Every applicant for opening current account must provide specific documents relevant to their entity type. Additionally, banks are required to perform a comprehensive Know Your Customer (KYC) verification for the entity and its key stakeholders, such as the proprietor, partners, or directors. KYC involves several steps to (i) establish customer identity (ii) understand the nature of customers’ activities and qualify that the source of funds is legitimate, and (iii) assess money laundering risks associated with customers.
Operational instructions:
1. PAN and Form 60 Requirement
While opening the account, if the account holder has not been allotted a PAN number, Form 60 must be submitted at the time of account opening.
2. Initial Deposit
- A Current Account can be opened with an initial cash remittance.
- Accounts may also be opened with a self-cheque drawn on another bank.
3. Deposit of Cash and Cheques
- Cash and cheque deposits must be made at the respective bank counters. No individual outside the counters is authorized to receive them.
- Customers may use drop box facilities for cheque deposits. For acknowledgement, cheques should be submitted across the counter.
- Only bank-supplied pay-in slips should be used.
4. Interest on Balances
- No interest is paid on balances in Current Accounts.
- Exception: In the case of death of a sole proprietor or individual account holder, balances in Current/Cash Credit accounts may earn savings bank interest from the date of death notification to the date of settlement.
5. Account Operations
- Withdrawals must be made using bank-issued cheque leaves.
- First-time cheque books are issued against a written request, and the customer must agree to maintain the minimum balance and accept penalties for non-compliance.
- Reissue of cheque books requires a signed requisition slip from the existing cheque book.
- If the request is suspicious or via third party, the cheque book will be sent by registered post to the customer’s recorded address.
6. Minimum Balance Requirements
- Varies by bank, account type, and location.
- Typically ranges between ₹2,000 to ₹1,00,000, with some tiered account options offering different requirements.
7. Cheque Book Security
- Customers must:
- Safeguard cheque books.
- Avoid issuing or signing blank cheques.
- Use cheques only for the account they were issued.
- Count cheque leaves upon receipt and report any missing to the bank.
8. Cheques Presented for Cash Payment
- Uncrossed cheques presented for cash must be signed on the reverse by the presentor.
- Cashiers will request a second signature at the time of disbursement.
9. Higher Cash Deposit and Withdrawal Limits
- Current Accounts enjoy higher deposit/withdrawal limits, often exceeding ₹1,00,000/day.
- Some accounts offer free cash deposits up to ₹10 lakhs/month.
- PAN details are mandatory for cash deposits exceeding ₹50,000 if not already linked.
- Cash deposits exceeding ₹50 lakh/year must be reported to the Income Tax Department, as per RBI guidelines.
10. Cheque Collection and Charges
- Cheques for collection should be deposited at counters or drop boxes.
- Collection charges vary:
- Local cheques are generally free.
- Outstation cheques may incur charges based on value and location.
- RBI mandates all-inclusive charges for outstation cheques (includes postage, handling).
11. Stop Payment Instructions
- Banks accept stop payment requests for lost/stolen cheques.
- Charges per cheque apply, varying by bank.
- Banks cannot guarantee non-payment if the cheque is presented and cleared.
12. Return of Paid Cheques
- As per Section 45Z of the Banking Regulation Act, 1949, paid cheques may be returned after copying, at the customer’s cost.
- An indemnity form must be signed to avail this service.
13. Cheques Returned for Insufficient Funds
- Charges apply for each cheque returned due to insufficient funds.
- If it happens more than three times, the bank may proceed to close the account with prior notice.
14. Account Holder Changes (Individual Accounts)
- Requests for additions or deletions must be in writing and signed by all account holders.
- KYC compliance is mandatory for additions.
- Deletions are allowed only if at least one original holder remains.
15. Temporary Overdrafts
- May be granted at the bank’s discretion, on prior arrangement.
- Not a right of the customer.
16. Statement of Account
- Statements are sent monthly, unless no transactions occurred.
- More frequent issuance available on request.
- Duplicate statements incur charges per ledger page (40 entries = 1 page for computer records).
17. Standing Instructions and ECS Mandates
- Accepted by the bank and subject to:
- Service charges
- Out-of-pocket expenses (postage, phone, etc.)
- Customers must inform the bank to cancel standing instructions or ECS mandates.
18. Ledger Folio Charges
- Charged annually after applying free folios as per bank guidelines.
Related Posts:
