, Inspection & Audit Department of
the Bank. The present volume attempts to bring at one place the important
aspects of Banking operations for reference of the functionaries at the
delivery point of the customer services in the Bank. It is also an effort to
streamline and standardize the procedures to usher in the various systems,
procedures and controls and the first of a series of such initiation planned by
the Bank.

Apart from incorporating up-to-date instructions on Banking
operations and the latest guidelines of NABARD on Safe Deposit Lockers
and Settlement of Claims of deceased depositors, the volume provides the
customer relationship policy of the Bank and also the customer service
norms of the Bank. It is also envisaged that this Manual would be updated
and revised from time to time based on the experience and feedback of the
staff at various levels and to incorporate the changes that take place in the
practices in Banking. I wish that the Manual will be put to successful use to
improve management of the Bank and provide better services to the
customers and would pave the way for greater codification and publication
of the functions and services of the Bank.

T.S. Appa Rao,
I.A.S.,
Managing Director
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Banking Operations Manual

CONTENTS

CHAPTER
No. TITLE PAGE No.

1 Introduction 01
Customer Identification &
2 04
Introduction – Opening of Accounts

3 Nomination 25
4 Current Accounts 34
5 Savings Bank Accounts 46
Maintenance of Accounts &
6 56
Operational Procedures
7 Cash and it’s custody 72
8 Clearing 78
9 Term Deposits - General 84
10 Fixed Deposits 91
Reinvestment Deposit Gruhalakshmi
11 100
scheme
12 Recurring Deposits 104
Local Cheques / Demand Drafts &
13 Outstation Cheques – Purchase / 109
Instant Credit
14 Demand Drafts & Pay Orders 112
15 Safe Deposit Lockers 119
Settlement of Claims of Deceased
16 133
Depositors
Appendix - A Customer Relationship Policy 153
Appendix - B Customer Service Norms 158

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Banking Operations Manual

CHAPTER - 1

Introduction

General:

This Manual mainly deals with the Banking operations and is intended as a
guide for staff functioning in Banking department and branches of the Andhra
Pradesh State Co-operative Bank (APCOB).

The operations of the Bank are fully computerized under a Core Banking
System (CBS). As such, this Manual does not attempt to detail the accounting,
calculation processes, vouchering etc., as would be relevant to the Manual
environment. The procedures involved in handling the various types of accounts
of customers are dealt with in this Manual for giving a better understanding and
background reference to the front office functionaries in the Branches and Banking
wing of the Bank. The current volume deals with the customer relationship
aspects of Banking in the Bank and focuses on the handling of deposit accounts.

Salient features of deposit schemes:

CURRENT ACCOUNT: Accounts under this type can be opened by Individuals, Sole
Proprietary Concerns, Partnership Firms, Companies, Clubs, Associations, Trusts,
Govt./Local Bodies, Cooperative Societies etc. This Account is meant for
Individuals / Institutions having large number / volume of transactions, mainly for
meeting their day-to-day business and operational requirements for parking their
operational fund balances.

No interest is provided on the balances in Current Account as the Bank renders a
considerable service in operation and maintenance of the Account. These
Accounts are operated only through the cheques provided by the Bank drawn
either in individual or representative capacity, either singly or jointly. The
Cheques, Bills, DDs etc of parties are collected through the Current Accounts and
cash/clearing payments are made in respect of cheques issued by the Account
holders. Over Drafts, secured or otherwise, are provided as per the separate loan
rules in this regard. For Accounts of individuals facility of withdrawal from ATM is
also provided.

SAVINGS BANK ACCOUNT: The Savings Bank Accounts are meant for individuals
operating singly or jointly with other individuals, Associations, Clubs etc. The
Savings Bank accounts can be operated either with cheque book facility or without
cheque book facility. Where cheque book facility is not provided or not opted for,
remittances in cash and withdrawals through withdrawal slip are allowed. There is
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Banking Operations Manual

a limit on the number of transactions allowed in Savings Bank account and these
accounts are not meant for business or trading activities etc. Interest at the rate
as prescribed by RBI (presently 3.5% p.a.) is paid on the monthly minimum
balance maintained in the account between 10th and last day of the month. The
interest is computed for the full month on the above basis and credited once in 6
months to the account. Where cheque book facility is extended, the party can
draw cheques on the account which can be collected by 3rd parties through the
clearing office. Deposits in cash and cash withdrawals by way of cheque or
through ATM is allowed. Cheques / DDs etc., favouring the account holder are
collected into the account.

