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Bank Accounts:A business has everything to do with bank accounts. Once we look into the aspects of

opening bank accounts we need to understand the pros & cons of bank account.

Advantages of Bank Account:

Ease of handling cash Image of the organisation Multiple payment options like cheque, Electronic fund transfer, online Banking & ATM cards etc. Collection of payments is easily managed Safety & security of fund is ensured Loan facility provided can help business run smoothly

Issues in bank account:

Psychological issue with Bank loan account is that once the company knows that there is a loanfacility available then they have a tendency to spend more

Bank account reconciliation is another issue for business Organisation very often need to hire extra staff for maintaining Bank account The banks also charge service fee for account maintenance.

Procedural aspects of opening business accounts with banks: One of the basics of business is to set-up

a business bank account. A business banking account helps to simplify Companys record keeping.

Business banking varies in fees and features & the costs of a business account are far less than the

benefits to Company business. Opening a business account with a bank earlier, can help with required

financing in the future. Despite all issues in Bank account management, we know that business cannot

survive without a bank account. So it is vital to know the procedure of bank account opening. If an

individual or company wants to open a bank account then there are certain steps to be followed:

Step 1: Choose a Bank & type of account: Any financial institution will have a variety of account types

and services that one can mix and match. On the basis of type of Business & level of operations,

Company can select a correct type of bank account. If this is a loan account, the formalities will be more

vigorous where, we need to satisfy the bank regarding the business, market, promoters & various other

issues.

Step 2: Providing Information & documents : In order to open an account, we need to provide some

information & documents to the bank. This includes the personal/business details of promoters & the

business. This includes, the basic information of customer specially the KYC ( Know tour Customer

norms) as the Banks are required to follow Know your Customer (KYC) guidelines.

Documents for opening personal accounts (In UAE): Passport , VISA, ID Proof & Letter from

sponsor & for address proof documents like Copy of Tenancy agreement or Other valid proof

like DEWA Bill etc.

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Documents for opening personal accounts (In India) :

Personal account : Customer identification: like Passport, Voter ID card , PAN Card & other

such documents for identifying the customers. Proof of address: viz. Credit card statement,

Salary slip, Income tax/ wealth tax assessment order or any designated address proof.

Non personal Accounts: for opening non personal accounts in addition to personal documents as

above, additional documents regarding the details of business are required which are as:

Companies : Memorandum and Articles of Association, A copy of the resolution of the Board

of directors for opening of the account & individual KYC

Societies/Associations/Clubs :Resolution for opening of the account, A copy of Bye-laws,

Copy of certificate of registration & Proof of Identification of the office bearers

Hindu Undivided Family (HUF): HUF comes into being because of a particular concept under

Hindu Law whereby all the members of the family reside together jointly, carry on a business

activity jointly and hold the property jointly and therefore, it is termed as Hindu Undivided

Family. Documents applicable for HUF are Declaration from the Karta, Proof of Identification

of Karta. & Prescribed Joint Hindu Family Letter signed by all the adult coparceners.

Trusts: Documents required for trust are acopy of the resolution, Trust deed, A copy

of registration certificate & Any officially valid document to identify the trustee

Partnership Firms: In Partnership deed, Partnership letter, Registration Certificate (in case of

Registered firm) & Individual KYC of Partners is to be submitted.

Step 3: Filling the application form & Agreeing to Terms & conditions: The account holder has to fill

the account opening form & has to agree to abide by certain rules and accept responsibility for certain

actions. When an individual or organisation opens bank accounts, they form a legal relationship with

Bank, based on a contract therefore they should know what they are getting into.

Step 4: Reconciliation of account & verifying the fees, interests etc. : Once the account has been

opened, another crucial & concurrent job is to do the transactions in the account & reconciling the

account time to time, with the accounting books of the company. This needs a regular approach towardsmaintenance of bank account & obtaining regular statements & information etc. From the bank and

matching the information & statements with our own records. Any discrepancies re to be notified to the

& corrections to be ensured.

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Step 5 : Submissions of regular information: in terms of regulatory requirements, many a times bank

ask for periodical information/return on management, annual accounts, audit, board meeting etc.

Unless this information is submitted to the bank on time, they may close the account or impose certain

penalties on the customer.

Step 6 : Closure/transfer of account: If the business is getting shifted to some other place or the

business man decided to close the business, than an application has to be submitted to the bank for

same. If closure of account is too early then te bank may charge certain fee for closure. The remaining

cheque book, ATM card etc., if any issued are to be surrendered to the bank for closure or transfer of

account.