A current account is a form of demand deposit account, designed for running transactions of a business establishment. The documents requirement at the bank for opening a current account depends upon how the business entity has been established (viz formed by an Individual owner or Partnership or club, association, society or Limited Company or Trust or Government Undertaking, etc.). Each entity who wants to open a Current account shall submit some specific documents depending upon the nature of the ownership. In all cases, the KYC Process should diligently be completed about the Firm as well as its proprietor, partners, or Directors.
Accounts of Hospitals, Nursing Homes, and Pathologies:
In addition to the above, some of the establishments may require a license to run their business. For example, while opening the accounts of hospitals, nursing homes, or pathology laboratories may be asked to provide a copy of the Certificate issued by Government Authorities granting permission for the establishment of Hospitals / Nursing Homes / Pathologies, etc. (as the case may be), in addition to requisite documents for opening current account based on the type of ownership viz. Individual owner or Partnership or an association, society or Limited Company Trust or Government Undertaking, etc. In addition to the above, the following are the common documents processed by the banks for opening all types of current accounts.
- Declaration to the effect that the account opener is not the borrower of other banks:
When a new current account is to be opened, banks insist on a ‘declaration’ from the opener of the account, to the effect that the account holder does not enjoy credit facility with any other bank. If the account opener enjoys credit facilities from other bank/s, they are required to produce a ‘No-Objection Certificate’ from their lending bank(s). It is binding on all the Banks to follow the above discipline. RBI would make the concerned bank liable for penalty under the Banking Regulation Act 1949 if the bank which fails to comply above condition. However, banks may open current accounts of prospective customers, if they do not receive any response for their notice from the existing bankers of the customer, after a minimum waiting period of a fortnight. If a response is received within a fortnight, the account opening bank should assess the situation concerning information provided to the prospective customer and there is no need to solicit a formal no objection. In the case of a prospective customer who is a corporate or large borrower enjoying credit facilities from more than one bank, the banks should exercise due diligence and inform the consortium leader, if under consortium, and the concerned banks, if under multiple banking arrangements.
2. New directives to Banks for opening Current Accounts
As per new regulations, all the banks have to make use of information available from the Central Repository of Information on Large Credits (CRILC) which collects stores, and disseminates data on all large borrowers’ credit exposures to and from Banks/Financial Institutions before opening the accounts. Banks would verify the data received from the CRILC, and whether the prospective customer is enjoying credit facilities from another bank.
3. Photographs of depositors
Photographs of all the persons who are authorized to operate the accounts shall submit two copies of the latest photographs for the bank’s record. Photocopies of driving license/passports containing photographs cannot be substituted in place of photographs. Accounts opened by other banks, Local Authorities, and Government Departments (excluding public sector undertakings or quasi-government bodies) are exempted from the requirement of photographs.
4. The introduction
Normally, new accounts are opened in the bank upon proper introduction of the customer to the bank. Typically an existing customer of the bank who has been maintaining a satisfactorily conducted account in the bank not less than the period of six months. Banks may also open the account based on an introduction from a respectable member of the public with acceptable bonafide well-known to the bank or the account may be opened without introduction at its discretion if the bank is satisfied with the bonafide of the applicant and perceives that the account to be opened is the low-risk category. Banks insist introduction of an account from one of the existing account holders who has been maintaining a satisfactorily conducted account for at least six months. However, the RBI has clarified that since the introduction is not necessary for opening accounts under the PML Act and Rules or the Reserve Bank’s extant KYC instructions, banks should not insist on the introduction for opening bank accounts of customers.
5. Signature on account opening forms and specimen signature sheet
In the account opening form as well as in the specimen signature sheet the signatures of all the partners/directors/trustees shall be signed at appropriate spaces provided for signature/s. The signature(s) must be uniform and well-formed and they shall not differ on cheques and letters issued at all times.
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Dear sir ,
Is solo operation in banks allowed for PVT ltd company.If operated like solo if at any point of time, if any discrepancy in operation of the account is found what other directors have to do .bank manager is telling that it is solo operation so I can not reveal information to other directors in the company . we are two directors in company and one is operating the account in solo mode and now he is trying to do fraud by transferring funds to his personal account and when ask bank manager to hold the transactions he is telling it solo operation so I cant do anything .Then how to stop him from doing transactions immediately my mobile 9966079479
Dear Raju, I don’t have clear cut idea in the matter referred by you. I suggest you to contact an experienced company secretary and act according to his suggestions. I share herewith the opinions of some of the experienced banker friends who shared their opinion with me.
1. “There is a concept called fiduciary responsibility. Though solo operated account can do all business transactions which includes transfer to his account for normal defrayment like salary etc he is not expected to issue cheques for other purposes in his name. In such a situation the banker is expected to bring it to the knowledge of the company and seek clarification on genuinity of the transaction. When that be the case here the banker has to politely refuse to the solo operator. Still if he is not ready to budge we may have to stop further operations in the account with proper notice to the company. Here when the other director gives a complaint the banker has to hold the transaction and if he contravenes he has to pay for it”. PS:. But normally such siphoning off of funds takes place by issuing cheques in the name of solo operator’s close relative.
2.Can give the resolution to change the signatory from solo to by two directors.
3. BOARD RESOLUTION – signed by two directors or the company secretary( himself) comes valid to make changes……I guess.
Plz correct me if I miss out any thing
4. Mode of operation under solo is set by both directors at the time of acc opening or later.
True, bank has to follow its protocol.
Now, as it become the fraud case it must involve the police administration.
Kindly carry the company kyc documents, personal kyc docs and agreement copy if available other than MOA/AOA and report FIR.With the consent of Police, total freeze can be levy in the account till the problem will not resolve.
5. Sir,when account is opened by a Pvt ltd company,at the opening of the account,we are getting how it goes to operate by their company,and sighned by others,if permitted for solo operation,and if it is misutilsed by solo,others can give a letter to stop the operation to bank,manager have to verify before stop the operation letter given by others is valid at the time of openers or not,if it is tallied,then Bank can stop the account operation,by giving a notice to solo operator with copy of the letter enclosed which signed by openers,and stop the account,until that solved problem.should send it through Regd AD.
6. Operation of account though primarily can be allowed on the basis of the resolution of the Board, in case of disputes among the directors it is bounded duty of the banker to stop further transactions and ask for fresh resolution duly signed by all directors on the operations of the account.
7.The other director has to give notice and bring an injunction. The Bank has to put the sole operator on notice and inform him that the operations are stopped and to get the matter resolved .
8. If the BOARD RESOLUTION specifically authorises that SINGLE PERSON, then other Directors are bound by his actions. If any other Director feels that this fellow may indulge in malpractice, he can issue STOP PAYMENT INSTRUCTION. Even in case of PARTNERSHIP A/Cs, ONE PARTNER MAY BE AUTHORISED TO OPERATE THE A/C. BUT THAT AUTHORITY IS ONLY TO “OPRRATE” THE A/C. BUT EACH PARTNER HAS THE RIGHT TO STOP PAYMENT OF A CHQ. LIKEWISE THE BOARD RESOLUTION “AUTHORISES” ONE SINGLE DIRECTOR TO “OPERATE” THE A/C. BUT IT DOES NOT EXTINGUISH THE RIGHT OF OTHER DITECTORS TO STOP PAYMENT. THAT IS WHY WE OBTAIN THE “SPECIMEN SIGNATURES” OF “ALL” DIRECTORS/PARTNERS AT THE TIME OF OPENING THE A/C. LATER THIS “STOP PAYMENT” ORDER MAY BE RATIFIED BY THE BOARD THROUGH ANOTHER RESOLUTION ALONGWITH A FRESH RESOLUTION AUTHORISING SOME OTHET PERSON(S) TO OPERATE THE A/C.
9. By solo authority it only means
A delegated authority for day to day operation or for a specific purpose like documentation authorised by the directors conferring power to the authorised signatory.the signatory can always be changed or revoked by the directors
Thank you sir.ivgot very useful information
Sir,
I am working as Pharmacist in a Govt. Ayurveda Hospital. There is Hospital Managing Committee as per State Govt. Rules and Directions in our Hospital. We want to open an account in favor of HMC in any Nationalized Bank (nearest one is SBI). The Account must be started jointly in the names of Chair Person (Grama Panchayath President) and Member Secretary (Head of the Hospital) of HMC. What type of Account is helpful for us and which documents needed for the same? Please help us.
Please click following URL to know how to open an account of Government Department
https://bankingschool.co.in/deposits/kyc-documents-for-current-accounts-of-all-varieties/