A special No Frills Savings Account called Abhyudaya S.B. A/c is made
available by the Bank to facilitate financial inclusion of persons of lower economic
standing, getting access to banking facilities. Under this, account can be opened
with Rs. 25/-. There is no minimum balance stipulated. Ten withdrawals are
allowed per quarter. Maximum balance at any point of time is stipulated at Rs.
25,000/-. There is no service charge or incidentals for these accounts and interest
will be paid at the rate applicable for normal Savings Bank Accounts. No cheque
book or ATM cards are issued for these accounts and collection of cheques and
DDs are not undertaken through these accounts.

FIXED DEPOSITS: These are deposits of specified sum of money permitted to be
made in multiples of Rs. 100/- for a specified period. For example, a Fixed
Deposit of Rs. 5000/- for 12 months period. Fixed Deposits may be accepted for
Days, Months, Years or their combination, as per request of customer. If the
deposit is for a minimum period of 12 months, then interest may be paid monthly,
quarterly, half-yearly or yearly. Minimum period of deposit is 7 days for Rs. 1.00
lakh or more and 15 days for deposits of below Rs. 1.00 lakh. Maximum period of
deposit is 120 months or 10 years. These deposits are repayable to the customer
on expiry of the period for which the deposit is made. However, the account
holders are permitted to make premature encashment of such deposits in case of
exigency / need – in such an event the principal amount is paid along with interest
as applicable for the period for which the deposit was actually with the Bank, less
penalty of 1 percentage points on the applicable rate of interest.

The interest is normally paid at quarterly rests for credit of the customer’s
Savings / Current account as per standing instructions or allowed to be withdrawn
in cash by the customer or paid to him by way of Bankers Cheque / Pay Order and
by way of D.D. for out-location customers. The Bank will pay interest at monthly
rests also if the customer so desires by duly discounting the interest for such
monthly payment.

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Banking Operations Manual

Loans against the Fixed Deposit may be issued to the customers on
surrender of duly discharged Fixed Deposit receipt with a letter of lien through a
separate Depositor Loan A/c for which interest is charged at 2% over the rate
provided on the deposit. In the event of foreclosure of deposit, the depositor loan
is also foreclosed with the rates of interest charged at 2% over the rate allowed on
the foreclosure of the deposit. [For foreclosure of deposit, the rate of interest
extended is applicable rate on date of deposit for the period for which the deposit
remained with the Bank minus 1% ].

GRUHALAKSHMI DEPOSIT: This deposit is essentially a term deposit which is
accepted for a minimum period of 6 months and for a maximum period of 120
months in multiples of Rs. 100/-, wherein the quarterly interest payable on the
deposit is cumulated and the total cumulative interest earned during the currency
of the deposit is paid in full along with the principal on the expiry of the period of
deposit. Deposits, as also Depositor loans, under this Head are also subject to the
norms of foreclosure as mentioned under Fixed Deposit.

RECURRING DEPOSIT: Deposits under this category are in the nature of fixed
amounts being paid in by the depositor every month subject to a minimum of Rs.
50/- and in multiples of Rs. 10/- thereafter for a specified period of years involving
monthly payments ranging from 12 to 120 months. Under this deposit scheme,
interest is cumulated at quarterly rests based on month-end balances in the
account and pre-determined amount is fixed as payable at the end of the period of
deposit. The rules relating to foreclosure and grant of loan against this deposit are
similar to that under Fixed Deposit except that in the event of foreclosure of a
Recurring Deposit, interest is paid based on monthly balances without cumulation
for the incomplete quarter. In computerized environment, the basic procedures of
interest calculation etc., are inbuilt in the Core Banking Solution (CBS) and as
such the users are fully guided by the system. However, the necessary
verification and checking as required in respect of various operations are essential
and need to be performed by the concerned functionaries.

~~~

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Banking Operations Manual

CHAPTER - 2

Customer Identification and Introduction: Opening of Accounts

Know Your Customer (KYC) Norms:

It is imperative that while opening accounts, the authorized officer must be
satisfied about the proper identity, standing and residential proof of the prospective
customer. It is only after furnishing of proper proof of identity through photo
identity card and acceptable address proof that accounts are to be opened.

The following is the customer verification and identification procedure:

Customer Identification Procedure
Features to be verified and documents that may be obtained from customers

Features Documents ( latest / valid )
Accounts of individuals
- Legal name and any other names used (i) Passport (ii) PAN card
(iii) Voter’s Identity Card (iv) Driving
Licence (v) Identity Card (subject to
the bank’s satisfaction) (vi) Letter
from a recognized public authority or
public servant verifying the identity
and residence of the customer to the

satisfaction of bank.

- Correct permanent address (i) Telephone bill (ii) Bank account
statement (iii) Letter from any
recognized public authority (iv)
Electricity Bill (v) Ration Card (vi)
Letter from employer (subject to
satisfaction of the bank) (any one
document which provides customer
information to the satisfaction of the
bank will suffice).
Accounts of companies
(i) Certificate of incorporation and
- Name of the company
Memorandum & Articles of Association (ii)
- Principal place of business
Resolution of the Board of Directors to
- Mailing address of the company open an account and identification of those
- Telephone / Fax number who have authority to operate the account
(iii) Power of Attorney granted to its
Managers, officers or employees to
transact business on its behalf (iv) Copy of
PAN allotment letter (v) Copy of the
telephone bill.
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Banking Operations Manual

Accounts of partnership firms
- Legal name (i) Registration certificate, if registered
- Address (ii) Partnership Deed (iii) Registered
- Names of all partners and their Power of Attorney granted to a partner
addresses or an employee of the firm to transact
- Telephone numbers of the firm business on its behalf (iv) Any officially
and partners valid document identifying the partners
and the persons holding the Registered
Power of Attorney and their addresses
(v) Telephone bill in the name of
firm/partners.
Accounts of Trusts & Foundations (i) Certificate of Registration, if
- Names of Trustees, Settlers, registered (ii) Registered Power of
Beneficiaries and Signatories Attorney granted to transact business on
- Names and addresses of the its behalf (iii) Any officially valid
Founder, the Managers/ Directors document to identify the Trustees,
and the Beneficiaries Settlers, Beneficiaries and those holding
- Telephone / Fax numbers Power of Attorney,
Founders/Managers/Directors and their
addresses (iv) Resolution of the managing
body of the foundation/association (v)
Telephone bill.

The original documents are to be verified, copies taken and duly authenticated by
the officer of the Bank stating ‘verified with the original’.

Introduction of Customer Accounts:

Salient features:
a. It is important that every prospective customer who wants to open
any type of deposit account in the branch must be properly
introduced to the Bank by a respectable person known to the Bank
(who may not necessarily be a constituent of the bank) or by an
existing customer of the Bank with satisfactory conduct of
transactions in deposit account (SB/C/a). The introducer must
normally call on the Bank and sign in the column specifically
provided for the purpose in the account opening application form.
Introduction is obtained primarily to get protection under Section 131
of the ‘Negotiable Instruments Act’ and all the members of the staff in
the branch must be made aware of the importance of a proper
introduction.

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Banking Operations Manual
b. The legal protection given to bankers in respect of cheques collected
“in good faith and without negligence” is available only if the account
is opened with proper introduction.

c. Once a party has been properly introduced to the Bank for opening
an account that party need not bring fresh introduction at the time of
opening another type of account (e.g. Current Account Holder
opening a SB/FD/RD/CC or a Savings Bank Account Holder opening
a CA/FD/RD/CC etc.)

d. However, if a party has Term Deposit with the Bank and such
investment has been made without any introduction and he wants to
open a Savings Bank or Current Account proper introduction is
necessary to open such Savings Bank / Current Account.

e. The need for introduction in the case of limited companies (unless
they are old and well known) is greater as they may form a
convenient medium for questionable transactions.

2. Who can introduce a customer?

Introduction of a new customer by an existing Current / Savings Bank
Account Holder is considered to be the best form of introduction. However, a
respectable person well known to the bank or a staff of the bank can also
introduce a new customer (except in case of opening Current Account).

3. Who cannot introduce a customer?

a. A Term Deposit holder who has no Current / Savings Bank Account
cannot introduce another person to open a Current / Savings Bank
Account.

b. A minor Account Holder cannot introduce.

c. It is desirable that there should be a reasonable time gap of at least
six months for a new Account Holder of the bank to introduce
another new customer to the bank. This will enable the bank to
assess whether the operations by the existing Account Holder are in
order or not.

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