3KNOW YOUR CUSTOMER- KYC Know your customer norms are applicableto all customer accounts. It deals with notonly to identify the customer but alsoto understand the activities of the customer,to ensure that the operations in the customeraccount/s is/are for genuine purpose
4KYC RULES The main rules are – Customer identification Ceiling and monitoring of cash transactionsInternal Control SystemsPrevention of Terrorism FinanceIdentification and Reporting of Suspicious TransactionsAdherence to Foreign Contribution Regulation Act (FCRA), 1976Record KeepingTraining of staff and management
6Indian Banking - Significant events 1 Three presidency banks were established in Calcutta (1806) in Bombay (1840) and in Madras (1843)In the early part of 20th century, on account of the Swadeshi movement a number of join stock banks were established by Indians like Bank of India, Bank of Baroda and Central Bank of India.In 1921 the three presidency banks were merged and the Imperial Bank of India was created.During the period 1900 to 1925 many banks failed, and the Government appointed in 1929 a Central Banking Enquiry Committee to trace the reasons for the failure of banks.The Reserve Bank of India Act was passed in 1934 and the RBI came into existence in 1935 and RBI was nationalised in 1949The Banking Regulation Act,1949 gave wide powers to RBI to act as the regulator for banks in India
8Indian Banking - Significant events 1 Three presidency banks were established in Calcutta (1806) in Bombay (1840) and in Madras (1843)In the early part of 20th century, on account of the Swadeshi movement a number of join stock banks were established by Indians like Bank of India, Bank of Baroda and Central Bank of India.In 1921 the three presidency banks were merged and the Imperial Bank of India was created.During the period 1900 to 1925 many banks failed, and the Government appointed in 1929 a Central Banking Enquiry Committee to trace the reasons for the failure of banks.The Reserve Bank of India Act was passed in 1934 and the RBI came into existence in 1935 and RBI was nationalised in 1949The Banking Regulation Act,1949 gave wide powers to RBI to act as the regulator for banks in India
9Progress of banking in India In the liberalised, privatised and globalised environment, banks opeating in India have diversified their banking activities by offering Para Banking facilities likeMerchant banking/Mutual fundsATMs/Credit Cards/Internet bankingVenture capital fundsFactoringBancassurance
11Foreign Currency Non-resident Deposit Accounts –FCNR (B) FCNR (B) accountsNRIs,PIOs,residing outside India can open FCNR (B) accountsFCNR (B) accounts are maintained as fixed deposits in certain designated currenciesThe designated currencies are:US$, GBP, Japanese Yen, Euro, Cad$, Aus $Maintained in Banks in India in the abovementioned foreign currencies and interest is also earned in such foreign currenciesRepatriation of funds (principal, interest) is allowed
14SERVICES OFFERED BY BANKS Over and above the traditional role of a bank to take deposits and offer credit facilities Banks today offer the following services-Internet BankingTelephone BankingMobile BankingOn-line trading in sharesBills payment on- lineBooking air/ railway tickets on- lineBills payment on-lineCash Management Services
15SERVICES OFFERED BY BANKS - contd 9 On-line remittance facility-RTGS/NEFT etc10 Sale of third party products – Mutual fund schemes/insurance11Safe Custody12 Safe deposit vault13 Depository Services14 tax payments on-line15 Counseling Services
16CASH MANAGEMENT SERVICES In today's competitive market place, effective management of cash flows can make the difference between success and failureThe cash management product usually offers corporate customers fast track cheque collections, speedier release of funds and profitable funds management, at a reasonable costPayments received from buyers and made to suppliers of a corporate client are efficiently processed to optimise cash flow position and to ensure the effective management of business' operating fundsThe flow of receivables and payables can also usually be seen on-line.
17DEPOSITORY SERVICESWith a view to adding value to banking services and making available the numerous benefits of depository system to clients, banks in India offer Demat services through either Depositories viz.National Securities Depository Limited (NSDL) or Central Depository Services (India) Ltd. (CDSL) or both by becoming a sub-participant.Services offered are usually at par with those offered by specialized organizations like Integrated etc
18COUNSELLING SERVICESThe following are the usual objectives of counselling services provided by some banks.Advising on gaining access to structured financial system including bankingCreating awareness among the public about financial managementCounseling people who are struggling to meet the repayment obligations and helping debt resolutionHelping in rehabilitation of borrowers in friendly and timely guidance not only to mitigate the immediate stress of the trapped individuals and their households, but also to help to infuse confidence in others who are in distress.
19POWER OF ATTORNEYPower of attorney (POA) also called letter of attorney is an authorization to act on someone else's behalf in a legal or business matter. The person authorizing the other to act is the principal, granter or donor (of the power), and the one authorized to act is the agentA power of attorney may be special or limited to one specified act or type of act, or it may be general, and whatever it defines as its scope is what a court will enforce as being its scope. It may also be limited as to time.The POA is usually stamped and notarisedThe POA can be cancelled or amended by the donor at any time.However is responsible for all acts till he gives notice
20MANDATE Usually an unstamped letter Addressed to a particular bank Authorises a third party to act on his/her behalfIssued for short/ temporary periodNot acceptable from limited companies/ cooperative societies
22LIEN & SET OFFA lien is the right of a creditor in possession of goods, securities or any other assets belonging to the debtor to retain them until the debt is repaid, provided that there is no contract express or implied, to the contrary. It is a right to retain possession of specific goods or securities or other movables of which the ownership vests in some other person and the possession can be retained till the owner discharges the debt or obligation to the possessor.The right of set off is also known as the right of combination of accounts .A bank has a right to set off a debt owing to a customer against a debt due from him.Both the claim and the set-off must be mutual debts, due from and to the same parties, under the same right A claim by a person in a representative capacity cannot be set off against a personal claim
23Garnishee OrderA garnishee order is an attachment order issued by a courtExample : A borrows money from B .A fails to repay the loan. B files a suit under Civil Procedure Code and the Court issuesa decree and attaches the funds in A’s bank account with Bank XYZ Ltd.The order issued by the Court on bank XYZ Ltd is called a“Garnishee Order”B is called the judgement creditor. A is the Judgement debtor. Bank XYZ Ltd is Judgement debtor’s debtorIt has 2 parts ‘order nisi’ , and ‘order absolute’