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.
Related articles
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- Opening of current account in the name of executor or administrator
- Opening of Current account for a limited company
- opening of current accounts for proprietorship/HUF/ Liquidator/ Trust/ Government departments
- opening of current account for partnership/LLP concerns
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