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BANKING PRACTICES LAB RECORD

[MBABT 419]

INTERNSHIP TRAINING

at

INDIAN OVERSEAS BANK Reddiarpalayam Branch, Pondicherry

Submitted by

S. PRAKASH RAJIV

REGISTER NO: 14381044

DEPARTMENT OF BANKING TECHNOLOGY

PONDICHERRY UNIVERSITY

PUDUCHERRY-605014

JANUARY 2015

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DEPARTMENT OF BANKING TECHNOLOGY

SCHOOL OF MANAGEMENT

PONDICHERRY UNIVERSITY

PUDUCHERRY-605014

BONAFIDE CERTIFICATE

Certified that this is the bonafide record of work done by S. PRAKASH RAJIV

(REGISTER NO: 14381044) in the BANKING PRACTICES LAB (MBABT 419) during

the academic year 2014-2015.

LAB IN-CHARGE HEAD OF THE DEPARTMENT

Submitted for the University Practical Examination held on ………………………..

INTERNAL EXAMINER EXTERNAL EXAMINER

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ACKNOWLEDGEMENT

I would like to express my sincere and heartfelt gratitude to my mentor

Mr. C. P. ABDUL GAFOOR, Assistant Professor, Department of Banking Technology,

Pondicherry University, for his valuable suggestions and his timely guidance.

Mere word of thanks would not be sufficient to express my gratitude to the ever

motivating Head of the department, Prof. Dr. K.CHANDRA SEKHARA RAO, for his

valuable advice and moral support during the Banking Practices lab.

I also express my sincere thanks to Mr. A. LAKSHMANASAMY, BRANCH

MANAGER for giving us an opportunity to undergo the training in the Bank. I wish to

acknowledge my sincere gratitude to all the staffs at INDIAN OVERSEAS BANK,

REDDIARPALAYAM BRANCH, PONDICHERRY who have been constantly helping us in

the training.

I also express my thanks to the Dean Dr. R. PRABHAKARA RAYA, School of

Management studies for providing all the necessary facilities in the University to successfully

complete the Training.

Finally, I would like to thank my parents for their constant encouragement and support.

Also, I would like to thank all the teaching, non-teaching staffs of Banking Technology

Department and our beloved friends for extending their help throughout the training.

To save the best for the last, I wish to express my profound gratitude to the almighty God

who gave me the strength to successfully commence as well as complete the Banking Practices

Lab.

Regards,

PRAKASH RAJIV S

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TABLE OF CONTENTS

CHAPTER TOPICS PAGE NO

NO

I BRANCH OPENING 1

1. DAY OPENING 1

2. CASH MANAGEMENT AT OPENING/

CASH BOOKLET/ VAULT 1

3. CASH ESTIMATION AND LOADING IN ATM 3

4. ATM OPERATIONS 8

5. DAY END, BACK UP, SERVER CLOSING,

BRANCH CLOSING 21

6. KEY ISSUES 26

II ACCOUNT OPENING

1. ACCOUNT OPENING/ CLOSING FORMALITIES/

KYC 28

2.1.1 KYC/ ANTI MONEY LAUNDERING 37

2.1.2 INDIVIDUALS/ SOLE OWNER/ JOINT/ NRI 38

2.1.3 SOLE PROPRIETORSHIP 39

2.1.4 PARTNERSHIP 39

2.1.5 COMPANIES 40

2.1.6 TRUSTS 41

III DEPOSIT ACCOUNTS

1. DEPOSIT ACCOUNT OPENING/ CLOSING

- FORMALITIES 56

3.1.1 SAVINGS ACCOUNT 61

3.1.2 RECURRING DEPOSITS 63

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3.1.3 FIXED DEPOSITS 69

3.1.4 NRI DEPOSITS 76

3.1.5 STUDENTS ACCOUNTS 78

3.1.6 SHG 79

3.1.7 PENSION ACCOUNTS 80

3.1.8 DORMANT ACCOUNTS 81

2. KEY ISSUES 81

IV LOAN/ ADVANCE ACCOUNT

1. LOAN ACCOUNT OPENING/ CLOSING

–FORMALITIES 82

4.1.1 CONSUMER LOAN 87

4.1.2 INDUSTRIAL LOANS 89

4.1.3 AGRICULTRAL LOANS 93

4.1.4 GOLD LOANS 99

4.1.5 MICRO CREDITS 103

4.1.6 LETTER OF CREDIT/ GUARANTEES/ LG 108

4.1.7 BILL/ CHEQUE DISCOUNTING 112

4.1.8 DIVERSION OF FUNDS IN LOANS 120

4.1.9 NPA ISSUES 121

2. KEY ISSUES 125

V DELIVERY CHANNELS

1. ALL DELIVERY CHANNEL OPERATIONS 129

5.1.1 DEMAND DRAFTS 129

5.1.2 CHEQUES 131

5.1.3 WITHDRAWAL SLIPS 135

5.1.4 BANK DRAFTS/ BANKERS CHEQUE 137

5.1.5 DEBIT CARDS/ CREDIT CARDS 138

5.1.6 INTERNET BANKING 150

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5.1.7 MOBILE BANKING 155

2. KEY ISSUES 160

VI AGENCY SERVICES

1. PAYMENT AND SETTLEMENT 162

2. RTGS/ NEFT 162

3. CLEARING SERVICES 169

4. CUSTODIAN 176

5. SAFE CUSTODY 188

6. NOMINATION FACILITIES 194

VII BRANCH MAINTENANCE 214

1. MAINTENANCE OF BRANCH PREMISES 214

2. MAINTENANCE OF FILES 215

3. MAINTENANCE OF CARD/ DEMAND/ CHEQUE 217

4. PASSWORD MAINTENANCE AND ADMINISTRATION 239

5. CORE BANKING SYSTEM (CBS) 240

6. NETWORK FAILURE 241

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CHAPTER 1

BRANCH OPENING

1.1 START OF DAY OPERATIONS

The first Supervisory user with Senior Manager Level will be assigned SA-Role for the

day. Such user should do the following activities before starting the business for the day.

Application Startup

Day Begin

Attendance Marking – In case the user is a Supervisory level user, he / she can mark

attendance for one Senior Manager only. After that, the Senior Manager only can mark

attendance to other staff members.

Once the above is over, the system can be used by the authorized users to put through

transactions, create masters etc for the day.

1.2. CASH MANAGEMENT

CHECKING OF CASH BALANCE

Before taking notes and coins into the ‘joint custody’ balance, the supervising official

should check their correctness in the following manner:

He/ She will personally count all notes of denominations of above Rupees Ten and will

verify a portion of all other notes on the "clip system". Under this system a few notes in each

book of notes are clipped together at the top and the remainder is counted by an employee other

than the one responsible for its correctness in the presence of the supervising official who

verifies the total by counting the clipped notes (Notes of the same denomination are bundled

together into books of one hundred pieces each, every ten such books being tied up into a section

of one thousand pieces).

He/ She will have all bags of rupees weighed in his presence and a number of bags

emptied to show that the contents are genuine coins. Out of a few bags he will take and count a

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few pieces and leave the remainder counted in front of him as a similar check to the "Clip

System “for notes, verifying the relative denomination slips in the bags at the same time; he will

also occasionally get this done in the case of small and un current coins.

CHECKING HAND-BALANCE AND CLOSING CASH

The supervising official should satisfy himself each evening that the joint custody

balance corresponds exactly with the entries in the system-generated cash balance printout. He

will also invariably check the entire Head Cashier’s / Cashier’s hand balance of loose notes and

also check the loose packets in hand balance by clip system and initial against the items checked

in the cash balance printout. After the closing cash is checked by the supervising official, he /she

must ensure that the notes and coins held in the Head cashier’s/cashier’s hand balance are kept in

the cash box and locked in his/her presence. He should accompany the Head cashier/cashier to

the safe room when the cash box is kept under joint custody. Before the safe is closed, he/she

should also check the bundles kept in the vault and verify the same with the vault register.

Periodically preferably once a week on different days the officer holding charge of cash should

check the whole of the branch cash balance by test check of different denominations and register

evidence of such check in the cash balance book under his/her signature and date. The First Line

Manager, if he is not in joint custody of cash, should on a surprise date in a month check in detail

all the notes of denominations above Rupees Ten and verify all the other notes on the clip

system. The date of the last such verification should be reported under the appropriate column of

the monthly Manager’s Certificate (AR.15).

EXCESS IN CASH

Any excess in the cash balance must be credited to Sundry Creditors Account on the

same day after the preparation of a credit voucher bearing complete particulars of such excess

cash. Such instances of excess cash should be reported to Regional Office on the same day.

Amounts which have been lying unclaimed for more than six months will be transferred to

Central Office every half year by March and September.

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1.2.2 CASH BOOK

Currency slips of other banks/parties must be removed by the receiving cashier after due

counting and the same replaced with our Bank’s currency slip and pasted with the security

sticker and checked, initialed/signed by the joint custodians.

The cash balance will ordinarily consist of nothing but notes and coin. In the event of any

cash payment being made or any cash deposit being received after the cash books have been

closed for the day , the relative vouchers must be entered the same day in a Register labeled as

''Late Payment and Receipt Reference Register". The entries in this Register should be made by

the Casher and each such entry should be authenticated both by the cashier and the Deputy

Manager or an Officer not below the rank of Deputy Manager authorized by the First Line

Manager who is verifying the closing cash for the day. ANY DEVIATION FROM THIS

INSTRUCTION WILL BE REGARDED AS A SERIOUS OFFENCE.

1.2.3 VAULT REGISTER

The amounts of all notes and coins withdrawn from, or deposited in, the joint custody

portion of the Bank cash balance (i.e. excluding the Head cashier’s/ cashier’s hand balance) will

be entered immediately in the Vault Register under the initials of the joint custodians. The Vault

Register must always remain in the strong-room. From it the withdrawals and deposits will be

entered in the cash analysis book in which the resultant balances will be struck, the entries being

checked and the balances initialed by the head cashier/cashier and the supervising official. At

branches where transactions in the "joint custody “portion of the Bank cash balance are few, a

cash analysis book may be dispensed with, the relative entries being checked from the Vault

Register and the incurrent coin register.

1.3 CASH ESTIMATION AND LOADING IN ATM

Branches should not load the cassette of the ATM, Currency Notes with the following

characteristics:

-Joined by any means

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-With staples or pins

-Sticky, adhesive substances

-Repaired with tape

-With tears exceeding 0.5 inches

-With holes or missing sections

-That is excessively crumpled

-That is dog-eared, with a folded edge exceeding 0.5" thickness

-That is limp or moist

-That are excessively bowed or deformed by prolonged storage

-That is dirty.

B.6.2. for ATM operations, the following General Ledger heads of accounts should be

maintained by ATM branches.

CASH AT ATM

Cash loaded in the cassettes placed in ATM should be to the debit of CASH AT ATM

account.

ATM BACK OFFICE OPERATION

Every day at the cut off time, the ATM Officer along with another authorized staff

member should open the ATM cassette, divert cassette and deposit cassette in the ATM as per

the procedure laid down. Physical verification of cash at ATM should be made and the cash

should be tallied with the figures shown in the computer screen and transaction log. The

cherubs and cash deposit covers fed into ATM by the cardholders should be removed and

entered in the Back Office ATM Register. After taking out a print out of the transaction log

(Journal Print out), the ATM should be closed after observing the laid down procedure. The

denomination of cash at ATM should be recorded in a separate register duly signed by

authorized Staff members and it should be tallied with General Ledger.

The covers containing cash and cherubs should be opened in the presence of two

authorized staff of the branch. Details on the transaction log should be verified and

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cash/cherubs should be passed on to the respective departments at the branch for

credit/collection for the accounts. The contents of the covers should be recorded in a separate

register duly signed by the two authorized staff of the branch. The covers should be preserved.

Cash should be replenished in the ATM to the desired level by debiting Cash at ATM

account.

Cash position of the ATM should be monitored with special attention since cash

shortage will result in ATM closure and disruption of Customer Service.

By studying the cash usage pattern of ATM over a period of time, the average daily

requirement of cash by ATM should be arrived at and the branch should replenish ATM with

sufficient cash to ensure uninterrupted functioning of ATMs.

The branch cashier and ATM Officer should carry out replenishment of ATM cash daily

before the closure of branch Cash Books. In the absence of the Officer-in-charge of ATM, other

officers in the branch should periodically check the cash level of the ATM.

Based on daily cash disbursal through ATM, branch should have an idea of per day

optimum cash requirement, and should load the ATM with adequate cash in the event of

ensuing holidays. If necessary, a separate safe can be provided for holding additional cash for

the holiday period. Such safe should also be under dual custody of two authorized official one

of whom should be the ATM Officer. Under appropriate staff arrangements these officials

should visit the branch on holiday period to ensure adequate cash level at the ATM.

SECURITY OF ATM CASH VAULT KEY

The cash in the ATM Cash Chest should be kept under dual custody of Officer in charge

of ATM and the Officer in charge of the branch Cash Department. The key holding particulars

should be recorded in the Key Movement Register.

The duplicate keys of the ATM Cash Chest should be lodged with the nearby branch as

in the case of other safe keys.

TEST CARDS

a. Branch is supplied with one Test Card, 2 set up cards and one operator card.

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b. Set up cards and operator card are for encrypting various fields in the card. Test Card

should be in the custody of officer in charge of ATM.

c. Sufficient care, as in the case of movement of Cash Key, is to be taken about the

movement of test card, set up card and operator card and all details should be recorded at the

branch.

d. To have dual control, Branch Manager should hold custody of set up cards and

operator card. Password should be available with ATM in- charge.

The four cash bins in ATMs are configured for 1xRs.50, 2xRs.100 and 1xRs.500.

Branches have to load currencies of all three denominations, since the intention of maintaining

50 rupee denomination is to avoid the customer coming to the counter, for small denomination

currency, after withdrawal. Cash can be loaded upto RS.10 lakhs in ATMs and in certain

branches where the daily disbursement has exceeded 5 lakhs we have permitted for 15 lakhs.

While loading cash branch has to sort the currency and load only ATM-FIT currency. The

following precautions to be taken while loading cash to avoid forged / counterfeit currency.

Currency notes have to be physically verified before placing them in the respective

cassettes of the ATMs in the same way a cashier/teller normally verifies the notes before making

cash payments across counter.

Branches should ensure that currency packets received from other banks / institutions as

well as deposits received from customers should not be used unless they are opened and verified

observing the procedures on cash handling and following the laid down norms to detect forged /

counterfeit currency.

Wherever possible, new currency notes are to be used as a marketing tool to encourage

our customers to use ATMs.

While loading cash, Branch has also ensure that journal paper roll is available adequate

enough to service the requests till the next working day; since if journal roll is exhausted the

ATM will not service even though sufficient cash is available in the ATM.

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CASH RECONCILIATION

The cash inside the ATM has to be treated at par with the cash in the safe; hence, it is

mandatory on the part of the branch to tally ATM cash on daily basis. For this purpose the ATM

attached branches are provided with the following reports.

This report is generated whenever the Supervisory Card is used in the ATM for cash

proofing and Host Totals option is selected after ‘Stop Cash Replenishment’. This report

contains the details of transactions which have taken place since the last cash proofing to the

current cash proofing, one row for each transaction, with the status of the transaction. This report

is downloaded to the branch from the switch within 15 minutes from the time of generation of

the report and available under ‘View / Print reports’ and can be selected by giving the report date

and by using search option in CBS.

The ATM Cash report for GL code 3003, ‘Statement of ATM CASH Transactions’ can

be generated from the branch applications for any day, range of days. This gives the list of ATM

cash transactions which were accounted at the branch attached to the ATM. Both the reports

have the necessary details and by cross verifying both the reports the branch can easily reconcile

cash. Any variance found has to be reported to IT department – ATM helpdesk for resolution.

The ATM journal is the final proof of status and the branch should take adequate care to

label and preserve the same for a minimum period as applicable for vouchers. The ATM journal

should be verified where the status of any transaction is marked as suspect. In addition to the

above two reports the branch is provided also the IPG Summary which will give a list of all

transactions under gl code 2526 for the given date, inclusive of ATM transactions.

IPG Reports (ipg4_1) has been added as a new feature under gl module for generation of

various utility based reports on ATM as under.

TODAY PREVIOUS DAY SWITCHDATE

FINANCIAL REQUEST

ALL TXNS PENDING TXNS SUPPLEMENTARY CASHSTATUS OF ATM

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The cash status of ATM report provides information on the cash balance available in the ATMs

attached to the branch apart from status of diagnostics like cash dispenser/card

reader/connectivity/journal printer/receipt printer/cassettes.

1.4 ATM OPERATIONS

Automated Teller Machine (ATM) is used for dispensing cash and also to receive

cash/cheques/requests for statement of account and issue of cheque books round the clock-

throughout the year. ATMs have been installed by our Bank in many centers to enlarge our

clientele. The Bank has multi – branded ATMs of Diedold, NCR, Wincor and Cash link cash

dispensers. The Bank has also arrangements with three consortiums -Cash tree, NFS & VISA,

HARDWARE SETUP

1. Branches in which ATMs are installed should ensure that they are functioning properly and

also to keep the rooms (customer lobby as well as back lobby) clean and tidy.

2. Wherever 1 is installed onsite, the router should be kept in the ATM room only and the leased

line is terminated there.

3. Where ever ATM is installed offsite, separate leased line should be obtained for the offsite

ATM and router should be kept in the ATM room.

4. The UPS connected to the ATM room and supplying power to the router kept in the ATM

room should always be kept ‘ON’ and should never be switch off.

DEBIT CARD MANAGEMENT

DEBIT CARD

Debit Card gives you global access to one’s account whenever and wherever they want.

The Debit Card allows purchasing goods at Merchant Establishments and also gives the freedom

to withdraw cash from ATMs in India and abroad. The customer need not carry cash anymore to

make his purchase and the purchases will be debited to his account instantly.

The cards which were issued for ATM usage were also used for AWB operations. These

cards could be used in the ATMs of IOB / member banks’ of ‘Cash tree’ and ‘NFS’ consortiums.

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To facilitate our customers with global acceptance of their cards at ATMs, Merchant

establishments and for e-commerce transactions, the Bank has entered into agreement with VISA

and from October, 2005 the Bank started issuing VISA Debit Cards.

At present the Debit cards are issued free of charge. As per RBI directives, any

cardholder can use other banks’ ATM for financial/non-financial transactions in his SB accounts,

free of charge 5 times a calendar month. Beyond 5 times, he will be charged Rs.20 per additional

transaction. However, this redate facility is not available for CD/CC account Cardholders.

When a Debit Card is used in an ATM, POS or for e-commerce transaction; the

customer is expected to maintain required balance in his account. In a Debit card usage, the

transaction will be authorized only after debit to the customer’s account. The transaction will not

be approved if the balance in the account is not adequate. The debit cards are convenient way of

carrying money instead of carrying physical cash.

ELIGIBILITY

The following account holders are eligible for issuance of debit card.

Savings Bank – Individuals – Single, A or S, Minor accounts operated by guardian and minor

students under SB-STUDENT scheme.

Current Account - – Individuals – Single, A or S CD – Proprietary Firms (Card will be issued in

the name of the Proprietor) CC- Individuals – single, A or S with prescribed minimum balance.

Legal persons like Incorporated Companies, Trusts, and Partnership firms are not

eligible.

In the case of A or S accounts, separate customer id has to be created for each constituent and

cards can be issued in their name. In the case of Cash credit accounts, the customers who enjoy

cash credit limits against deposits and other readily realizable securities (except shares) for

personal purpose are eligible for Debit Cards. Earlier, in addition to illiterates, the Bank was not

extending the Debit card facility to visually handicapped persons due to the issues involved in

their operation of their account through ATMs. But recently, pursuant to directives from

Government of India, the Bank has decided to extend the facility to Visually impaired customers

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subject to certain additional safeguards (MISC / 242 / 2008-09 dated 9.6.08 issued by

Management Services Department).

OTHER CONDITIONS

The Cardholder should maintain the minimum balance prescribed by the bank and

failure to do so will attract penal or service charges as per bank's rules from time to time or

withdrawal of ATM facility to the Cardholder.

The following services are offered free to the customer for application form, processing,

issue of card, drawl or any other ATM transactions such as balance enquiry, wrong entry, wrong

try etc. Cardholders should be advised that the charges for other services may be varied by the

Bank without reference / notice to them.

When an account is overdrawn by the ATM Cardholder, interest on such overdrafts as

prescribed by the bank should be charged and collected as per the instructions in force for TODs.

During the currency of the ATM card, the SB/CD account of the Cardholder cannot be

closed or transferred to other branch. If the cardholder wants to close his/her SB/CD account,

he/she should surrender the card and give the bank not less than seven working days time from

the date of surrender of the card, for effective closure of the account.

The bank is entitled to terminate ATM facility with immediate effect and the card shall

be impounded upon occurrence of any of the following events.

a. Failure to adhere to or comply with the terms and conditions of ATM facility.

OR

b. An event of default under any agreement of commitment

(Contingent or otherwise) entered into with the Bank relating to

Transactions other than the ATM

OR

C. On the cardholder being adjudicated as insolvent or on the cardholder

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Filing insolvency petition.

OR

d. Demise of cardholder or any one of the joint account holders.

OR

e. Any other event by which bank concludes that allowing possession of card with the cardholder

is detrimental to the image / interest of the Bank.

In the case of joint accounts, the obligations of such executants to the agreement will be

joint and several and notice to any one Joint account holders will be deemed effective

notification to all joint holders.

Any notice sent by post to the last known address of the ATM cardholder by the bank

will be deemed to have been received by the Cardholder on the third day of posting.

The Bank reserves the right to disclose any information as may be necessary or

appropriate in connection with its participation in Electronic Funds Transfer Net Work, in strict

confidence, to any other Institutions, for issuance / cancellation of the card, operations in ATMs

and card holder's account with the bank.

The card holder alone should use the ATM Services and will be responsible for all the

transactions effected by the use of the card, whether authorized by the card holder or not and

shall indemnify the bank for the loss or damage caused to or suffered by the bank by any

unauthorized use of the card or the relative PIN.

The card is and will be at all times the property of the bank and delivered to the

Cardholder in trust and shall be returned by him/her to the bank unconditionally and immediately

upon the bank's request. The bank will not be liable for failure to provide any service or to

perform any obligation where such failure is attributable (whether directly or indirectly) to any

malfunction of ATMs or the card, insufficiency of cash held in ATM, failure of power etc.

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APPLICATION FOR DEBIT CARD, PERSONALIZED AND INSTACARD

The applicant for the ATM Card should apply to the branch in the prescribed application

form F 604(EH) in duplicate after confirming his/her acceptance to and accepting the terms

conditions applicable for ATM facility. The application should be retained at the branch except

except for Student card for which application affixing the photo should be sent to Central office)

and should record the details of application in the ATM application / issue register.

The Bank is issuing two types of VISA Debit cards, Personalized / customized Cards and

Instacards. Personalized cards are cards where the customer’s name is printed on the card and the

card is customized and issued, at the request of the customer, only after submission of

application by the customer, where as an Instacard is a pre-customised card without customer’s

name which is available in dockets, as stock with the issuing branch. These Instacards, which are

non-personalised cards can be issued for all category of customers of CBS branches. Other than

printing of name the functions and usage of both types of cards are similar. Student Cards are

issued to Students of age 16 and above with Photo.

BRANCH OPERATIONS

The details provided by the customer in the application form from the customer are

entered at branch level, through card master program, which is a part of awb module and ATM

option. The users should familiar with various options viz., Issue, Modify, Cancel, View,

Approve, Status-Marking and Quit.

After the data is entered, the officer shall approve the entry. The data then will be

automatically sent to Central office for further processing and card customization. Data will not

be transmitted unless it is approved by an officer.

On specific request from the cardholder or at the time of closing the account, the card

should be cancelled. Neither a Replacement card nor a new card will be issued to the customer.

Status Marking – Various options for marking status such as Suspended, Lost, Hot

listing, Damaged and for issue of New VISA Debit cards are available and the user should use

appropriate options as described in the user manual.

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Safe custody of Instacard Kits has to be scrupulously followed, on the same lines

stipulated in our circular ITEC/1/2006-07 dated 18.6.2006 and COMLET No: 4 /2006-07 dated

23.6.2006.

INSTA CARD

ATM / Debit cards are to be issued on the day of opening account for all category of

customers of CBS branches, whoever do not insist for personalization. The customer will be

given the kit containing PIN and the Debit Card immediately after opening of account, and the

card will be activated within 24 hours of opening of the account.

Stock will be supplied to the CBS branches in individual sealed covers (kits) consisting

of the Debit Card, PIN Mailer, Terms & Conditions Booklet, User Manual, etc.

The stock received has to be entered in the CBS System through the ‘InstaCard Stock

Maintenance’ program. The above cards, when delivered to the customer after opening of SB or

CDCC account, will get attached to the account, through entry in the revised Card Master

Program.

On receipt of the stock, the Officer-in-charge of ATM cards has to physically count the

number of Kits received and ensure the correctness of the stock supplied to the branch. The kits

should not be opened by any branch staff, and has to be intact at the time of delivery to the

customer.

The details of the stock received, namely starting kit number, ending kit number, count,

received from branch are to be entered in system by the officer- in-charge of the ATM cards

using ‘InstaCard Stock Maintenance’ option. InstaCard Stock Maintenance application consists

of Receive and View options and user should get familiarized with these options as detailed in

User manual.

In the eventuality of the branch finding any missing kits in the stock received, or any kit

damaged, the user is to use the option ‘Receive’ and enter the number of missing / damaged

cards individually with the respective status as detailed in the user manual.

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Regional Office, with a copy to card division of Transaction Banking Department for

getting fresh stock of Instacard Kits. Branches cannot take Kits from other nearby branches as it

is validated at the central database.

CUSTOMIZED CARD

Once the service provider completes card customization, the cards relating to each

branch are sent directly from the service provider to the respective branches through courier

service. After dispatch of cards to branches, the individual Pin mailers with the related welcome

letter, Terms & Conditions booklet and charges details are dispatched by the service provider

directly to the customer, through speed-post services. The customer on receipt of PIN mailer has

to collect the Debit Card from the Branch where he is having his account. In case the customer

has not received his pin mailer, branch should obtain a written request for generation of new pin

mailer, deliver the card to the customer and send his request for re-generation of PIN by lodging

complaint in IOBONLINE. On receipt of the request, ATM section at Central Office will

generate a new pin and send it to branch for delivery to customer. On receipt of the Debit cards

consignment from the card customizing service provider, the branch has to verify and confirm

correctness of the physical cards received with the dispatch list from the service providers.

Immediately after receipt of cards, the branch has to enter the card details in the related register.

The guidelines for reducing operational risks in handling of ATM / Debit cards is advised vide

the Common Letter 4 / 2006 – 07 dated 23.6.2006 issued by IT Department.

DELIVERY OF CARD

Branches have to deliver the Debit card to the cardholder after proper identification,

against his acknowledgement in the ATM / Debit card register. Branch has to advise and ensure

that the customer signs his signature at the specified place on the reverse of the card. Branches

should not under any circumstance deliver the card without the customer signing at the reverse of

the card, or, to any other person including the joint account holder.

Branch should never ask the customer to hand over the card, except in cases where the

ATM rejects the card immediately on insertion (without even prompting for the PIN). Branches

should collect the card and send it to CARD DIVISION TBD for verification of the encoding on

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the magnetic stripe. The status of the card should be marked as Suspended immediately on

receipt of the card from the cardholder and before sending it to TBD.

Branches should not insist on production of evidence for having received the PIN mailer

before handing over the card. A format of the register to record the receipt / delivery of Debit

cards / PIN at the branch is enclosed (Annexure I).

In the case of NRIs where a foreign address is provided, branch should first send the card

through a courier. On receiving their confirmation that card has been dispatched, Transaction

Banking Department will send the PIN mailer also to the branch for onward transmission to the

foreign address through a separate courier.

As a precaution, at the time of delivery of Debit Card itself, the customer should be

advised of the importance of the PIN, and should be advised of the safety measures he/she has to

take like

a. Not retaining PIN with the card, so that anybody other than the customer, who gets access to

both the card and PIN can withdraw cash through any ATM.

b. Always change the PIN through PIN change option available in the ATM, after the first

transaction using the original PIN.

c. Always to retain the PIN only in memory and not to retain it in physical format.

d. Other precautions as per the Terms & Conditions booklet issued with each Debit card.

ACTIVATION OF CARD

In the case of both personalized cards and non-personalized Instacards the customer

should be advised to make the first usage of the card in an ATM of our Bank or a consortium

member Bank. With the first successful PIN verification the card gets activated, and only

thereafter the card can be used for merchant transactions. This precaution is required to ensure

that both the card and PIN mailer are properly received by the applicant customer. Any attempt

to use the card at POS machines or for online transactions will fail if the card is not used for the

first time in an ATM.

CARD SECURITY MEASURES

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The Debit card and PIN mailer for that card should not be held at the branch at the same

point of time under any circumstances, except where specifically authorized by Central Office.

At the time of applying customers should be told to provide their current address and

other contact details including mobile numbers, following all the KYC guidelines. These details

are to be entered, counter-checked and approved in the system and these forms are to be retained

at the branches and filed with the ATM / Account opening forms. This shall address the problem

of PIN mailers being returned undelivered for want of correct / complete mailing address of

customers.

Whenever the VISA Debit Cards / PIN mailers / Instacard Dockets, Student Cards are

received, till delivery of the same, to the customer, they should be preserved under safe and dual

custody at branch level. The cards / PIN / Dockets are equivalent to security items and should be

preserved in the safe room not accessible to anyone other than the custodians of the above items.

RE-ISSUANCE OF PIN

The PIN generated for a Debit Card is not stored anywhere in the system, and hence in

the event of the customer not receiving / forgetting the PIN, only a fresh PIN has to be generated

in the system and sent to the customer. Such requests are chargeable as prescribed.

Original PIN not received by customer

The PIN dispatched through Speed post is not received by the customer due to the following

reasons.

a. The branch is not entering the correct and full address of the applicant with pin code number

in the respective fields at the time of entering the application.

b. The customer has shifted his/her residence and not informed the Bank

c. The customer not available at the time of the visit of the Delivery person and has not left any

information.

d. Normally the postal authorities leave a notice in the case of speed-post to the addressee

informing the consignment, and the customer has not taken enough care to collect the same.

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In all the above cases the PIN mailer is returned undelivered to Transaction Banking

Department. In such cases branches need not to mark a request for Re-PIN. Instead they should

deliver the card to the customer observing all usual procedures and report to Transaction

Banking Department through IOBONLINE -BRANCH PRODUCTS- CBS/ATM Helpdesk-

ATM Complaints to ensure that at no point of time both the card and PIN mailer remain with the

branch. On receipt of confirmation from the branch regarding delivery of the card to the

customer, a Re-PIN will be sent to the branch, for delivery to the customer. The branch should

observe prescribed procedures in delivering the PIN-mailer to the customer, against due

acknowledgement.

PIN FORGOTTEN BY CUSTOMER

When a customer has forgotten his PIN and has keyed wrong PIN in any ATM for more

than 5 times his card will be blocked temporarily. In the event of the customer being able to

recollect his PIN, then, if taken up with Transaction Banking Department-ATM Help-Desk, the

blocking can be reset. But, when the customer has forgotten his PIN and is not able to recollect,

then only a New PIN has to be issued to him for further operations. In this case the branch has to

mark the Re-PIN request through the status changing option as detailed in user manual as well as

make a complaint through IOB ONLINE-BRANCH PRODUCTS-CBS/ATM Helpdesk- ATM

Complaints. On receipt of modified data a Re-PIN will be generated to the card and will be sent

to the customer. Once Re-PIN is generated the card status at branch level will get restored to

active. Branch should not keep on marking the status again and again, since this will lead to re-

generation of PIN again and again.

REPLACEMENT CARDS

Replacement cards are issued in lieu of VISA Debit Cards reported damaged or lost. The

cards are issued with a different card number and are issued with a revised validity period. A

new PIN also will be generated for the card and the PIN will be sent to the customer while the

card will be dispatched to the branch. On receipt of PIN mailer, the customer has to collect the

Card from the branch. Any status changing process first takes the user to the address columns of

the customer, the correctness of which branch has to ensure before marking the status. This will

avoid any delay in delivery of the PIN mailer to the customer. Even for Instacards the

replacement cards will be only by way of personalized cards.

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LOST CARD

Whenever a Debit Card or ATM card is reported lost the branch has to act up on the

instructions immediately, by marking the appropriate status as detailed in the user manual to

avoid the lost card being misused in any merchant establishments or for any online transactions.

Even if the customer reports the loss of the card over phone, the branch has to immediately act

on the complaint by marking the status of the card initially as suspended. In the case of

Suspended status, if the customer is able to trace the card, the branch itself can reactivate the

card by changing the status appropriately, and In the case of card being confirmed Lost, branch

has to mark the status as lost as detailed in the user manual. If the customer calls in person and

reports the loss of his / her Card, then the branch can directly mark the status as Lost as detailed

in the user manual. For such cards, where the status is marked as lost, a replacement card will be

issued to the customer. The branch should have a register to record such cases of card reported

Lost or Damaged, and record the date and time of receipt of such communication from the

customer. In the case of written complaints due acknowledgement should be given to the

customer with date and time of receipt of such intimation.

DAMAGED CARD

Whenever a card is reported ‘Damaged’, the branch has to get the damaged card and

destroy it in the presence of the customer, and mark the status as Damaged through the card

master program as detailed in user manual. On receipt of data from branch, the replacement card

and PIN will be generated and the PIN will be sent to the customer and card will be sent to the

branch in usual course and the cards should be delivered as discussed above in A.8.

CANCELLATION OF CARD

This option to cancel a card should be used by the branch only when the customer wants

to surrender his card once for all, or when the customer is closing his account with the branch.

The account will be permitted to be closed only when the card is cancelled. Once card is

cancelled thereafter the customer is not eligible for any card facility in that particular account.

SUSPENSION OF CARD AND RE-ACTIVATION

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This option to Suspend the card can be used in situations as explained in A.12.1 when

initial oral complaint is received on loss of card. This option can also be used to temporarily stop

the customer withdrawing money from the account. This is the only option where the branch

itself can re-activate the card by changing the status appropriately as detailed in user manual.

OVERDRAFT DUE TO DEBIT OF CHARGES

The customer is allowed to withdraw the entire balance in his account using his VISA

Debit Card. On rare occasions due to the charges debited to the account if the transaction has

taken place in other bank ATMs, then the balance may result in overdraft when the charges are

debited to the account. In such cases the overdraft has to be treated like regular overdraft and the

branch should take steps as in normal course to contact the customer, to regularize the account,

and advise him to keep adequate balance in his account before withdrawal. In case the customer

is not regularizing the account, the branch is in order in temporarily suspending the card to avoid

further debits due to charges on continued attempts by the customer, in other bank ATMs, for

balance enquiry etc...

DAILY LIMITS OF CARD

Daily limits on the use of the Debit Card at ATMs and Merchant Locations is at present

as follows:

Usage at ATM: between Rs.20, 000/- and Rs.50, 000/- as recommended by the branch

Usage at merchant establishments & internet (jointly) Rs.50, 000/- (per day)

CHARGES ASSOCIATED WITH THE CARD

Issue of New Cards No charges

Renewal of Cards No charges

Annual Fee No charges

Re-issue of Lost / Stolen / Damaged Card Rs.100/-

Re-issue of PIN Rs.20/-

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For transactions at InstaCash ATMs / VISA / Plus ATMs / Other shared ATM Network (Cash

Tree and NFS) For transactions at InstaCash ATMs /

VISA / Plus ATMs / Other shared ATM

Network (Cash Tree and NFS) –

No charges upto 5 transactions for SB customers

For usage at Merchant Establishments No charges

For usage at Petrol Pumps Surcharge of 2.5% of transaction amount or Rs.10/- (whichever is

higher)

For usage at Railway Stations Surcharge of 2.5% of the transaction amount

For SB Account holders For SB a/c cardholders, First 5 transactions (Financial and Non-

financial txns viz. Balance enquiry/Pin change etc) in a calendar month is free of charge. For

subsequent txn charges will be Rs.20/- per such txn. For CD and CC account Cardholders, all

txns are charged at Rs.20/-per txn from the first txn itself

RENEWAL OF ATM CARD

If the ATM transactions put through by any Card holder is unsatisfactory, viz., frequent

overdrawals, discrepancies in cash deposits etc, the branch concerned should submit a detailed

Report to the ATMCC at Central Office. This information should be given, to ATMCC in

advance at least one month before expiry date.

On expiry of validity period, the ATM Division, ITD, Central Office will renew the card

automatically unless any information of unsatisfactory operations by cardholders is received

from the branches as above.

HELP DESK & COMPLAINTS

Any complaint regarding ATM is to be lodged with the ATM Help Desk at Transaction

Banking Department on all days through 24/7 basis. Also the complaints can be routed to the

Service Providers Help desk number given in the Debit Card for assistance and marking the

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status. Though action will be taken based on oral complaint, in all cases the customer should be

advised to confirm his complaint at the branch, in writing, on the following working day.

1.5 DAY-END CONSOLIDATION

Before consolidating the cash at the end of the day, the following points have to be

observed. It is the primary duty and responsibility of the Cashiers / Tellers / Special Assistants /

Officials attending to cash related schedule of work to ensure strict compliance to the operational

instructions put in place by Central Office under Clean Note Policy. The said Policy which was

framed by our Central Office in the light of Notification under Section 35A of Banking

Regulation Act issued by Reserve Bank of India. Copies of related circulars { MISC/96/2003-04

dated 28th April 2003 and Government Accounts Department Circular No:5 / 2003-04 dated 3rd

January 2004) are appended to this Chapter for ready reference of Branches and Controlling

Offices.

(I)Cashiers have to segregate notes into soiled/cut and reissuable including ATM-fit and prepare

sections separately for soiled / cut notes and reissuable notes.

(ii)Notes of the same denominations have to be bundled together into books of one hundred

pieces each and bank's currency bundle label has to be placed on the section to go round the note

packet on the left side to cover a major portion of the front and rear of the note packet and tied

firmly with twine. Thereafter, the packet must be secured with twine / paper band / rubber band /

polymer band firmly to ensure that all the notes inside the paper band packet remains intact. It

should be borne in mind that using stapler / sticker / gummed labels / stitching-needle or any

method which tend to damage the currency notes, is prohibited in terms of the provisions of

Clean Note Policy implemented in our Bank. As compliance to the said provisions is legal

requirement, utmost care should be taken by the staff members handling cash.

The branch round rubberstamp must be affixed on the label ends and the label must be signed by

the cashier who has prepared the packet. The band must thereafter be placed in such a manner

that it covers a part of the branch round stamp and cashier’s signature. Every ten such books

must be tied up into a bundle of one thousand pieces.

(iii)Before taking notes in joint custody and depositing them in the Currency Chest, both officials

in joint charge should personally count all notes of denominations above Rupees Ten and will

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verify, as large a proportion as possible, of all other notes on the "Clip system". Under this

system, a few notes in each book of notes are clipped together at the top and the remainder is

counted by a cashier other than the two cashiers responsible for their correctness.

(iv)The checking officer must ensure that all the leaves are firmly held in the packet and the

security paper band is fixed in the manner as mentioned above.

(v)Branches can retain the reissuable note packets for transactions and remit the non-issuable

note packets into the currency chest. If the branch holds surplus cash, reissuable note sections

can also be remitted into the currency chest.

1.5.2 BACK UP

In terms of instructions currently in force ( Circular - Government Accounts

Department, Central Office Circular No: 6/2003-04 dated 5th January 2004) the Cashier shall be

solely responsible for the quality of the notes from Rupee one to Rupees fifty. In respect of

denominations above Rupees fifty ( i.e. Rupees one hundred, five hundred and one thousand) the

cashier shall remain responsible only jointly for the quantity of notes prepared by him / her along

with Officer / Special Assistant.

In the light of the above, the responsibility in case of shortage detected in the packets (no matter

when it is detected) will be fixed equally on the cashier and the checking officer whose

signatures appear on the label. In other words, the cashier and officer who have originally

made/checked the packet will be accountable for any discrepancy even if they are not the

custodians at the time of detection so long as the seal is intact. If the security bands have not

been disturbed and there is no evidence on the face of the packet to indicate that it has been

tampered with, then in such cases, where a shortage is detected (this can take place when one or

more notes are physically torn out of the section leaving a part of the note stuck inside the

stitched packet) the responsibility for such shortage will be decided on a case to case basis.

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1.5 SERVER CLOSING

Every user having a need to work in the CBS system should have an individual

login-id created in the CBS server identifying the user with a branch. For the purpose of Login-

id, the user’s Roll No. as allotted by PAD, Central Office should only be used, which will be

validated by the system with the PAD Salary Database. Wherever the user-id is less than 5 digits,

the roll-no should be prefixed with 0 to make the total digits as 5. In case the user’s roll-no is not

found in the PAD system, the system would not allow the user creation. It is the responsibility of

the Regional Office and PAD, C.O. to ensure that as and when a member is posted to a branch /

Department / Office, the roll no. of the member is attached immediately to the branch in the PAD

Salary Database to enable verification by CBS system. The User-id should be created and

approved by Senior Manager / System Administrator users of the branch as and when any user

joins the branch / office.

All login to the CBS server are controlled by two level authentication, viz. User-id and

Password. Every user should create his/her own password as prompted by the system which

should NOT be revealed to any other person under any circumstances. The password should be

of minimum 5 characters with a maximum of 8 chars and should consist of Alphabet and

Numbers. The password should be changed at frequent intervals but not later than 7 days. As and

when the password is due for change, the system would prompt the user to enter a new password.

Every user should remember the password created by him / her.

At times, users may forget the password created by them as a result they would not be

able to login to CBS system and worI. In such instances, the user should make a written request

to the Branch Chief and request for password change. The Branch Chief should record the letter

in a separate register as per format given in annexures before deleting the existing password of

the user using the ‘del_passwd’ option in user maintenance. Under no other circumstances, this

option should be used by the Branch Officials. Once the existing password is deleted, the user

should login and give a new password. Then the user-id has to be approved by the Senior

Manager / System Administrator before the user would be allowed to login to CBS for working.

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CBS permits creation of users with various levels and Roles depending on the

designation of the user as well as the responsibilities assigned to the users. The System

Administrator / Senior Manager who creates the user should assign only the relevant level / Role

to the user. In case any user has to be assigned with a higher level / role than what he / she is

eligible, the fact should be recorded in a register with appropriate reasons duly authenticated by

the Branch Chief. Once the exigency is over, the user should be reset to his authorized level /

role without fail. The following list indicates the various level and role authorized in CBS :

Designation Level

All Clerical Staff 11

Head Cashier-II 29

Special Cadre Assistants 31

Assistant Manager (Scale –I) 51

Manager (Scale – II) 51

Senior Manager (Scale – III ) 81

Chief Manager (Scale –IV) 81

Branch Chief 99

Type Description

------- -----------------

S Supervisor

L Client User

M Manager

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E Branch Chief

P Special Cadre Assistant

A User Creator/Administrator

R RCC

N Senior/Chief Manager

F C.O/R.O User

H Head Cashier

I Inspectors

D Concurrent/External Auditors

O Operator

Branch Chief to be assigned to Head of the Branch irrespective of his Grade/Scale. Depending

on the requirement of Management, the levels will be changed by ITD, CO from time to time for

better control and users informed of the changes.

1.5.4 BRANCH CLOSING

The First user Senior Manager level user logging to the System would be assigned with the SA-

Role. This user would have to function both the SA as well as the normal Role as assigned to

him during the day. In case the user has to leave the office before closure of the day’s work in

the system, he / she has to assign the SA-role to another user before leaving office. The user

having SA-role should do all Administration related jobs like Application Start-up, Day begin,

Attendance marking, User Maintenance, User-Reset, Day end, Application Shutdown etc.

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As part of security implementation, all the users in CBS would be deactivated at

the end of the day. As and when users of a branch / office report for duty next day morning, the

Senior Manager or the SA-user should mark the user as ‘active’ by marking their attendance in

the system. Only then, the user would be allowed to login to the system. Under no circumstances,

the attendance should be marked for all the users irrespective of their physical attendance in the

office / branch. Such act would be viewed as serious lapse and action initiated against the erring

officials.

A select number of branches have been provided with Bio-metric authentication

system as part of enhanced security measure using which the user is authenticated by reading the

Finger print recorded in the system. The system would be implemented at all branches shortly.

Wherever the system is implemented, branch users should take care to maintain the system in

perfect condition and strictly enforce its use without trying to circumvent the system. In case of

mechanical fault the matter should be taken up with the vendors immediately and necessary

repairs carried out to bring the system to working condition. In case of such emergency, request

may be made to ITD, CO to bye-pass the control as an exception. However, it should not be

resorted as a routine feature.

Users should use only those terminals authorized by ITD to get connected to CBS

system. Whenever a user has completed his/her work and does not want the use of the terminal,

he / she has to log out from the programs gracefully (using 0 or Q as the case may be) so that any

other user who might require the terminal can use the same using his/her user-id and password.

In case of the user wants to temporarily log out for a very short duration of time, using ‘F4’ key

the terminal should be locked by the user before leaving his/her seat. To re login, the user should

enter his/her password once more and enter the system. Every user is responsible for the

transactions put through under their User-id and hence the users should ensure that others do not

have access to their password.

1.6 KEY ISSUES

Whenever a staff member is transferred out of the branch or is no more attached

to the branch, the Senior Manager concerned should remove the user from the branch user-list

using User Maintenance Program and record the same in the attendance register also. Under no

33

circumstances, the user-id of a user who is not attached to the branch should be kept open

leading to perpetration of frauds. Any omission on this account will be viewed seriously and any

repercussions thereon will be the sole responsibility of the Senior Manager concerned.

Due to exigencies, Regional Office may depute members from one branch to

another on a temporary basis. In such cases, the branch where the member is originally attached

should ‘De-activate’ the member’s user-id from their branch user list before relieving the

member to the other branch. The branch where the member is going on deputation should create

a fresh login id for the member as per extant guidelines and activate the same. On completion of

the deputation period, the relieving branch should ensure that the user-id is de-activated before

he/she reports for duty at the parent branch.

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CHAPTER 2

ACCOUNT OPENING

2.1 ACCOUNT OPENING /CLOSING

2.1.a) SAVINGS BANK ACCOUNTS

Individuals–single accounts, or joint accounts of two or more individuals.

minors by themselves or on behalf of the minors by their guardians

Following entities Primary Co-operative Credit Society which is being financed by the

bank.

Khaki and Village Industries Board

Agriculture Produce Market Committee

Societies registered under Societies Registration Act, 1860 or any other corresponding

Law in force in the state or Union Territory.

Companies Governed by the Companies Act 1956 which have been licensed by the

Central Government under section 25 of the Act, or under the corresponding provisions

in the Indian Companies Act 1913 and permitted, not to add to their names the word

"Limited or the words "Private Limited"

Government departments/bodies/agencies in respect of grants/subsidies released for

implementation of various programmers/schemes sponsored by Central

Government/State Governments subject to production of an authorization from the

respective Central/State Government departments to open savings bank account.

Development of women and children in rural areas (DWCRA).

Self-help Groups (SHGs) registered or unregistered, which are engaged in promoting

savings habits among their members.

Farmers'Clubs - Vikas Volunteer Vahini. (V V)

Branches shall not open Savings Bank account in the name of the following:

a. any trading or business concern, whether such concern is proprietorship, partnership, company

or association.

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B.Government departments/bodies depending upon budgetary allocations for performance of

their functions.

C.Municipal Corporations/Committees

d.Panchayat Samities

e.State Housing Boards

f.Industrial Development Authorities

g.State Electricity Boards

h.Water / Sewerage / Drainage Boards

i.State Text Book publishing corporations / societies

j.Metropolitan Development Authorities

k.State / District level housing Co-operative Societies.

L.Other banks including Regional Rural Banks, Co-operative Banks and land Development

Banks.

M.Political parties

These Institutions / Organizations are specifically excluded from opening SB

Accounts with Banks and earn interest thereon and hence branches are prohibited from opening

such Accounts.

Introduction of Accounts

Where the applicant for a SB Account submits sufficient proof of identity and

address as prescribed in KYC-AML Policy of our bank and the branch is satisfied with the

bonafides of the applicant and as a respectable person, with such proof of identity and address,

branch may open the account without insisting on an introduction by an existing account holder.

However a Letter of Thanks to the depositor should be sent as envisaged in Chapter.1 on

“Constituents’ Accounts - General”. Branch should be in a position to classify such account

holders under “Low risk-RIP I under KYC Norms / AML Standards.”

With the exception of the above, and “No frills Accounts” all other Accounts should be

introduced as guided in Chapter.1on “Constituents’ Accounts - General”.

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2.1.b) CURRENT ACCOUNT

Instructions relating to the formalities to be observed for opening of an account,

operations in an account and other matters relating to maintenance common for current and

savings accounts have been given in Chapter.1on “Constituents’ accounts – General”.

The additional provisions relating to Current Accounts and Cash Credit accounts (only the

operational part and not credit monitoring) are provided in this chapter. The provisions contained

herein must be read together with those in Chapter.1 on “Constituents’ Accounts - General”.

All formalities connected with opening of an account as detailed in Chapter.1 on

“Constituents’ accounts-General” should be carefully followed. Branch Managers/Second Line

Functionaries/ Departmental Officers must see that the particulars in the account opening forms

signed by constituents are recorded in the computer master and that the forms and all other

documents relating to the opening of the accounts are serially numbered and systematically filed.

The serial numbers of the opening forms, the numbers of the relative specimen signature sheets

and Powers of Attorney or Letters of Authority, must be recorded in the computer master. Any

special instructions affecting the authority of the drawer(s) must be recorded in the computer

master as well as on the specimen signature sheet.

Partnership letters, Joint Hindu Family Letters, Letters of Authority to operate

accounts and copies of partnership deeds, memoranda and articles of association of Companies

and rules of Associations and Societies should be filed with the account opening forms. In the

case of accounts in the names of limited companies, firms, co-operative societies etc., where

such documents are numerous, a separate file should be maintained for each account to facilitate

reference.

Branches should adhere to the KYC Norms / AML Standards as detailed in our

KYC policy. Branches should obtain KYC forms for the legal persons (entities) as well as the

constituents of the legal persons ( e.g. partners, directors, office bearers , power of attorney ,

mandate holders etc) . Branches should also obtain address proof and identify proof from all

parties to an account to complete the customer acceptance policy and customer identification

procedure, in respect of legal persons branches should additionally obtain documents like

37

partnership deed, memorandum and articles of association, resolution etc., without fail. Based on

the customer acceptance policy and identification procedure branches should categorise the

accounts on risk perception as Low risk – RIP I, Medium risk – RIP II, High risk - RIP III,

exceptionally high risk – RIP IV as detailed in KYC policy and monitor the accounts

accordingly.

Documents for Individuals (natural persons) and legal persons (entities)

Customer identification details (for individuals/Proprietor/Partners/ coparceners/ Directors /

Authorised Signatories ) :

a.Passport alone where the address on the Passport is the same as the address on the account

opening form

Or

b.Any one document from each of the under noted TWO lists, for a photo ID and proof of

address

List I - photo proof List II – address proof

1 Passport where the address

differs

1 Current telephone bill /Postal

identity card/ Current Pass Port

2 PAN Card 2 Letter from any recognized

public authority

3 Voters Identity Card 3 Bank account passbook/

statement

4 Driving license 4 Latest electricity bill

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5 Identity card

( subject to Bank’s satisfaction)

5 Letter from employer to

Bank’s satisfaction

6 Letter from recognized public

authority Or Public servant

verifying the photograph to

Bank’s satisfaction

6 Property tax book / Receipt

7 Registered lease deed

8 Ration card

Any one or more document(s)

which provide customer

information to Bank’s

satisfaction

Additional documents required , ( Legal persons – entities)

For the partnership firms

Registration Certificate if registered

Partnership deed

Power of Attorney grantedto a partner or an employee of the firm to transact business On Firm’s

behalf (as provided in the partnership deed , otherwise all partners should be involved in all the

transactions )

Telephone bill in the name of the firm / partners

Any Officially valid documents identifying the partners and the persons holding the power of

attorney and their (PA) addresses

For Limited Companies

A copy of the Certificate of Incorporation duly certified by a Director or Secretary of the

Company

39

A copy of the Certificate of Commencement of business duly certified by a Director or Secretary

of the Company ( for Public LTD Companies only)

A copy of the Memorandum and Articles of Association certified to be true and upto date by a

Director or Secretary of the Company

Resolution of the Board of Directors to open an account and identification of those who have

authority to operate the account ( specimen annexed)

Power of Attorney granted to Company’s Manager(s),/ officers/ Employees to transact business

on its behalf

Copy of the PAN allotment letter / PAN card

Copy of the Telephone Bill

For Trusts / Association/ Clubs / Societies

Trusts Associations / Clubs / Societies

1.Certified copy of the trust deed

2.If a charitable trust, a certified copy of the

certificate from Charity commissioner

3.Where there is no trust deed, a certified

copy of the order from a competent Court

4.Certified copy of the resolution

regarding opening and conduct of the bank

account

5.List of present trustees with bio data of

each trustee

6.Certified copy of a certificate under IT

act wherever the deed provides for use of

1.Certified True copy of the Rules, Regulations,

Bye-Laws (as the case may be)

2.Certified True copy of Certificate of Registration

in case of Registered bodies

3.(original to be verified)

4.A certified true copy of the Resolution certified

(by the Chairman of the meeting of the Governing

Board or Managing Committee or Like Body, at

which it was passed)

5.A copy of the Balance sheet in the case of Co-

operative Society, if available

6.Certificate of Registration if registered

40

Trust money for business activities.

7.Certificate of Registration if registered

8.POA to transact business if applicable

9.Any officially valid document to identify

the Trustees, Settlers, beneficiaries and

those holding Power of attorney,

Founders/ Branch Managers / Directors

and their addresses

10. Telephone bill

7.POA to transact business if applicable

8.Any officially valid document to identify the

committee members, office bearers, Directors and

their addresses

9.Telephone bill

2.1 c) CLOSING OF ACCOUNTS

When a customer approaches a branch with a request for closing his account, it is

necessary for the branch to ascertain the reasons for the closure of the account.

If it is on account of poor service, reported by the customer, then steps must be taken to see that

the quality of service is improved and the customer is persuaded to retain his account with us. If

the request is due to the customer’s transfer to another station where our Bank has a branch, the

branch should suggest that the account can be transferred to the other place. If the closure is

inevitable, then the following procedure must be followed.

On receipt of the letter from the customer requesting closure of the

account(Request letter format appended), the signature on the letter should be verified with the

specimen on record. It must be noted that the letter requesting closure of the account must be

signed by all the joint account holders, irrespective of the mandate (such as either or survivor,

any one or survivor etc.). However, where all the joint account holders authorize the Bank in

writing to close the account on the instruction of one of them, the account may be closed on the

basis of a letter signed by the person named in the authorization letter. The letter must be

circulated to the other departments of the branch to ascertain whether there are any

41

liabilities/dues to the branch from the customer. On the same letter department officers should

initial and convey the liabilities / dues or no liabilities / dues to the branch /bank. The letter

should then be referred to the Branch Manager for instructions.

After receipt of the letter, duly approved by the Manager for closure of the

account, the department should proceed to close the account and deal with the balance payable to

the customer after adjusting our dues as per his/her instructions.

In the case of accounts bearing interest, the amount of interest should be

calculated at the rate and for the period upto which such interest is payable and applied to the

account.

In the case of cheque operated accounts if there are any cheques issued by the

customer but not yet presented, the customer must be requested to make suitable arrangements

for meeting them, as otherwise, they will be returned unpaid.

Where the customer has come in person he/she should be asked to draw a cheque

for the net amount payable to him/her and the cheque should be paid in the usual manner. Where

a customer has sent a blank cheque duly signed by him/her through a third party with a proper

letter of authorization to receive the payment on his/her behalf after establishing authenticity of

such instructions , the departmental officer should inform the third party the amount payable so

that he/she can fill up the amount in the cheque and present it for payment. The departmental

officer may render any assistance that the third party may require in filling up the cheque. The

cheque should then be paid in the usual manner.

After closure of the account, the account should also be removed from the

account master.

The pass book must be updated and closed with the notation “Account closed on

42

___________. Unutilized cheque leaves from---------- to -----------------returned” and returned to

the customer.

The unutilized cheque leaves returned must be dealt with as stated in

The Account Opening Form and the specimen signature card of the customer

should be cancelled by drawing a line across the face of the form and writing in red ink in bold

letters "ACCOUNT CLOSED". Such forms should be stitched along with the day’s vouchers.

An entry should be made in the Accounts Opened and Closed Register and the running number

of live accounts should be reduced.

The account must be removed from the index by drawing a line over the entry.

The noting if any, in the standing instructions register should also be similarly deleted. For the

same purpose, a letter of cancellation of standing instructions should be obtained from the

customer.

If the customer has not made any arrangements for meeting the cheques issued by

him but had not been presented before his request for closing the account, any cheque presented

on the account after closure of the account should be returned with the reason "Refer to Drawer".

REQUEST FOR CLOSURE OF ACCOUNT (FORMAT)

Place:

Date:

To The Branch Manager

Indian Overseas Bank

__________________ Branch

Dear Sir,

43

Request for closure of account

Name of the A/C :

Type of Account :

Account Number :

=======================================================

I/We am/are having the captioned account with your branch for the

last_____________ years.

I/We request you to close the above deposit account for the following

reason/s.

a)

b)

I/We enclose herewith the unutilized cheque leaves for the purpose.

Yours faithfully,

2.1.1 KYC NORMS / AML STANDARDS

Along with the application form as under noted branches should obtain KYC-

CROP form from all individuals / parties to the account including mandate holders / power of

attorney holders. Branches should also obtain KYC-CROP form for the entities ( legal Persons )

like Partnership, Company, Associations, clubs etc., and do the risk classification . However if

the customer has already been subjected to due diligence for KYC / AML for the Current

account or Savings bank account, the process need not be repeated for term deposits. However

the risk classification as ascertained from the Savings bank or Current account department

should be noted in the application form along with Customer ID provided by the computer

system for such CA / SB account.

44

2.1.1.1 KYC AN ANTI MONEY LAUNDERING INSTRUMENT

Banks were advised to follow certain customer identification procedure

for opening of accounts and monitoring transactions of a suspicious nature for the purpose of

reporting it to appropriate authority. These ‘Know Your Customer’ guidelines have been

revisited in the context of the Recommendations made by the Financial Action Task Force

(FATF) on Anti Money Laundering (AML) standards and on Combating Financing of Terrorism

(CFT). Detailed guidelines based on the Recommendations of the Financial Action Task Force

and the paper issued on Customer Due Diligence (CDD) for banks by the Basel Committee on

Banking Supervision, with indicative suggestions wherever considered necessary, have been

issued. Banks have been advised to ensure that a proper policy framework on ‘Know Your

Customer’ and Anti-Money Laundering measures is formulated with the approval of their Board

and put in place.

This Master Circular aims at consolidating all the instructions/guidelines issued

by RBI on Know Your Customer (KYC) norms/Anti-Money Laundering (AML)

standards/Combating Financing of Terrorism (CFT)/Obligations of banks under PMLA, 2002.

The Master Circular has been placed on the RBI website (http://www.rbi.org.in).

2.1.2 CURRENT ACCOUNT FOR INDIVIDUALS (BUSINESS PURPOSE)

One Identity proof from: PAN Card, Passport, Voter Identity Card, Driving License,

Adhaar Card.

One Address proof from: PAN Card, Passport, Voter Identity Card, Driving License,

Adhaar Card.

Recent Color Photograph

PAN/Form 49 A along with Form 60 if applied for PAN

Account opening Cheque from existing Savings/Individual Current Account

45

2.1.3 SOLE PROPRIETORSHIP FIRM

First & Second entity proof from: Trade license, APMC/ Mandi license or TAN

registration certificate. View complete list of documents Please note that both the documents

cannot be same.

Apart from the above list, second entity proof can also be: Latest copy of Electricity Bill or

registration of firm with EPFO/ ESIC View complete list of documents

Address proof in the name of proprietor or proprietorship firm (if communication address

is different or other than address mentioned on entity proofs)

Proprietorship Letter as per the bank’s format

Identity proof of proprietor View complete list of documents

Account opening cheque from existing account of proprietorship firm or from savings /

individual current account of proprietor (in case of a new firm)

Residence address proof of the proprietor (if account opening cheque is collected from

proprietor's savings / Individual current account)

PAN Card in the name of the Proprietor or Form 49 A along with Form 60 (if applied for

PAN)

No objection certificate (if proprietorship firm is enjoying credit facility from any other

bank (s))

2.1.4 PARTNERSHIP FIRM

Partnership deed

Partnership letter as per the bank’s format

Entity proof* of partnership firm from:

Trade License

Shops & Establishments Certificate/Licence

APMC/Mandi Licence

TAN Registration Certificate. *View complete list of documents

PAN Card in the name of firm or Form 49 A along with Form 60 (if applied for PAN)

Address proof* in name of the firm from (if address is different or not given on the Entity

proof):

46

Latest Three months Bank Account Statement along with account opening cheque

Latest copy of Electricity Bill

Latest copy of Telephone Bill

Property Tax bill along with Tax payment receipts

Water Tax bill along with Tax payment receipts

Identity and Address proof of all partners. View complete list of documents

Partnership Registration Certificate (if partnership firm is registered with Registrar of

Firms)

Account opening cheque from existing account of partnership firm or from savings

account of partner (in case of new firm)

No objection certificate (if partnership firm is enjoying credit facility from any other

bank(s))

2.1.5 COMPANIES

2.1.5.1 PRIVATE/PUBLIC LIMITED COMPANY

Certificate of Incorporation

Board Resolution (BR)

Memorandum of Association (MOA) & Articles of Association (AOA)

Certificate of Commencement of Business (COB) (only for Public Ltd Company)

Latest list of directors as per the bank’s format

Communication address proof in the name of company (if different than that mentioned

in the Certificate of Incorporation):

Trade License

Shops & Establishments Certificate/Licence

APMC/Mandi Licence

TAN Registration Certificate

Latest Three months Bank Account Statement. View complete list of documents

Registered address proof of the company (if different than that mentioned in the

Certificate of Incorporation)

Identity proof of all authorized signatories View complete list of documents

47

Proof of appointment of current director/s (if his/her name is not available in first list of

Director/s)

Proof of resignation of Director/s (if name of that Director/s is not available in latest list

of Director/s)

PAN Card of the company or Form 49 A along with Form 60 Only (for New Companies

which are less than 90 days)

Share Holding Pattern of the company as per the bank’s format

No objection certificate (if Company is enjoying credit facility from any other bank (s))

2.1.6 TRUSTS

2.1.6.1 NRI ACCOUNT

In terms of Section 2 (w) of FEMA "Person resident outside India"means a person who

is not resident in India. Person includes an individual, a Hindu undivided family, a company, a

firm, an association of persons or a body of individuals whether incorporated or not.

1.An Indian Citizen who stays abroad for employment/carrying on business or vocation outside

India or stays abroad under circumstances indicating an intention for an uncertain duration of

stay abroad is a non-resident. Persons going abroad for studies are treated as Non-Resident

Indians (NRIs) and are eligible for all the facilities available to NRIs. Educational and other

loans availed of by them as residents in India will continue to be available as per FEMA

regulations.

1.1.Persons posted in U.N.Organisations and officials deputed abroad by Central/State

Government and Public Sector undertakings on temporary assignments are also treated as non-

residents.

1.2.Non-resident foreign citizens of Indian Origin are treated on par with non-resident Indian for

opening and maintaining accounts and for making investment.

‘Person of Indian Origin’means a citizen of any country other than Bangladesh or Pakistan, if

48

a)he at any time held Indian passport;

or

b)he or either of his parents or any of his grand- parents was a citizen of India by virtue of the

Constitution of India or the Citizenship Act, 1955 (57 of 1955);

or

c)the person is a spouse of an Indian citizen or a person referred to in sub-clause ( a ) or (b);

1.3.Overseas Corporate Bodies (OCBs) have been derecognized as an eligible ‘class of investor’

under various routes/schemes available under extant Foreign Exchange Management

Regulations.

1.4.In case of doubts/clarifications regarding the NRI status of individuals approaching branches

to open accounts, branches should take up with D &A Section, Foreign Exchange Department,

Central Office. Further, FAQ on various entitlements of NRI/PIO published in the website of the

Reserve Bank is also made available in the home page of our TREASURY (FOREIGN) and

branches may refer to the same.

ACCOUNTS OF CERTAIN NON-RESIDENTS TREATED AS RESIDENT ACCOUNTS

Although the under noted categories of persons, firms, companies, etc., are

treated as resident outside India under FEMA, their rupee accounts with ADs in India are

regarded as resident accounts and hence branches may open such accounts and allow free

operation of accounts, provided the requirements under FEMA 1999 are complied with.

(i)Indians, Nepalese or Bhutanese resident in Nepal or Bhutan.

(ii)Offices and branches situated in Nepal or Bhutan of any business carried on by a company or

a Corporation incorporated or established under any Law in force in India, Nepal or Bhutan.

(iii)Offices and branches in Nepal or Bhutan of any business carried on as a partnership firm or

otherwise by Indians, Nepalese or Bhutanese.

49

3.For opening accounts in the names of Pakistani and Bangladesh nationals, branches should

obtain prior approval of Reserve Bank of India and the approval details should be recorded in the

relative account opening forms and Ledger/Register folios/ system records.

4.All the Indian branches of our Bank can open and maintain the following categories of Rupee

Accounts in the names of Non-Resident Indians (NRIs) and Person of Indian Origin.

i)Ordinary Non-Resident Rupee Accounts (NRO Accounts)

ii)Non-Resident (External) Rupee Accounts (NRE Accounts)

A comparative chart containing the salient features and conditions governing credit/debit

transactions of the above four types of accounts are furnished as Annexure-I. Before opening

accounts under these schemes, branches should ensure that the applicants satisfy the criteria laid

down for the residential status under FEMA 1999.

5.Branches should be guided by instructions contained in the following while opening and

allowing operations in non-resident rupee accounts:

i)Foreign Exchange Management (Deposit) Regulations, 2000 issued under FEMA 1999 and

Notification No. FEMA 5 /2000-RB dated 3rd May 2000 .

ii) Master circulars and AP (DIR) Circulars issued by Reserve Bank of India

iii) Circulars issued by Central Office.

(Regulations governing maintenance of and operations on non-resident rupee accounts by

authorised Co-operative/Commercial banks have been given separately by Reserve Bank of India

in Memorandum ABM).

50

2.1.6.2 OPENING OF ACCOUNTS IN THE NAMES OF NRIs

Any Non-Resident of Indian Origin or Nationality who desires to open account with the

branch, may send the prescribed application duly completed and signed - verified by his/her

Bank/Indian Embassy/Notary Public/our Bank’s Account holder along with remittance to the

branch.

Alternatively, photocopies of passport giving passport number, signature, photographs

and date of issue/expiry date of passport may be sent by the prospective account holder.

Branches are permitted to open NRE accounts for Indians before proceeding abroad

with zero balance in the account after verifying Passport, Visa and Air ticket for the journey and

give them the Account Number.

Branches opening rupee accounts in the names of minors, joint accounts should ensure

observance of the usual precautions for opening of accounts, issue of pass book/statement of

accounts, issue and despatch of cheque books, operation of accounts, standing instructions, etc.

Branches should choose the correct type of non-resident account in the CBS package, for

different categories of non-resident accounts opened/maintained by them.

Details such as names of NRIs, their nationality, Indian contact address, overseas

address, passport particulars, name and address of the introducer/identifying overseas

bank/branch, operational/payment instructions like E or S, F or S, A or S, nominations etc.,

should be recorded in the account master in CBS packages authenticated properly by the

authorised official.

Branch should send the deposit receipt through registered post to the NRI depositor at

the address given in the application/account opening form. The deposit receipt should not be

handed over to agents/middlemen/third parties. The branch should ensure that complete postal

51

address of the NRI depositor has been furnished in the account opening form and should exercise

special care, if the address is incomplete or only post box number has been furnished.

The Account opening forms, specimen signature cards, should be properly filed,

preserved and produced for verification by our Internal Inspectors/Reserve Bank of India

Inspectors/External Auditors when required.

In terms of Policy Document on KYC-AML, Non–resident customers are placed under

RIP – Three (high risk) category in the Risk Perception Matrix. Hence branches should apply

due diligence with the available information provided by the customer and the estimation arrived

on the additional information gathered through interaction with the customer. Suitable STTL

(Single Transaction Threshold Limit)may be fixed as applicable to the risk level.

REMITTANCES

Branches handling inward remittances received for opening/credit to non-resident

accounts and outward remittances made to the debit of non-resident accounts should ensure that

the remittances received/made are in conformity with the permitted methods prescribed under

FEMA 1999.

Branches should ensure that each inward remittance is promptly acknowledged to the

NRI and relative credit is made to the account without delay, observing procedural guidelines for

handling inward remittances. Similarly, the requests for foreign outward remittances should be

promptly attended to by branches.

NAD branches opening/maintaining accounts should note to handle purchase

transactions under prior report to the designated AD branch. For sale of foreign exchange on

account of NRI customers, the NAD branch should take up with the designated AD branch,

which will arrange for release of exchange in the form of draft, mail transfer, telegraphic

transfer, foreign currency TCs/Notes, etc. In this connection, branches are advised to ensure

compliance of procedural aspects contained in relevant chapters of this volume.

52

While handling foreign currency notes/coins on account of NRIs, branches should be

guided by the general instructions regarding purchase/encashment of foreign currency notes

contained in Chapter on ‘Foreign Travels’ of the volume.

The purchase/sale transactions (in foreign exchange) in opening/maintaining non-

resident accounts in the names of NRIs by both AD branches and NAD branches shall be

reported to TREASURY (FOREIGN) only by AD branches, in accordance with the procedure

laid down for such reporting.

Branches should properly record and promptly execute the various standing/special

instructions of NRIs for local disbursements under advice to account holders. While executing

the instructions of the customers, branches should ensure that debits/credits made to these

accounts are permitted debits/credits under FEMA 1999.

LOANS AND OVERDRAFTS

Branches granting loans/overdrafts to NRIs against the security of NRO/NRE deposits

should ensure compliance of guidelines contained in Notification No. FEMA 5/2000-RB dated

3rd May 2000 read with subsequent amendments and Volume II of Book of Instructions as well

as circulars issued by Central Office, regarding maximum amount of loan, interest rate, margin,

purpose etc.

Advances against FCNR/NRE deposit to the depositor himself or to a third party should

be granted up to a maximum of Rs.100.00lacs only, only under his specific request/mandate and

after verifying the authenticity of the signature of the depositor. If the NRI availing the loan is on

a visit to India, the loan documentation could be completed at the branch, where he proposes to

avail of the facility. If the NRI seeks to avail of loan from the branch in India, when he is abroad,

the loan document (60 H) should be sent to the NRI abroad with a request to execute the

53

documents at an Overseas Branch or at the branch office of the Correspondent of our Bank and

arrange to forward the documents along with the deposit receipt (carrying the undated discharge

of the depositor/s) through the overseas branch/office of the correspondent bank where the

documents were executed. A copy of the passport of NRI should also be called for along with the

application and discharged deposit receipt.

The covering letter of the overseas branch/Correspondent bank forwarding the

documents should confirm that the depositor had called on them and executed the documents in

their presence. On receipt of documents, branch can affix and effectively cancel the revenue

stamp on the reverse of deposit receipt where the undated discharge of the depositor/s appears

and proceed to grant the loan. The proceeds of loans so granted could be credited to the NRO

account only of the NRI availing the loan. Under no circumstances, the loan proceeds should be

credited to NRE/FCNR accounts of NRIs or repatriated abroad.

Branches have to propose to their Regional Office for sanction of loan against NRE

deposits to third parties.

Branches should not grant advances to third parties against NRE/FCNR B deposits on

the basis of Power of Attorney.

In case of any loan / overdraft availed by a resident and who subsequently became a

person resident outside India, in terms of Reserve Bank guidelines under FEMA 1999, it is left to

the discretion and commercial judgment of the authorised dealer / branch to allow continuance of

such facilities. In such cases, payment of interest and repayment of loan may be made by inward

remittance or out of legitimate resources in India of the person concerned. As per Reserve Bank

guidelines, authorised dealers at their discretion / commercial judgment, are permitted to allow

overdrawing in NRE SB account for a period not more than two weeks, up to a limit of

Rs.50,000 subject to the condition that such overdrawing together with the interest payable

thereon are cleared/repaid within the staid period of two weeks, out of inward remittance through

normal banking channels or by transfer of funds from other NRE/FCNR accounts. However,

branches should be guided by our Bank’s discretionary powers for various branches

54

communicated from time to time, before considering such requests from their NRI customers.

Branches should note that the loan/overdraft facilities granted to NRIs in India against

the security of NRO/NRE/FCNR B deposits could be adjusted—

(a)by foreign inward remittance, or

(b)from the proceeds of deposits held as security, or

(c)to the debit of the NRO/NRE account of the borrower.

When a loan granted to a NRI against the security of his/her NRE/FCNR deposit is

adjusted out of the rupee resources held in NRO account, branches should note to recover

interest as laid down by Central Office in ‘Interest Rate on Advances’ circulars.

At the time of sanctioning credit facility against the NRE/FCNR deposits, branch should

necessarily obtain instructions from the depositor, well before the due date, for adjustment/roll

over of the facility on the due date. Branch should send deposit maturity notice along with details

of the facility outstanding and the instructions already in place. If any change in instructions is

given by the depositor, branch should take note of the same.

As any interest rate movement/exchange rate movement will result in complaints from

customers, branches should take adequate care on this issue.

BLOCKED ACCOUNTS

The Reserve Bank of India has powers to ‘block’ accounts in India of any person,

whether an individual, firm or company resident outside India and to direct that payment of any

sums due to that person shall be made to such blocked account. A blocked account means an

account opened as a blocked account at any branch or office in India of a bank authorised in this

behalf by Reserve Bank of India. No blocked account may be opened by a branch or an existing

55

‘free’ account blocked, except under directions of Reserve Bank of India. No blocked account

should be un blocked by a branch except under specific direction from Reserve Bank of India.

The Reserve Bank of India will issue special directions regarding operations on

individual blocked accounts at the time of authorizing opening of such blocked accounts.

Submission of STAT 2 return to the Reserve Bank for blocked accounts has been

dispensed with.

Annexures:

I– Comparative chart showing the salient features of NRO and NRE deposit schemes.

II– Account Opening Form for NRE Account.

ANNEXURE I

RUPEE ACCOUNT OF NON-RESIDENTS OTHER THAN BANKS

NON-RESIDENT (ORDINARY) – NRO NON-RESIDENT (EXTERNAL) – NRE

1.WHO CAN OPEN:

Any person resident outside India (other

than a person resident in Nepal and

Bhutan) (Opening of accounts of

individuals / entities of Pakistan /

Bangladesh nationality / ownership as

well as erstwhile OCBs require prior

approval of Reserve Bank of India).

Non-Resident individuals of Indian Nationality

or origin (Opening of NRE accounts in the

names of Pakistani / Bangladeshi individuals /

entities require prior approval of Reserve Bank

of India).

2. SOURCE OF FUNDS :

Proceeds of remittances received in any

Remittances received from abroad in an

56

permitted currency from abroad or any

permitted currency tendered by the account

holder during his temporary visit to India or

transfers from rupee accounts of Non-

Resident Banks.

Legitimate dues in rupees of account holder

in India.

Transfer from NRE/FCNR accounts.

Designating existing account as NRO, of a

person proceeding abroad (other than Nepal

or Bhutan) which would give him the status

of a NRI.

approved manner in freely convertible

currency, Transfer from NRE/FCNR accounts.

Accounts may be opened in the name of any

eligible NRI during his temporary visit to India

against tender of foreign currency, TCs issued

in his own name or notes and coins tendered

provided the branch is satisfied that the status

of the person continues to be a non-resident.

Branches should ensure that TCs and currency

notes tendered by the account holder have in

fact been brought by him from abroad and not

acquired locally.

Transfers from NRO account to NRE account

are permitted subject to the ceiling of USD 1

million already available for repatriation from

NRO accounts

3. TYPE OF DEPOSIT:

SB, CD, Term Deposit

SB, CD, Term Deposit

4. GL CODE :

Same as ordinary deposit.

SB NRE – 1301

CD NRE – 1501

NRE TD (S) – 1101

TD NRE (L) – 1151

5. PERIOD OF DEPOSIT :

TD - 15 days to 120 months

TD – 12 months to less than 60 months

6. INTEREST :

SB &TD–As applicable to domestic deposits.

SB - 3.5 % p.a.

TD-BASED ON LIBOR

57

Depending on period of deposit

(For current rates refer circular issued by

Central Office). No additional interest is

payable on deposit accounts of staff members.

7. JOINT ACCOUNT :

Allowed with resident.

- Joint NRE accounts in the names of two or

more non-resident individuals is permitted

provided all the account holders are persons of

Indian Nationality or Origin. If the spouse of an

NRI is a foreign national, the status of such a

person will be that of a Person of Indian Origin.

However, such persons are permitted to have

only joint bank accounts along with the spouse.

Residents can also be joint account holders in

NRE account son a ‘former or survivor’ basis.

8. REPATRIATION :

Not reparable except for the following in the

account – 1) Current income. 2) Up to USD 1

million per financial year for any bonafide

purpose out of the balances in NRO

account/sale proceeds of assets in India

acquired by way of inheritance/ legacy

inclusive of assets acquired out of settlement

subject to certain conditions.

Freely reparable.

9. NOMINATION :

Nominee can be a person resident in India or

a person resident outside India. In the case of

Non-resident nominee, the amount entitled to

him from the account(s)/deposit(s) of a

Nominee can be a person resident in India or a

person resident outside India. In the case of

Non-resident nominee, authorised dealers are

allowed to remit funds lying in the account of

58

deceased person will be credited to his NRO

account and the repatriation will be subject to

the overall ceiling of USD 1 million per

financial year, subject to taxes.

the deceased account holder.

10. TAX :

Tax at the rate of 30 % on the interest income

is to be deducted at source and remitted to

Government. If the Non-Resident is from any

of the countries with whom Double Taxation

Avoidance Agreement is entered into, the

applicable rate will be deducted.

Income from interest on monies standing to the

credit of NRE accounts is exempt from Income

Tax. Balances held in the accounts are exempt

from Wealth Tax. Gifts made to close relatives

in India from out of balances in such accounts

are also free from Gift Tax. (These Tax

exemptions are available only in respect of

NRE accounts maintained by NRIs and any

fresh directive issued will prevail)

11. PREMATURE CLOSURE :

If the deposit is up to Rs. 5 lakhs, applicable

interest for the period run prevailing on the

date of deposit is payable without foreclosure

charges. 1% less than the rate applicable for

the period the deposit has run prevailing on

the date of deposit, additional interest for

bulk deposits of Rs.15 lakhs and above, is not

payable on foreclosure.

In case of an overdue deposit renewed with

overdue interest, is closed prematurely before

completing the minimum period for which

such deposits are accepted from the date of

renewal, no interest is payable on the

renewed deposit and the interest paid for the

overdue period should also be recovered.

1% less than the applicable interest for the

period the deposit remained with the bank

prevailing on the date of deposit. Additional

interest, if any, payable on bulk deposit of

Rs.15 lakhs and above is not payable.

If an overdue deposit renewed with interest

payment for the overdue period, is closed

prematurely before completing the minimum

period for which such deposits are accepted

from the date of renewal, no interest is payable

on the deposit and the interest already paid for

the overdue period should also be recovered.

59

12. RENEWAL OF DEPOSIT :

Can be done as per Rules as applicable to

domestic deposits.

Renewal of deposit can be done as long as the

depositor’s status is NRI. Renewal must be

made within 14 days from the due date to get

retrospective effect and must be renewed for

the minimum period prescribed. If the overdue

period is less than one year, the interest rate for

one year prevailing on date of maturity or

renewal, whichever is lower, is to be applied.

13. CHANGE OF STATUS :

NRO accounts should be redesignated as

resident accounts on the return of account

holder to India, provided the branch is

satisfied that the account holder has returned

to India for taking up employment, business

or vocation or for any other purpose

indicating his intention to stay in India for an

uncertain period. Where the account holder is

on a temporary visit to India, the account

should continue to be treated as Non-resident

even during such visits.

NRE accounts should be redesignated as

resident rupee accounts or as RFC accounts (if

eligible) at the option of account holder

immediately upon the return of account holder

to India provided the branch is satisfied that he

has returned to India for taking up employment

or for carrying on a business or vocation or for

any other purpose with an intention of residing

in India for an uncertain period.

Where the account holder is only on a short

visit to India, the account may continue to be

treated as NRE account even during his stay in

this country.

In respect of funds held in fixed deposits in

NRE accounts, interest will be payable at the

rate originally fixed, provided the deposit is

held for the full term even after conversion into

resident account.

14. OPERATIONS IN THE ACCOUNT :

Branches may allow transactions in NRO

14. OPERATIONS IN THE ACCOUNT :

Branches may allow transactions in NRE

60

accounts complying with instructions

contained in FEMA Notification No. FEMA

5/2000-RB dated 3rd May 2000.

At the time of opening of the accounts, the

account holders should give an undertaking

that in cases of debits to the accounts for the

purpose of investment in India and credits

representing sale proceeds of investments,

they would ensure that such investments/

disinvestments would be covered by the

general or special permission of Reserve

Bank of India.

Credits: Proceeds of remittances in any

permitted currency from outside India

through normal banking channels or any

permitted currency tendered by the account

holder during his temporary visit to India or

transfers from rupee accounts of non-resident

banks. Other legitimate dues in India of the

account holder.

Debits: All local payments in rupees

including payments for investments subject to

compliance with the relevant regulations

made by the Reserve Bank and remittance

outside India of current income in India of the

account holder net of applicable tax.

A resident can be authorised by the NRI by

way of Power of Attorney or Mandate Letter

to operate the NRO accounts. The

withdrawals are restricted to local payments

only by the mandate holder. Operations on

accounts complying with instructions contained

in FEMA Notification No. FEMA 5/2000-RB

dated 3rd May 2000.

At the time of opening of the accounts, the

account holders should give an undertaking that

in cases of debits to the accounts for the

purpose of investment in India and credits

representing sale proceeds of investments, they

would ensure that such investments/

disinvestments would be covered by the general

or special permission of Reserve Bank of India.

Credits: Proceeds of remittances in any

permitted currency from outside India through

normal banking channels or any permitted

currency tendered by the account holder during

his temporary visit to India or transfers from

rupee accounts of non-resident banks. Other

legitimate dues in India of the account holder.

Debits: All local payments in rupees including

payments for investments subject to compliance

with the relevant regulations made by the

Reserve Bank and remittance outside India of

current income in India of the account holder

net of applicable tax.

A resident can be authorised by the NRI by way

of Power of Attorney or Mandate Letter to

operate the NRE accounts. The withdrawals are

restricted to local payments only by the

mandate holder. Operations on the account in

terms of Power of Attorney is restricted to

withdrawals for permissible local payments or

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the account in terms of Power of Attorney is

restricted to withdrawals for permissible local

payments or remittance to the account holder

himself through normal banking channels.

remittance to the account holder himself

through normal banking channels.

CHAPTER 3

DEPOSIT ACCOUNTS

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3.1 DEPOSIT ACCOUNT OPENING/CLOSING

3.1a) TERM DEPOSIT ACCOUNTS CAN BE OPENED BY

a) a person in his/her own name

b)two or more persons in their joint names payable to:

I) both or all of them or to the survivor(s) or

ii) either or any one or more of them or to the survivor(s)

c)a natural guardian on behalf of a minor

d)a natural guardian in the joint names of himself/herself and the minor, payable to either or

survivor

e) a person in the name of any minor of whom he/she is the guardian appointed by a competent

court

f) a minor aged Ten years or above in his/her single name to be operated upon by himself/herself

g) A Club, Association, Society, Educational Institution and other such bodies

h)Trustees/Executors/Administrators/Courts

I) Proprietary concerns, Partnership Firms and Limited Companies

j) Central or State Government departments / Corporations / Organizations, Local Bodies and

Statutory Authorities, Quasi- Government Bodies etc.

k) Members of staff/Ex-staff of Indian Overseas Bank

OBTENTION OF INTRODUCTION

Branches should ensure that all term deposit accounts are properly introduced with the

exception of the following:

a) Where the applicant for a Term deposit Account submits sufficient proof of identity

and address as prescribed in KYC-AML policy of our bank and the branch is satisfied with the

bonafides of the applicant and as a respectable person, with such proof of identity and address,

branch may open the account without insisting on an introduction by an existing account holder.

However a Letter of Thanks to the depositor should be sent as envisaged in the Chapter.1 on

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“Constituents’ Accounts – General”. Branch should be in a position to classify such account

holders under “Low risk – RIP ME under KYC Norms / AML Standards”.

b) Where the savings bank account holder / current account holder who has been

subjected to KYC due diligence, wants to open a term deposit account, a reference to the account

can be made in the account opening form and introduction need not be insisted upon.

Documents for Individuals (natural persons) and legal persons (entities)

Customer identification details (for individuals / the Prop/Partners / coparceners/ Directors

/ Authorized Signatories ) :

a)Passport alone where the address on the Passport is the same as the address on the account

opening form

Or

b)any one document from each of the under noted TWO lists, for a photo ID and proof of

address

List I - photo proof List II – address proof

1 Passport where the address differs 1 Current telephone bill

2 PAN Card 2 Letter from any recognized public

authority

3 Voters Identity Card 3 Bank account passbook/ statement

4 Driving license 4 Latest electricity bill /postal

identity card

5 Identity card

( subject to Bank’s satisfaction)

5 Letter from employer to Bank’s

satisfaction

6 Letter from recognized public 6 Property tax book / Receipt

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authority

Or Public servant verifying the

photograph to Bank’s satisfaction

7 Registered lease deed

8 Ration card

Any one or more document(s)

which provide customer

information to Bank’s satisfaction

c)Additional documents required, ( Legal persons – entities ): For the partnership firms :

Registration Certificate if registered

Partnership deed

Authority given to a partner or an employee of the firm to transact

business

On Firm’s behalf (as provided in the partnership deed , otherwise all partners

should be involved in all the transactions )

4. Telephone bill in the name of the firm / partners if available

FOR LIMITED COMPANIES

A copy of the Certificate of Incorporation duly certified by a Director or

Secretary of the Company

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A copy of the Certificate of Commencement of business duly certified by a

Director or Secretary of the Company ( for public ltd companies only)

A copy of the Memorandum and Articles of Association certified to be true and

upto date by a Director or Secretary of the Company

Resolution of the Board of Directors to open an account and identification of

those who have authority to operate the account

Power of Attorney granted to Company’s Manager(s),/ officers/ Employees to

transact business on its behalf

Copy of the PAN allotment letter / PAN card

Copy of the Telephone Bill

FOR TRUSTS / ASSOCIATION/ CLUBS / SOCIETIES

Trusts Associations / Clubs / Societies

1.Certified copy of the trust deed

2.If a charitable trust, a certified copy

of the certificate from Charity

commissioner

3.Where there is no trust deed, a

certified copy of the order from a

competent Court

4.Certified copy of the resolution

regarding opening and conduct of the

bank account

5.List of present trustees with bio data

of each trustee

1.Certified True copy of the Rules,

Regulations, Bye-Laws (as the case may be)

2.Certified True copy of Certificate of

Registration in case of Registered bodies

(original to be verified)

3.A certified true copy of the Resolution

certified (by the Chairman of the meeting of

the Governing Board or Managing Committee

or Like Body, at which it was passed)

4.A copy of the Balance sheet in the case of

Co-operative Society, if available

5.Certificate of Registration if registered

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6.Certified copy of a certificate under

IT act wherever the deed provides for

use of Trust money for business

activities.

7.Certificate of Registration if

registered

8.POA to transact business if

applicable

9.Any officially valid document to

identify the Trustees, Settlers,

beneficiaries and those holding Power

of attorney, Founders/ Managers /

Directors

10.Telephone bill , if available

6.POA to transact business if applicable

7.Any officially valid document to identify

the committee members, office bearers,

Directors and their addresses

8.Telephone bill, if available

KYC NORMS / AML STANDARDS

Along with the application form as under noted branches should obtain KYC-

CROP form from all individuals / parties to the account including mandate holders / power of

attorney holders. Branches should also obtain KYC-CROP form for the entities ( legal Persons )

like Partnership, Company, Associations, clubs etc., and do the risk classification . However if

the customer has already been subjected to due diligence for KYC / AML for the Current

account or Savings bank account, the process need not be repeated for term deposits. However

the risk classification as ascertained from the Savings bank or Current account department

should be noted in the application form along with Customer ID provided by the computer

system for such CA / SB account.

CLOSING FORMALATIES

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In the following instances Branch should follow the guidelines

a)If the depositor desires to close the account during the deposit programmed (Stage-I)

prematurely.

b)If the depositor desires to close the account after completion of Stage-I but before

commencement of repayments under Stage-II.

c)If the depositor desires to close the account after commencement of repayment programmed

under Stage-II. Excess interest paid, if any should be adjusted out of the proceeds.

A Stamped receipt in the following form should be obtained at the time of closing the account:

“Received from Indian Overseas Bank a sum of Rs.....………Rupees

…………………………………..only) in full settlement of my/our PIP account No...........”

PAYMENT ON CLOSURE SHOULD BE MADE TO THE DEBIT OF PERMANENT

INCOME PLAN ACCOUNT — GL. HEAD SFD ACCOUNT.

3.1.1 SAVING ACCOUNT

Saving is income not spent, or deferred consumption. Methods of saving include putting

money aside in, for example, a deposit account, a pension account, an investment fund, or

as cash. Saving also involves reducing expenditures, such as recurring costs. In terms of personal

finance, saving generally specifies low-risk preservation of money, as in a deposit account,

versus investment, wherein risk is higher; in economics more broadly, it refers to any income not

used for immediate consumption.

"Saving" differs from "savings." The former refers to an increase in one's assets, an

increase in net worth, whereas the latter refers to one part of one's assets, usually deposits in

savings accounts, or to all of one's assets. Saving refers to an activity occurring over time,

a flow variable, whereas savings refers to something that exists at any one time, stock variable.

This distinction is often misunderstood, and even professional economists and investment

professionals will often refer to "saving" as "savings" (for example,Investopedia confuses the

two terms in its page on the "savings rate").

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There is some disagreement about what counts as saving. For example, the part of a

person's income that is spent on mortgage loan repayments is not spent on present consumption

and is therefore saving by the above definition, even though people do not always think of

repaying a loan as saving. However, in the U.S. measurement of the numbers behind its gross

national product (i.e., the National Income and Product Accounts), personal interest payments

are not treated as "saving" unless the institutions and people who receive them save them.

Saving is closely related to investment. By not using income to buy consumer goods and

services, it is possible for resources to instead be invested by being used to produce fixed, such

as factories and machinery. Saving can therefore be vital to increase the amount of fixed capital

available, which contributes to economic growth.

However, increased saving does not always correspond to increased investment. If

savings are stashed in or under a mattress, or otherwise not deposited into a financial

intermediary such as a bank, there is no chance for those savings to be recycled as investment by

business. This means that saving may increase without increasing investment, possibly causing a

short-fall of demand (a pile-up of inventories, a cut-back of production, employment, and

income, and thus a recession) rather than to economic growth. In the short term, if saving falls

below investment, it can lead to a growth of aggregate demand and an economic boom. In the

long term if saving falls below investment it eventually reduces investment and detracts from

future growth. Future growth is made possible by foregoing present consumption to increase

investment. However savings kept in a mattress amount to an (interest-free) loan to the

government or central bank, who can recycle this loan.

In a primitive agricultural economy savings might take the form of holding back the best

of the corn harvest as seed corn for the next planting season. If the whole crop were consumed

the economy would deteriorate to hunting and gathering the next season.

3.1.2 RECURRING DEPOSIT

Recurring deposit (rd) scheme is intended to inculcate the habit of saving on a regular

basis. as an inducement, higher rate of interest as applicable to term deposits is offered for

deposits under recurring deposit.

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Under the recurring deposit scheme depositors are required to remit a fixed sum every

month for a specific period ranging from six months to one hundred and twenty months.

recurring deposit accounts may be opened for periods above six months and in multiples of three

monthly intervals upto one hundred and twenty months viz. six, nine, twelve, fifteen,

eighteen,..... one hundred and twenty months. recurring deposit accounts may be opened for

monthly installment of rupees fifty and minimum in multiples of rupees five only. the amount of

monthly installment and the total number of installments, stipulated at the time of opening the

account cannot be subsequently altered.

Thirty days after payment of the last installment or on the date of maturity, whichever is

later, the principal amount plus accrued interest will be paid to the depositor.

No interest will be payable on the deposit after the date of maturity of the recurring

deposit if the amount remains unclaimed after that date.

3.1.2.1 OPENING OF ACCOUNTS

a)All guidelines stipulated for opening of a term deposit should be strictly followed for opening

of Recurring Deposit accounts also.

b)The depositor after filling in the appropriate account opening form should be asked to remit

the amount of the first installment by filling up common pay in challan . The payment may be

made in cash or transfer from an existing account.

c)Once the initial installment has been paid, branch should open the account in the Recurring

Deposit Register R-126 entering therein the full particulars of the depositor. In the computer

master if the deposits module has been implemented and enabled RD. The maturity value of the

deposit should be arrived at using the maturity value charts supplied by Central Office. The

maturity value given by the computer should be cross verified with the same. The maturity value

thus arrived at and the maturity date should be filled in the appropriate spaces provided in the

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Recurring Deposit register. The entries in the Register should be duly verified and authenticated

by the officer-in-charge of the department.

d)Accounts should be opened consecutively, in the Recurring Deposit Register, irrespective of

the number of installments, each account being allotted a serial number followed by the year of

opening, which should be entered in the pass book. For example 1/2009...... 10/2009 etc. where

1, 10 etc. indicate the serial number and 2009 the year of opening the account.

e) Branch should then issue the appropriate Recurring Deposit pass book according to the

number of installments, entering therein all the particulars of the depositor and the deposit. The

first installment deposited should be entered in the relevant column in the pass book and

authenticated by the officer-in-charge. The pass book should then be handed over to the

depositor against his acknowledgement.

3.1.2.2 PAYMENT OF MONTHLY INSTALMENTS

1.The installment for any calendar month must be paid by the depositor on or before the last

working day of that month, failing which, penalty should be levied on the installments in arrears

at the following rates:

a. For deposits of sixty month sand less- Rupee one and paisa fifty only for Rupees one

hundred per month

b. For deposits over sixty months-Rupees Two only for Rupees one hundred per month

While calculating the above penalty, fraction of a month should be treated as a full month.

The penal interest thus collected should be credited to Branch Profit and Loss account -

Discount.

2.Branches may waive the penalty payable in respect of delayed installment(s) of a Recurring

Deposit account against payment of equal number of advance installments.

3.Branches may accept standing instructions from the depositor for debiting the monthly

71

installments to his/her account with the branch. Such instructions should be noted in the

appropriate column in the account opening form at the time of opening the account. The standing

instructions should be noted in the standing instructions register and the account number to

which the monthly installments are to be debited should be noted in the RD register at the head

of the account.

4.Standing instructions for payment of installments from the account of the depositor may be

effected free of charge. Where, however, the depositor fails to maintain sufficient balance in

his/her account to effect such transfer, the standing instructions should be treated as cancelled,

under advice to the depositor.

5.The monthly installments may be paid by the depositor at any branch of the Bank by Mail

Transfer/ through CBS, free of charge. Outstation cheques drawn on our Bank may be accepted

free of charge in payment of installment but credit must be given only after realization through

collection if non CBS / through CBS.

6.When an installment is in default even after the close of the month, a reminder on form RD-6

should be sent to the depositor. If the arrears build up for over three months, the branch may

issue a notice calling on the depositor to pay the same within a fortnight. If the depositor is

unable to continue the account, branch may advise the depositor to close the RD account and

transfer the same to his/her account.

3.1.2.3 INTEREST PROVISION

1.Monthly provision for approximate interest payable on Recurring Deposit accounts should be

made by calculating interest at an uniform rate advised by Central Office from time to time. In

a computerized environment the programmed will calculate the interest provision on

actual rates of individual accounts. Such interest provision should be made on the closing

General Ledger balance of each month under Recurring Deposit, except in March and

September when interest should be worked out for each account on the basis of interest

provision chart supplied by Central Office.

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2.Branches may arrive at the closing balance of the month by adding to the penultimate working

day’s balance receipts less payments, of the last working day.

3.Interest so calculated at the end of each month should be debited to Interest Paid on Deposits

account and credited to Interest Accrued account. This credit should be posted in the Interest

Accrued register in the folio meant for Recurring Deposit.

4.At the end of each half-year, the amount of actual interest accrued on Recurring Deposit

accounts should be calculated from the interest provision charts supplied by Central Office and

should be noted in the column of the Recurring Deposit register against each account. These

interest amounts should be extracted in a balance book with separate folios for different interest

rates. The balance book total will be the actual interest accrued on all RD accounts at the end of

that half year. If the amount of approximate interest provision already made every month and

held in Interest Accrued account as per Para E.5.1 to E.5.3above is more than the actual interest

calculated in the above manner, the excess should be transferred to Interest Paid on Deposits ac-

count.

If, however, the amount of provision already made is less than the actual amount as per

the balance book, the shortfall should be debited to Interest Paid on Deposits account.

The amount outstanding in the Interest Accrued register (RD folio) should tally with the amount

extracted in the balance book. This amount includes interest accrued on Wedding Deposit,

Education Deposit and Permanent Income Plan accounts since they are also classified under the

GL head Recurring Deposits.

NOTE: Interest provision charts for half yearly interest provision of Recurring Deposit,

Wedding Deposit, and Education Deposit are supplied by Central Office. The charts for

Recurring Deposit should be used for PIP accounts also during Stage-1.

In computerized environment, the programmed will calculate the interest on individual accounts

and will make provision. However branches should verify whether the interest provision made

by the system is approximately agreeing with manual calculations based on month end balances

as above.

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3.1.2.4 PAYMENT OF RECURRING DEPOSITS

1.On maturity

A Recurring Deposit account matures for payment after completion of the term of the account

or thirty days after payment of the lastinstalment, whichever is later.

At the time of payment on maturity, the principal sum along with the accrued interest should be

paid. This sum should be equal to the maturity value calculated at the time of opening the

account.

The following entries should be passed at the time of maturity for making the payment:

Debit: Interest Accrued Account (for the total amount of interest payable on the account)

Credit :Interest Accrued and Payable Account

Debit: Interest Accrued and Payable Account

Credit: Recurring Deposit Account (for the above amount)

Debit: Recurring Deposit Account (for the total amount of installments paid plus the interest)

Credit :Account of the Depositor or pay as per instructions of the depositor.

2.When the deposits are repaid to the depositor, a stamped receipt reading as under must be

obtained:

“Received from the Indian Overseas Bank a sum of Rs...............

(Rupees.......................………………………………………………..) in full settlement of RD

account No........ held with the bank for a period of ...... months.”

3.Where the account has run for the full period but all the installments have not been paid:

The depositor has two options:

i.Regularise the account by paying the defaulted installments with penalty as stated in Para

E.4.1above.

or

discontinue the deposit till maturity without regularizing it and earn compound interest at the

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contracted rate for the full period. In such cases branches should levy service charges of Rupees

Five only. Such service charges should be credited to Profit and Loss account — Commission.

3.1.2.5 PREMATURE CLOSURE

Eligible interest should be calculated on premature closure of Recurring Deposits as

detailed in Section A of this Volume ( NODCIP form ).

Where eligible , Interest will be paid at the rate applicable to the period for which the

Deposit has run less penalty / no penalty as the case may be , as on the date of opening of the

Deposit and service charges of Rupees Five should be collected.

3.1.2.6 PASS BOOKS

1.Pass books should be presented at the time of every deposit and it should be returned to

the depositor posted upto date then and there.

2.When an account is closed, the pass book should be returned to the depositor duly posted upto

date and stamped “ACCOUNT CLOSED” under the signature of the officer-in-charge, with

date.

3.The procedure for custody and issue of pass books will be same as for Savings Bank Pass

Books.

3.1.2.7 BALANCING OF BOOKS

Ledger balances must be extracted as at the close of the penultimate working day of each

month, except in March and September when balancing must be done as at the close of the

month, and tallied with the General Ledger. Separate openings need not be made for each

category of deposit and only RD account number and balance need be written.

Since the General Ledger balances under Recurring Deposits includes Wedding Deposits,

Education Deposits and Permanent Income Plan accounts, the balancing should be done for all

75

these heads of accounts and tallied.

In computerized environment, the master balance should remain tallied with GL balance .

Branches should take note of the same while doing day end procedure.

3.1.2.8 ADVANCES AGAINST RECURRING DEPOSITS

Drawing power for advances should be worked out as detailed in Part A of this Volume.

The minimum amount of loan should be Rupees One hundred only. The rate of interest

chargeable is circulated to branches from time to time. The interest on the loan account should be

recovered separately from the depositor every quarter. Other formalities like documentation etc.,

should be followed as prescribed in Advances.

3.1.3 FIXED DEPODITS

SHORT AND FIXED DEPOSITS

1. Moneys deposited for six months and above are called Fixed Deposits and deposits for less

than six months are called Short Deposits

2. Branches can accept deposits for a minimum of Rupees One thousand for periods ranging

from fifteen days to One hundred and twenty months except in the case of accounts of minors

and under orders of court, where the branch can accept deposits for periods exceeding One

hundred and twenty months.

2.1. Branches should use the appropriate account opening form for opening of deposits as

prescribed.

2.2. FORMS AND REGISTERS TO BE USED

a) Fixed Deposit Register R-17

b) Deposit Challan/voucher F.No.60

c) Deposit Receipt

d) Account Opening Form F.567

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2.3. All deposit accounts should be properly introduced as detailed in Para 2 Chapter 1.Once the

account opening form duly filled in is received, the officer in charge of the department should

verify the contents of the form and advise the depositor to fill up the Form 60 i.e. the

challan/voucher for issuing deposit receipts. Once this form is filled the amount of deposit may

be accepted by the branch either in cash or by transfer from an existing account or through

clearing in the case of existing customers.

2.4. The Challan/voucher in Form 60 duly authenticated by the officer in charge, should then be

used as the voucher to issue the Deposit Receipt.

2.5. Branch should allot the next Deposit number from the Fixed Deposit Register which is

entered serially. This number should be entered both in the application form and the challan in

the space provided. Deposit number should be serial number for the year/the year. For example a

Short Term deposit bearing serial number 32 issued in the year 2000 will be numbered in the

receipt as SDR/32/2000.

2.6. The details of the depositor(s) viz. names(s), address(as), mandate for operation like Either

or Survivor, Anyone or Survivor etc., Deposit Receipt printed number as also the number

assigned as per Para B.4.1., amount of deposit, period of deposit, rate of interest appropriate to

the period of the deposit and the maturity date should be filled up in the appropriate columns in

the Fixed Deposit Register R-17.

2.7. The Deposit Receipt should be filled up neatly in good handwriting with full particulars in

the appropriate space provided in the receipt. When a receipt form is spoiled in preparation or a

duplicate receipt is issued, the fact must be noted in the deposit register against the entry for the

particular deposit and the stub marked “Cancelled” or “Duplicate of deposit No....……….

issued” as the case may be, the entries in the stub and the register being initialed by the officer-

in-charge, who should destroy the spoiled form, after tearing off the portion containing the

printed number from the receipt and pasting the same in the counterfoil stub of the deposit

receipt book.

2.8. The principal amount of the deposit should then be entered in the Interest Accrued Register

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in the credit column of the deposits side under the appropriate rate of interest and the balance

arrived at.

2.9. The due date diary should then be entered to note the month and date of maturity of the

deposit to enable the branch to send the maturity notice to the depositor at the time of maturity of

the deposit.

3. The details of the deposit should then be entered in the index of depositors maintained

alphabetically against the existing entry for the depositor if the depositor has other deposit

accounts or a separate opening should be made for the fresh deposit.

3.1. The officer in charge of the department should then verify and authenticate the entries in all

the registers, check the deposit receipt for accuracy and sign the same in the space provided

appending the specimen signature number below the signature. The deposit receipt should then

be sent to the next higher supervising official along with the application form and the challan for

second signature.

3.2. The supervising official who signs second on the deposit receipt should verify the particulars

on the deposit receipt from the account opening form and the voucher, ensure accuracy and then

append his signature with the specimen signature number on the receipt. In the case of branches

with single officer, the officer should sign at both the places meant for Deputy Manager and

Manager.

3.3. The deposit receipt should then be handed over to the depositor against acknowledgement on

the reverse of the challan.

4. PAYMENT OF INTEREST

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Interest on Short Deposits is payable only on maturity of the deposit. Interest on Fixed

Deposit is payable half-yearly on the first working day of April and October.

Normally interest should be paid to the depositor on production of the Fixed Deposit

Receipt after entering particulars of payment on the reverse of the receipt in the space provided.

However, branches may credit the interest to the account of the depositor, without insisting on

production of the FDR if the depositor has given instructions (on the account opening form) to

credit the interest to his/her/their account. If the depositor desires cash payment, interest should

be paid only on production of the deposit receipt. Each depositor should be requested to exercise

his/her option at the time of opening of the account.

The interest payments in cash should be properly receipted by the depositor over the

requisite revenue stamp (presently Rupee One) where the interest paid exceeds Rupees Five

hundred only. Where the interest amounts are credited to the accounts of the depositors a rubber

stamp must be branded on the reverse of the FDRs to the effect that interest will be credited half-

yearly to the account of the depositor. This would serve as a precaution in case the deposit

receipt is presented for interest payment in cash.

While making periodical interest payment, the interest entries in the Deposit register

should indicate the date of payment to avoid duplication. The entries should be authenticated by

the officer in charge. In a computerized environment branch should cross verify with the

computer display and deposit receipt on the nonpayment of interest for the particular period

interest is being paid.

5. INTEREST PROVISION

Branches should follow instructions under Para A.14of this Chapter for interest provisions on

term deposits.

6. INTEREST ACCRUED AND PAYABLE ACCOUNT (IAP)

Interest payable for each half year should be noted in the FDR register against each deposit in the

appropriate column at the time issue of the deposit. From this register, the amount of interest

79

payable on each deposit should be extracted at the end of each half year in a balance book with

separate columns for different rates of interest. The total amount of all these columns should be

the total interest payable on deposits for the particular half year.

If the amount of monthly provision already made and held in Interest Accrued account is more

than the amount calculated in the above manner, the difference should be transferred back to

Interest Paid on Deposits Account by passing the following entries:

Debit : Interest Accrued Account

Credit: Interest Paid on Deposits Account

If the amount of provision is less than the actual amount as per the balance book, the shortfall

should be brought from interest paid on deposits account by passing the following entries:

Debit : Interest Paid on Deposits Account

Credit: Interest Accrued Account

The amount thus calculated should be credited to IAP Account by passing the following entries:

Debit : Interest Accrued Account

Credit: Interest Accrued and Payable Account

The net amount of interest available in IAP Account relating to Fixed Deposits should be equal

to the total amount of interest payable on all Fixed Deposits for the relevant half year and the

amount of interest pertaining to the previous half-years not claimed by depositors.

In a computerized environment , the programmed in the system will take care of the above

aspects. Branches should take note of the process and in case of any branch manually

maintaining the deposit registers, the procedure will be applicable to them.

Half yearly interest payments on individual Fixed Deposits should be made to the debit of IAP

Account and such payments should be posted in the respective interest-wise folios in the IAP

register or in the computer programmed as applicable.

7. PAYMENT OF DEPOSIT

While making payment of the deposit, the deposit receipt should be discharged by the

depositor(s) on the reverse of the deposit in the space provided. Such discharge should be on

revenue stamp of requisite value except where the deposit is renewed or the proceeds are placed

to the credit of an account. Branch should compare the signature(s) of the depositor(s) with those

in the account opening form. Once the signatures have been verified and found correct, the entry

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in the Fixed Deposit Register should be rounded off against the number and the amount, marking

the date of payment of interest and principal in the appropriate columns. The columns for interest

payment on the back of the receipt should be filled in. Care should be taken to ensure that no

“Lien” exists. In the computer programmed the repayment option should be used for making

payment.

The name of the depositor should be rounded off from the due date diary and the list of deposits

held by each depositor maintained alphabetically.

The accounting entries to be passed are:

a. Payment on maturity

i. Fixed deposit receipts:

Debit: Interest Accrued Account (for the interest for the period from first day of the current half-

year till date of maturity)

Credit : Interest Accrued and Payable Account (with the amount of interest calculated for the

period from first day of the current half-year till date of maturity)

Debit : Fixed Deposit Account (for principal amount) (The deposit receipt to serve as voucher)

Debit : Interest Accrued and Payable Account (for the total interest payable to the depositor

including the interest not drawn by the depositor for the previous half-years) and pay cash

or

Credit: The Account of the Depositor/Banker’s Cheque Account/DDR Account (as per the

instructions of the depositor either to credit his/her account, or issue a Banker’s Cheque or a

Demand Draft)

In a computerized environment, the programmed will be debiting Interest accrued account and

allow payment instead of routing through IAP for the current broken period. The debit in IA will

get adjusted in the month end provision. Branches to take note of the same.

ii. Short deposit receipts

Debit: Interest Accrued Account (for the amount of interest payable on the Deposit)

Credit : Interest Accrued and Payable Account

Debit: Short Deposit Account (for the principal amount of the short deposit)

Debit : Interest Accrued and Payable Account

Credit: The Account of the depositor/Banker’s Cheque Account/DDR Account.

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In the computerized environment the interest payment is not routed through IAP account.

b. Payment before maturity

Premature closure shall be allowed in terms of the instructions provided in part A.

The total interest payable on the deposit should be worked out at the rate arrived at for premature

closure. If the depositor has not drawn the interest for the previous half years and the amount is

lying in IAP account, branch should pass the following entries:

Debit : IAP Account (for the amount already lying in IAP account)

Credit: Interest Paid on Deposit

....Debit: Interest Paid on Deposits (for the actual interest payable)

Credit: Interest Accrued Account (for the actual interest payable)

....Debit : Interest Accrued account (for the actual interest payable)

Credit : IAP Account (for the actual interest payable)

Debit Fixed Deposit Receipt

Debit : IAP Account (for the actual interest payable)

Credit: Depositor’s Account (for principal plus interest on premature closure)

Where the interest has been drawn by the depositor and it is more than the actual interest payable

on premature closure, excess interest paid should be recovered from the principal amount by

passing the following entries:

Debit: Fixed Deposit Receipt Account

Credit : Depositor’s Account

Credit: Interest Paid on Deposits (for the excess amount of interest already paid) In the

computerized environment, the programmed will calculate the premature amount payable,

however branches should calculate the eligible amount as shown in Part. A under NODSIP

format and cross verify with the programmed.

3.1.4 NRI DEPOSITS

Types of accounts which can be maintained by an NRI / PIO in India

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A. Non-Resident Ordinary Rupee Account (NRO Account)

Any person resident outside India may open NRO account with an authorised dealer or an

authorised bank for the purpose of putting through bona fide transaction in rupees.

Opening of accounts by individual/ entities of Pakistan and entities of Bangladesh require prior

approval of Reserve Bank of India.

NRO accounts may be opened / maintained in the form of current, savings, recurring or fixed

deposit accounts.

● Savings Account - Normally maintained for crediting legitimate dues /earnings / income such

as dividends, interest etc. Banks are free to determine the interest rates.

● Term Deposits - Banks are free to determine the interest rates. Interest rates offered by banks

on NRO deposits cannot be higher than those offered by them on comparable domestic rupee

deposits.

● Account should be denominated in Indian Rupees.

● Permissible credits to NRO account are transfers from rupee accounts of non-resident banks,

remittances received in permitted currency from outside India through normal banking channels,

permitted currency tendered by account holder during his temporary visit to India, legitimate

dues in India of the account holder like current income like rent, dividend, pension, interest, etc.,

sale proceeds of assets including immovable property acquired out of rupee/ foreign currency

funds or by way of legacy/ inheritance.

● Eligible debits such as all local payments in rupees including payments for investments as

specified by the Reserve Bank and remittance outside India of current income like rent, dividend,

pension, interest, etc., net of applicable taxes, of the account holder.

● NRI/PIO may remit from the balances held in NRO account an amount not exceeding USD

one million per financial year, subject to payment of applicable taxes.

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● The limit of USD 1 million per financial year includes sale proceeds of immovable properties

held by NRIs/ PIOs.

● Other than current income and the limit of USD 1 Man per financial year applicable to

NRIs/PIOs, balances in NRO accounts cannot be repatriated without the prior approval of RBI.

● The accounts may be held jointly with residents and / or with non-resident Indian.

● The NRO account holder may opt for nomination facility.

● NRO (current/savings) account can also be opened by a foreign national of non-Indian origin

visiting India, with funds remitted from outside India through banking channel or by sale of

foreign exchange brought by him to India. The details of this facility are given in the FAQs on

“Accounts opened by Foreign Nationals and Foreign Tourists” available on the RBI website.

● Loans to non-resident account holders and to third parties may be granted in Rupees by

Authorized Dealer / bank against the security of fixed deposits subject to certain terms and

conditions.

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3.1.5 STUDENT ACCOUNTS

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3.1.6 SHG ACCOUNT

IOB – Arties Yolanda

Objective To provide financial assistance to Earthiest who are well

established in the line with good reputation.

Eligibility

1.Arthias or Commission Agents functioning in markets / man

dies having field of operations in rural/ semi urban area who

are having receivables from farmers / SHGs/ JLGs and buying

Agricultural produce from farmers / SHGs/ JLGs are eligible

for loan under this scheme.

2. They should have been authorized by the local market yard

(Mandi) or Marketing Board / Committee.

Purpose

To provide loans to commission agents for

1. Extending credit to farmers / SHGs/JLGs

2. Supply of inputs to farmers / SHGs/JLGs

3. Buying produce from farmers / SHGs/JLGs

Cash Credit limit 60 % of value of Book debts, subject to a maximum of Rs 100

laces.

Margin 40 % of Book debts.

Security

Hypothecation of Receivables and Mortgage of immovable

properties other than Agricultural land and/or cash securities

like NSC/KVP/LIC etc, worth at least 150 % of the loan

amount.

Repayment Cash Credit limit with healthy operations in the account, to be

renewed annually.

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Rate of Interest &

other details You may contact the nearest Branch for interest & other details.

3.1.7 PENSION ACCOUNTS

VARIOUS PENSION PAYMENT SCHEMES OF CENTRAL / STATE GOVT

Pension Disbursement

Centralized Pension Processing Centre (CPPC)

Indian Overseas Bank has centralized payment of Central Civil, Defense and Railways

pensions by formation of Centralized Pension Processing Centre (CPPC). The amount of pension

Payable to these pensioners drawing their pension will be calculated at a centralized level at

CPPC. All Changes in pension payment parameters including arrears of DA, etc. are also to be

done centrally and with this timely and accurate payment of pension is assured.

Government of India Central Civil, Defense, Railway, Telecom & Freedom Fighter Pension

Indian Overseas Bank disburses pension to Civil, Defense, Railway, Telecom and State

Government retired employees , Former MPs, Former MLAs of Tamil nadir through 1032

branches.

Indian Overseas Bank disburses other Pensions Viz. Employees Provident Funds

Organization, Chennai Port Trust, Tamil Nadu Electricity Board, Madras Dock Labor

Board CMPFO(Coal Miners Provident Funds Organization) Pensions.

Pension payment Scheme for the benefit of pensioners

In case of complaints/grievance pensioners may approach the pension paying branch. They may

also access the Grievance Redressed Portal of Ministry of Personnel, Public Grievance and

Pensions under http://pensionersportal.gov.in/cnetizen/homepg.htm

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3.1.8 DORMANT ACCOUNTS

If no transaction — credit or debit other than crediting of periodic interest or debiting of

service charges — takes place in your savings account for more than 12 months, the account

becomes inactive. And if the period exceeds 24 months the account is declared dormant or

inoperative. The exact period after which a bank is declared inactive or dormant varies from one

bank to another. For instance, ICICI Bank declares an account inactive after 15 months and

dormant after 18 months. Punjab National Bank and Barclays, on the other hand, declare it as

dormant after just six and three months respectively.

3.2 KEY ISSUES

Once an account turns inactive or dormant, you can't perform several operations. In case of an

inactive account you cannot request that a cheque book be issued. Once an account turns

dormant, the number of restrictions increases even further. You can't request that a cheque book

be issued, the address be changed, the signature be modified, a joint holder be added or deleted,

or an ATM/debit card be renewed. You will also not be able to withdraw money from an ATM

or carry out any transaction either through internet banking or a branch of the bank.

However, even after your account turns inactive or dormant, interest is still credited to your

saving account regularly. And if a fixed deposit receipt matures and you don't withdraw the

proceeds, the amount left unclaimed in the saving account will attract the rate of interest

applicable to this account.

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CHAPTER 4

LOAN/ ADVANCE ACCOUNT

4.1 LOAN ACCOUNT OPENING/ CLOSING – FORMALITIES

Applications can be opened by entering module_id = ‘adv’ and a few characters of the

Program Name to be used, in the LOAD APPLICAIONS Menu. Apart from View and Report

programs pertaining to the advances module, the following applications are available to the

Operator (clerical) staff as part of Advance Module:

ADV Interest Posting

ADV Transaction Posting

ADV Transaction Master Creation

ADV Interest Rate Maint - (Includes slab Rates)

ADV Master A/c Opening and Maintenance

ADV Interest Calculation

ADV Transactions Entry - Transferred A/cs

ADV Master Creation (NPA-INTEREST)

ADV Security Details

MASTER MAINTENANCE

ACCOUNT OPENING

All accounts to be opened should have explicit sanction from the Manager or an Officer

authorised by the Manager. Accounts can be opened, modified, viewed and closed by choosing

the options provided. The charge interest field should always be ‘Y’ for all performing accounts.

While opening the advances account the existing customer id is to be given while asked for if he

is the existing customer. If the advance account is opened for a new customer then the customer

id is to be created first from the KYC details, approved by supervisory officials. Then with this

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customer id the advance account is to be opened. Subsequently when any other credit facility is

granted to the same customer the same customer id, which is already available for this customer,

should alone be used and fresh customer id should not be created.

In CORE environment while opening the advances master the user should provide all

details like Priority/Non Priority, Sector code, BSR Code, Complete Borrower Information,

Security Details if the loan is secured, activity code, purpose code, BSR Borrower Code, Interest

rate as per sanction terms and interest is BPLR based or not, holiday period if any, repayment

start date, repayment end date, EMI values, periodicity of repayment etc.

Since many MIS reports and CIBIL data are taken from the advances master, the values

in all the fields should be filled up error free. In addition to the above, correct details entered by

the Branch will enable the system to provide correct interest and arrival of DP, which is essential

for calculation of overdue interest.

SECURITY MAINTENANCE

In CBS the capturing of security details and allotment of separate security id is a special

feature. So far the security details are filled up as a narrative field. But hereafter the security

details are stored in a security id/s and referred to with respect to the security id in future if the

same security is attached for any advance account. The securities can be attached / detached at

the time of opening or closing of any advance account. Hence branches should not club all types

of securities in one ID.

REPAY PLAN MAINTENANCE

Branches while entering the details of the repay plan it is utmost important to feed the

correct sanction details in respect of the Holiday period [with interest servicing or without

interest servicing], frequency of repayment as to whether monthly, quarterly, half yearly etc,

repayment start date, end date, first repay date, installment amount [EMI]. Branches should go

through the User manuals supplied by ITD in this respect. If the repay plan is not maintained

properly then the interest calculation whether it is regular or overdue will not be correct.

Similarly when there is any rephasement of advances, simultaneous updating should be effected

in the repay plan also.

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INTEREST RATE MAINTENANCE

The rates as advised by Central Office from time to time should be updated through this

application. Utmost caution should be exercised while updating the interest since the interest

calculation application accesses these rates only for calculation. However in case of accounts

where interest is applicable account-wise or as determined by the sanctioning authority suitable

modifications should be made while opening of account. Change of interest rates will be

effective from the last posted date only. Provision has been made In CBS the system to take care

of the BPLR changes. As such, while entering interest rates, Branch should give correct details

as to whether the advance account attracts BPLR rate or not.

DOCUMENT MAINTENANCE

The document maintenance should be updated regularly to generate a report on

documents due for revival. This will enable the branch to take appropriate steps.

STAGE RELEASE MAINTENANCE

Whenever new advance is granted which attracts release in various stages then the stage

release data entry is to be done by the user and the same is to be approved by any authorized

supervisory official. [eg. Term Loan, Vidya Jyothi Loan ]. This is done to ensure correct

Drawing Power is arrived and interest charged accordingly by the System, based on the amount

so far disbursed and NOT ON THE DOCUMENT AMOUNT in the case of Stage Released

Loans. Whenever a part disbursement is made in the case of any new/old stage Released Loan,

the entry type “DI” to be given at the time of posting the advances transaction and an entry is to

be made in the Stage Release Master for that amount and approved. Even if wrong entry type had

been given at the time of advances transaction posting and if it is actually a part disbursement,

then the entry is to be made in the Stage Release Master without fail. If not done, the DP arrival

and the interest charged on the account will be wrong.

SUBSIDY MASTER MAINTENANCE

The amount of back ended subsidy received from various Government departments in the

case of Govt. Sponsored Schemes like PMRY, SJSRY, DWCUA, TAHDCO, NHB, SGSY,

SLRS is kept in GL Head ‘Subsidy Reserve Fund’. In order to manage this subsidy amount and

to grant interest concession on the subsidy amount to the respective accounts, branches are

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required to create Subsidy Master with relevant details of the advances account with the amount

of subsidy, whenever a loan is granted under the above Schemes using Subsidy Master Entry

Program. The details are to be approved by a Supervisor using the approval program available

for this purpose. The system, while calculating interest, will take into account the subsidy

amount so long as the subsidy amount is available with the branch.

TRANSACTION POSTING

All postings should be done through the posting menu. All the fields should be filled in

completely since various masters get updated while recording details. Please take care to enter

the “Entry type” correctly. Posting can be done depending on the value date of the transaction.

The value date column should also contain the correct date in order to avoid overdue problem.

CBS branches can receive repayment / installment credits for other CBS branch advance

accounts also. Closure of other branch accounts is not permitted.

Types of transactions in adv module are

1. Cash Payment

2. Cash Receipt

3. Transfer Debit

4. Transfer Credit

5. Clearing Credit

ADVANCES SCA JOBS

ADV Transaction Passing

ADV Master Approval

ADV Bulk Transaction Posting/Passing

ADV Stage Release Transaction Approval

ADV Master View

ADV-Monthly Flash Return on Agricurltural Advances

ADVANCES SUPERVISORY JOBS

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ADV Transferred to Other Branch

ADV DICGC Maintenance / Approval

ADV Law Suits Maintenance

ADV Consortium Detail Maintenance

ADV Inspection Detail Maintenance

ADV Transaction Verification

ADV Update Advances Accounts after Limit Attachment

ADV Revival Document Maintenance

ADV Lawyer Maintenance

ADV Transaction Master Approval

ADV FA/FL Master opening through floppy data

ADV Document Maintenance

ADV Insurance Detail Maintenance

ADV Transactions Approval - Transferred a/cs

ADV Transfer of interest for NPA A/cs

ADV Staff Perks (on Loans) Calculations

ACCOUNT CLOSURE

When the customer wants to close the advances account, up to date interest is to be

calculated. Charge the calculated interest to the account and then close the account after

liquidating the entire outstanding. The clerical user can do this, in the Loan closure option. The

same should be approved by the Advances Officer / Supervisor. Once the balance in the account

becomes ZERO then the branch should choose for close-account option in advances master

maintenance menu and close the account. NO ACCOUNT WITH ZERO BALANCE

ACCOUNT SHOULD BE KEPT AS ACTIVE.

REPORTS

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The following reports should be generated as per their periodicity. They should be

authenticated by the concerned supervisory staff and neatly bound and preserved. All master

modifications and exception reports should be authenticated by the Manager or by an Officer

authorised by the Manager.

1. Supplementary — daily

2. Ledger/statement — monthly

3. Balances scheme-wise / glcode-wise for previous date/current date with

breakup details like principal/interest debited/received

4. Exception report — as required

5. Overdue position report — as required

6. Overdue notices — monthly

7. Master modification report — daily

8. Print consolidated list of accounts for one scheme / all schemes amount wise —- Monthly

9. ALIS ASCII data generation — as required

10. HYR Report – half yearly

4.1.1 CONSUMER LOAN:

CATEGORIES OF PRIORITY SECTOR

(i)Agriculture(Direct and Indirect finance)

Direct finance to agriculture shall include short, medium and long term loans given for

agriculture and allied activities (dairy, fishery, piggery, poultry, bee-keeping, etc.) directly to

individual farmers, Self-Help Groups (SHGs) or Joint Liability Groups (JLGs) of individual

farmers without limit and to others (such as corporates, partnership firms and institutions) up to

the limits indicated in Section I, for taking up agriculture/allied activities. Indirect finance to

agriculture shall include loans given for agriculture and allied activities as specified.

(ii) Micro and Small Enterprises (Direct and Indirect Finance)

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Direct finance to micro and small enterprises shall include all loans given to micro and

small (manufacturing) enterprises engaged in manufacture/ production, processing or

preservation of goods, and micro and small (service) enterprises engaged in providing or

rendering of services, and whose investment in plant and machinery and equipment (original cost

excluding land and building and such items as mentioned therein) respectively, does not exceed

the amounts specified in Section I. The micro and small (service) enterprises shall include small

road &water transport operators, small business, professional &self-employed persons, retail

trade i.e. advances granted to retail traders dealing in essential commodities (fair price shops),

consumer co-operative stores and advances granted to private retail traders with credit limits not

exceeding Rs. 20 lakh and all other service enterprises, as per the definition.

Indirect finance to small enterprises shall include finance to any person providing inputs

to or marketing the output of artisans, village and cottage industries, handlooms and to

cooperatives of producers in this sector.

(iii) Micro Credit

(iv) Educational loans

Educational loans include loans and advances granted to only individuals for educational

purposes up to Rs. 10 lakh for studies in India and Rs. 20 lakh for studies abroad, and do not

include those granted to institutions. Loans granted to educational institutions will be eligible to

be classified as priority sector advances under micro and small (service) enterprises, provided

they satisfy the provisions of MSMED Act, 2006

(v) Housing loans:

Loans up to Rs. 25 lakh to individuals for purchase/construction of dwelling unit per

family (excluding loans granted by banks to their own employees) and loans given for repairs to

the damaged dwelling units of families up to Rs. 1 lakh in rural and semi-urban areas and up to

Rs. 2 lakh in urban and metropolitan areas.

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4.1.2 INDUSTRIAL LOAN

Advances against goods i.e. produce, commodities, goods and merchandise should be

seasonal or constantly revolving and granted for meeting the genuine requirements of the

working capital of the approved customers of the Bank –

who are entirely trustworthy as the risks of fraud are particularly great in this type of

business;

who are regular dealers in the line of goods against which advances are granted;

who do not overtrade or speculate;

who have adequate resources to pay the shortfall in margins without difficulty if the

prices of goods tend to fall; and

who can be thoroughly relied upon to repay the advances without recourse to forced sale

of goods by the Bank.

Advances against goods are to be granted generally in the form of either as pledge of

goods or as hypothecation of goods depending upon the convenience of the borrower, nature of

goods and their marketability, and the integrity and credit worthiness of the borrower. Pledge of

goods can be in the form of (a)key loan or (b)key cash credit or (c)advances against document of

title to goods. And advances against hypothecation are in the form of open cash credit only.

Goods which are not the sole property of the borrowers should not be accepted as security.

a) In other words, the value of the goods proposed to be offered as security should have

been fully paid for by the borrower to the seller of the goods. The payment for the goods

can well be verified by correlating the cheque number, invoice for goods and the

statement of account. It should be ensured that no “unpaid vendors’ lien” exists on the

goods that are offered as security. However, the fact of possession of goods is the vital

factor in determining whether the seller can have any lien on the goods, which have not

been fully paid for by the borrower.

b) The seller cannot have any lien on the goods when he has given lawful possession of the

goods to the buyer. Similarly, in the case of goods pledged to the Bank and which are in

the possession of the Bank or in the possession of the Bank’s approved Clearing Agents,

the seller cannot exercise his right of lien as an unpaid vendor.

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c) Branches should grant hypothecation advances, only when the goods are lying in the

custody and possession of the borrowers. These advances should not be granted against

goods which are lying in the possession/premises of the seller.

No advances should be granted against goods for which the quality, quantity and value

cannot be easily ascertained. Goods should be readily marketable. They should not be subject to

violent fluctuations in price and/or rapid deterioration in quality. Perishable goods and goods of

inflammable character should not be accepted as security. Under circumstance of accepting

such goods as security, utmost care should be taken.

Branch should be very careful while accepting the security of export produces which are

held for long time beyond the export season as those goods may likely be unsold forever.

Seasonal agricultural products of more than one year old (from the date of harvest) should not be

retained without the specific sanction of the Central Office, in each instance. Advances granted

against commodities which lose its quality due to seasonal changes must be cleared before the

onset of such season.

The total of any one type of commodity taken as security should not exceed the normal

stock the local market carries. Banks should not encourage or be a party for hoarding of large

stocks by the borrowers for speculative purposes or to assist the borrowers to resist the falling

prices and such other anti-social activities. Branches must, therefore, regularly compare their out

standings with the figures for the previous years and make sure that they are not over-financing

any particular market. Goods accepted, as security should be stored at suitable places in a

manner by which the identification, inspection and monitoring are easier.

VALUATION OF STOCKS/GOODS

Branches should ensure proper valuation of stocks is done before they are accepted as

security. Branches should call for the documentary evidences in all the cases, which can be in the

form of paid invoices/bills. Such documentary evidence must be scrutinised thoroughly

To find out the ownership of the borrower to goods and

To ascertain the basis of valuation of goods. The branch may correlate the invoice, the

details of the cheque by which the invoice was paid, and the statement of the account to

verify that the goods offered are fully paid stocks.

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The following method can be followed for valuation of goods.

IMPORTED GOODS:

a) Imported through our Bank:

The goods should be valued on the basis of landed cost of the goods or market value of

the goods whichever is less. (Landed costs are the final value of the goods which includes

the cost of the materials, insurance, freight, loading and unloading charges, demurrage,

customs duties, clearing charges, transit, warehousing charges etc.) For the goods for

which the market price is highly volatile and fluctuate, the branch should adopt a very

conservative approach and it may be even the average of the market prices for the past 2

or 3 years/ seasons.

b) Imported through other Banks

Normally, the Bank does not lend against goods imported through other Banks. However,

where specific permission has been obtained from the Regional Office/Regional Office in

this regard, goods should be valued on the landed cost or market value whichever is less.

It should be ensured that the borrower has retired the import document by actual payment

and not taken delivery by either accepting the Usance bill of exchange or executing a

Trust Receipt.

c) Imported Goods purchased in the Open Market

Where the invoice value of the goods is known, the goods should be valued on the basis

of invoice value or market value whichever is less. Where, however, the invoice value is

not known, the market value of the goods may be taken as the basis for valuation of

goods in which case the margin will be similar to that maintained on other indigenous

goods against which advances are made by the Bank.

INDIGENOUS GOODS / MANUFACTURED GOODS :

When the invoice value of the goods is known, the goods should be valued on the basis of

the invoice value or market value, whichever is less. Where, however, the invoice value is not

ascertainable, the market value of the goods may be taken as the basis for valuation. In such

cases, branches should ascertain the market rates at frequent intervals and maintain a record

thereof. In the case of manufactured goods the basis of valuation should be either cost price or

market price, whichever is lower and the manufacturer’s invoice should be produced for

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verification.

MARKET PRICE REGISTER :

Branches should maintain a Market price Register to record the weekly market prices of

all commodities against which advances could be granted by the bank. Entries’ regarding the

ruling prices of all the commodities available in that locality should be made whether advances

against them have been made or not so that the fluctuations in prices of seasonal commodities

over a period of years are known. This data would enable to regulate the advance rate for a

particular commodity when an advance is actually to be made.

INSPECTION OF STOCKS

Branches must inspect the stocks charged as security to the Bank regularly and as per the

instructions in force. There should be an element of surprise and hence inspection should be

carried out at irregular intervals.

Godown inspections have to be planned during the first week of every month. Branches

should maintain a register for this purpose recording the month-wise details of the nature and

address of the godown, name of the officer who has been assigned the responsibility to inspect

the godown, his initials in token of having noted the allocation of work, date actually inspected

and his initials. Such a register must be held with the Manager/Sr. Deputy Manager/Deputy

Manager as the case may be. The inspection of godown should be carried out meticulously as per

terms of sanction. Normally for all advances unit inspection will be conducted on monthly basis.

In deserving cases, sanctioning authorities can take a view on the periodicity of the inspection,

depending upon the nature of the activity, and can relax periodicity of the unit inspection after

duly documenting the reasons. However, at least once in a quarter, unit inspection will be

conducted. In the case of consortium, where our Bank is leader, the periodicity of unit visit can

be fixed as per the above guidelines. In cases where our Bank is not the leader, the Bank will fall

in line with the leader of the consortium.

In the case of godowns under hypothecation, the Chief Manager/Senior

Manager/Manager should inspect regularly and submit the Godown Inspection Reports to the

controlling offices, as required from time to time. Godown inspection work can be divided

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among the Chief Managers/Senior Managers/Managers/Senior Deputy Managers/Deputy

Managers and Asst. Managers by rotation so that the same official does not inspect the same

godown(s) repeatedly.

4.1.3 AGRICULTURAL LOAN:

INTRODUCTION

After nationalisation of banks, banks lending to Agriculture and other allied sectors was

given importance. Over the years as the banks gained experience, improvements have taken

place in the methodology of lending and selection of borrowers. Earlier branches were extending

agricultural advances wherever potential existed for growth and in many places due to

competition there were multiple financing. To rectify the situation, the concept of Service Area

Approach (SAA) had been introduced since 1st April 1989 by which branches are required to

provide financial assistance to the villages allotted to them.

Financing Agriculture and allied activities may be of a short term nature or of a long term

nature. While detailed instructions are given in the following Chapters in respect of such

advances, the instructions contained in this Chapter are common for all types of lending to

Agriculture and allied Activities.

AGRICULTURAL FINANCE

DIRECT FINANCE

Finance to individual farmers [including Self Help Groups (SHGs) or Joint Liability

Groups (JLGs), i.e. groups of individual farmers, provided banks maintain disaggregated data on

such finance] for Agriculture and Allied Activities (dairy, fishery, piggery, poultry, bee-keeping,

etc.)

Short-term loans for raising crops, i.e. for crop loans. This will include traditional/non-

traditional plantations and horticulture.

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Advances up to Rs. 10 lakh against pledge/hypothecation of agricultural

produce(including warehouse receipts) for a period not exceeding 12 months, irrespective

of whether the farmers were given crop loans for raising the produce or not.

Working capital and term loans for financing production and investment requirements for

agriculture and allied activities.

Loans to small and marginal farmers for purchase of land for agricultural purposes.

Loans to distressed farmers indebted to non-institutional lenders, against appropriate

collateral or group security.

Loans granted for pre-harvest and post-harvest activities such as spraying, weeding, sting,

grading, sorting, processing and transporting undertaken by individuals, SHG socio-

operatives in rural areas.

Loans granted for agricultural and allied activities, irrespective of whether the borrowing

entity is engaged in export or otherwise. The export credit granted by banks for

agricultural and allied activities may, however, be reported separately under heading

"Export credit to agricultural sector".

Finance to others [such as corporates, partnership firms and institutions] for Agriculture and

Allied Activities (dairy, fishery, piggery, poultry, bee-keeping, etc.)

Loans granted for pre-harvest and post harvest activities such as spraying, weeding,

harvesting, grading, sorting and transporting.

Finance up to an aggregate amount of Rs. one crore per borrower for the purposes listed

at 1.1.1, 1.1.2, 1.1.3 and 1.2.1 above.

One-third of loans in excess of Rs. one crore in aggregate per borrower for agriculture

and allied activities.

INDIRECT FINANCE

Finance for Agriculture and Allied Activities

Two-third of loans to entities covered under 1.2 above in excess of Rs. one crore in

aggregate per borrower for agriculture and allied activities.

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Loans to food and agro-based processing units with investments in plant and machinery

up to Rs. 10 crore, undertaken by those other than 1.1.6 above.

(i)Credit for purchase and distribution of fertilisers, pesticides, seeds, etc.

(ii)Loans up to Rs. 40 lakh granted for purchase and distribution of inputs for the allied

activities such as cattle feed, poultry feed, etc.

Finance for setting up of Agri clinics and Agribusiness Centres.

Finance for hire-purchase schemes for distribution of agricultural machinery and

implements.

Loans to farmers through Primary Agricultural Credit Societies (PACS), Farmers’

Service Societies (FSS) and Large-sized Adivasi Multi Purpose Societies (LAMPS).

Loans to cooperative societies of farmers for disposing of the produce of members.

Financing the farmers indirectly through the co-operative system (otherwise than by

subscription to bonds and debenture issues).

Loans for construction and running of storage facilities (warehouse, market yards,

godowns, and silos), including cold storage units designed to store agriculture

produce/products, irrespective of their location. If the storage unit is registered as SSI

unit/micro or small enterprise, the loans granted to such units may be classified under

advances to Micro and Small Enterprises sector.

Advances to Custom Service Units managed by individuals, institutions or organisations

who maintain a fleet of tractors, bulldozers, well-boring equipment, threshers, combines,

etc., and undertake work for farmers on contract basis.

Finance extended to dealers in drip irrigation/sprinkler irrigation system/agricultural

machinery, irrespective of their location, subject to the following conditions:

The dealer should be dealing exclusively in such items or if dealing in other products,

should be maintaining separate and distinct records in respect of such items.

A ceiling of up to Rs. 30 lakh per dealer should be observed.

Loans to Arthias (commission agents in rural/semi-urban areas functioning in

markets/mandies) for extending credit to farmers, for supply of inputs as also for buying

the output from the individual farmers/ SHGs/ JLGs.

Credit outstanding under loans for general purposes under General Credit Cards (GCC).

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Loans to MFIs for on-lending to agriculture as per the conditions specified in paragraph

3.2.

Loans sanctioned to NGOs which are SHG Promoting Institutions, for on-lending to

members of SHGs under SHG-Bank Linkage Program for agricultural purposes.

Loans granted to RRBs for on-lending to agriculture and allied activities sector.

Overdrafts, up to Rs. 25,000 (per account), granted against 'no-frills' accounts in rural and

semi-urban areas.

Loans not eligible for classification as direct/indirect finance to agriculture

Loans sanctioned w.e.f. April 1, 2011 to NBFCs (other than MFIs which adhere to the

criteria specified in paragraph 3.2) for on-lending. The bank loans extended prior to April

1, 2011 to NBFCs, and classified under Priority Sector will continue to be reckoned

under Priority Sector till maturity of such loans.

Loans sanctioned to NBFCs for on-lending to individuals or other entities against gold

jewellery, investments made by banks in securitised assets originated by NBFCs, where

the underlying assets are loans against gold jewellery, and purchase/ assignment of gold

loan portfolio from NBFCs.

Loans sanctioned to Central/ State Co-operative Marketing Federations and State Civil

Supplies Corporations.

Loans sanctioned to corporate/ private companies/ sugar companies for financing of

receivables of farmers/vendors/traders against their supplies of agricultural produce to

such corporate/ private companies/sugar companies.

4.1.3.1 TERM LOAN FOR MINOR IRRIGATION

Minor Irrigation’ is an activity which deals with the utilisation of ground water which

may be from sources below the ground level or from tanks, ponds, lakes, rivers. In view of the

emphasis made by Government of India to bring more area under irrigated cultivation, financing

for Minor Irrigation Development is undertaken on a priority basis.

The items constituting minor irrigation works are many and their type and size depend

not only on the hydrogeology of the area but also on the size of the farm. Minor Irrigation works

comprise of three parts :

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Construction of structures (digging or boring of well).

Lifting of water to the ground level.

Conveyance or distribution of water for irrigation.

Financial assistance can be provided on a composite basis covering all the above works

of minor irrigation, or to any one/two purposes alone provided the other is in satisfactory

working condition. Necessary application and documents have to be obtained as detailed in the

following sections depending upon the purposes for which credit facilities are sought for.

Ground Water Development

Branches should be aware of the stage of groundwater development in the service area

before entertaining any credit proposal for digging of wells/Minor Irrigation.

Depending upon the stage of ground water development expressed as a percentage of

available resources, the scheme area (block, watershed etc) is classified as Safe or Semi

Critical or Critical. If the unit is classified as Safe, there is no restriction in financing

minor irrigation schemes till it becomes ‘Semi Critical’.If it is Semi Critical, then

financing can be done so long as it does not become Critical. If it is Critical,then no

financing should be done.

Spacing Norms

NABARD has prescribed minimum spacing norms between two wells block-wise in each

district (circularised by RO from time to time) and the same is to be followed scrupulously.

4.1.3.2 TERM LOAN FOR SINKING / DEEPENING OF WELLS

Purpose

There are different types of wells to tap underground water depending upon hydro

geological situation and soil profile, as listed below:

Dug Wells,

Dug cum bore wells,

Filter points, and

Tube wells.

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Term Loans can be extended to construct any of these wells, for deepening/renovating the

existing wells and for boring in the existing dug wells to augment water supply.

4.1.3.3 TERM LOAN FOR PURCHASE OF ELECTRIC MOTOR / OIL ENGINE WITH

PUMPSET

Except in the case of flow irrigation, water is to be lifted from its source to the point of

application by some device. Conventional methods of water lifting are less efficient, time

consuming and tiresome too. When pump-sets are fitted, larger area can be covered at a

lesser cost.

Selection of a suitable water lifting device for a particular situation depends on the

characteristics of the source of water and the lifting device, the amount of water to be lifted, the

depth to the pumping water level, type and amount of power available and the economic status of

the farmer.

4.1.3.4 Establishment of NABARD

The National Bank for Agriculture and Rural Development (NABARD) was set up on

12th July, 1982 under an Act of the Parliament. It was established by merging the Agricultural

Credit Department (ACD), Rural Planning and Credit Cell (RPCC) of the Reserve Bank of India

and the Agricultural Refinance and Development Corporation (ARDC).

NABARD is an apex development bank in the country for providing credit for the

promotion of agriculture, tiny industries, artisans, cottage and village industries, handicrafts and

other rural crafts and other economic activities in rural areas with a view to promoting integrated

rural development and securing prosperity to rural areas.

NABARD is engaged in

Providing refinance facility to Commercial Banks (for investment credit i.e. term loans),

Regional Rural Banks and Co-operative Banks.

Strengthening the Credit Delivery System for improving the quality of loans and

supervision over the utilisation of credit.

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Credit monitoring — by way of stipulating norms in rural lending viz margin, unit cost,

unit size, repayment schedule etc. in order to have uniformity and rationality in rural

lending.

Undertaking field surveys, preparation of potential linked plans, preparation of model

schemes, evaluation of agricultural schemes implemented by banks, conducting District

Oriented Monitoring Study (DOM Study) etc.

Imparting training for the officials of Banks, State Governments and other institutions

concerned.

4.1.4 GOLD LOAN

Advances in the form of Demand Loans may be granted against the security of gold

ornaments and gold coins of 24 carat fineness sold by banks only, to the constituents of the

Bank, for the following purposes :

Productive Purposes-

a) Agricultural Operations – for crop cultivation and maintenance

b) Activities allied to Agriculture – for animal husbandry activities

c) Other Priority Sector activities- for business activities including consumption

purposes.

d) Non priority purposes

Non-Productive Purposes-

e.g.:- Medical expenses, festival celebrations &Unforeseen liabilities etc.

Branches are requested to ensure the following while granting jewel loan.

Commercial Cash Credit against Jewel – a new product:

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Salient Features

Target Group: Individuals who own jewels, engaged in business activities like small

business/trade/professional and self-employed etc.

Purpose: To meet the business needs for running a commercial activity against the prime

security of jewels.

Type of advance: Business needs will be met in the form of cash credit or over draft with

cheque book facility.

Amount of loan: Minimum finance under the scheme will be Rs.50,000/- and the

maximum will be Rs. 10 lakhs. For limits up to Rs.3 lakhs, the quantum of finance will

be the advance value advised by the Bank from time to time multiplied by the net weight

of the jewels or Rs.3 lakhs whichever is lower. For limits exceeding Rs. 3 lakhs,

quantum of finance will be the Advance value multiplied by the net weight of the jewels

or 20% of the projected turn over whichever is lower, subject to a maximum of

Rs. 10 lakh. Total limit should not exceed 20 % of the projected turn over. Drawing

power is to be regulated based on gold advance value.

End use verification: Branches should verify end use of funds by regular inspection of

stocks to ensure that the funds are utilised for the activity he/she is engaged in.

Margin: Advance rate for gold jewellery as fixed by the Bank takes care of margin.

Hence, no margin.

Interest: Interest has to be charged on fixed rate option and the rates are to be as per

circulars issued by BOD, Central Office. Interest should be serviced regularly.

Repayment: Cash Credit is to be renewed / reviewed every year. DP will be arrived

according to the value of jewels as determined by the rate advised by Priority Credit

Department (Agri), Central Office periodically.

Assessment: Borrower's genuine need is to be ascertained before sanction.

a) For limits up to Rs.3 lakhs, the limit will be assessed based on the quantum of jewels

pledged and no balance sheet is required.

b) For limits above Rs. 3 lakhs, unaudited balance sheet should be obtained and

analysed to assess the quantum of finance and also the capacity of the customer to

liquidate the limit.

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Security: The advance is fully secured by pledge of gold jewellery (prime security). This

should be appraised by an appraiser authorised by the bank for its fineness. 20 ct to 22 ct

jewellery could be taken as security.

Security Documents: DPN, F.16 (Letter of continuity), Hypothecation agreement, F. 89-

E (Application cum security delivery letter).

Other Documents: Registration certificate with District Industries Centre / Sales Tax

registration certificate etc. should be obtained as proof of activity of the applicant. An

undertaking letter should be obtained from all the applicants indicating the business

activity and assuring that the funds will not be used for speculative purposes.

Processing charges: To be levied as per Circular in force.

Appraiser commission should be obtained separately from the customer and it is subject to a

maximum of Rs.300/- per limit.

PROCEDURE FOR GRANTING THE JEWEL LOAN

The valuation of the ornaments / gold coins must be based on the weight and fineness of

gold content and the average market price of ornamental gold. So the manager must have

a fair knowledge about the movement of price of the ornamental gold.

The advance rate per gram will be regulated/ determined by C.O. on the basis of the

fineness of the gold and the market price of the gold and will be expressed to the nearest

rupee. Per gram advance rate will be as applicable to 22 carat hallmarked Jewels. The

advance rate per gram of gold will be notified to the branches, by Central Office, from

time to time, on which no margin need be maintained. Branch has no discretion to

increase the advance rate on no account.

Advances against gold coins should not be sanctioned for purchase of new coins and

subsequent / simultaneous pledging of the same.

It should be noted that loans against gold coins should be granted only against the gold

coins which are already purchased and possessed by the customers.

The hall mark jewellery fetches slightly higher rate to jewels with no hall mark.

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The branch should apply the correct advance rate after ascertaining the exact purpose of

the loan as C.O. advises different advance rates for AJL / Staff members and JL to others

purposes.

Whenever such rates are advised by Central Office, and, if there is any increase in

advance value per gram, branches should not encourage renewal of the existing loans,

under any circumstances.

APPRAISAL OF JEWELS :

Branches in Tamilnadu will ensure that all the weighing instruments and weights are got

stamped and verified once in every twelve months in order to comply with the

requirements under Madras Weights and Measures (Enforcement) Rules, 1967. It is also

necessary that the certificate of verification is exhibited in the branch Notice Board.

Branches in other states will adhere to the rules prevailing in their respective States.

Advances against gold ornaments can be granted only after the ornaments are duly

appraised by the jewel appraiser, engaged by the Bank and only when the Manager and

other Officers who are involved in sanctioning the advances have fully satisfied

themselves as to the weight, fineness and valuation of the ornaments.

Branch Managers and other officers should be competent to value gold ornaments and if

they are not, it is their duty to learn the work without delay. Branches may employ the

services of an approved Jewel Appraiser, where the loan amount is above Rupees One

thousand; but this does not absolve the Managers and other officers of their responsibility

for the correct weight, fineness of gold and the valuation of ornaments.

The weight of all extraneous matter such as wax, string, fastenings and as well as

precious stones, must be deducted/reduced from the gross weight, on a liberal scale and

must be entirely ignored when ornaments containing them are valued. The ornaments

containing wax should be immersed in water together with the side of the weighing

scale,( in case of physical balance ) to ascertain the weight of gold in the ornaments, as

water and wax have same specific gravity. However, it should be noted that this test may

be vitiated if any other base metal is embedded in the wax. Also this test can not be

carried out when electronic balance is used for weighing.

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Branches should be extremely vigilant against spurious ornaments made of brass with a

coating of gold can be passed off as solid gold ornaments.

Agricultural jewel loans can be issued to farmers who want to specifically avail loans for

agricultural purposes against security of their gold jewellery. It should be ensured that the

borrower is a genuine agriculturist and that the advance is for agricultural operations. It is

enough if the branch manager looks into the genuineness of the farmer and his need by verifying

the available land records like chitta, adangal, patta pass books, kist receipts etc. and the details

incorporated in Form 89 E and these need not be kept along with the AJL application.

Where the loan is for cultivation purposes, the loan amount sanctioned should be with

reference to the approved scale of finance for the crop to be raised and the extent of cultivation.

Agricultural jewel loans can also be considered for other agricultural purposes like dairy, sheep

rearing, purchase of bullocks, pumpsets, etc. The usual norms and disciplines applicable to the

advances as per guidelines should be observed. Keeping the credit requirement in view,

agricultural loans can be granted against gold ornaments and jewellery (within the stipulated

advance value of jewels pledged) so long as the quantum of loan is assessed with reference to the

crop grown or to the investment proposed and the repaying capacity likely to be generated and

not with reference to assessment of eligibility on the basis of value of gold ornaments pledged.

Branches should not refuse credit against the security of gold ornaments and jewellery to

people affected by natural calamities.

4.1.5 MICRO CREDITS

Loans of very small amounts, not exceeding Rs.50,000 per borrower provided by banks

either directly or indirectly through a SHG/JLG mechanism for on-lending up to Rs. 50,000 per

borrower.

Bank credit to Micro Finance Institutions extended on, or after, April 1, 2011 for on-

lending to individuals and also to members of SHGs / JLGs will be eligible for categorisation as

priority sector advance under respective categories viz., agriculture, micro and small enterprise,

and micro credit (for other purposes), as indirect finance, provided not less than 85% of total

assets of MFI (other than cash, balances with banks and financial institutions, government

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securities and money market instruments) are in the nature of “qualifying assets”. In addition,

aggregate amount of loan, extended for income generating activity, is not less than 75% of the

total loans given by MFIs.

A “qualifying asset” shall mean a loan disbursed by MFI, which satisfies the following

criteria:

a) The loan is to be extended to a borrower whose household annual income in rural

areas does not exceed Rs.60,000/- while for non-rural areas it should not exceed

Rs.1,20,000/-.

b) Loan does not exceed Rs.35,000/- in the first cycle and Rs.50,000/- in the

subsequent cycles

c) Total indebtedness of the borrower does not exceed Rs.50,000/-.

d) Tenure of loan is not less than 24 months when loan amount exceeds Rs.15,000/-

with right to borrower of prepayment without penalty.

e) The loan is without collateral.

f) Loan is repayable by weekly, fortnightly or monthly installments at the choice of

the borrower.

Further, the banks have to ensure that MFIs comply with the following caps on margin

and interest rate as also other ‘pricing guidelines’, to be eligible to classify these loans as

priority sector loans:

a) Margin cap at 12% for all MFIs. The interest cost is to be calculated on average

fortnightly balances of outstanding borrowings and interest income is to be

calculated on average fortnightly balances of outstanding loan portfolio of

qualifying assets.

b) Interest cap on individual loans at 26% per annum for all MFIs to be calculated on

a reducing balance basis.

c) Only three components are to be included in pricing of loansviz., (a) a processing

fee not exceeding 1% of the gross loan amount, (b) the interest charge and (c) the

insurance premium.

d) The processing fee is not to be included in the margin cap or the interest cap of

26%.

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e) Only the actual cost of insurance i.e. actual cost of group insurance for life, health

and livestock for borrower and spouse can be recovered; administrative charges

maybe recovered as per IRDA guidelines.

f) There should not be any penalty for delayed payment.

g) No Security Deposit/ Margin are to be taken.

The banks should obtain from MFI, at the end of each quarter, a Chartered Accountant’s

Certificate stating, inter-alia, that (i) 85% of total assets of the MFI are in the nature of

“qualifying assets’’, (ii) the aggregate amount of loan, extended for income generation activity,

is not less than 75% of the total loans given by the MFIs, and (iii) pricing guidelines are

followed.

The guidelines relating to categorization of

(i) Investment by banks in securitised assets originated by MFIs

(ii) Outright purchase of loan portfolios of MFIs as priority sector advances in the books of

the banks would be issued in due course. In the meantime, fresh assets would qualify for

priority sector treatment only if they satisfy the criteria of qualifying assets and adhere to

the pricing guidelines as specified above.

Bank loans to MFIs, which do not comply with above conditions will not be reckoned as

priority sector loans w.e.f. April 1, 2011. The bank loans extended prior to April 1, 2011

classified under Priority Sector will continue to be reckoned under Priority Sector till maturity of

such loans.

Micro Finance Institutions to be included in the above regulatory framework have to

initiate requisite organisational capacity building exercise so as to enable them to conform to the

above guidelines. Banks which are lending to MFIs will be one of the important pillars of the

new regulatory framework and, hence, they need to build up necessary criterion of due diligence

while processing loan applications from MFIs. This process should be initiated immediately to

ensure that MFIs availing finance from them are capable enough to put up the systems in terms

of Corporate Governance, Human Resource Management, Customer Protection and other aspects

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of the proposed regulatoryframework, so as to ensure that once the new regulatory framework is

in place, Micro Finance Institutions can carry out their operations without any major disruption

4.1.5.1 SWARNAJAYANTI GRAM SWAROZGAR YOJANA (SGSY)

The Scheme:

The Scheme aims at establishing a large number of micro enterprises in the rural areas.

The list of Below Poverty Line (BPL) households identified through BPL census duly approved

by Gram Sabha will form the basis for identification of families for assistance under GSY. The

objective of SGSY is to bring the assisted poor families (Swarozgaris) above the poverty line by

ensuring appreciable sustained income over period of time. This objective is to be achieved by

inter alia organising the rural poor into Self Help Groups (SHGs) through the process of social

mobilisation, their training and capacity building and provision of income generating assets. The

rural poor such as those with land, landless labour, educated unemployed, rural artisans and

disabled are covered under the Scheme.

The assisted poor families known as Swarozgaris can be either individuals or groups and

would be selected from BPL families by a three member team consisting of Block Development

Officer (BDO), Banker and Sarpanch. SGSY will focus on vulnerable sections of the rural poor.

Self-Help Groups (SHGs)

The Self Help Groups (SHGs) shall be organised by Swarozgaris drawn from the BPL list

approved by Gram Sabha. The Scheme provides for formation of Self Help Groups (SHGs),

nurturing and their linkages with banks. SHGs may be an informal group or registered under

Societies Act, State Co-operative Act or as a partnership firm. The assistance (loan cum subsidy)

may be extended to individuals in a group or to all members in the group for taking up income

generation activities. Group activities will be given preference and progressively majority of the

funding will be for Self Help Groups. Half the groups formed at block level should be

exclusively women groups.

Self Help Groups go through various stages of evolution viz. Group formation, Group

Stabilization, Micro Credit stage and Micro Enterprise Development stage.

Under the Scheme, generally a Self Help Group may consist of 10-20 persons.

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However, in difficult areas like deserts, hills and areas with scattered and sparse

population and in case of minor irrigation and disabled persons, this number may vary

from 5-20. The difficult areas have to be identified by the State Level SGSY Committee

and the above relaxation in membership will be permitted only in such areas.

Generally all members of the group should belong to families below the poverty line

(BPL). However, if necessary, a maximum of 20% and in exceptional cases, where

essentially required, up to a maximum of 30% of the members in a group may be taken

from families marginally above the poverty line living contiguously with BPL families

and if they are acceptable to the BPL members of the group.

The Above Poverty Line (APL) members will not be eligible for the subsidy under the

Scheme. The group shall not consist of more than one member from the same family. A

person should not be a member of more than one group. The BPL families must actively

participate in the management and decision making, which should not ordinarily be

entirely in the hands of the APL families. Further, APL members of the SHG shall not

become office bearers (Group leader, Assistant Group leader or Treasurer) of the group.

The group should operate a group account preferably in their service area bank branch, so

as to deposit the balance amounts left with the groups after disbursing loans to its

members.

The group should maintain simple basic records such as minutes book, attendance

register, loan ledger, general ledger, cash book, bank pass book and individual pass

books.

In case of disabled persons, the groups formed should ideally be disability specific,

wherever possible; however, in case sufficient number of people for formation of

disability specific groups are not available, a group may comprise of persons with diverse

disabilities or a group may comprise of both disabled and non disabled persons below the

poverty line.

In cases where the size of the SHG is large {as in the case of Neighbourhood Groups

(NHGs) under the Kudumbashree Programme of Government of Kerala where a

neighbourhood group can comprise up to 40 members}, banks have been expressing

difficulty in extending finance to such large groups. Hence, sub groups within the large

group may be considered for financing by the banks under the SGSY provided they (or

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the large group) have satisfied the required grading criteria, possess all the characteristics

of a viable and sustainable group and are found credit-worthy by the banks.

In States and Union Territories where the formation of SHGs has not taken root, banks may

continue to extend credit facilities to eligible individual Swarozgaris.

4.1.6 LETTER OF CREDIT/ GUARANTEES/LG

4.1.6.1 LETTER OF CREDIT

Letters of Credit module in CBS provides for both Inland and Foreign letters of Credit

books management. All the manual system of maintaining Letters of Credit have been made

available in the system.

Requirement for going online :

Existing balance in Letters of Credit head to be vouched in gl_sub_cd 1.

Branch should create Master Details of customers enjoying LC facility under sanctioned

limits using ‘Exim Customers Maintenance’ program and also create account numbers

for this facility using ‘Exim Accounts Maintenance’ program.

Branch should Inform RCC / ITD to make the module ONLINE.

ONLINE Programs:

OUTWARD LETTERS OF CREDIT:

Only authorized branches can use the programs for issuance of Letters of Credit. Before

invoking the program to issue, the desk officer in-charge of LC issue should ensure that

the application is filled up in all respects and necessary approval of the Branch Chief has

been obtained to issue the LC.

Once all the values are entered in the system, the system will generate the LC-No and the

same should be noted on the application and other documents.

All the LC issue to be approved by a Supervisory Officer, after verifying that the details

entered in the system is correct. Once an LC is approved, modification is not permitted

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and any clause can be modified only by way of an Amendment, which should not be

resorted to by branches for the mistakes committed by them.

Any amendments to the LC issued by the branch should be entered in the LC

amendments program and duly approved before communicating the same to the

beneficiary.

Whenever documents have been submitted under the LC, the desk officer should note to

mark necessary utilization entry in the said LC and ensure that the balance available in

the LC reflects the correct position.

Once an LC has been fully utilized and the customer is not likely to use the LC in future,

it should be marked as “Closed” using the program ‘LC Revocation / Closure’ with due

approval of the Branch Chief. Once an LC has been marked as ‘Closed’ it can not be used

further.

On a day to day basis, contra entries for lodgment as well as utilization should be marked

in the system using the ‘LC contra Vouching’ Program without fail.

INWARD LETTERS OF CREDIT:

The programs for registration of Inward Letters of Credit are available to all branches

handling LCs for their customers. All letters of Credit received by the branch should be

entered in the system and the number generated by the system should be marked on the

LC for future use.

Provision is given to generate the LC Advice from the system which should be used to

send the LC to the beneficiary, wherever required.

Any amendment received for the LC should be entered in the system using ‘LC

Amendments’ programs chronologically and duly approved by the Supervisory user. The

amendment should then be advised to the beneficiary for his acceptance. On receipt of

the acceptance from the beneficiary, the same should be marked in the system, using ‘LC

Amendments Application’ in the same order of amendment.

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FIRM ORDERS:

The Letter of Credit Package provides for registration of documents received as ‘Firm

Orders’ for the purpose of granting Packing Credit against such orders. All firm orders recorded

in the system should be approved by a Supervisory staff duly verifying the details entered.

CHARGES:

All charges required to be recovered from the borrower / customer should be promptly

recovered for which necessary program has been provided.

LIABILITY MAINTENANCE:

The Supervisory Staff in-charge of LC department in the branch should periodically take

liability reports and ensure that the liabilities of various borrowers / customers tally.

NOTIONAL RATES REVISION:

Whenever change in Notional Rates is notified by Central Office, the change should be

applied on the liabilities outstanding in Letters of Credit also, using the relevant program, on the

due date to reflect the correct liability position.

4.1.6.2 LETTER OF GUARANTEE/ LG

Branches are advised to be guided by the instructions provided in Chapter 18 Volume-II

of Book of Instructions as modulated to the computer environment of a branch.

OPENING OF LETTER OF GUARANTEE:

All opening of Letter of Guarantees should be done through the master creation

application. Similarly modifications/ deletions are to be carried out using this application only.

The various options available in each screen are Issue, Extend, Modify, Eliminate and View to

enable opening, extending, modification, elimination and viewing of LGs.

The Letter of Guarantee should be opened through the LG Master Maintenance Program. It also

enables the user to:

1. Modify existing LG

2. Eliminate the entries of LG

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3. View the LG details in the master

4. Amend the LG amount already issued

5. Extend the validity period of LG

Before the branch user attempts to open a Letter of Guarantee, Beneficiary of the LG

should have been created and approved for all new customers. If the Beneficiary Code for a

customer is already available, branch should note down the Beneficiary Code to create master for

the Letter of Guarantee account. Branches should avoid creating multiple beneficiary codes

for each letter of guarantee account for the same customer. The Application for LG –

Beneficiary Maintenance also enables the branch to modify or Delete the master information.

Opening of Letter of Guarantees should be done through the master creation application.

Similarly modifications/ deletions are to be carried out using this application only. The various

options available in each screen are Issue, Extend, Modify, Eliminate and View to enable

opening, extending, modification, elimination and viewing of LGs.

LETTER OF GUARANTEE CLOSURE:

The account number should be given for which closure is to be affected. Depending on

the type of closure, the system generates requisite vouchers, including margin, and once the user

gives the disposal details, generates the Lot entries. The User at the Branch has to prepare the

vouchers manually for the purpose of records. The system also posts the transaction and gives

the transaction numbers, which have to be noted down on the voucher. For the use of branches, a

new combined voucher has been supplied in pre-printed format, which has to be used for noting

down all the closure details, and respective transaction numbers noted there against.

LETTER OF GUARANTEE APPROVAL:

All Letter of Guarantee opening, modification and closures should be approved by the

supervisory staff simultaneously without keeping the transaction pending till end of day. Before

approving the transactions, the officer-in-charge should verify all the details in the system and

approve only if the details are found to be correct.

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LETTER OF GUARANTEE – CASH MARGIN MAINTENANCE:

Whenever margin on LG is collected by way of Cash, using this program the details of

margin collected should be entered by the user after the LG is opened in the system. This should

also be approved by Supervisory User.

LETTERS OF GUARANTEE – CONTRA VOUCHING:

Before closure of business for the day, the Supervisory user should ensure that necessary

contra is passed for LGs issued / closed / revoked etc. using the Contra Voucher Generation

program in the system and ensure that the liability balance tallies with the individual LGs issued.

DEFERRED PAYMENT GUARANTEE:

In the case of guarantees under Deferred Payment Guarantee, to account for the DPG

installment payments, the ‘DPG Posting’ and ‘DPG passing’ programs should be used by the

branches.

LETTER OF GUARANTEE SCHEME MAINTENANCE:

Whenever schemes are introduced or modified, necessary changes will be done by

Information Technology Department, C.O. only.

4.1.7 BILL/CHEQUE DISCOUNTING

4.1.7.1 DEMAND BILLS PURCHASED

A demand bill may either be a clean bill or a documentary bill. A demand bill does not attract

stamp duty.

Clean demand bills are unsecured bills and comprise the following :

a) Approved cheques

b) Bank drafts / Bankers’ Cheques

c) Dividend Warrants and Refund Orders

d) Interest Warrants

e) Inland Clean Demand Bills

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f) Rupee Travellers Cheques issued by other Banks

g) Foreign Cheques / Bank Drafts payable in India .

Documentary Demand bills are secured bills and comprise the following:

Inland Demand bills accompanied by documents of title to goods such as, Railway

Receipts, Lorry Receipts (issued by approved transport operators), Bills of Lading etc.

Inland Documentary Demand Bills drawn under letters of credit opened by another

branch of the Bank or by another Bank calling for, inter alia, document of title to goods as one of

the documents.

USANCE BILLS:

Usance Bills of exchange attract stamp duty. Such bills should be drawn on Hundi paper

of requisite stamp value as payable under the Indian Stamp Act. When two or more sheets of

stamped papers are used in drawing a bill, a portion of the bill must appear on each sheet. A

Usance Bill may be either a clean bill or a documentary bill. It may be payable locally or outside

the place at which it is drawn. A documentary bill of exchange may be either D/A (documents to

be delivered against acceptance) or D/P (documents to be delivered against payment) and made

payable either after sight or after date. A D/A bill becomes an unsecured bill once the documents

are delivered against acceptance. A D/P bill, however, is a secured bill.

4.1.7.2. SANCTION OF CREDIT LIMITS

Branches should ensure that appropriate credit limits are fixed for parties who require

Bills purchased/discounted facilities by following the procedure prescribed for appraisal

of a credit proposition and fixing of credit limits.

However, Branch Managers may allow purchase/discount of bills representing genuine

trade transactions, under their discretion, where regular limits are not sanctioned to

parties, whenever such facility is required occasionally by the Bank’s good customers,

strictly adhering to the instructions laid down in this chapter.

Branches should obtain, inter alia, information relating to the credit facilities, if any, with

other Banks enjoyed by the customers whose proposals for Bills facilities are under

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consideration. Branches should not allow any bill purchase/bill discounting limits to the

parties without the concurrence of their main/existing Bankers.

Unless specifically permitted in the sanction, the following instruments should not be

purchased/discounted by the branches :

a) clean bills;

b) clean or documentary bills drawn on party’s own branch or sister concerns/associates;

c) cheques drawn by the customer on his branch or associates/sister concerns: As per the

Loan policy Document 2009, where there is no backward / forward integration, house

bills on a single drawee should be restricted to 10% of the bills limit and total of such

bills to associates should not exceed 25% of the bills limit. Relaxations in the above

ceiling of 10%/ 25% may be permitted by the next higher sanctioning authorities.

d) self- cheques;

e) endorsed bills i.e. discounting to an endorsee;

f) Documentary bills accompanied by bills of lading covering foreign shipments and

drawn on inland parties.

While sanctioning/recommending limits for sanction, the branch should note to

sanction/recommend suitable sub-limits/drawee bill limits, wherever necessary.

4.1.7.3. SCRUTINY OF BILLS

The various aspects of the bills/cheques tendered by the customer should be

scrupulously verified to ensure that they are in order in all respects.

The cheques/bills once dishonoured should not be purchased/ discounted again.

Similarly, branches should not evince, any interest in the bills which are drawn on the

drawees who have earlier returned the bills or who have rejected the goods, unless there

are convincing reasons for such rejection/return. Similarly, cheques / bills which have

been already taken for collection should not, normally be transferred to purchase

portfolio unless there is a compelling reason to do so.

Cheques should be scrutinised to ensure that –

a) The cheque is properly drawn as to its date, amount in words and figures, signature

and endorsements, if any

b) The cheque is crossed.

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c) The cheque is neither stale nor post-dated there is nothing to indicate that it has not

arisen from out of a bonafide business transaction.

Bills should be scrutinised to ensure that –

a) the bills are properly drawn and in order and are made out payable to the Bank or

duly endorsed in the Bank’s favour ;

and

b) the documents said to have been enclosed are actually found enclosed and that each

one of the documents is in order.

If there are any discrepancies in the cheque/bill, it should not be accepted for

purchase/discount.

In the case of documentary bills, the bill of exchange must be accompanied by the

invoice besides the transport documents viz., Railway Receipts, Lorry Receipts, etc.

Branches should verify whether the gap between the date of despatch of goods and the

date of submission of the documents to the Bank for the purpose of discount/purchase, is

long. If the gap is too long, say, 2 days or more, such bills should not be accepted for

purchase/discount unless the customer is able to offer acceptable reasons for the delay.

Branch Managers should satisfy themselves that the goods covered by the bill are not

other than the ones in which the party is dealing in, that the value of the goods mentioned

in the bill and invoice is correct in relation to the market price and that the amount of the

bill is not inflated i.e. the goods have not been over-invoiced.

The invoice and bill should be compared with the document of title to goods (RR/LR) to

ensure that the description of the goods, the quantity and weight of the goods and other

particulars agree.

The transport documents should invariably be consigned to the order of Indian Overseas

Bank. However, in the case of Railway Receipts, the goods should have been consigned

to ‘self’ or order of the consignor-drawer and endorsed in favour of the Bank or order.

This would prevent the consignee from taking delivery of the goods against an indemnity

without the knowledge of the bank.

Branches should accept documents for purchase/discount accompanied by Lorry Receipts

only when such Lorry Receipts are issued by transport operators who are recommended

by the Indian Banks’ Association and placed on the approved list of the Bank. The lorry

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receipts should be in the special format prescribed by Indian Banks’ Association in this

regard.

When endorsed clean bills are presented for purchase/discount it should be ensured that

the bills are genuine and that the party is not discounting them for accommodating the

drawer who has exhausted his own credit limits.

4.1.7.4. CLEAN DEMAND BILLS :

No clean bill should be purchased if it does not represent genuine trade transaction or

relate to a legitimate movement of funds. Clean Bills drawn by a firm on its own

office/associate/sister concern should be avoided. Purchase of self-cheques should invariably be

subject to prior sanction from the Central Office.

Purchase of Clean Demand bills covering local sale of goods, where bills are not drawn

on parties connected with the borrower or his selling agents/sister concerns/associates,

may be allowed normally to the maximum extent of Rs.5,000/- only. However, where a

higher amount is required, branches should explain the reasons for such higher amounts

and obtain the sanction from the appropriate controlling authority.

Prompt payment on presentation of cheque/demand bill should always be insisted on and

should there be any delay, the advance must be recovered forthwith from the

drawers/endorsers immediately on receipt of non-payment advice. Collecting branches

should be informed to advise non-payment by letter or by telegram if the amount of the

bill is Rs.3,000/- or over.

Every case of non-payment or delay in payment by the drawee of a clean demand bill

should be carefully enquired into and unless a satisfactory explanation is forthcoming, the

fact must be regarded as seriously affecting the relationship of the drawer or endorser

with the Bank. The greatest care must be taken that the Bank is not made the victim of

‘kite flying’ by parties in difficulties. For example, one purely accommodation bill

having been floated, a second one is negotiated in order to meet the first and so on. Once

started, this cycle has a tendency to grow rapidly and prove difficult of recovery. Any

apparent evidence of such manipulation, such as suspicious telegraphic remittance by

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parties to bills, must be reported immediately by collecting branches. Such kite flying

may be attempted both in the case of bills as well as cheques.

As already stated above, branches should not purchase/discount accommodation

cheques/bills.

Cheques drawn on other branches of the bank or on other banks elsewhere (other than

self cheques), may be purchased for credit of personal accounts of constituents only when

the Branch Manager is fully satisfied that the account holders are good for the amounts

involved. This discretion can be exercised by the Branch Managers only subject to the

discretionary powers vested with the respective branch managers as contained in the

Discretionary powers booklet and as advised by the Central Office from time to time.

However, branches should offer the facility of immediate credit of outstation cheques

upto Rs.15000/- (or such amounts as may be advised from time to time) to all the

customers subject to the guidelines issued from time to time. In all other cases, the

cheques should be accepted only on collection basis.

4.1.7.5. INTEREST / DISCOUNT :

The rates of discount/interest/overdue interest are advised by the Central Office. The

service charges to be collected by the branches are also advised by the Central Office from time

to time. Branches should collect these charges without fail, in addition to the amount of

interest/discount as stipulated in the sanction endorsements Apart from collection charges and

postages for bills/cheques as applicable, branches should collect interest/discount from the date

of purchase/discount till the date of realisation at the time of purchase/discount itself, as under:

Branches should charge normal rate of interest for the first:

a) 15 days in the case of bills accompanied by LRs

b) 30 days in the case of bills accompanied by RRs

c) Upto the predetermined period in case of Supply Bills

d) 7 days in the case of cheques and other clean instruments

e) Branches should charge normal rate of interest till due date in the case of Usance

bills.

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OVERDUE INTEREST should be charged on bills after the expiry of the normal

period stipulated as above, AT THE TIME OF REALISATION.

Overdue interest should not be charged for cheques purchased and are outstanding

beyond 10 / 14 days, as the case may be, unless the cheques are returned unpaid, in which

case interest is to be charged for the period from the date of purchase to the date of

recovery.

Any excess/shortage of interest should be adjusted at the time of realisation.

The interest should be collected from the date of purchase/discount till the date of

realisation, i.e. crediting of the proceeds in any of our branches. The purchasing branch need not

charge interest for the return transit period of the credit advice i.e. from the date of realisation till

the date advices are received and responded. However, if the bills are realised by another bank

and remitted to our branch, the date of realisation of the bill at the branch is to be taken as the

date of realisation and interest collected upto that date. Branches while calculating interest on

Bills purchased/ discounted should exclude the amount held, if any, in the margin account and

charge interest only on the net amount of the bill credited to party’s account at the time of

purchase/discount. However, if the margin is held in the form of deposit accounts, then the

interest should be charged for the full amount of the bill.

4.1.7.6. FOLLOW-UP :

Branches should follow-up regularly the fate of the bills purchased/discounted by them.

If proceeds of the cheques/bills are not received within a reasonable time, their fate should be

enquired from the collecting branch/Bank by sending a fate enquiry card and where the amount

of the bill purchased/discounted is large such fate enquiry should be done by telephone / telex.

Full particulars of the cheque/bill such as its number, amount, name of the drawee etc. should be

given in this regard. If no reply is received from the collecting branch/Bank, it should be

followed-up by further fate enquiries till receipt of reply/proceeds. The dates of enquiring the

fate should be recorded in the Bills register under the initials of a supervising official. Actual

charges incurred for the telegram / telex in this regard should be recovered from the party

without fail.

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If advice of non-payment of the bills is received from the collecting branches/Banks, the

customer should be promptly informed of the non-payment of the bill, giving reasons for non

payment, if any, received from the collecting branch / bank and instructions sought for disposal

of the bill. The dates of non-payment advice received from the branch and the non-payment

advice sent to the party should be noted in the bills register under the initials of a supervising

official.

Branch should follow-up with the customer-drawer and obtain disposal instructions in

writing at the earliest and communicate the same to the collecting branch/bank.

4.1.7.7. LOCAL BILLS DISCOUNTED :

These bills are clean Usance bills payable locally and hence this type of business should

be restricted to approved parties who provide finance to small traders in their respective areas.

This form of advance can also be made to the suppliers/manufacturers of material/goods for their

working capital requirements, where the supplies/sales are made locally on credit for which

Usance bills are drawn by them on the retailers.

The parties should be in a position to pay the amounts of the bills discounted on due dates

in the event of the drawees or acceptors failing to retire them. Accommodation bills should not

be accepted for discounting under any circumstances.

When business proposals are submitted for this type of credit facility, branches should

furnish list of probable drawers and/or acceptors together with satisfactory credit reports on them

to enable the sanctioning authority to fix suitable limits for each drawer or acceptor, whose

specimen signature, wherever possible should be obtained for record.

The bills may be either in the form of promissory notes or bills of exchange, as illustrated

hereunder:

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PROMISSORY NOTE

NINETY DAYS / THREE MONTHS AFTER DATE, I PROMISE TO PAY TO.................... OR

ORDER THE SUM OF RUPEES.........……………………………………………. FOR VALUE

RECEIVED.

DRAWER’S SIGNATURE WITH ADDRESS

BILL OF EXCHANGE

NINETY DAYS / THREE MONTHS AFTER DATE / SIGHT PLEASE PAY

TO........................... OR ORDER THE SUM OF RUPEES ........................

........................................ FOR VALUE RECEIVED.

NAME AND ADDRESS DRAWER’S SIGNATURE/ SIGNATURE OF DRAWEE WITH

ADDRESS (to be attested by the drawer)

4.1.8 DIVERSION OF FUNDS IN LOANS

During the viability study causes for sickness should be investigated and diagnosed. A

major cause of sickness is Diversion of Funds.

OPEN CASH CREDITS - Advances against Hypothecation of goods

The stocks remain in the possession of the borrowers and are merely equitably charged

to the bank under documents signed by them is called hypothecation whereas in the case of a

pledge, (whether it is lock and key or open factory type) the borrower’s goods are in the Bank’s

possession under bank’s own locks. In practice, it may be difficult to take possession of the

goods when it becomes necessary for the bank to do so at the time when the borrowers resist,

even though the bank is empowered to do so under the documents executed by the borrowers,

and under various provisions of the Law, like SARFAESI Act. Therefore, hypothecation

advances should be sanctioned only to those borrowers who are considered good for the amount

on clean basis at all times and whose honesty and integrity are unquestionable.

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Advances against hypothecation of goods are granted only for financing the working

capital requirements of the borrowers. Branches should take proper care while releasing the

advances and ensure that the Working Capital is released only after completion and

implementation of the project in the case of manufacturing concerns and when the manufacturing

activity has really commenced. Branches should ensure proper end use of the Working Capital

and that diversion of funds is not allowed under any circumstances, say, for acquiring the fixed

assets. Branches should scrupulously adhere to the sanction terms and conditions before

releasing hypothecation advances, as the Bank may face difficulties later if the sanction terms are

not complied with.

Ordinarily goods purchased should be paid for by cheques on the Bank and all sale

proceeds must likewise be credited to the account. Branches should verify whether the cheques

issued are in favour of the suppliers of goods/manufacturers/dealers with which the borrowers

normally have business dealings. Similarly, the receipts in the accounts should represent genuine

sale transactions and branches should ensure that all the sale proceeds are routed through these

accounts. Branches should ensure that only transactions relating to business are routed through

these accounts and mutual transfer of funds for very large amount are not affected among the

accounts of the concerns/family members, which may ultimately lead to diversion of funds.

4.1.9 NON - PERFORMING ASSETS ISSUES

4.1.9.1 MANAGEMENT OF NON - PERFORMING ASSETS

The growing Non Performing Assets (NPAs) of banks adversely affect the profitability of

the Bank. The NPAs are double edged weapons. On the one hand, the banks cannot recognise

interest income on NPAs on accrual basis and on the other hand, the banks have to make

provisions depending on the age of NPA and classification of the asset. The reduced profits on

account of burgeoning NPAs affect the capital adequacy ratio and thereby the capacity of the

banks to expand their credit portfolio. The restriction on increase in advances reduces the

profitability. This vicious circle can be broken only by substantial reduction of NPAs of banks.

Hence the need for proper management of NPAs is required.

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The first step in NPA Management is to ensure that assets of the bank in the ‘Standard

Assets’ category continue to be retained in the same category. This calls for qualitative credit

appraisal and close monitoring of accounts. Branches should supervise all standard accounts very

closely, recover interest debited periodically, recover installments falling due on term loans

promptly and see to it that ‘Standard Assets’ do not slip down under any circumstances.

Allowing the accounts to become NPA would deprive the branches from recognising interest

income.

Despite best efforts put in, certain accounts would have become NPAs and slipped down

to ‘Sub-Standard’ asset category. The reasons therefore should be studied in detail and corrective

measures should be initiated. The efforts of the branches should be directed to upgrade the asset.

Branches should personally prevail upon the borrowers/guarantors for early

adjustment/regularisation of such accounts. Branches may send registered notices to the

borrowers/guarantors or arrange to issue legal notices to the borrowers/guarantors as

circumstances may warrant and as per the powers vested with them. At this stage, branches may

resort to enforcement of liquid prime/collateral securities held by them after giving due notice to

the borrower/guarantors.

The sub-standard accounts could be reviewed in the Task Force Committee Meetings

held periodically at Branch/Regional Office/Central Office in the presence of the borrowers as

per instructions in force. The minutes of such meetings should be recorded and steps should be

taken as per the decisions taken in such meetings. If the securities now held are found inadequate

to cover the dues of the bank, branches should endeavour to obtain additional securities for the

advance as this would help the bank in reducing the provision requirement should the advance

slip down to ‘Doubtful Asset’ category. Additional provision is to be made even in Sub-

Standard accounts, if there is any security shortfall.

As doubtful assets attract heavy provisioning, effective action should be taken

continuously either to recover the dues fully or to improve the classification by rehabilitating the

unit. Where the doubtful assets cannot be upgraded by partial recovery or rehabilitation and

where the borrowers are sincere and cooperative in adjustment of the dues, negotiated settlement

can be thought of. Where the borrowers are wilful defaulters and adequate securities and

personal guarantees are available to cover the advance, the amount should be recovered by

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institution of legal proceedings. Immediate steps to be initiated to declare them as willful

defaulters as per RBI guidelines.

As the provision requirement on ‘Doubtful Assets’ depend on the value of security

available to a large extent, branches should ensure that such assets are backed by adequate

security. Branches should conduct Desk Top Valuation and revaluation of the properties as per

instructions in force, which would help the bank in reducing the provision requirements. If an

account remains in doubtful category for three years, irrespective of the security value, the

provision has to be made at the rate of 100% of the balance outstanding. Hence, there is an

urgent need to recover the account within the 4 years of the account becoming NPA.

4.1.9.2 Compromise/Negotiated Settlement:

a) Compromise is an attempt to enter into an agreement superseding all the earlier

agreements. It is an arrangement between the bank and the borrowers where there is an

element of sacrifice on the part of both the parties. The RBI has issued broad guidelines

to banks in regard to compromise/negotiated settlements. Based on these guidelines the

bank has come out with Recovery Policy for NPA accounts. As every account is unique,

it will be difficult to lay down standard guidelines for compromise settlement and as

such, suitable strategies are to evolved for each case. While considering compromise

proposals, proper distinction should be made between willful defaulters and the

borrowers defaulting in repayments due to circumstances beyond their control. Under the

settlement, the bank should recover its dues to the maximum extent possible at minimum

expense.

Eligible Accounts:

All NPA accounts – both Suit filed and Non-Suit filed.

Written-Off Accounts

Accounts under BIFR / AAIFR / CDR.

Accounts under Public Interest litigation (PIL) / External Agency’s Investigation / willful

defaulters / cases of malfeasance / Fraud etc., - However the permission of SAC at

Central Office must be obtained for considering such accounts for compromise

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settlements by the appropriate layer of authority and after sanction it should be vetted by

Management Committee of the Board as per RBI guidelines.

Any other accounts, which are covered by specific recovery campaign, launched, as per

the terms of such campaign.

Ineligible accounts:

1. A loan account sanctioned earlier by the official, who is the competent authority presently to

consider the compromise settlement of the same account has to be sanctioned only by the next

higher layer of authority.

2. NPA Accounts sold / assigned to ARCs / Banks / FIs / NBFCs.

b) Branches must explore the possibility of negotiated settlement in the following cases.

The account should have been classified as NPA and the recovery of the dues to

the Bank in the normal course is found difficult or would take unduly longer

period depriving the Bank the immediate benefit of recycling of funds.

Efforts for Upgradation either by restructuring or rehabilitation have failed and /

or may not yield desired results.

The securities, income / worth of the borrower / guarantor are not sufficient to

ensure full &early recovery of the dues.

Any other reason in which continuation of relationship with the borrower is

considered not in the interest of the bank. The recovery through legal measures

will take longer time to result in recovery.

4.1.9.3 VALUATION OF THE SECURITIES:

As per the valuation policy of our bank (circular Misc/174 /2007-08 dated 17.11.2007) all

NPA accounts, irrespective of outstanding and limit should be valued by approved panel

Valuer every 3 years.

However, it should be ensured that whenever any OTS proposal is submitted, valuation

of the securities should not be more than ONE year old as on the date of submission of

compromise proposals.

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If the valuation by the approved panel valuer is more than one year, fresh valuation

should be obtained from approved panel valuer for this purpose.

4.2 KEY ISSUES

4.2.1 OTHER IMPORTANT FEATURES OF THE GUIDELINES

Investments by banks in securitised assets, representing loans to various categories of

priority sector, shall be eligible for classification under respective categories of priority sector

(direct or indirect) depending on the underlying assets, provided the securitised assets are

originated by banks and financial institutions and fulfill the Reserve Bank of India guidelines on

securitisation. This would mean that the banks' investments in the above categories of securitised

assets shall be eligible for classification under the respective categories of priority sector only if

the securitised advances were eligible to be classified as priority sector advances prior to

securitisation.

Outright purchases of any loan asset eligible to be categorised under priority sector, shall

be eligible for classification under the respective categories of priority sector (direct or indirect),

provided the loans purchased are eligible to be categorized under priority sector; the loan assets

are purchased (after due diligence and at fair value) from banks and financial institutions,

without any recourse to the seller; and the eligible loan assets are not disposed of, other than by

way of repayment, within a period of six months from the date of purchase.

Investments by banks in Inter Bank Participation Certificates (IBPCs), on a risk sharing

basis, shall be eligible for classification under respective categories of priority sector, provided

the underlying assets are eligible to be categorised under the respective categories of priority

sector and are held for at least 180 days from the date of investment.

The targets and sub-targets under priority sector lending would be linked to Adjusted Net

Bank Credit (ANBC) (Net Bank Credit plus investments made by banks in non-SLR bonds held

in HTM category) or Credit Equivalent amount of Off-Balance Sheet Exposures (OBE),

whichever is higher, as on March 31 of the previous year. The outstanding FCNR (B) and NRNR

deposits balances will no longer be deducted for computation of ANBC for priority sector

lending purposes. Investments made by banks in the Recapitalization Bonds floated by

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Government of India will not be taken into account for the purpose. Existing and fresh

investments made by banks in non-SLR bonds held in HTM category will be taken into account

for calculation of ANBC.

Deposits placed by banks with NABARD/SIDBI, as the case may be, in lieu of non-

achievement of priority sector lending targets/sub-targets, though shown under Schedule 8 –

'Investments' in the Balance Sheet at item I (v) – 'Others', will not be treated as investment in

non-SLR bonds held under HTM category. For the purpose of calculation of credit equivalent of

off-balance sheet exposures, banks may use current exposure method. Inter-bank exposures will

not be taken into account for the purpose of priority sector lending targets/sub-targets.

Existing and fresh deposits placed by banks on account of non-achievement of priority

sector lending targets/ sub-targets would not be eligible for classification as indirect finance to

agriculture/ small enterprises sector, as the case may be.

4.2.2 PRECAUTIONS TO BE TAKEN:

Managers must exercise the greatest care and diligence in discounting and purchasing bills and

employ all available means of satisfying themselves of the credit worthiness and the capacity of

the parties thereto.

Branch Managers should not merely rely on the documents of title to goods

accompanying the bills, since, in the case of non-payment of such bills on demand or on

due dates, the advances have to be recovered immediately from the drawers or the

endorsers. In addition, Branch Managers must also make themselves fully conversant

with the provisions of the Negotiable Instruments Act in order that the Bank’s right of

recourse may not at any time be extinguished owing to the neglect of any of the

provisions.

Branch Managers must maintain a close personal touch with the customers and other

parties connected with the bill business, apart from periodically obtaining and recording

opinion on the drawers and drawees.

Branches should invariably obtain satisfactory credit reports on all parties from whom

bills are received for purchase/discount except in the case of stray bills and cheques

purchased from parties well known to the bank. In addition, satisfactory credit reports

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should be obtained on drawees on whom the bills are drawn frequently or on whom bills

for large amounts are drawn. These credit reports should be obtained and reviewed

periodically, say, once in 12 months, and, should be submitted to the concerned

sanctioning authority with relative renewal proposals. Such reports are particularly

necessary in the case of clean bills and DA bills.

Managers must not advance against bills which do not naturally belong to their respective

areas, unless they are authorised to do so, by the appropriate sanctioning authority.

Particular caution should be exercised when bills are offered by parties who are known to

usually conduct such transactions through other banks. In such cases, branches should not

allow any facilities without the concurrence of those banks with whom the parties operate

their bills limits.

When accepted clean Usance bills are to be discounted, it is necessary that the signatures

of the drawees are verified by the discounting branches by calling for the signatures of

drawees duly attested by their bankers on a separate specimen signature sheet to ensure

the genuineness of the signature.

Branches should purchase/discount instruments arising out of genuine trade transactions

or representing legitimate movement of goods/funds only and should never entertain

accommodation bills/cheques under any circumstances.

a) Branches should also satisfy themselves that the bills discounted/purchased

have arisen out of the actual movement of goods and for this purpose, verify

the relative invoices as also the documents like LR/RR and in respect of local

sales, the bills should be supported by either receipted delivery

orders/Challans or invoices receipted by the drawees concerned.

b) It should be ensured that the drawers/endorsers of the bills are in a position to

repay the amount immediately in the event of the bills being dishonoured by

the drawees against whom the Bank has no recourse. However, in the case of

Usance bills that have been accepted by the drawees, bank has recourse on

both the drawee and the drawer.

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The parties who have bills limits should normally maintain a Current Account/Cash

Credit account with the Bank and the proceeds of the bills should be credited to that

account. The proceeds should not be paid in cash.

It is not necessary that the trade bills must be drawn on the place to which the relative

goods are consigned; the business connection of the drawers or the flow of money may

render other places more convenient or endorsees who may be shroffs or other

intermediaries, may not be directly interested in the transactions. By closely following the

market and the business operations of borrowers, Managers should however be able to

distinguish between genuine trade bills and bills drawn for accommodation purposes.

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CHAPTER 5

DELIVERY CHANNELS

5.1 ALL DELIVERY CHANNEL OPERATIONS

5.1.1 DEMAND DRAFTS

ISSUE OF DEMAND DRAFTS:

Demand Drafts can be issued by all branches on another Branch / Extension Counter in

India only. Before entering the details in the Application for issue of Demand Drafts, branches

should ensure to note down the correct branch code on which the customer requires the Demand

Draft to be drawn. In those centres where our Bank has established CCOs, the Demand drafts

should be issued only on the CCOs and not on any other Branch. While issuing the Demand

Drafts appropriate exchange has to be collected from the customers and the transaction should be

attached to the Draft transaction without fail. Wherever local drafts are demanded by the

customers, branches connected to CCO should draw the Draft on the CCO only. Other branches

may draw the drafts on themselves and issue the same to the customers.

CANCELLATION OF DRAFTS:

Once a Demand draft has been issued and printed, it can be deleted only by choosing

‘Cancel Draft’ option in the Issue program and should not be paid through the Payment program.

This will create necessary data for marking contra and reconciliation at IBR.

PAYMENT OF DEMAND DRAFTS:

Before proceeding with debiting the instruments, branches should scrutinize the drafts

thoroughly and ensure that the instrument is in order and is genuine onC. Wherever required,

branches can make use of the ‘View Demand Drafts Details’ facility provided in IOBONLINE /

CBS.

Wherever drafts are drawn in a CBS branch, the system will check for existence of the

issue details and in case not found, will give a warning to the user that ‘No such instrument is

found’. The branch where the payment is being effected should take note of such alerts and make

thorough enquiry before effecting payment.

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Branches are authorized to make payment of only those drafts drawn on them. Drafts

drawn on CCOs, however, can be paid by the branches connected to the respective CCOs

directly using the payment program given for that purposC. Drafts should not be paid by

branches other than those on which the instrument is drawn on.

PAYMENT OF DRAFTS UNDER AGENCY ARRANGEMENTS:

Regional Rural Banks sponsored by our Bank are having arrangements with our Bank to

draw drafts on specific branches of our bank. When such drafts are received for payment, it

should be paid only by those designated branches on which the Draft has been drawn on and

other branches should not make the payment directly through DDR program. In case the

instruments are received at other branches, it should be sent to the branch on which it is drawn

on for realization of proceeds.

DDR PRINTING :

Branches have been provided with a dedicated printer to print the Demand Drafts.

Branches should note to use this facility and issue the drafts in the Printed form only to ensure

against any data mistake. The pre-printed 9 digit Demand Draft Number on the instrument

should be matched with the data before inserting the draft leaf in the printer. Any mistake in this

regard would pose difficulties when the instrument is presented for payment as the issue details

would not match the instrument on hand. After printing the branch is to enter the C.S.No [i.e. the

Check Sum number] on the voucher also for future reference.

BULK DDR ISSUE :

To use the special program for issuance of Drafts in Bulk for valued customers, branch

should ensure to obtain data in the specific format from the customers using which the system

would generate the drafts. Before using the program, branch is to ensure that adequate number of

draft leaves are available with them to print all the drafts. Once the program has generated the

Draft issue details, using the ‘DDR Printing’ program, the branch users should print the drafts

after duly verifying the draft numbers picked up in the screen and the draft leaf inserted into the

printer are same.

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BULK DRAFT PAYMENT:

Branches can use this facility to pay drafts in bulk when the drafts are drawn favoring the

same customer of the branch and the drafts are drawn on them only. In case the drafts are drawn

on any other branch, then this program should not be used.

5.1.2 CHEQUES

A cheque is a document that orders a bank to pay money from an account. The person

writing the cheque, the drawer, has a transaction banking account (often called a current, cheque,

chequing or checking account) where their money is held. The drawer writes the various details

including the monetary amount, date, and a payee on the cheque, and signs it, ordering their

bank, known as the drawee, to pay that person or company the amount of money stated.

Cheques are a type of bill of exchange and were developed as a way to make payments

without the need to carry large amounts of money. While paper money evolved from promissory

notes, another form of negotiable instrument, similar to cheques in that they were originally a

written order to pay the given amount to whomever had it in their possession (the "bearer").

Technically, a cheque is a negotiable instrument instructing a financial institution to pay a

specific amount of a specific currency from a specified transactional account held in the drawer's

name with that institution. Both the drawer and payee may be natural persons orlegal entities.

Specifically, cheques are order instruments, and are not in general payable simply to the bearer

(as bearer instruments are) but must be paid to the payee. In some countries, such as the US, the

payee may endorse the cheque, allowing them to specify a third party to whom it should be paid.

Although forms of cheques have been in use since ancient times and at least since the 9th

century, it was during the 20th century that cheques became a highly popular non-cash method

for making payments and the usage of cheques peaked. By the second half of the 20th century, as

cheque processing became automated, billions of cheques were issued annually; these volumes

peaked in or around the early 1990s.[1] Since then cheque usage has fallen, being partly replaced

by electronic payment systems. In an increasing number of countries cheques have either become

a marginal payment system or have been completely phased out.

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In addition to regular cheques, a number of variations were developed to address specific needs

or to address issues when using a regular cheque.

1. Cashier’s cheques and bank drafts

Cashier's cheques and banker's drafts also known as a bank cheque, treasurer's

cheque or banker's cheque, are cheques issued against the funds of a financial

institution rather than an individual account holder. Typically, the term cashier's cheques

are used in the US and banker's drafts are used in the UK and most of the

Commonwealth. The mechanism differs slightly from country to country but in general

the bank issuing the cashier’s cheque or bankers draft will allocate the funds at the point

the cheque is drawn. This provides a guarantee, save for a failure of the bank, that it will

be honoured. Cashier's cheques are perceived to be as good as cash but they are still a

cheque, a misconception sometimes exploited by scam artists. A lost or stolen cheque can

still be stopped like any other cheque, so payment is not completely guaranteed.

2. Certified cheque

When a certified cheque is drawn, the bank operating the account verifies there

are currently sufficient funds in the drawer's account to honour the cheque. Those funds

are then set aside in the bank's internal account until the cheque is cashed or returned by

the payee. Thus, a certified cheque cannot "bounce", and its liquidity is similar to cash,

absent failure of the bank. The bank indicates this fact by making a notation on the face

of the cheque (technically called an acceptance).

3. Payroll cheque

A cheque used to pay wages may be referred to as a payroll cheque. Even when

the use of cheques for paying wages and salaries became rare, the vocabulary "pay

cheque" still remained commonly used to describe the payment of wages and salaries.

Payroll cheques issued by the military to soldiers, or by some other government entities

to their employees, beneficiants, and creditors, are referred to as warrants.

4. Warrants

Warrants look like cheques and clear through the banking system like cheques,

but are not drawn against cleared funds in a deposit account. A cheque differs from a

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warrant in that the warrant is not necessarily payable on demand and may not be

negotiable. They are often issued by government entities such as the military to pay

wages or suppliers. In this case they are an instruction to the entity's treasurer department

to pay the warrant holder on demand or after a specified maturity date.

5. Travellers cheque

A traveller's cheque is designed to allow the person signing it to make an

unconditional payment to someone else as a result of paying the account holder for that

privilege. Traveller's cheques can usually be replaced if lost or stolen, and people often

used to use them on vacation instead of cash as many businesses used to accept traveller's

cheques as currency. The use of credit or debit cards has begun to replace the traveller's

cheque as the standard for vacation money due to their convenience and additional

security for the retailer. This has resulted in many businesses no longer accepting

traveller's cheques.

6. Money or postal order

A cheque sold by a post office, bank or merchant such as a grocery store for

payment by a third party for a customer is referred to as a money order or postal order.

These are paid for in advance when the order is drawn and are guaranteed by the

institution that issues them and can only be paid to the named third party. This was a

common way to send low value payments to third parties, avoiding the risks associated

with sending cash via the mail, prior to the advent of electronic payment methods.

7. Oversized cheques

Oversized cheques are often used in public events such as donating money to

charity or giving out prizes such as Publishers Clearing House. The cheques are

commonly 18 by 36 inches (46 cm × 91 cm) in size, however, according to the Guinness

Book of World Records, the largest ever is 12 by 25 metres (39 ft × 82 ft). Regardless of

the size, such cheques can still be redeemed for their cash value as long as they have the

same parts as a normal cheque, although usually the oversized cheque is kept as a

souvenir and a normal cheque is provided. A bank may levy additional charges for

clearing an oversized cheque.

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8. Payment vouchers

In the US some public assistance programs such as the Special Supplemental Nutrition

Program for Women, Infants and Children, or Aid to Families with Dependent

Children make vouchers available to their beneficiaries, which are good up to a certain

monetary amount for purchase of grocery items deemed eligible under the particular

programme. The voucher can be deposited like any other cheque by a participating

supermarket or other approved business.

Cheque book request facilities available through ATMs

When the customer selects this option the request will be sent to the branch where the

customer is having his/her account. The branch has to necessarily go through the request before

the dayend operations of the day.

CHEQUES REALISATION:

Realisation of cheques under expo module can be made through realisation program by

choosing the non-export option. The system generates either individual or consolidated vouchers

for the cheques realised. The user has to choose options other than normal realization of export

bills, non export bills realisation, advance payment, written off and marking returned bills as

unpaid as applicable.

In case of NAD items, the branch should collect the charges separately from the NAD

branch and credit to P &L heads.

For all other instance, the applicable charges such as commission and PTTR should be

recovered from the related customer account.

The transactions relating to other modules are to be posted and passed before invoking

passing option in the expo module.

Unpaid cheques as well as realisation of collection items designated in foreign currency whose

proceeds is received in Rupees can alse be realised in expo realisation program. For items

designated in foreign currency but whose proceeds is realised in rupees the correspondent code

should be given as ‘MISCIN’.

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CHEQUE TRUNCATION SYSTEM CLEARING (CTS)

Cheque Truncation System (CTS) is an Image Based clearing system introduced by RBI

(Presently at Delhi), which replaces the existing clearing system of Instrument Based clearing.

The purpose of introducing the new system is to:

Reduce the existing time taken for the clearance of cheques for both the local and the

outstation cheques.

Improve the efficiency and quality of the services offered by banks in the area of the

Cheque Clearing– both to customers of banks and for internal improvements in areas such as

clearing reconciliation, risk management, systemic efficiency etc.

5.1.3 WITHDRAWAL SLIPS

Withdrawals normally required the account holder to visit the branch where the account

was held, where a debit slip or withdrawal slip would be prepared and signed. If the account

holder was not known to the teller, the signature on the slip and the authorities would be checked

against the signature card at the branch, before money was paid out. In the 1960s, banks adopted

the black light signature system for passbooks, which enabled withdrawals to be made from

passbooks at a branch other than the one where an account was opened, unless prior

arrangements were made to transfer the signature card to the other branch. Under this system, the

passbook's owner would sign in the back of the passbook in an invisible ink and the signing

authorities would also be noted. At the paying branch, the signature on the withdrawal slip would

be checked against the signature in the book, which required a special ultraviolet reader to

read. Nowadays, customer verification is more likely to be by PIN and commonly from

an automated teller machine.

MAINTENANCE OF REGISTER FOR CASH REMITTANCE / WITHDRAWAL

A Register in the following form should be maintained to record all cash remittances to

and from local banks, remittances to other branches through staff, remittances from other

branches whether through post or staff. There should be separate openings in this register for

inward and outward remittances with columns as under:

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REMITTANCE : OUTWARD CASH

Date

&time

To

whom

sent

Through

whom

Amount

(Rs.)

Mode of

transport/

Vehicle

Registration

number /

Name of

Driver

Signatures of

staff attending

remittance

and Officer

Joint

custodian

Signature with date, of

Deputy Manager in

token of his / her having

verified the receipt of

the remittance at the

other end

Remarks

(1) (2) (3) (4) (5) (6) (7) (8)

REMITTANCE : INWARD CASH

Date

&

Time

From

whom

Through

whom

Cheque no.

if drawn on

the Bank’s

Account

with local

banks

Amount

Rs.

Mode of

transport/

Vehicle

Registration

number /

Name of

Driver

Signatures of

staff

attending

remittance

and Officer

Joint

custodian

Signature

with date, of

Cashier for

receipt of

money

Remarks

(1) (2) (3) (4) (5) (6) (7) (8) (9)

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5.1.4 BANK DRAFTS/ BANKERS CHEQUE

A banker's draft is a cheque (or check) where the funds are taken directly from the

financial institution rather than the individual drawer's account.

A normal cheque represents an instruction to transfer a sum of money from the drawer's

account to the payee's account. When the payee deposits the cheque into their account, the

cheque is verified as genuine (or 'cleared', a process typically taking several days) and the

transfer is performed (usually via a clearing house or similar system). Any individual or

company operating a current account (or checking account) has authority to draw cheques

against the funds stored in that account.

However, it is impossible to predict when the cheque will be deposited after it is drawn.

Because the funds represented by a cheque are not transferred until the cheque is deposited and

cleared, it is possible the drawer's account may not have sufficient funds to honour the cheque

when the transfer finally occurs. This dishonoured or 'bounced' cheque is now worthless and the

payee receives no money, which is why cheques are less secure than cash.

By contrast, when an individual requests a banker's draft they must immediately transfer

the amount of the draft (plus any applicable fees and charges) from their own account to the

bank's account. (An individual without an account at the issuing bank may request a banker's

draft and pay for it in cash, subject to applicable anti-money laundering law and the bank's

issuing policies.)

Because the funds of a banker's draft have already been transferred they are proven to be

available; unless the draft is a forgery or stolen, or the bank issuing the draft goes out of business

before the draft is deposited and cleared, the draft will be honoured. Like other types of cheques,

a draft must still be cleared and so it will take several days for the funds to become available in

the payee's account.

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5.1.5 DEBIT CARDS/ CREDIT CARD

Debit Card Management

Debit card:

Debit Card gives you global access to one’s account whenever and wherever they want.

The Debit Card allows to purchase goods at Merchant Establishments and also gives the freedom

to withdraw cash from ATMs in India and abroad. The customer need not carry cash anymore to

make his purchase and the purchases will be debited to his account instantly.

The cards which were issued for ATM usage were also used for AWB operations. These

cards could be used in the ATMs of IOB / member banks’ of ‘Cashtree’ and ‘NFS’

consortiums. To facilitate our customers with global acceptance of their cards at ATMs,

Merchant establishments and for e-commerce transactions, the Bank has entered into agreement

with VISA and from October, 2005 the Bank started issuing VISA Debit Cards.

At present the Debit cards are issued free of charge. As per RBI directives, any

cardholder can use other banks’ ATM for financial/non-financial transactions in his SB

accounts, free of charge 5 times a calendar month. Beyond 5 times, he will be charged Rs.20

per additional transaction. However, this redate facility is not available for CD/CC account

Cardholders.

When a Debit Card is used in an ATM, POS or for e-commerce transaction; the customer

is expected to maintain required balance in his account. In a Debit card usage, the transaction

will be authorised only after debit to the customer’s account. The transaction will not be

approved if the balance in the account is not adequate. The debit cards are convenient way of

carrying money instead of carrying physical cash.

Eligibility:

The following account holders are eligible for issuance of debit card.

Savings Bank – Individuals – Single, A or S, Minor accounts operated by guardian and

minor students under SB-STUDENT scheme.

Current Account - – Individuals – Single, A or S CD – Proprietary Firms (Card will be

issued in the name of the Proprietor) CC- Individuals – single, A or S with prescribed

minimum balance.

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Legal persons like Incorporated Companies, Trusts, Partnership firms are not eligible.

In the case of A or S accounts, separate customer id has to be created for each constituent

and cards can be issued in their name. In the case of Cash credit accounts, the customers who

enjoy cash credit limits against deposits and other readily realizable securities (except shares)

for personal purpose are eligible for Debit Cards.

Earlier, in addition to illiterates, the Bank was not extending the Debit card facility to

visually handicapped persons due to the issues involved in their operation of their account

through ATMs. But recently, pursuant to directives from Government of India, the Bank has

decided to extend the facility to Visually impaired customers subject to certain additional

safeguards (MISC / 242 / 2008-09 dated 9.6.08 issued by Management Services Department).

Other conditions:

The Cardholder should maintain the minimum balance prescribed by the bank and failure

to do so will attract penal or service charges as per bank's rules from time to time or withdrawal

of ATM facility to the Cardholder.

The following services are offered free to the customer for application form, processing, issue

of card, drawal or any other ATM transactions such as balance enquiry, wrong entry, wrong try

etc. Cardholders should be advised that the charges for other services may be varied by the

Bank without reference / notice to them.

When an account is overdrawn by the ATM Cardholder, interest on such overdrafts as

prescribed by the bank should be charged and collected as per the instructions in force for

TODs.

During the currency of the ATM card, the SB/CD account of the Cardholder cannot be

closed or transferred to other branch. If the cardholder wants to close his/her SB/CD account,

he/she should surrender the card and give the bank not less than seven working days time from

the date of surrender of the card, for effective closure of the account.

The bank is entitled to terminate ATM facility with immediate effect and the card shall

be impounded upon occurrence of any of the following events.

a. Failure to adhere to or comply with the terms and conditions of ATM facility.

OR

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b. An event of default under any agreement of commitment (contingent or otherwise) entered

into with the Bank relating to transactions other than the ATM.

OR

c. On the cardholder being adjudicated as insolvent or on the cardholder filing insolvency

petition.

OR

d. Demise of cardholder or any one of the joint account holders.

OR

e. Any other event by which bank concludes that allowing possession of card with the

cardholder is detrimental to the image / interest of the

Bank.

In the case of joint accounts, the obligations of such executants to the agreement will be

joint and several and notice to any one Joint account holders will be deemed effective

notification to all joint holders.

Any notice sent by post to the last known address of the ATM cardholder by the bank

will be deemed to have been received by the Cardholder on the third day of posting.

The Bank reserves the right to disclose any information as may be necessary or

appropriate in connection with its participation in Electronic Funds Transfer Net Work, in strict

confidence, to any other Institutions, for issuance / cancellation of the card, operations in ATMs

and card holder's account with the bank.

The card holder alone should use the ATM Services and will be responsible for all the

transactions effected by the use of the card, whether authorised by the card holder or not and

shall indemnify the bank for the loss or damage caused to or suffered by the bank by any

unauthorised use of the card or the relative PIN.

The card is and will be at all times the property of the bank and delivered to the

Cardholder in trust and shall be returned by him/her to the bank unconditionally and

immediately upon the bank's request. The bank will not be liable for failure to provide any

service or to perform any obligation where such failure is attributable (whether directly or

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indirectly) to any malfunction of ATMs or the card, insufficiency of cash held in ATM, failure

of power etc.

Application for Debit Card , Personalized and Instacard

The applicant for the ATM Card should apply to the branch in the prescribed application

form F 604(EH) in duplicate after confirming his/her acceptance to and accepting the terms

conditions applicable for ATM facility. The application should be retained at the branch except

except for Student card for which application affixing the photo should be sent to Central

office) and should record the details of application in the ATM application / issue register.

The Bank is issuing two types of VISA Debit cards, Personalised / customized Cards and

Instacards. Personalised cards are cards where the customer’s name is printed on the card and

the card is customised and issued, at the request of the customer, only after submission of

application by the customer, where as an Instacard is a pre-customised card without customer’s

name which is available in dockets, as stock with the issuing branch. These Instacards, which

are non-personalised cards can be issued for all category of customers of CBS branches. Other

than printing of name the functions and usage of both types of cards are similar. Student Cards

are issued to Students of age 16 and above with Photo.

Branch Operations:

The details provided by the customer in the application form from the customer is entered

at branch level, through card master program, which is a part of awb module and ATM option.

The users should familiar with various options viz., Issue, Modify, Cancel, View, Approve,

Status-Marking and Quit.

After the data is entered, the officer shall approve the entry. The data then will be

automatically sent to Central office for further processing and card customization. Data will not

be transmitted unless it is approved by an officer.

On specific request from the cardholder or at the time of closing the account, the card

should be cancelled. Neither a Replacement card nor a new card will be issued to the customer.

Status Marking – Various options for marking status such as Suspended, Lost, Hotlisting,

Damaged and for issue of New VISA Debit cards are available and the user should use

appropriate options as described in the user manual.

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Safe custody of Instacard Kits have to be scrupulously followed, on the same lines

stipulated in our circular ITEC/1/2006-07 dated 18.6.2006 and COMLET No:4 /2006-07 dated

23.6.2006.

Insta card :

ATM / Debit cards are to be issued on the day of opening account for all category of

customers of CBS branches, whoever do not insist for personalisation. The customer will be

given the kit containing PIN and the Debit Card immediately after opening of account, and the

card will be activated within 24 hours of opening of the account.

Stock will be supplied to the CBS branches in individual sealed covers (kits) consisting

of the Debit Card, PIN Mailer, Terms & Conditions Booklet, User Manual, etc.

The stock received has to be entered in the CBS System through the ‘InstaCard Stock

Maintenance’ program. The above cards, when delivered to the customer after opening of SB or

CDCC account, will get attached to the account, through entry in the revised Card Master

Program.

On receipt of the stock, the Officer-in-charge of ATM cards has to physically count the

number of Kits received and ensure the correctness of the stock supplied to the branch. The kits

should not be opened by any branch staff, and has to be intact at the time of delivery to the

customer.

The details of the stock received, namely starting kit number, ending kit number, count,

received from branch are to be entered in system by the officer- in-charge of the ATM cards

using ‘InstaCard Stock Maintenance’ option. InstaCard Stock Maintenance application consists

of Receive and View options and user should get familiarized with these options as detailed in

User manual.

In the eventuality of the branch finding any missing kits in the stock received, or any kit

damaged, the user is to use the option ‘Receive’ and enter the number of missing / damaged

cards individually with the respective status as detailed in the user manual.

The branches have to monitor the stock and have to raise the indent well in advance to

Regional Office, with a copy to card division of Transaction Banking Department for getting

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fresh stock of Instacard Kits. Branches can not take Kits from other nearby branches as it is

validated at the central database.

Customized card:

Once the service provider completes card customisation, the cards relating to each branch

are sent directly from the service provider to the respective branches through courier service.

After dispatch of cards to branches, the individual Pin mailers with the related welcome letter,

Terms & Conditions booklet and charges details are dispatched by the service provider directly

to the customer, through speed-post services.

The customer on receipt of PIN mailer has to collect the Debit Card from the Branch

where he is having his account. In case the customer has not received his pin mailer, branch

should obtain a written request for generation of new pin mailer, deliver the card to the customer

and send his request for re-generation of PIN by lodging complaint in IOBONLINE. On receipt

of the request, ATM section at Central Office will generate a new pin and send it to branch for

delivery to customer.

Receipt of customized cards

On receipt of the Debit cards consignment from the card customising service provider,

the branch has to verify and confirm correctness of the physical cards received with the dispatch

list from the service providers. Immediately after receipt of cards, the branch has to enter the

card details in the related register. The guidelines for reducing operational risks in handling of

ATM / Debit cards is advised vide the Common Letter 4 / 2006 – 07 dated 23.6.2006 issued by

IT Department.

Delivery of card

Branches have to deliver the Debit card to the cardholder after proper identification,

against his acknowledgement in the ATM / Debit card register. Branch has to advise and ensure

that the customer signs his signature at the specified place on the reverse of the card. Branches

should not under any circumstance deliver the card without the customer signing at the reverse of

the card, or, to any other person including the joint account holder.

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Branch should never ask the customer to hand over the card, except in cases where the

ATM rejects the card immediately on insertion (without even prompting for the PIN). Branches

should collect the card and send it to CARD DIVISION TBD for verification of the encoding on

the magnetic stripe. The status of the card should be marked as Suspended immediately on

receipt of the card from the cardholder and before sending it to TBD.

Branches should not insist on production of evidence for having received the PIN mailer

before handing over the card. A format of the register to record the receipt / delivery of Debit

cards / PIN at the branch is enclosed (Annexure I).

In the case of NRIs where a foreign address is provided, branch should first send the card

through a courier. On receiving their confirmation that card has been despatched, Transaction

Banking Department will send the PIN mailer also to the branch for onward transmission to the

foreign address through a separate courier.

As a precaution, at the time of delivery of Debit Card itself, the customer should be

advised of the importance of the PIN, and should be advised of the safety measures he/she has to

take like

Not retaining PIN with the card, so that anybody other than the customer, who gets

access to both the card and PIN can withdraw cash through any ATM.

Always change the PIN through PIN change option available in the ATM, after the first

transaction using the original PIN.

Always to retain the PIN only in memory and not to retain it in physical format.

Other precautions as per the Terms & Conditions booklet issued with each Debit card.

Activation of Card

In the case of both personalised cards and non-personalised Instacards the customer

should be advised to make the first usage of the card in an ATM of our Bank or a consortium

member Bank. With the first successful PIN verification the card gets activated, and only

thereafter the card can be used for merchant transactions. This precaution is required to ensure

that both the card and PIN mailer are properly received by the applicant customer. Any attempt

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to use the card at POS machines or for online transactions will fail if the card is not used for the

first time in an ATM.

Card security measures:

The Debit card and PIN mailer for that card should not be held at the branch at the same

point of time under any circumstances, except where specifically authorised by Central Office.

At the time of applying customers should be told to provide their current address and

other contact details including mobile numbers, following all the KYC guidelines. These details

are to be entered, counter-checked and approved in the system and these forms are to be retained

at the branches and filed with the ATM / Account opening forms. This shall address the problem

of PIN mailers being returned undelivered for want of correct / complete mailing address of

customers.

Whenever the VISA Debit Cards / PIN mailers / Instacard Dockets, Student Cards are

received, till delivery of the same, to the customer, they should be preserved under safe and dual

custody at branch level. The cards / PIN / Dockets are equivalent to security items and should be

preserved in the safe room not accessible to anyone other than the custodians of the above items.

Re-issuance of PIN

The PIN generated for a Debit Card is not stored anywhere in the system, and hence in

the event of the customer not receiving / forgetting the PIN, only a fresh PIN has to be generated

in the system and sent to the customer. Such requests are chargeable as prescribed.

Original PIN not received by customer

The PIN dispatched through Speed post is not received by the customer due to the

following reasons.

The branch is not entering the correct and full address of the applicant with pin code

number in the respective fields at the time of entering the application.

The customer has shifted his/her residence and not informed the Bank

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The customer not available at the time of the visit of the Delivery person and has not left

any information.

Normally the postal authorities leave a notice in the case of speed-post to the addressee

informing the consignment, and the customer has not taken enough care to collect the

same.

In all the above cases the PIN mailer is returned undelivered to Transaction Banking

Department. In such cases branches need not to mark a request for Re-PIN. Instead they should

deliver the card to the customer observing all usual procedures and report to Transaction

Banking Department through IOBONLINE -BRANCH PRODUCTS- CBS/ATM Helpdesk-

ATM Complaints to ensure that at no point of time both the card and PIN mailer remain with the

branch.

On receipt of confirmation from the branch regarding delivery of the card to the

customer, a Re-PIN will be sent to the branch, for delivery to the customer. The branch should

observe prescribed procedures in delivering the PIN-mailer to the customer, against due

acknowledgement.

PIN forgotten by customer

When a customer has forgotten his PIN and has keyed wrong PIN in any ATM for more

than 5 times his card will be blocked temporarily. In the event of the customer being able to

recollect his PIN, then, if taken up with Transaction Banking Department-ATM Help-Desk, the

blocking can be reset.

But, when the customer has forgotten his PIN and is not able to recollect, then only a

New PIN has to be issued to him for further operations. In this case the branch has to mark the

Re-PIN request through the status changing option as detailed in user manual as well as make a

complaint through IOB ONLINE-BRANCH PRODUCTS-CBS/ATM Helpdesk- ATM

Complaints. On receipt of modified data a Re-PIN will be generated to the card and will be sent

to the customer. Once Re-PIN is generated the card status at branch level will get restored to

active. Branch should not keep on marking the status again and again, since this will lead to re-

generation of PIN again and again.

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Replacement Cards

Replacement cards are issued in lieu of VISA Debit Cards reported Damaged or Lost.

The cards are issued with a different card number and are issued with a revised validity period. A

new PIN also will be generated for the card and the PIN will be sent to the customer while the

card will be dispatched to the branch. On receipt of PIN mailer, the customer has to collect the

Card from the branch. Any status changing process first takes the user to the address columns of

the customer, the correctness of which branch has to ensure before marking the status. This will

avoid any delay in delivery of the PIN mailer to the customer. Even for Instacards the

replacement cards will be only by way of Personalised cards.

Lost card

Whenever a Debit Card or ATM card is reported lost the branch has to act up on the

instructions immediately, by marking the appropriate status as detailed in the user manual to

avoid the lost card being misused in any merchant establishments or for any online transactions.

Even if the customer reports the loss of the card over phone, the branch has to immediately act

on the complaint by marking the status of the card initially as suspended.

In the case of Suspended status, if the customer is able to trace the card, the branch itself

can reactivate the card by changing the status appropriately, and In the case of card being

confirmed Lost, branch has to mark the status as lost as detailed in the user manual. If the

customer calls in person and reports the loss of his / her Card, then the branch can directly mark

the status as Lost as detailed in the user manual. For such cards, where the status is marked as

lost, a replacement card will be issued to the customer. The branch should have a register to

record such cases of card reported Lost or Damaged, and record the date and time of receipt of

such communication from the customer. In the case of written complaints due acknowledgement

should be given to the customer with date and time of receipt of such intimation.

Damaged Card

Whenever a card is reported ‘Damaged’, the branch has to get the damaged card and

destroy it in the presence of the customer, and mark the status as Damaged through the card

master program as detailed in user manual. On receipt of data from branch, the replacement card

and PIN will be generated and the PIN will be sent to the customer and card will be sent to the

branch in usual course and the cards should be delivered as discussed above in A.8.

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Cancellation of Card

This option to cancel a card should be used by the branch only when the customer wants

to surrender his card once for all, or when the customer is closing his account with the branch.

The account will be permitted to be closed only when the card is cancelled. Once card is

cancelled thereafter the customer is not eligible for any card facility in that particular account.

Suspension of Card and Re-activation

This option to Suspend the card can be used in situations as explained in A.12.1 when

initial oral complaint is received on loss of card. This option can also be used to temporarily stop

the customer withdrawing money from the account. This is the only option where the branch

itself can re-activate the card by changing the status appropriately as detailed in user manual.

Overdraft due to Debit of Charges

The customer is allowed to withdraw the entire balance in his account using his VISA

Debit Card. On rare occasions due to the charges debited to the account if the transaction has

taken place in other bank ATMs, then the balance may result in overdraft when the charges are

debited to the account. In such cases the overdraft has to be treated like regular overdraft and the

branch should take steps as in normal course to contact the customer, to regularise the account,

and advise him to keep adequate balance in his account before withdrawal. In case the customer

is not regularizing the account, the branch is in order in temporarily suspending the card to avoid

further debits due to charges on continued attempts by the customer, in other bank ATMs, for

balance enquiry etc..

Daily limits of card:

Daily limits on the use of the Debit Card at ATMs and Merchant Locations is at present

as follows:

Usage at ATM: between Rs.20,000/- and Rs.50,000/- as recommended by the branch

Usage at merchant establishments & internet (jointly) Rs.50,000/- (per day)

Charges associated with the card.

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Issue of New Cards No charges

Renewal of Cards No charges

Annual Fee No charges

Re-issue of Lost / Stolen / Damaged Card Rs.100/-

Re-issue of PIN Rs.20/-

For transactions at InstaCash ATMs / VISA /

Plus ATMs / Other shared ATM Network

(Cash Tree and NFS)

For transactions at InstaCash ATMs /

VISA / Plus ATMs / Other shared ATM

Network (Cash Tree and NFS) –

No charges upto 5 transactions for SB

customers

For usage at Merchant Establishments No charges

For usage at Petrol Pumps Surcharge of 2.5% of transaction amount or

Rs.10/- (whichever is higher)

For usage at Railway Stations Surcharge of 2.5% of the transaction amount

For SB Account holders For SB a/c cardholders, First 5 transactions

(Financial and Non-financial txns viz.

Balance enquiry/Pin change etc) in a

calendar month is free of charge. For

subsequent txn charges will be Rs.20/- per

such txn. For CD and CC account

Cardholders, all txns are charged at Rs.20/-

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per txn from the first txn itself

Renewal of ATM Card:

If the ATM transactions put through by any Card holder is unsatisfactory, viz., frequent

overdrawals, discrepancies in cash deposits etc, the branch concerned should submit a detailed

Report to the ATMCC at Central Office. This information should be given, to ATMCC in

advance at least one month before expiry date.

On expiry of validity period, the ATM Division, ITD, Central Office will renew the card

automatically unless any information of unsatisfactory operations by cardholders is received

from the branches as above.

Help Desk & Complaints

Any complaint regarding ATM is to be lodged with the ATM Help Desk at Transaction

Banking Department on all days through 24/7 basis. Also the complaints can be routed to the

Service Providers Help desk number given in the Debit Card for assistance and marking the

status. Though action will be taken based on oral complaint, in all cases the customer should be

advised to confirm his complaint at the branch, in writing, on the following working day.

5.1.6 INTERNET BANKING

Introduction:

1. Our Bank is offering Internet Banking services since 2000. The services can be accessed from

the site www.iobnet.co.in or by clicking on ‘Internet Banking’ link in www.iob.in

2. The facility enables customers to transact online with the bank. Online transaction can be done

from anywhere at any time of the day through Internet. While it facilitates the customer to

transact online with the bank, the branch staff should take care to ensure that the guidelines,

systems and procedures in activating an account are followed meticulously.

3. The following services are currently offered under Internet Banking:

View of Balance in account

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View of Last few transactions

Generate statement of Account for SB/CDCC/Liquid Deposit/Civil Pension accounts

Search Cheque Paid Status

Viewing of Recurring Deposit/Loan /PPF Accounts

View of Form 26AS Tax Details

Transfer funds from SB, CD or CC account to another SB, CD, CC, Loan or Deposit

accounts within the bank on the same day or on a future scheduled date within 30 days

Transfer of funds to accounts with other banks through NEFT mechanism on the same

day or on a future scheduled date within 30 days

Block IOB Debit cards

Opening of new Deposits

Pay the following taxes

Indirect taxes (Excise and Service taxes)

Direct tax (TDS and Income Tax dues, etc.)

Customs Duty

Kerala/Maharashtra/Tamilnadu VAT

Pay Tamilnadu Electricity bills

Pay fees for SASTRA college

Port Trust Payments of Kandla/Chennai/Visakapatnam/Cochin ports

Pay the IOB Credit Card dues

Utility Payment facility by tying up with M/s Bill Desk,M/s TechProcess, M/s

CCAvenue, M/s Times of Money Ltd wherein Customer can remit money to utility and

other merchants.

Examples of such remittances are as follows:

1. Insurance dues to LIC of India , HDFC , Max Newyork Life etc

2. Telephone bill payments of BSNL, MTNL, Airtel ,Vodafone, Tataindicom and

most other

3. Cellular companies.

4. Book air tickets, hotel rooms, etc., through popular travel sites like yatra.com etc.

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5. Purchase of units in select mutual funds

Eligibility

1. Individuals and Corporate customers of networked branches are eligible for availing

Internet Banking services.

2. Proprietary concerns are treated as individuals.

3. Corporate customers will include Limited Companies, Partnership firms, Trust, Society,

Association etc where the operation of the account is entrusted to a specific person/

persons by the Corporate/partnership firm/Trust/society/Association. These customers

should register only through ‘Corporate Banking’ module.

4. The Customer should comply with KYC and AML norms. The Customer should have a

unique Customer id.

5. In the case of individuals (or proprietary concerns) the mode of operation of the account

should be ‘Single’ or ‘E or S’ or ‘Any One or Survivor’.

6. If the account is operated ‘JOINTLY’ or if the account holder is a minor, Internet banking

services cannot be given except for SB-Student accounts.

7. The customer should be aware of the risks involved in operating an account through

Internet. If the customer is ignorant of Internet (for example if he/she is an illiterate), do

not offer the facility to the customer.

8. If an account holder has more than one account, he/she can register all the accounts under

the same login-id. However an account holder cannot add accounts that are not in his

name. Accounts in the names of Minors and jointly operated Accounts are not eligible

for Internet Banking facility.

Individual Customer

1. Individuals and proprietary concerns will come under the category of Individuals.

2. The customer has to register online for the services (through www.iobnet.co.in or

www.iob.in ).

3. The customer can register only the accounts he is authorized to operate in his individual

capacity.

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4. To operate the account through Internet Banking, each individual will have a unique login

id selected by him during the registration process.

5. The user is expected to have a customer-id in the branch system.

6. Individuals have to submit to the branch the registration form duly signed.

Branch Operations

1. Branch should exercise due caution before activating the accounts for internet banking.

Before approving the login-id /user-id of customer of internet banking, due diligence has

to be done by the branches. Once the internet banking login-id is tagged to an account,

the owner of the login-id will be able to access the details of account over internet and

will also be able to transfer funds from the account.

2. Branch should ensure that at no cost a person is allowed to access an account that he not

entitled to. In the case of corporate accounts it should be ensured that the customer does

not club his personal account under the same login id.

3. Accounts, which need constant monitoring can be extended internet banking facility

without the fund transfer facility. Funds transfer facility can be extended to Corporate

who have good track record.

4. Registration form should be submitted by the applicant. If the applicant is a corporate,

document as stipulated in 3.8 above should be submitted.

The procedure is as follows:

1. Go to IOBONLINE

2. Click on Branch Product

3. Click on Esee-Banking Branch Admin

4. Enter branch code, roll no and password (Used in CBS) and click on submit

5. From the menu displayed, select ‘Individual login’ or Corporate Login’ as the case

may be.

6. From the option displayed below select ‘Approve Account’

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7. Enter the Login-id/ User-id as given in the application form and submit the request for

the activation.

The login-id /user-id is case sensitive and should be entered exactly as given in the registration

form failing which the account may not be activated. Once the login-id / user-id is entered in the

system and the account is activated, the registration forms and other forms (Resolution, Letter of

Authority, Fund transfer Authorization Form, etc.,) have to preserved as a permanent record and

will be subjected to audit.

Cancellation of Internet Banking Services

1. The Internet banking services offered can be terminated on a request from the customer.

This option will be applicable in cases like when the customer does not require this

facility, when a user operating a corporate account is no longer associated with the

company; and such other cases. The bank may also terminate the facility if it feels that

the customer is misusing the facility.

2. In such cases, the branch has to delete the entry for the account in the branch system by

going through AWB Menu -> Card Master -> Wap option.

3. On Deletion of the entry, the entry in the central system will also be deactivated and the

user will not be able to use Internet Banking services thereafter.

Modification of login-id.

1. The details entered in the CBS system may have to be modified in the following

circumstances

Change of login ID

To be enabled/disabled for funds transfer

2. In case of change to the login id or change of status of funds transfer, branch has to

choose the Modify option under Card Master-> WAP option.

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5.1.7 MOBILE BANKING

Introduction:

Our Bank is offering Mobile Banking services since July 2009. The services can be

accessed from the mobile by typing www.iobnet.mobi in their mobile browser or by

downloading Java Based Application (J2ME) from www.iobnet.mobi/j2me or by clicking on

‘Mobile Banking’ link in www.iob.in

The facility enables customers to transact online with the bank using their mobile phones.

Online transaction can be done from any where at any time of the day through Mobile phones.

While it facilitates the customer to transact online with the bank, the branch staff should take

care to ensure that the guidelines, systems and procedures in registration process, activating an

account, modification of vital information like mobile number, Reset PIN are followed

meticulously.

The following services are currently offered under Mobile Banking:

View Balance in the account

View Last few transactions

Search Cheque Paid Status

Viewing of Deposit/Loan Accounts Balance

Transfer funds from SB, CD or CC account to another SB, CD, CC, Loan or Recurring

Deposit accounts within their own accounts or within the bank

Transfer of funds to accounts with other banks through NEFT mechanism

Interbank Mobile Payment Service(IMPS) – Instant Interbank Funds transfer

M-Commerce Transactions like Air Ticket Booking and Movie Ticket Booking. After

making the purchase online, the customer is brought to our site for effecting transfer of

funds.

1. Credit Card payments

2. Past 24hrs financial transaction

3. Branch Locator

4. ATM Locator

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5. Suspend ATM/Debit Card

6. Loan Payment History (last few)

7. DEMAT Registration (IOB)

8. DEMAT Holding Enquiry

9. DEMAT Script Enquiry

10. DEMAT Statement

11. DEMAT Bill Enquiry

12. DEMAT Holding Alerts

Eligibility

Individual customers of branches are eligible for availing Mobile Banking

services.Proprietary concerns are treated as individuals.

Corporate concerns are currently not eligible for availing Mobile Banking Services.

The Customer should comply with KYC and AML norms. The Customer should have

a unique Customer id.

In the case of individuals (or proprietary concerns) the mode of operation of the

account should be ‘Single’ or ‘E or S’ or ‘Any One or Survivor’.

Mobile banking services are not available if the account is operated ‘JOINTLY’ or if

the account holder is a minor.

The customer should be aware of the risks involved in operating an account through Internet or

through SMS or through Mobile(GPRS). If the customer is ignorant of those channels (for

example if he/she is an illiterate), do not offer the facility to the customer. If an account holder

has more than one account, he/she can register all the accounts under the same login-id provided

the customer id is same. However an account holder cannot add accounts that are not of the same

customer id.

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Registration

Mobile Banking request form is available with the branch or the customer can download

the form from the Bank’s website http://www.iobnet.mobi/customer under the link “How to

Register”.

Customer has to fill in the application form and submit to the branch after duly signing it.

The customer can register only the accounts he is authorized to operate in his individual capacity.

Branch has to make an entry in Mobile Banking Registration menu in CBS Application and the

same has to be approved by another officer in the branch.

On successful registration by the branch, Customer will receive two SMS messages. One

message contains the customer’s User Id (his customer_id by default) and the other message

contains link for Downloadable Java (J2ME) application. User id can be changed by the

customer later on by logging into Mobile Banking site www.iobnet.mobi/customer from their

PC.

After receipt of SMS messages, there are three ways of getting started:

IOBMobile Using text (SMS) message

IOBMobile using GPRS

IOBMobile using J2ME

Mobile PIN (MPIN) will be generated automatically and the PIN mailer will be

despatched to the Customer’s address directly. On receipt of MPIN, Customer can change their

PIN number of their choice for security purpose by logging into Mobile Banking using the User

id and the password provided to him. Where the customer has account in more than one branch,

they can register all the accounts provided they have the same customer id.

Branch Operations

Branch should exercise due caution before activating the accounts for Mobile banking.

Before approving the user-id of customer of Mobile banking, due diligence has to be

done by the branches. Once the Mobile banking User-id is tagged to an account, the

owner of the user-id will be able to access the details of account over mobile and will

also be able to transfer funds from the account.

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Branch should ensure that at no cost a person is allowed to access an account that he not

entitled to.

Accounts, which need constant monitoring, can be extended Mobile banking facility

without the fund transfer facility.

Registration form should be submitted by the applicant. For Either or Survivor and

Anyone or Survivor accounts, letter of mandate duly signed by the joint holders has to be

submitted by the applicant along with the application form. The letter of mandate for

Mobile Banking form is available in the second page of the application form.

Procedure to make an entry in Mobile Banking Registration is as follows:

Select sb Module

Select Mobile Banking Registration

Select Add option

Enter the customer id of the customer

Account particulars(Branch, Account type, Account number)

Mobile Number

Email Id (optional)

Service Type (Query only, Funds Transfer(own/within bank/full)

Funds Transfer – Daily limit

Fund Transfer

At the time of registration the customer has to mention the total transaction limit for the

day if he requires funds transfer. This information is available in the registration form which is

submitted by the customer to the branch. Branch can then allow or disallow fund transfer in the

branch system after entering the customer id of the customer at the time of registering the

account through CBS Menu.

A customer opting for the fund transfer will be get a daily limit of upto `50,000/- per day

and `2,50,000 per month for SB and CDCC accounts. The customer can transfer funds upto this

amount each day. Branch can use its discretion and increase this amount if requested by the

customer. To increase or decrease the daily limit, branch has to use the Mobile Banking

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Registration menu given in CBS on written request from the customers. But Reserve Bank of

India has prescribed a maximum daily limit of Rs.50000/-.

Funds transfer option can be enabled at the discretion of the branch. Depending on

circumstances, (like a CC account under watch category account), branch can deny fund transfer

facility to the customer.

Unsubscribe Mobile Banking Services

The Mobile banking services offered can be terminated/unsubscribed/Withdrawal upon a

request from the customer. This option will be applicable in cases like when the customer does

not require this facility, and such other cases. The bank may also terminate the facility if it feels

that the customer is misusing the facility.

In such cases, the branch has to unsubscribe the registration for the account in the branch

system by going through Mobile Banking Registration menu in CBS with option “Withdraw

Facility”.

On Withdrawal of the entry, the entry in the Mobile Banking system will also be

unsubscribed and the user will not be able to use Mobile Banking services there after.

Modification of login-id.

The details entered in the CBS system may have to be modified in the following circumstances

Change of Mobile number

Change of Email-id

To be enabled/disabled for funds transfer

In the case of any change 0f the mobile number or change of status of funds transfer,

branch has to choose the Modify option under Mobile Banking registration menu in CBS.

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5.2 KEY ISSUES

Common errors to be avoided by the branches / Customers

During registration, branch should check whether the customer has chosen the correct branch,

account type and account number as well as daily transaction limit with the application form.

The branch officer who processes the forms should sign them.

Branch should

Verify that the customer fills up and indicate the per day limit for funds transfer. If the

per day limit is blank or entered as zero, then only Query services should be enabled for

the customer.

Request the users to get their account normalized before requesting for Mobile Banking

services as dormant/inoperative accounts cannot be enabled for Mobile Banking.

Verify that customer has signed the application form.

Select the customer-id of the person who has registered for Mobile Banking and the

wrong customer-id should not be selected while enabling Mobile banking.

The Letter of Mandate for mobile banking should be signed by all the joint holders.

Branch should disapprove the accounts which do not belong to the customer in his

individual capacity

Discourage having multiple user id for same mobile number

Branch should educate the customers of the facilities available and to keep their MPIN

secret and change MPIN periodically.

Administration activities for Mobile Banking Help Desk at Transaction Banking

Department

Mobile Banking Help Desk has been provided with Mobile Banking Administration module

using which the following activities can be performed by the officers of the Help Desk.

Activate/Deactivate Mobile Banking

Resetting MPIN on customer’s request. MPIN will be generated and PIN mailer will be

sent to the customer’s address.

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Approval of Payees (Within IOB, Interbank(NEFT), IMPS)

Reactivation of J2ME (Java Based Application)

Creation of new Operators in Administration module.

Monitoring of transactions

Master Maintenance(Branch/ATM/IFSC etc)

Campaign Management (SMS/Email)

DEMAT Account – Authorise/Approve (by Depository)

Pushing the mobile banking registrations from CBS to Mobile Banking Server

Monitoring SMS delivery

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CHAPTER- 6

AGENCY SERVICES

6.1. PAYMENT AND SETTLEMENT

CASH PAYMENT / RECEIPT

The cash balance will ordinarily consist of nothing but notes and coin. In the event of any

cash payment being made or any cash deposit being received after the cash books have been

closed for the day , the relative vouchers must be entered the same day in a Register labeled as

''Late Payment and Receipt Reference Register". The entries in this Register should be made by

the Cashier and each such entry should be authenticated both by the cashier and the Deputy

Manager or an Officer not below the rank of Deputy Manager authorized by the First Line

Manager who is verifying the closing cash for the day. Any deviation from this instruction will

be regarded as a serious offence.

6.2. RTGS AND NEFT

6.2.1. RTGS (Real Time Gross Settlement)

RTGS is a funds transfer mechanism where transfer of money takes place from one bank

to another on a 'real time' and on 'gross' basis. This is the fastest possible money transfer system

through the banking channel. It is operated and supervised by the Reserve Bank of India and the

payment is taken as final and irrevocable. Settlement in 'real time' means payment transaction is

not subjected to any waiting period. The transactions are settled as soon as they are processed.

'Gross settlement' means the transaction is settled on one to one basis without bunching with any

other transaction. The settlements are on real-time basis for gross amounts (as different from

“net” amounts) viz., transaction-by- transaction, that are in queue for a given day.

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OPERATIONAL INSTRUCTIONS

The functional process of RTGS System involves the roles of Remitting / Receiving

branch of our Bank, Paying / Receiving Branch of other bank and Treasury Domestic

Department /ITB.

Concepts of RTGS

In order to send / receive a RTGS message the remitting bank / branch and the receiving

bank / branch should be participating in RTGS.

Under RTGS, the settlement is on Real Time basis G.C., instant credit for the Gross

amount (as against “net” balance method).

The payment instructions between banks are processed and settled individually and

continuously throughout the day by computer-enabled processing and messaging system.

The Payee banks (and their customers) receive funds with certainty and such credits are

insulated fully against the risk of “return” due to insufficient funds, etc.

Both bank-related and customer-related transfer of funds (remittances) between banks

takes place by way of exchange of messages through RBI who will operate the RTGS

transactions on day-to-day basis through a special “Settlement Account” of each

participating bank.

The RTGS system is primarily for large value transactions. The minimum amount to be

remitted through RTGS is Rs.2 lakh. There is no upper ceiling for RTGS transactions.

The transaction messages exchanged between banks are encrypted by digital signatures

ensuring a high level of security in transmission ensuring confidentiality and authenticity.

Remittances to accounts of beneficiaries/ NRE accounts Maintained in India

Since a good number of cross border remittances are also routed through RTGS, the

following guidelines are applicable to enable smooth flow of remittances to accounts of

beneficiaries/ NRE accounts maintained in India.

Only foreign inward remittances and debits originated from NRE accounts in India are

eligible for credits in NRE accounts.

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Thus, while Branches originate such a transaction, the originator must ensure that funds

are either received from abroad or a NRE account maintained in India is debited before

the transaction is originated.

For appropriate AML/KYC related due diligence, the receiving bank may request sender

details from the sending bank on a later date for a proper audit trail and the sending bank

must provide the sender details to the receiving bank.

6.2.2. NEFT (National Electronic Funds Transfer)

National Electronic Funds Transfer (NEFT) system is a nationwide funds transfer system

to facilitate transfer of funds from any bank branch to any other bank branch and was introduced

by Reserve Bank of India.

NEFT is complementary to Real Time Gross Settlement (RTGS). The main functional

difference between RTGS and NEFT is that the settlement in RTGS is on a gross basis while that

of NEFT will be on a net basis in batches.

The system uses the concept of centralized accounting system and the bank's account,

which is sending or receiving the funds transfer instructions, gets operated at one centre, viz,

Mumbai only. The individual branches participating in NEFT could be located anywhere across

the country. The detailed list of branches of various banks participating in NEFT system is

available on RBI’s website.

The beneficiary gets the credit on the same Day or the next Day depending on the time of

settlement

The work flow of NEFT REMITTANCE

The parties to a funds transfer under NEFT system are the sending bank, the sending

branch, the sending Service Branch viz. RTGS/NEFT cell under Transaction Banking

Department, C.O., the NEFT Centre (at RBI, Mumbai), the receiving Service Branch and

the beneficiary branch.

The remitting customer shall submit an NEFT Application Form authorizing the sending

bank to debit the sender’s account and transfer funds to the beneficiary specified in the

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NEFT Application Form. The sending branch will prepare an electronic message and

send it to its Service branch.

All such messages are consolidated and submitted to NEFT Centre (National Clearing

Cell of RBI at Mumbai) through SFMS. NEFT Centre consolidates all NEFT Data Files

received from the participant Banks and shall process the data and generate SFMS

Messages to the beneficiary Banks. The SFMS messages generated will be sent to the

Service Centre of the destination banks by NEFT Centre.

On receipt of SFMS messages from NEFT Centre, the receiving Service Branch shall

credit the beneficiaries account through SFMS or through some other Straight Through

Processing (STP) mechanism.

Upon credit to beneficiary account the other bank will send an acknowledgement

message (N10) based on that our bank will send a SMS/Email to the mobile number or

ID given at the time of originating outward NEFT. A message which is neither

acknowledged nor returned unaffected within subsequent two batches is treated to have

been completed. Hence, it is vital that branches have to either accept or return the

transaction within two hours of receipt itself.

If the beneficiary specified in the sender’s payment order fails to get payment through

NEFT system for some valid reasons, and then the sender shall be informed immediately

after the sending bank gets the returned NEFT. The amount should be re-credited to the

account of the sender.

Presently, NEFT is settled in ELEVEN batches at 0900, 1000, 1100, 1200, 1300, 1400,

1500, 1600, 1700, 1800 and 1900 hours on weekdays and 0900, 1000, 1100, 1200 and

1300 hours on (FIVE batches) Saturdays. Each batch will be settled on a net basis by

RBG. The net credit / debit will be accounted for in the individual Banks’ RTGS

Settlement account. RTGS Cell, Transaction Banking Department, Central Office will

monitor the transactions made through NEFT system.

The beneficiary gets the credit on the same Day or the next Day depending on the time of

settlement. Where the batch settlement is not the last batch of the day, the amount will get

credited to the beneficiary’s account on the same day. Where the settlement is done on

the last batch of the day, the amount may be credited on the same day itself or latest

before 11.00 AM of next day.

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NEFT is a PKI-enabled (Public Key Infrastructure) application which ensures that the

messages are transmitted in a highly secure mode with features of Privacy, Authenticity,

Integrity and Non-repudiation built in.

There is no value limit for individual transactions.

Any transaction initiated after a designated settlement time would have to wait till the

next designated settlement time.

Operational Instructions for branches

The branches should exercise utmost care in putting transactions through NEFT as funds

can be transferred to any Bank, anywhere in the country in near Real Time.

All networked branches are enabled for NEFT. Customers having SB or CD or CC

accounts in these branches will be able to transfer to or receive funds from other NEFT

participant Banks.

Each NEFT enabled branch will be identified by a unique code called as ‘Indian

Financial System Code (IFSC). The branch should verify that the IFSC Code of the Bank

branch, name of customer, account type, account number of the remitter is filled in the

prescribed application as given in annexure.

An outward remittance instruction given by the customer cannot be revoked once it is

executed by the branch.

Remittances can’t be sent abroad using NEFT except Indo-Nepal remittance system.

Transactions can’t be originated to receive funds from another account.

Funds can be sent / received from / to NRI accounts, subject to applicability of provisions

of FEMA.

The remitting customer can track the remitting transaction through the remitting branch

only, as the remitting branch is aware about the status of the remitted transactions.

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General

Before ‘day-end’ Branches to ensure that all outgoing and incoming entries have been

properly accounted for.

Branch should indicate the reasons for NEFT returns properly citing the exact reasons.

Branch should confirm that NEFT returns should be processed in the system only and

sent back by the very next settlement. Returns outside the NEFT system should be strictly

avoided.

Once the customer account is debited, the transactions should leave the branch for the

next available settlement.

Any transactions originated after the last settlement batch should be settled in the first

batch of the next working day.

All the inward transactions should be credited to the customer’s account within two hours

of the settlement.

Branches should make arrangements to inform customers on the NEFT credit through

some means such as SMS alert or e mail.

Branches should ensure credit to beneficiary's account on the same day of NEFT

settlement in respect settlement taking place up to 6p.m. With regard to 6 p.m. to 7 p.m.

batch settlement, the credit should be afforded to the accounts of beneficiaries latest by

next day morning 11.00a.m without any delay.

Branch should note to exercise utmost care on an on-going basis in adhering to the

mandatory time-schedule prescribed by RBI for transmitting NEFT credits to the

accounts of beneficiaries.

In the event of delay beyond two hours in crediting funds received through NEFT to the

beneficiary-customer's account, branches are required to arrange for payment of

compensation at the current REPO + 2% interest rate without waiting for receipt of claim.

In the case outgoing NEFT remittance, branches should ensure that the Customer's

account is debited only on the day our Bank's account gets debited at RBI and not earlier.

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Reports

At the end of the day, Branch has to generate Reports of outward transactions, inward

transactions, and outward rescheduled transactions. These reports should be verified with the

day’s vouchers.

The branch should also ensure that the status of all the transactions is ‘Completed’ and if

any transaction is in any other status, branch has to immediately take up with RTGS Cell,

Transaction Banking Department, Central office and satisfy themselves about the correctness of

the transaction.

Branches are aware that in respect of inward NEFT/NECS/ECS remittances, wherever 15

digit account number is available, system will credit the account through straight through

processing (STP).

In this process, branches are required to do post-credit verification of the credits

processed through STP and ensure correction. For this purpose, separate report is available in

“awb” menu (Success STP) which should be generated by the branches daily at the end of the

day. The said report can also be generated by branch staff as and when required during the day.

This report contains the list of accounts, name of the beneficiaries as received from the

originating branch and the names of the beneficiaries as available in our system/books. This data

has to be verified by the Officer-in-charge of RTGS/NEFT/NECS/ECS sections on the same day

as post credit-checking.

If at the time of post-credit checking, it is found that credit has been afforded to a wrong

account, branch must reverse such credits and set right the mistake and/or return the transactions

to the originating bank branch.

This particularly needs to function very efficiently and pro-actively till such time

customers are comfortable with the new arrangements/procedure. A facility to generate report on

failed STP transactions is also available in the system which can be generated by the branch to

verify the failed transactions.

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6.3. CLEARING SERVICES

CHEQUE TRUNCATION SYSTEM CLEARING (CTS)

Cheque Truncation System (CTS) is an Image Based clearing system introduced by RBI

(Presently at Delhi), which replaces the existing clearing system of Instrument Based clearing.

The purpose of introducing the new system is to:

Reduce the existing time taken for the clearance of cheques for both the local and the

outstation cheques.

Improve the efficiency and quality of the services offered by banks in the area of the

Cheque Clearing– both to customers of banks and for internal improvements in areas

such as clearing reconciliation, risk management, systemic efficiency etc.

6.3.1. LODGMENTS

Under CTS lodgment is to be done in 2 stages.

a) Lodgments of cheques in CBS environment. Lodgments are to be done by clerical staff.

Approvals are to be done by Supervisory staff.

b) Once the approval of instruments is done, the Branch user shall generate and upload the data

of lodgment to the CTS system available in the branch.

c) Scanning of cheques to be done in a stand-alone machine provided for the purpose and to be

done by clerical staff. Approval is to be done by Supervisory staff by logging in as Supervisor in

the Stand-alone machine provided for this purpose. The system will balance the amount lodged

in CBS with the amount of the scanned instruments and also attach the digital signature to the

images as required by RBI..

For lodging the instruments, branches should use the CTS lodgment programs only.

While lodging cheques, the branches should enter the MICR details of the cheque only. For

example, for lodging of a cheque drawn on IOB, Jan path, New Delhi, enter ‘110’ (micro city

code for New Delhi),’020’ (micro bank code for IOB), 004(micro branch code for Jan path

branch) instead of entering the alpha codes as done in MICR clearing.

Branch should ensure that all cheques that are entered in CBS system are scanned without

fail. Under CTS system collecting branches are responsible for the genuineness of the cheque.

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The onus of proving the genuineness of the cheque lies with the collecting bank and not the

paying bank.

In respect of cheques issued by Government Departments (‘B’ type cheques), branches

should note to send the instrument also to CCO, besides the image, in the respective clearing

zone.

Presentation

There is no change in the existing Presentation procedure.

Release

No change in the existing Release procedure.

Returns

CCO will inform the branches about the dishonored cheques presented by them.

Regularization

Branch has to release the vouchers after ascertaining the fate of the cheques sent for

collection in clearing.

Extensions

Under CTS clearing, RBI may grant extension to participating banks to upload scanned

images in clearing or to inform the fate of the inward images presented to them. Branches

participating in CTS clearing have to take into account the extension granted to participating

banks before regularizing the presentments of previous dates. The details of extensions given to

banks can be obtained from CCO. Branches needing extension either to present or to inform the

fate of images should take it up with CCO concerned who in turn will take up with RBI. The

decision to grant extension is at the sole discretion of RBI.

Handling of Inward Cheques

Branches have been provided with a stand-alone PC loaded with the image viewing

software, for the purpose of viewing the Inward images received under CTS system. Normally,

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under CTS the clearing takes place the same day of presentment and settlement done

immediately. As such the fate of cheques on any day is known the next day unless there is any

extension granted to any bank by RBI. The Inward Images are available early in the morning on

any working day. Branches are to view the images choosing the Document Identification

Number (DIN) and process the same.

Return marking of the Inward cheques

The branch can mark payment/return of the images as they desire to pay / return.

Cancellation of Outward Returns

When they want to cancel any return already marked they can mark it themselves. If the

system does not permit them to do so then they should contact CCO and get their confirmation

that the fate of the instrument has not been conveyed to RBI and then proceed for cancellation of

return marking.

Preservation of Cheques

Branches participating in CTS clearing are responsible for preserving the cheques

deposited by their customers. Since only the image is travelling to RBI, the physical cheques are

to be kept under the custody of the presenting branch. These cheques are to be preserved for a

period of 8 years.

System Maintenance

Branches are to take proper care of the CTS systems available with them like scanners,

stand-alone machine with the CTS software etc. Also they should, in coordination with RCC

should maintain these CTS related systems.

Role and Responsibilities of CCO

Central Clearing Office of the CTS centre plays a major role in the smooth functioning of

the CTS system. CCO is the main link between RBI and the branches and is responsible for

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timely uploading /downloading of images to/from RBI. They have to make these images

available to branches at the earliest on the succeeding working day after the date of presentation.

Technical Role

All the images are processed at CCO, who is responsible to ensure that the images are

processed on time and uploaded to RBI before the presentation time. CCO has to be more

cautious and ensure that the process is completed on time for each session since RBI simply

publishes a notice in its website about the end of the session.

Similarly, once the inward images are received, CCO should process the same at the

earliest and upload the images for branches to process at their end.

Administrative Role

CCO should coordinate with RBI for the smooth functioning of CTS system. It should

take up with RBI for any extension required by any of the branches for presenting the cheques or

for informing the fate of the inward images received. It should take up with RBI for blocking the

branches under its jurisdiction, which may not be in a position to participate in CTS clearing due

to circumstances beyond their control.

Holiday Marking

It is the responsibility of CCO to intimate RBI about the branches not working on any

day due to declaration of holiday in that area for whatever reason. They should liaison with RBI

in such eventualities and ensure that these branches are blocked and no images are presented to

them on holidays.

MAGNETIC MEDIA BASED CLEARING SYSTEM (MMBCS)

Magnetic Media Based Clearing System (MMBCS) has been introduced in many clearing

centres by RBI / SBI / PNB etc. who are running the clearing house. All branches covered in the

respective centres are required to furnish data in a specific format to the clearing house along

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with the instruments presented by them. Regional Office/ RCC should take up ITD, CO along

with full particulars required for inclusion of branch(s) in MMBCS clearing. On receipt of

information, ITD will bring the branch under MMBCS system which will enable them to use the

special programs developed for MMBCS clearing.

Outward Clearing

Lodgment of Cheques

The Clerical staff at Branches covered by MMBCS clearing should note to use the

Special Program ‘CTS/MMBCS Clearing Lodgment’ only and should not use the normal

clearing lodgment program. While entering the details of instruments care should be taken to

enter the bank code, branch code, city code etc. as available in the instrument’s MICR bank. Any

mistake committed by the branches in this regard would create problem at the time of approval /

generation of data.

Similarly the Supervisory users should note to use the specific program for approval

‘CTS / MMBCS Clearing Lodgment Approval’ only and approve the voucher / instruments after

verifying the details.

Generation of Data

Once the approval is completed for all the instruments for the day, the branch should

generate the required data file from the system and copy the same in a floppy to be sent to the

branch which is participating in the clearing on behalf of all the branches in the centre.

Nodal branch

The branch which is participating in the clearing house on behalf of all the branches of

the Bank in the centre should collect floppies from the branches and note to merge the data using

the Merger Program given by the respective clearing house bank, as per instructions.

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MICR / NON MICR Clearing Systems

Outward Clearing

Lodgment of Instruments

All the instruments received for clearing through Local clearing house should be lodged

in the ‘Clearing Lodgment’ program by the branch users without fail. While doing the data entry,

care should be taken to ensure that the details are entered correctly without any error, especially

in the case of accounts relating to other CBS branches. Care also should be taken to enter the

details of instruments individually and correctly so as to enable generation of Data files/ report/

Patta required at various Clearing Centres.

Approval of Lodgment

All the instruments lodged in the clearing module should be approved by the authorized

official well before the scheduled time for presentation.

Clearing Presentation

Before sending the instruments to the Clearing house, branch users should invoke the

Presentation Application to prepare presentation vouchers for all those instruments lodged in

clearing and approved by them. The total of number of instruments presented should tally with

the physical instruments on hand.

Clearing Release and Regularization Dates

Branches should note to enter the correct date for credit of the proceeds to the respective

accounts (Release) taking into account the clearing cycle as prevalent in the respective centres /

zones. Similarly the regularization date also should be fixed at the time of presentation based on

the return clearing discipline for the respective zone / centre.

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Modify Clearing Release / Regularization Dates

This option should be chosen as and when there is change in the clearing process as

advised by the local Clearing House Bank and the revised date should be entered before the

release or regularization is done. Once the activity is completed, the dates cannot be changed.

Release of Clearing Instruments

On the due date for release, branches should note to release the clearing vouchers to the

respective accounts using the relevant program. During this process the credits to SB and CDCC

Accounts will be made by the system as ‘Under Clearing’ as per extant guidelines in force. The

transactions have to be verified by a Senior Manager level user along with the vouchers and

authenticated duly in the vouchers.

Regularization of Clearing Credits

On receipt of Inward Clearing Return instruments, branches should to first debit the

accounts for returns received for the day. Once the returns are accounted for, the application for

regularization of under clearing balances kept in various Savings Bank and Current Accounts

should be invoked and the balance made as ‘clear balance’.

Branches to use Inward Return Entry, Approval program for this purpose (clg37_1, 2, 3)

Inward Clearing

Payment of Instruments received in Inward Clearing

Branches to strictly adhere to the guidelines spelt out for handling of Clearing

Transactions/ Cheques in Volume IV of Book of Instructions without fail. To debit the

instruments received in clearing, branches should use the normal posting / passing programs

given under various modules and complete the transactions within the time limit specified.

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Refer to Manger

Wherever the debit cannot be passed in normal course and require to be referred to the

Manager for approval / return, it should be done well within the time specified for Return

Clearing Discipline.

Branches to use Clg Return Data Entry Program to record the return details in the system

(clg36_1, 2, 3)

Inward Clearing Vouching

Once all the transactions have been accounted for, the officer in-charge of clearing

operations should use the Inward Clearing Vouching option and pass the transaction for credit to

CCO / Main branch as the case may be and tally the clearing lot. Programs are available for the

use of the branches to tally the inward clearing before completing the vouching.

6.4 CUSTODIAN

JOINT CUSTODY

The Cash must be kept in the strong-room in the joint custody of the Head cashier/cashier

and an authorized supervising official, who will be the Deputy Manager or an Officer not below

the rank of Deputy Manager authorized by the First Line Manager. Any other arrangement

should have the prior approval of Regional Office.

DISPLAY OF NOTICE

Deputy Manager or an Officer authorized by the First Line Manager should ensure that

no member of staff other than the Cashier / Teller receives money over the counter from

depositors and that Notices as appended are prominently displayed in Regional language Hindi

/ English in two places, one near the cash department and the other near the branch entrance.

The Teller is authorized to receive cash up to 15,000/- (Rupees Fifteen Thousand only)

for deposit into Savings Bank Account. The public are also advised to be present till the

counting of the cash by the cashier is over and found by him to be in order.

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RELEASING THE COUNTERFOIL

The Cashier/Teller on receiving cash should refer the entire Chelan along with the

counterfoil to the officer concerned to be countersigned by him /her and only the officer

concerned should release the counterfoil after verifying the figures and ensuring that necessary

entries were made in the system.

LOCKING ARRANGEMENTS

DOUBLE LOCK

The strong-room or safe must be under the double lock of the Head cashier/cashier

and the supervising official in charge of cash (herein after referred to as the "supervising

official"). Both officials must be present when the strong-room /safe is opened and as far as

possible, all receptacles in the strong-room which are used for storing cash must also be under

the double lock of the Head cashier/cashier and the supervising official, with the exception of

the receptacle used for the Head cashier’s/cashier’s hand balance which should be under his /

her single lock. It must be ensured that the locking mechanism of all receptacles is effective

and that the doors of all cupboards etc., are securely fastened before being locked.

CASH-CABIN DOORS

Locking arrangements should be provided for cash cabin doors and also cash counter

drawer. The door of the cash cabins should remain locked/or bolted when the cashiers are inside

the cash cabins. It should also be kept locked from outside whenever the cashiers leave their

cabins for any other work. The officers in charge of Cash Department should ensure that the

cashiers keep their cabins locked at all times.

STRONG-ROOM

The arrangements in the strong-room shall depend upon the accommodation available

and shall be subject to detailed orders from Central Office in each case. The following general

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instructions must, however, should be invariably observed.

All receptacles must be locked by the joint custodians, the utmost care being taken to

prevent the possibility of any notes being stolen or pilfered when the strong room is open.

Adequate precautions should also be taken to prevent loss through ventilators or other apertures

when the strong room is closed.

CASH BALANCE

The bulk of the cash balance should always be in the strong-room/safe under joint

custody, while remainder (cashier’s hand balance) which will be kept as low as conveniently

possible, will be left with the Head cashier/cashier during the day for the day’s transactions. Only

cash sufficient for the day’s requirements should be withdrawn in the morning from joint

custody.

VAULT REGISTER

The amounts of all notes and coins withdrawn from, or deposited in, the joint custody

portion of the Bank cash balance (i.e. excluding the Head cashier’s/ cashier’s hand balance) will

be entered immediately in the Vault Register under the initials of the joint custodians. The Vault

Register must always remain in the strong-room. From it the withdrawals and deposits will be

entered in the cash analysis book in which the resultant balances will be struck, the entries being

checked and the balances initialed by the head cashier/cashier and the supervising official. At

branches where transactions in the "joint custody" portion of the Bank cash balance are few, a

cash analysis book may be dispensed with, the relative entries being checked from the Vault

Register and the incurrent coin register.

DAY-END CONSOLIDATION

Before consolidating the cash at the end of the day, the following points have to be

observed. It is the primary duty and responsibility of the Cashiers / Tellers / Special Assistants /

Officials attending to cash related schedule of work to ensure strict compliance to the operational

instructions put in place by Central Office under Clean Note Policy. The said Policy which was

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framed by our Central Office in the light of Notification under Section 35A of Banking

Regulation Act issued by Reserve Bank of India. Copies of related circulars (MISC/96/2003-04

dated 28th April 2003 and Government Accounts Department Circular No:5 / 2003-04 dated 3rd

January 2004) are appended to this Chapter for ready reference of Branches and Controlling

Offices.

Cashiers have to segregate note into soiled/cut and re-issuable including ATM-fit and

prepare sections separately for soiled / cut notes and re-issuable notes.

Notes of the same denominations have to be bundled together into books of one hundred

pieces each and bank's currency bundle label has to be placed on the section to go round

the note packet on the left side to cover a major portion of the front and rear of the note

packet and tied firmly with twine. Thereafter, the packet must be secured with twine /

paper band / rubber band / polymer band firmly to ensure that all the notes inside the

paper band packet remains intact.

It should be borne in mind that using stapler / sticker / gummed labels / stitching-needle

or any method which tend to damage the currency notes, is prohibited in terms of the

provisions of Clean Note Policy implemented in our Bank. As compliance to the said

provisions is legal requirement, utmost care should be taken by the staff members

handling cash.

The branch round rubberstamp must be affixed on the label ends and the label must be

signed by the cashier who has prepared the packet. The band must thereafter be placed in

such a manner that it covers a part of the branch round stamp and cashier’s signature.

Every ten such books must be tied up into a bundle of one thousand pieces.

Before taking notes in joint custody and depositing them in the Currency Chest, both

officials in joint charge should personally count all notes of denominations above Rupees

Ten and will verify, as large a proportion as possible, of all other notes on the "Clip

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system". Under this system, a few notes in each book of notes are clipped together at the

top and the remainder is counted by a cashier other than the two cashiers responsible for

their correctness.

The checking officer must ensure that all the leaves are firmly held in the packet and

the security paper band is fixed in the manner as mentioned above.

Branches can retain the reissuable note packets for transactions and remit the non-

issuable note packets into the currency chest. If the branch holds surplus cash, reissuable

note sections can also be remitted into the currency chest.

CASH SHORTAGE

In terms of instructions currently in force (Circular - Government Accounts Department,

Central Office Circular No: 6/2003-04 dated 5th January 2004) the Cashier shall be solely

responsible for the quality of the notes from Rupee one to Rupees fifty. In respect of

denominations above Rupees fifty (i.e. Rupees one hundred, five hundred and one thousand) the

cashier shall remain responsible only jointly for the quantity of notes prepared by him / her along

with Officer / Special Assistant.

In the light of the above, the responsibility in case of shortage detected in the packets (no

matter when it is detected) will be fixed equally on the cashier and the checking officer whose

signatures appear on the label. In other words, the cashier and officer who have originally

made/checked the packet will be accountable for any discrepancy even if they are not the

custodians at the time of detection so long as the seal is intact. If the security bands have not been

disturbed and there is no evidence on the face of the packet to indicate that it has been tampered

with, then in such cases, where a shortage is detected (this can take place when one or more notes

are physically torn out of the section leaving a part of the note stuck inside the stitched packet)

the responsibility for such shortage will be decided on a case to case basis.

CURRENCY SLIPS

Currency slips of other banks/parties must be removed by the receiving cashier after due

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counting and the same replaced with our Bank’s currency slip and pasted with the security sticker

and checked, initialed/signed by the joint custodians.

LATE CASH PAYMENT / RECEIPT

The cash balance will ordinarily consist of nothing but notes and coin. In the event of any

cash payment being made or any cash deposit being received after the cash books have been

closed for the day , the relative vouchers must be entered the same day in a Register labeled as

''Late Payment and Receipt Reference Register". The entries in this Register should be made by

the Casher and each such entry should be authenticated both by the cashier and the Deputy

Manager or an Officer not below the rank of Deputy Manager authorized by the First Line

Manager who is verifying the closing cash for the day.

CHECKING OF CASH BALANCE

Before taking notes and coins into the ‘joint custody’ balance, the supervising official

should check their correctness in the following manner:

He/ She will personally count all notes of denominations of above Rupees Ten and will

verify a portion of all other notes on the "clip system". Under this system a few notes in

each book of notes are clipped together at the top and the remainder is counted by an

employee other than the one responsible for its correctness in the presence of the

supervising official who verifies the total by counting the clipped notes (Notes of the

same denomination are bundled together into books of one hundred pieces each, every ten

such books being tied up into a section of one thousand pieces).

He/ She will have all bags of rupees weighed in his presence and a number of bags

emptied to show that the contents are genuine coins. Out of a few bags he will take and

count a few pieces and leave the remainder counted in front of him as a similar check to

the "Clip System" for notes, verifying the relative denomination slips in the bags at the

same time; he will also occasionally get this done in the case of small and un current

coins.

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CHECKING HAND-BALANCE AND CLOSING CASH

The supervising official should satisfy himself each evening that the joint custody balance

corresponds exactly with the entries in the system-generated cash balance printout. He will also

invariably check the entire Head Cashier’s / Cashier’s hand balance of loose notes and also check

the loose packets in hand balance by clip system and initial against the items checked in the cash

balance printout. After the closing cash is checked by the supervising official, he /she must

ensure that the notes and coins held in the Head cashier’s/cashier’s hand balance are kept in the

cash box and locked in his/her presence. He should accompany the Head cashier/cashier to the

safe room when the cash box is kept under joint custody. Before the safe is closed, he/she should

also check the bundles kept in the vault and verify the same with the vault register.

Periodically preferably once a week on different days the officer holding charge of cash

should check the whole of the branch cash balance by test check of different denominations and

register evidence of such check in the cash balance book under his/her signature and date. The

First Line Manager, if he is not in joint custody of cash, should on a surprise date in a month

check in detail all the notes of denominations above Rupees Ten and verify all the other notes on

the clip system.

EXCESS IN CASH

Any excess in the cash balance must be credited to Sundry Creditors Account on the same

day after the preparation of a credit voucher bearing complete particulars of such excess cash.

Such instances of excess cash should be reported to Regional Office on the same day. Amounts

which have been lying unclaimed for more than six months will be transferred to Central Office

every half year by March and September.

REMITTANCE OF CASH

When remittances of currency notes are sent by post from one office to another, the

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following instructions must be strictly complied with :

a) Remittances should be in full currency notes.

b) The remitting branch should keep a proper record in a separate register maintained for this

purpose.

The registered and insured covers should be sent to the post office through the cashier in

whose presence the currency notes were enclosed and sealed and he/she should be accompanied

by a messenger or preferably a guard if the branch has one.

ADVICE OF REMITTANCE

Remittances sent by post or under escort, should be advised to the addressee detailing the

particulars and the amount thereof. The advice should be made out in duplicate, the original

being sent along with the remittance and the duplicate by separate mail.

CURRENCY NOTES RECEIVED BY POST

Remittances of currency notes received by post should be counted by the cashier in the

presence of the Deputy Manager of an Officer who is holding joint charge of cash. They should

be entered in the Inward Remittance Register and should be promptly acknowledged to the

remitting branch.

Any discrepancy should be immediately brought to the notice of the remitting

branch. As the denomination memos affixed to the bundles in question would be required in

fixing up responsibility for shortage, if any, they should be forwarded to the remitting branch.

Physical cash remittances to branches outside the town should be undertaken only if

transfers cannot be effected through the State Bank of India or another Nationalized Bank.

PACKING

Remittances must be packed in the presence of the secured employee accompanying the

remittance. They must be conveyed in a strong wooden or iron box locked with a padlock which

should be sealed. Under no circumstances should the keys of the remittance box accompany the

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remittance. For this purpose, the box should be locked with a padlock having duplicate keys. One

set of keys should be held by remitting branch and the other set by the receiving branch or bank.

Branches having regular drawing arrangements with the Reserve Bank of India or State Bank of

India or any of their subsidiaries or any other bank under prior permission from Regional Office /

Central Office , should arrange with the offices concerned to hold one set of keys of the

remittance boxes.

CASH BOX TO BE CHAINED

Where branch has a motor car or van of its own, the remittance box should always be

conveyed in the car or van. The box should be securely chained and locked to a stable or other

fixed object in the car, van, bus, cart or train by which the remittance is carried.

MAINTENANCE OF REGISTER FOR CASH REMITTANCE / WITHDRAWAL

A Register in the following form should be maintained to record all cash remittances to

and from local banks, remittances to other branches through staff, remittances from other

branches whether through post or staff. There should be separate openings in this register for

inward and outward remittances with columns as under:

SHROFFING OF COIN

The Rules for the issue and acceptance of coins, laid down in Part XIV, Chapter III of the

Central Government Compilation of Treasury Rules, Volume I (herein after referred to as the

Treasury Rules), must be strictly observed and branch Managers should l ensure that the

instructions contained therein are fully understood by all concerned. Pressure of work will not be

accepted as an excuse for inefficient shroffing.

UNCURRENT COIN REGISTER

DETAILS OF ALL UNCURRENT COIN

Details of all uncurrent coin, i.e. defaced, light weight and defective coins and other coins

withdrawn from circulation which are included in the Bank’s cash balance must be set forth in an

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Uncurrent Coin Register under various categories. The respective totals should be checked and

initialed daily by the Head cashier/cashier and the supervising officials, who shall then agree the

relative items with those in the cash balance book.

PLACEMENT OF UNCURRENT COIN

Uncurrent coin may not ordinarily be placed in the currency chest or small coin depot

balances, and will therefore be retained in the Bank’s cash balance pending a remittance to the

Mint. The Reserve Bank of India may, however, authorise exceptions to this Rule and allow the

deposit of certain designated uncurrent coins in the currency chest or small coin depot. Coins so

held need not be entered in the uncurrent coin Register.

In order to expedite the examination of large remittances of coins when the shroffs

accompanying such remittances are unable to watch the work of shroffing effectively, they

should be asked to agree to each bag being weighed in their presence and its weight recorded, on

the understanding that if any shortage is reported, the bag will be reweighed and that if it

conforms to the recorded weight, the shortage will be accepted as correct. The bags should be

weighed against a checked and sealed bag of similar coin, additional coins being added to the

lighter scale and the weight of the bags recorded in number of coins.

CURRENCY NOTES

The Rules for the receipt and issue of Government of India and Reserve Bank of India

currency notes are contained in Part XIV, Chapter IV of the Treasury Rules. Instructions

contained in Treasury Rules regarding forged, defective and lost notes are furnished in Para 37of

this chapter. Notes disfigured by oil or other substances should be scrutinised with special care as

forged notes are sometimes intentionally thus disfigured to render detection difficult.

LOCKING OF STRONG-ROOM

The Strong-rooms must at all times be under the double lock of the Cashier and the

supervising official jointly in charge of cash. Both officials must be present when any strong-

room is opened and neither may enter it except in the presence of the other.

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ENTRY IN VAULT REGISTER

The amounts of all notes withdrawn from, or deposited in the currency chest will be

entered immediately in the Vault Register under the initials of the joint custodians. The Vault

Register will be the primary check on the deposits and withdrawals made and must always

remain in the strong room. Withdrawals made for the purpose of shroffing or examination must

also be entered in the Vault Register in the same manner as other withdrawals.

CURRENCY CHEST JOTTING BOOK

After the day’s transactions have been closed and the individual cashiers have agreed

their balances, notes intended for deposit into the currency chest will be made up and the

amounts entered in the Currency Chest Jotting Book from which the net amount of deposit or

withdrawal is arrived at and accounted for by debit or credit to our account with the Reserve

Bank of India maintained at the main/link branch under advice to them.

CERTIFICATE OF CASH HOLDING AND VERIFICATION

CHANGE OF OFFICIALS

Branches should l submit to Regional Office a certificate of their cash, currency chest and

small coin depot (if any) balances at the close of business on the last weekly balance day of the

month (as per Specimen Tenclosed).

VERIFICATION OF CASH BALANCE

At branches where the First Line Managers are not in charge of cash, they will verify the

Bank cash balances, if any, held by the branch at intervals to be stipulated by Central Office; at

large branches the verification is to be performed by the Deputy Manager or other senior official

who himself is not in joint charge of the cash. In other cases, Central Office will depute officials

from elsewhere to verify the balances at intervals. The verification should l be carried out in

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accordance with the directions contained in Para A.12.At the time of such verification, the

verifying official will also check :

a)Articles in safe custody

b)Foreign currency notes

c)any other bearer securities

When the post of the supervising official in joint charge of the cash changes hands or a

branch Manager is permanently relieved the official taking over will carry out the verifications as

laid down above.

On the occasion of every verification, the verifying official will submit to Regional

Office a Cash Verification Report (as per specimen enclosed)

CHANGE OF CASHIER – CERTIFICATE

Whenever the post of a Head cashier/cashier changes hands, the outgoing and the

incoming officials will sign a Certificate for record at Regional Office:

"We, the undersigned __________ and ___________ advise having respectively made over and

assumed joint charge, with the Manager/Deputy Manager of this branch, of gold ornaments

under lien to the Bank and of the Bank’s cash, currency chest/small coin depot balances held at

the branch as from the close of business on the ___________20__."

Signature of Relieved Head Cashier/Cashier ................................................

Signature of Relieving Head Cashier/Cashier ................................................"

Both Head Cashiers/Cashiers should be required to sign the Cash Balance Book, (the

currency chest book and small coin depot book if any) on the date of relief. The incoming

official will also initial in the Jewel Movement Register after satisfying himself/herself that the

total number of packets as mentioned in the Register tallies with the packets in the Jewel Safe.

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LEAVE / DEPUTATION

Whenever a cashier or Assistant Manager/Deputy Manager/Manager who hold custody of

keys is to proceed on leave/deputation or to hand-over charge under any other circumstances,

he/she must personally hand over possession of such keys to the next authorised officer/cashier

(as decided by Branch Management from time to time) against the latter’s acknowledgment in

the key movement register.

When situations arise where it is not possible for such key holder to personally hand over

possession of keys as mentioned above, he/she should send the keys in a closed cover through a

person whom he /she considers reliable for the purpose. It must be ensured that the sticking flap

of the cover is signed across by the key holder before sending the same to the branch. Such

deliveries of keys in a closed cover must be accompanied by a letter signed by the key holder as

per the format provided in Annexure IXto this Chapter. Even if the letter is not sent or the letter

sent is not in the prescribed format, the key holder is bound by the provisions contained in the

format. Such covers should be opened by the Branch Manager/official holding charge in the

presence of the person to whom the keys are to be delivered and the fact of transfer of custody of

the keys must be duly recorded in the Key Movement Register.

RELIEVING CASHIER

The relieving cashier should check the "Hand Balance" in the presence of the joint

custodian before he takes over and also the bundles of notes taken out from the vault balance for

the day’s transaction. Whenever the keys relating to the cash safe are handed over to another

officer/cashier, the officer/cashier assuming joint custody must check the entire vault balance by

counting the number of bundles and packets and checking such numbers with the entries in the

Vault Balance Book. Such checking must be done in the presence of the other joint custodian.

6.5 SAFE CUSTODY

CUSTODY OF KEYS - KEY REGISTER

Particulars of all important keys, including those of the Head cashier/cashier, must be

entered in the branch Key Register. The Register should show what originals and duplicates exist

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and where they are to be found and must be initialled by every incoming Manager. Whenever

important keys change hands from Supervising Official/ Head Cashier/ Cashier holding the keys

of the strong room/safe room and safes/ cup-boards containing cash, gold ornaments under

pledge to the Bank and other securities, the same should be recorded then and there in the Key

Register with dates under the signatures of all the persons concerned (i.e. the persons who are

handing over the keys and who are taking over the keys).

The main keys of the branch may on no account leave the possession of the officials to

whose charge they have been entrusted except as provided in paragraph A.32 or in the case of

incapacitation for duty when they will be taken over by another Official deputed by Central

Office/Regional office. The grave consequences that may result from any slackness in the

observance of this instruction cannot be too strongly impressed on officials, particularly those

responsible for the safe custody of cash, gold ornaments, securities and other valuables.

When the keys of the strong-room or cash safe are kept in the personal safe of the Deputy

Manager or an Officer authorised by the First Line Manager , the key of the safe in which they

are lodged must not leave his/her custody.

Subordinate employees or other unauthorised persons must never be allowed to handle

the keys of the strong room and safes for any purpose whatsoever. Should this by any chance

occur, the circumstances must be immediately reported to Regional Office / Central Office so

that necessary steps may be taken to safeguard the Bank’s interest.

The above instructions apply with equal force to the head cashier/cashiers in joint charge

of cash and valuables.

LOSS OF KEYS / CHANGING OF LOCKS

Whenever a key of the Safe/Safe room is lost, it should be reported to concerned

Regional Office / Central Office immediately. On receipt of information, Regional Office should

instruct the branch to replace the concerned locking system and fifty percent of the cost of such

replacement must be recovered from the member (in whose possession, the key should have

been) in one lump sum before making payment to the company towards replacement charges.

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The remaining fifty percent of the cost of replacement must be debited to branch Suspense

Account under advice to Regional Office.

The bank has taken an Insurance Policy to cover the loss of keys. The policy is subject to

an excess of Rupees one thousand five hundred for any one claim. Hence, in the event of any

loss of keys, the branch must send the claim form to the concerned Regional Office along with

First Information Report (FIR) issued by the Police, Original bills towards replacement, original

receipt and non-traceability certificate from the police authorities. Regional Office after due

verification should in turn forward the claim form and other documents to Overheads Section,

Personnel Administration Department, Central Office, for preferring a claim with the insurance

company.

After settlement of the claim by the insurance company, Central Office shall advise

Regional Office regarding settlement who in turn shall advise the branch to eliminate the related

Suspense entry by debiting their Profit and Loss account under advice to Central Office. After

complying with the instructions of Regional Office branch should immediately submit a

Compliance Report to Regional Office.

DUPLICATE KEYS

The officials holding the keys of the strong room/safe room and safes/cupboards

containing cash, gold ornaments under pledge to the Bank and other securities, should pack their

duplicate keys individually in a strong cloth lined envelope which should be sealed by them with

their own personal seals. Before they are packed, the keys must be greased and labelled (the label

indicating the lock to which the key relates and the designation of the official who holds the

original).

The sealed packets must be placed in a strong wooden or tin box locked or otherwise

secured and wrapped in waterproof cloth. It must then be sealed in the presence of the officials

concerned and the sealed box should be labelled with the name of the branch and should bear a

docket reading as under:

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"This packet contains duplicate keys of ....................branch of the Indian Overseas Bank

and is deliverable against the joint signature of the Manager/Deputy Manager and Cashier of the

branch for the time being".

The said docket should be signed by the Cashier and First Line Manager or Deputy

Manager or other supervising official whose keys are deposited therein. These instructions

should also be conveyed to the branch of the Bank holding the box in safe custody by means of a

letter signed by all the officials holding the keys.

The box should be deposited with the nearest branch of the Bank at places where we have

more than one branch. If we do not have another branch locally, it must be deposited with the

local branch of the State Bank of India. At places where we do not have another branch and the

State Bank of India are not established, the box may be despatched to our nearest branch,

wrapped in a separate cover by registered post, duly insured for rupees one hundred and advice

of despatch being sent to them separately.

Overseas branches may deposit their duplicate keys with the local branches of any well

established exchange bank after obtaining Central Office approval.

SAFE DEPOSIT RECEIPT

In all cases, the relative safe deposit receipt will be entered in the Branch Documents

Register and kept in the personal custody of the Manager in his personal safe or cabinet. Under

no circumstances should the receipt be kept in any safe, the duplicate key of which is held in safe

custody with another branch or bank, as in the event of the loss of the original key or keys the

duplicates may not be available without the production of the safe custody receipt.

DRAWAL AND REDEPOSIT OF KEYS

Duplicate keys must be withdrawn from safe deposit at every inspection of the branch

and whenever there is a change of First Line Manager, Head Cashier/Cashier or supervising

official jointly in charge of cash. The reason for and the duration of their withdrawal should be

recorded in the key Register. The box must be opened by the Manager in the presence of the

cashier and the supervising official concerned, and Inspector who should themselves break the

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seals on the parcels containing their keys. When the keys have been examined and tested, they

will, unless they are more worn than the originals, be taken into use and the originals deposited

in the box otherwise the duplicates may be re-deposited.

REPORTING TO REGIONAL OFFICE

The fact of withdrawal and redeposit of duplicate keys must be reported to Regional

Office, unless such operation was made in connection with the inspection of the branch. When

the box is held by another branch, the dates of its withdrawal and re-deposit should also be

advised to Regional Office by that safe custodian branch, if it is not received back promptly, a

reminder must be sent and Regional Office informed.

The packet should be returned to safe deposit the same day and in the event of delay,

adequate precautions should be taken for its safe keeping until its despatch the following day and

the fact should be reported to Regional Office.

BANK GUARDS

All branches where Police guards are stationed, First Line Managers should arrange with

the local police authorities for definite orders to be issued to the guards regarding their duties and

responsibilities. Where the bank’s own guards are employed, orders should be drawn up by the

Managers themselves. In all cases, a copy of the orders should be hung up in the guard room.

In drafting orders for the Bank’s own guards, Managers shall be guided by the following

general rules, the details of which may be adopted to meet local conditions:

The hours of duty will ordinarily be from 20.00 hours to 09.00 hours but these hours need

not be rigidly adhered to provide at least one guard is invariably on duty between 22.00

hours and 06.00 hours. One guard must be present when the strong room is closed in the

evening and when it is opened in the morning, if this precaution is considered necessary.

On Sundays and holidays a twenty four hour watch must be maintained, if the Manager is

not residing in the premises.

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Guards will come on duty fully dressed in uniform and must not divest themselves of

their uniforms and equipment at any time during the period of duty.

When he comes on watch, the guard will examine all doors, windows and locks and

satisfy himself, that these are properly secured. He will also examine the strong room

door and all safes in the Office and see that these are locked.

The guard on watch will patrol the Bank premises in such a way, that the strong

room/cash safe is not out of sight for longer periods than are necessary and he must not

leave his seat until he is relieved. Where necessary a tell-tale clock may be used.

In case of any untoward incident the guard on watch will immediately arouse other

guards, if any, and will, if necessary, send one of them to the police and/or the Manager.

Guards will be provided with fire arms when this is considered necessary by Central

Office. Sirens and/or brass gongs or police type whistles should be provided for calling

the police in an emergency. The actual method by which the police would be called in an

emergency should be arranged in consultation with the local police authorities.

On no account should the guard allow any persons including members of the branch staff

to have access to the Bank premises outside office hours without the Manager’s

permission. He should not accept any food or drink offered by anybody while on duty.

Should a guard on duty become indisposed and unable to perform his duties he should

arouse another guard if there is one and if necessary arrange for the Manager to be

informed.

The First Line Manager or Deputy Manager will inspect the guard at irregular intervals to

see that proper watch is maintained. A guard inspection book will be kept in which the

date and time of each inspection will be recorded. Arrangements should also be made for

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a police officer to visit the Bank while on his rounds and report any slackness on the part

of the guard to the Manager.

Branches provided with Armed Guards are advised to take note of the following for their

immediate compliance:

a) Gun licence should be registered in the name of First Line Manager and the retainer’s licence

should be obtained in the name of all persons allowed to hold the gun.

b) The date of expiry of licence should be properly diarised and licence should be renewed in

time.

c) The Rifle provided to the branch should be tested and ensured to be in working condition. All

formalities thereof should be ascertained from the licensing authorities for compliance.

d) The cartridges which are old should be destroyed and new cartridges should be purchased. All

formalities thereof should be ascertained from licensing Authorities, for compliance. A record of

such events should be maintained.

e) Branches provided with guns should note to keep the gun loaded at the opening of business

hours of the branch.

f) All the branches should have the main grill doors locked after the Banking hours and

customers are to be allowed only after identification.

6.6 NOMINATION FACILITIES

NOMINATION AND SETTLEMENT OF CLAIMS IN ACCOUNTS

Banks are permitted to accept nomination in Deposit accounts, Locker facility and Safe

custody of articles facility with effect from 29th March, 1985 by introduction of new sections

45ZA to 45ZF in the Banking Regulation Act and framing of the Banking Companies

(Nomination) Rules, 1985.

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Individual customers enjoy the facility of making nominations in favor of individuals in respect

of

a) deposits standing in their names

b) contents of Safe Deposit Lockers hired by them and

c) items left by them in Safe Custody

Branches should ensure that all customers are aware of this facility and give nominations

at the time of opening the accounts. Necessary provisions have been made in the account

opening forms for this purpose. Branches should ensure that the existing account holders also

give their nominations. Where there is no nomination, branch should write to the customers and

ensure ostentation of nomination.

If any customer does not wish to make nomination for any personal reasons, inspite of the

advantages explained by the branch, an endorsement may be made in the Nomination form

attached to the account opening form or in the account opening form itself reading “I/We ..........

do not require Nomination facility” under the signature(s) of the account holder(s).

In the case of death of a depositor, or a customer who has kept articles in safe custody

with the Bank or a hirer of a safe deposit locker, the nomination facility enables the Bank to

release to the nominee, the deposit amount or the articles left in safe custody or the articles kept

in the safe deposit lockers, as the case may be, without insistence on a Succession certificate or a

Probate of the Will of the deceased customer.

DEPOSIT ACCOUNTS

While accepting nominations in deposit accounts branches should observe the following

conditions/formalities.

Nominations should be obtained on form DA-1(Annexure – 1)for all deposit accounts

standing in the name(s) of individual depositor(s).

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Branches shall accept nominations only in deposits held in the personal names of the

constituents. Branches should not accept nominations in respect of deposits held in any

representative capacity such as, director of a company, secretary in an association,

partner of a firm, karta of a Hindu Undivided Family and the like.

In the case of proprietary concern branches shall extend nomination facility as the deposit

held by a proprietary concern is construed as the one standing in the name of individual

viz. the sole proprietor. (RBI Manual of Instructions-1998 para.18.6.g)

Branches can accept nominations in the following types of deposit accounts standing in

the name(s) of individual depositor(s).

a) Savings Bank accounts

b) Current accounts

c) Term Deposit accounts including Multiple Deposit, Multiple Investment

Scheme and Recurring Deposit accounts

d) Non-resident (ordinary),non-resident (external) and Foreign Currency

Non-resident accounts

e) Accounts of Pensioners

Branches shall obtain a separate nomination in respect of each deposit account.

In respect of Multiple Deposit accounts, Multiple Investment Scheme accounts, and

Recurring Deposits where the deposits made at various intervals are credited into the

same account, branches need not obtain a separate nomination every time a deposit is

made. The nomination made in the account at the time of the first deposit will be valid for

the subsequent deposits made in the same account.

In respect of term deposits, the nomination made during the currency of a deposit will

continue to be valid even after renewal of that deposit.

Branches should note that only one individual in his/her personal capacity can be made as

a nominee in respect of a particular deposit account.

Acceptance of more than one nominee in any particular deposit account is prohibited.

Hence, branches should, under no circumstance, accede to the requests from depositors

for nominating more than one person for any deposit account.

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Where the depositor has more than one deposit account, branches should accept separate

nominations in respect of each deposit account, even though all the deposits stand in the

name of the same depositor.

Where the depositor(s) wish (es) to nominate more than one person for a single deposit,

branches may permit splitting of the deposit in the proportion desired by the depositor(s),

subject to the period and the aggregate amount of the deposit not undergoing any change

as a result of such splitting. Branches may permit such splitting for the purpose of

nomination, without any loss of interest to the depositor.

For each of the resultant deposits, branch should obtain a separate nomination.

WHO CAN NOMINATE

Every depositor having a deposit in his/her individual name either singly or jointly with

other individual(s) can give a nomination for each one of the deposits standing in

his/her/their name(s).

Branches may accept nominations in various deposit accounts in the following manner:

a) Accounts in the name of an individual

*nomination should be given by that individual alone.

b) Accounts in the joint names of two or more individuals

* nomination should be made jointly by all the joint account holders.

c) Accounts in the joint names of individuals with “Either or Survivor”, Anyone or

Survivor” or Former or Survivor” mandate

* nominations should be made jointly by all the joint account holders irrespective

of the operational instructions.

d) Accounts of minors operated by guardian on behalf of the minors

*nomination should be made only by the guardian authorized to operate the

account of the minor (natural guardian or the guardian appointed by the Court)

e) Accounts of minors operated by guardian held jointly with the guardian

*nomination should be made only by the guardian both on behalf of the minor and

the guardian himself/herself.

f) Minor’s Special Deposit accounts

*Branches should not accept any nomination in Minor’s Special Fixed deposit

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accounts and Minor’s Special Savings Bank accounts operated by the minor

alone.

g) Accounts of Non-resident Indians

*nominations can be made by the non-resident Indians in their non-resident

(ordinary), non-resident (external) and Foreign Currency Non-resident accounts in

the same manner as in sub para (a) to (f) above.

Accounts of pensioners

Nomination may be made by a pensioner in the account to which the pension amount is

credited. Since the pension rules prohibit joint accounts being opened by the pensioner for credit

of pension, it is desirable that in every pension account nomination is obtained by the branches.

Branches should persuade the pensioner to give nomination. This nomination will be apart from

the nomination made by him/her under “Arrears of Pension (nomination) Rules 1983” which will

be applicable for payment of pension arrears.

The nomination in respect of arrears of pension payable is made to the government for

payment of arrears after the death of the pensioner, whereas the nomination obtained for the bank

account (under Banking Companies (nomination) rules, 1985) of the pensioner is to cover the

credits already made into the account of the pensioner before the death of the pensioner.

WHO CAN BE NOMINATED

Branches shall ensure that only individuals in their personal capacity are nominated in

respect of deposit accounts.

The nominee may be

a) any individual who is a resident of India, in his/her personal capacity, named by

the depositor(s)

b) a minor represented by the guardian (natural or appointed by Court)

c) a non-resident Indian of Indian Origin

d) a foreign national of Indian origin

e) a foreign national of non-Indian origin

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A non-resident Indian can nominate a resident as a nominee and a resident Indian can

nominate a non-resident as a nominee. However, remittance of funds from the account of

the deceased depositor to the non-resident nominee will be subject to the Exchange

Control Regulations, prevailing at the time of remittance.

Where a nominee is a minor, the sole depositor or all the depositors as the case may be,

should appoint another individual, not being a minor, to receive the amount of the deposit

on behalf of the minor, during the latter’s minority. Such individual need not necessarily

be the natural guardian of the minor-nominee.

OBTENTION OF NOMINATIONS

While obtaining nominations in respect of any deposit account, branches should follow the

procedure detailed hereunder:

Branches should provide the customers with form DA-1(which is annexed to the account

opening forms). If old account opening forms are used, branches should use the form

DA-1 supplied for use by existing account holders.

Upon receipt of the duly filled nomination letter (DA-1) from the depositor(s) branch

should examine the same carefully to ensure that

a) All columns are duly filled in and the account number and name(s) of the

depositor(s) and the name, address and date of birth (if the nominee is a minor) of

the nominee are clearly written

b) It is signed by all the depositors

c) Only one nominee is appointed on the nomination letter

d) The eligibility criteria as prescribed in Para. A.2, A.3 and A.4are satisfied.

After verifying the nomination letter as above, the officer-in-charge of the department

should verify the signature(s) of the depositor(s) on the nomination letter and thereafter

sign on the acknowledgment slip attached to the nomination letter under the branch round

stamp.

The acknowledgment slip should be dated and handed over to the depositor in token of

having registered the nomination.

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The relative ledger folio/entry of the particular deposit account and also the

Savings/Recurring Deposit pass book/term deposit receipt should be branded with the

rubber-stamp reading “Nomination Registered”.

The nomination letter should be retained with the relative account opening form.

While obtaining nominations, branch need not obtain the signature of the nominee.

CANCELLATION OR VARIATION OF A NOMINATION

A nomination once made can be changed or cancelled by the depositor(s) any time during

the currency of the deposit.

Instructions for cancellation of nomination should be given in form DA-2(annexure-

2)and change or variation of nomination should be made using form DA-3.(annexure-3)

Where the deposit is in joint names, branch should obtain the form DA-2 and/or DA-3

duly signed by all the joint account holders irrespective of the operational instructions

(like Either or survivor, anyone or survivor etc.)

In the case of accounts in joint names irrespective of the mandate such as “Jointly”,

“Either or Survivor”, “Both or Survivor”, “Anyone or Survivor” or “Former or Survivor”

on the death of one of the depositors, branch may allow cancellation and/or variation of

nomination during the currency of the account.

Branches should ensure that, such cancellation or variation of nomination is made jointly

by all the depositors surviving at the time of cancellation or variation of the nomination.

Before accepting an application for cancellation or variation of a nomination, the officer-

in-charge of the department should examine the application form DA-2 or DA-3 as the

case may be, and ensure that it is complete in all respects and is signed by all

the depositors as stated in paras 6.1 to 6.3 above.

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In addition, when a nominee is to be changed, branch should ensure that the new

nominee satisfies the eligibility criteria provided in para A.3and A.4 of this Chapter.

The officer-in-charge of the department should compare the signatures of the depositors

on the application for cancellation/variation of the nomination, with the specimen

signatures on record.

After ensuring that the application for cancellation/variation of a nomination is in order,

the officer-in-charge of the department must sign on the acknowledgment slip attached to

the form, under the branch round stamp and date and return the acknowledgment slip to

the depositor(s).

In the case of an application for cancellation of a nomination, the officer-in-charge of the

department must cancel the nomination letter given earlier, by drawing a line across the

face and entering the remark “nomination cancelled vide DA-2 dated ...........(date)”under

his/her initials and date.

The application for cancellation of the nomination must be attached to the relative

account opening form and kept on record. The nomination letter which was cancelled

should also be retained with the relative account opening form.

In the case of an application for variation of a nomination in form DA-3, the officer-in-

charge of the department must cancel the nomination letter given earlier, by drawing a

line across the face and entering the remark “nomination changed vide DA-3 dated

.......”under his/her initials and date.

The application for variation of the nomination must be attached with the relative account

opening form and kept on record. The nomination letter which was cancelled should also

be retained with the relative account opening form.

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Whenever a particular account is carried forward to a fresh folio/register, the details of

the nomination should also be carried forward without fail.

A nomination/change of nomination or cancellation of nomination will be deemed to be

in force even when the relative deposit is renewed, unless the nomination is changed, in

which case, a fresh nomination is required.

Upon the death of the sole depositor in the case of deposit in the name of an individual,

or upon the death of one or all of the depositors in a deposit in the names of two or more

individuals, the name(s) of the deceased depositor(s) in the deposit cannot be substituted

by the name of the nominee.

The name of the nominee cannot also be added to the name(s) of the surviving

depositor(s). In other words, under no circumstance, can a branch permit the nominee to

become the depositor under the same account.

The role of the nominee is only to receive the proceeds of the deposit in the event of

death of all the depositor(s).

Similarly, granting of a loan to a nominee against the deposit standing in the name of the

deceased depositor(s) is not permissible. Whenever, a nominee makes a request for a loan

against the deposit standing in the name(s) of the deceased depositor(s), it should not be

conceded but the claims should be settled first in favor of the nominee by following the

procedure laid in para: A.9 below.

By making payment of the deposit amount to the nominee, the bank gets a good and valid

discharge. It is entirely the responsibility of the nominee to account the money with the legal

heir(s) of the deceased and bank is in no way concerned with it.

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If the nominee so desires, a deposit can be accepted from him/her, even though such

deposit may be made by the nominee out of the proceeds of the deposit of the deceased

customer, after the claim has been settled in favor of the nominee.

Such deposits should not be construed as the funds of the deceased depositor and hence

loans can be granted by the bank against the security of such deposits in the name of the

nominee, (now turned depositor).

NOMINATION IN RESPECT OF ARTICLES HELD IN SAFE CUSTODY

Branches shall accept nominations for items held in safe custody only if they are held in

personal name of a single individual and not in any representative capacity, as holder of

an office or otherwise.

Branches should not accept nomination in respect of persons jointly depositing articles

for safe custody.

Branches shall accept only one individual, not in any representative capacity as holder of

an office or otherwise, as nominee in respect of items covered by a safe custody receipt.

Where such a nominee is a minor, the person who makes the nomination may appoint

another individual, not being a minor, to receive the items on behalf of the minor during

the latter’s minority.

Branches should note to obtain a separate nomination in respect of each lodgment

covered by a safe custody receipt. Such nomination should be obtained on formSC-1.

(Annexure – 6)

Branches shall accept a nomination in favor of a non-resident person of Indian or non-

Indian origin or a foreign citizen or national, for articles deposited in safe custody.

However, application of non-resident nominee for taking out of India, the articles in safe

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custody of the deceased persons, should be referred to Reserve Bank of India for prior

permission.

Branches may permit cancellation/variation or change of nomination at any time during

the currency of the safe custody agreement. Requests for cancellation of nomination

should be made using form SC-2(annexure-7)and variation or change of nomination

should be made using form SC-3(annexure-8).

After due acknowledgment of nomination/cancellation or variation of the nomination the

officer-in-charge of the department should attach the original nomination form and the

forms for cancellation and/or variation, to the relative agreement/account opening form

and hold the same safely.

SAFE DEPOSIT LOCKERS

Branches shall permit nominations only in respect of Safe Deposit Lockers hired by

persons in their individual capacity and not in any other representative capacity.

Only individuals, not in any representative capacity, can be made nominees in respect of

Safe Deposit Lockers

In the case of joint hirers, branch may accept more than one nominee. However, at any

time the total number of nominees must not exceed the total number of joint hirers.

Branch should obtain separate nomination in respect of each locker account.

For making nomination in respect of lockers hired in the name of sole hirers, branches

should use Form SL-1(annexure-9) and in respect of lockers hired jointly by more than

one hirer, Form SL-1A(annexure-10) should be used.

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Branches can permit cancellation or variation of nomination in the case of lockers hired

by sole hirers or by joint hirers. However, in the case of joint hirers, branch should permit

cancellation/variation of nomination only if such request is made jointly by all the hirers,

irrespective of the operational instructions such as “Either or Survivor”, “Anyone or

Survivor” etc. Since Safe Deposit Lockers should not be rented out with “Former or

Survivor” mandate nomination by such hirers cannot arise.

Requests for cancellation of nomination should be made using Form SL-2(annexure-11)

irrespective of whether the locker is hired in single name or joint names. Variation of

nomination should be made by using Form SL-3 (annexure-12) for single hirers and

Form SL-3A (annexure-13) for joint hirers.

“If the sole locker hirer nominates a person, Bank should give to such nominee access of

the locker and liberty to remove the contents of the locker in the event of the death of the

sole locker hirer.

In case the locker was hired jointly with the instructions to operate it under joint

signatures, and the locker hirer(s) nominates person(s), in the event of death of any of the

locker hirers, the bank should give access of the locker and the liberty to remove the

contents jointly to the survivor(s) and the nominee(s).

In case the locker was hired jointly with survivorship clause and the hirers instructed that

the access of the locker should be given over to ‘either or survivor’, ‘anyone or survivor’

or according to any other survivorship clause, Branch should follow the mandate in the

event of the death of one or more of the locker-hirers. Where, however, all the joint hirers

(with E or S / Anyone or Survivor Clause) have died, the nominee or the nominees

jointly, (if there are more than one nominee), should be permitted to withdraw the

contents of the locker.

Nomination in respect of lockers can be cancelled or varied by the sole hirer or all the

joint hirers as the case may be but, in the case of nominations made by the joint hirers,

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branch should not permit the surviving hirers to cancel or vary the nomination upon the

death of one or more of the hirers, unlike the position in Deposit Accounts.

The contents of the lockers have to be necessarily withdrawn by the surviving hirer(s)

jointly with the nominee(s).

All other formalities for abstention of nomination, cancellation or variation of

nomination, recording of the same, acknowledgment and preservation of records are

same as those applicable to Deposit Accounts.

SETTLEMENT OF CLAIMS WHERE NOMINATION HAS BEEN OBTAINED

If nomination had been obtained in the accounts of the deceased constituent, claim should

be settled in favor of the nominee as per the procedure detailed in the following paras.

SETTLEMENT OF CLAIMS UNDER NOMINATION — DEPOSIT ACCOUNTS

Claims from a nominee must be entertained only upon the death of the depositor (or all

the depositors). Branches may inform the nominee on receipt of notice of death of the

depositor if after a reasonable time it is found that the nominee does not come forward to

claim the deposit.

Satisfactory proof evidencing the death of the depositor(s) must be tendered along with

the claim papers.

An announcement of death in a newspaper, production of a death certificate or a report

from a reliable person etc., is sufficient notice of death to act upon, subject to the

ostentation of Death Certificate before settling the claim.

Upon receipt of the notice of death, the officer in charge of the department should record

the same immediately in the relative ledger folio/registers with the date and source of

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information in red ink under his initials. A suitable note should also be made in red ink in

the relative account opening form and specimen signature sheet under the initials of the

officer-in-charge.

A claim made by a nominee in an account in respect of which he has been nominated

must be settled only by closure of the account and payment of the balance together with

interest, where applicable, to the nominee.

Such payments can be made in cash, only if the aggregate amount of the claim including

interest is below Rupees Twenty thousand only. If the amount of claim is Rupees Twenty

thousand and above, as per Section 269(T) of Income Tax Act, the payment should be

made only by an Account Payee crossed Bankers Cheque or Demand Draft or by credit to

a bank account of the nominee.

This would constitute full and valid discharge of the Bank’s liability. The nominee

should not be allowed to operate the account of the deceased depositor(s) under any

circumstance. Similarly, no loan should be granted to the nominee against the security of

the deposit in the name of the deceased customer.

The nominee can prefer a claim only in respect of the account/deposit in which he has

been nominated. For example, if the deceased depositors had made nomination in one

deposit and left another without nomination, the former deposit should be settled with the

nominee and the latter should be settled with the legal heirs of the deceased.

When a claim is received from a nominee it should be verified that the nomination is in

force in the concerned account and that it has not been varied or cancelled.

Where the nominee is a minor, the balance in the account must be paid to the person

authorized to receive the monies on behalf of the minor in the nomination letter and the

receipt obtained from him for the payment.

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In a minor account, if a guardian, (say father)nominates a third person for the deposit

account in the name of his minor son/daughter and if the minor expires during the

currency of deposit, the deposit amount is payable to nominee only and not to the natural

guardian (in this case the father).

Where, however, the minor account is operated by a guardian appointed by a Court, upon

the death of the minor, the branch should take up with Regional Office for a decision on a

case to case basis.

Where the nominee is not a resident of India and it is sought to repatriate abroad the

monies in the account of the deceased depositor(s), branches should be guided by the

following:

a) Claims from a nominee who is a non-resident Indian / Person of Indian Origin,

the monies standing to the credit of deceased depositor(s), should be credited to

the nominee’s NRO account only. Repatriation of such balances up to USD one

million per financial year from the NRO accounts may be permitted subject to

compliance with the following, as stated by RBI, vide their Master Circular

No.3/2007-08 dated 02.07.2007 as below :

NRI/PIO may remit an amount, not exceeding USD 1,000,000 per

financial year, out of the balances held in NRO accounts / sale proceeds of

assets / the assets in India acquired by him by way of inheritance / legacy,

on production of documentary evidence in support of acquisition,

inheritance or legacy of assets by the remitter, and an undertaking by the

remitter and certificate by a Chartered Accountant in the formats

prescribed by the Central Board of Direct Taxes.

NRI/PIO may, within the overall limit of USD one million as stated above, remit sale

proceeds of assets acquired under a deed of settlement made by either of his parents or a close

relative (as defined in Section 6 of the Companies Act, 1956) and the settlement taking effect on

the death of the settler, on production of the original deed of settlement and an undertaking by

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the remitter and certificate by a Chartered Accountant in the formats prescribed by the Central

Board of Direct Taxes.

In case, the amount to be repatriated is more than one million US dollars, the application

should be made to Reserve Bank of India.

Where a non-resident nominee happens to be a foreign national of non-Indian origin, the

balances standing to the credit of the deceased depositor would have to be credited to NRO

account.

Instructions of the Exchange Control Department of Reserve Bank of India must be

sought when request for repatriation of funds is received in such cases. Utilization of such funds

in India is also subject to the current provisions of FEMA.

In all cases of claims by the nominee, the branch should request the nominee to produce

the death certificate or any other acceptable proof of death of the depositor in respect of whose

account the claim is being made.

In addition, the nominee must surrender the pass book and cheque book relating to the

account or the deposit receipt as applicable. If the pass book, cheque book or deposit receipt is

not available with the nominee and the branch is convinced about the bonafides of the nominee,

the same may be waived.

“Upon the information of death of the customer, the nominee should be provided with the

Claim Form as per specimen in Annexure 14 (Revised) and be instructed to submit the same duly

completed. Branches are required to identify the nominee-claimant with Ration Card (with

Photo), Voters Photo ID Card, and Passport, etc., and satisfy themselves about the genuineness

of the claim / nominee. Branches are also advised to obtain the original as well as a copy of death

certificate and the proof of identity from the claimant and return the original after verification

while retaining the copy for branch records”.

The Claim Form duly completed as indicated in para: 9.13above together with the death

certificate and documents mentioned in para: 9.12above must be tendered by the nominee to the

branch for settlement of the claim.

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After verifying the documents submitted by the nominee, the officer in charge of the department

must ensure that:

a) The nomination in favor of the claimant is in force and there is no variation or

cancellation.

b) That there is no lien on the monies claimed and that there is no liability

outstanding against the deceased customer that would necessitate the exercise of

the Bank’s right of set-off against the monies claimed. However, it should be

borne in mind that the Bank cannot exercise its right of set-off or lien on the

money payable to the nominee for his viz. nominee’s individual dues. The branch

should, in such a case, refer the matter to the respective Regional Office for

guidance.

c) That no order of any court has been received restraining payment of the amount to

the nominee.

d) If the claim is for amounts lying in a Savings Bank Account of a deceased

pensioner, branch should ensure that no pension payment has been made for the

period subsequent to the death of the pensioner.

These details should be recorded under the signature of the department officer on the

reverse of the claim form. In case of any doubt, the matter must be referred to the Regional

Office for guidance.

If the claim is in order, the officer-in-charge of the department must place the Claim

Form together with his noting to the Manager of the branch for closure of the account.

After obtaining the Manager’s permission, the department may proceed to close the

account.

Amounts held in Term Deposits may be paid to the nominee (after satisfying the

above formalities for the claim) by foreclosing the deposit before maturity if the

nominee so desires without applying the penalty applicable for premature closure. If

the nominee wants the money to be paid on maturity, the branch can do so.

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Interest on amounts held in term deposit accounts in the name(s) of the deceased

depositor(s) may be paid to the nominee in the manner indicated below:

a) At the contracted rate up to the date of maturity of the deposit if paid on the date

of maturity.

b) Where the claim is made before the date of maturity of the deposit, interest should

be paid at the appropriate rate for the period for which the deposit has remained

with the bank, without charging penalty for premature closure.

c) Where the deposit amount is claimed by the nominee after the date of maturity of

the deposit, interest should be paid at the contracted rate up to the date of maturity

and thereafter, simple interest should be paid at the appropriate rate applicable as

on the date of maturity for the period from the date of maturity till the date of

settlement without treating the deposit as being renewed.

d) In the case of FCNR and NRE deposits, where the deposit is claimed after the

date of maturity of the deposit, interest should be paid at the contracted rate till

the date of maturity. From the date of maturity till the date of settlement of the

claim, interest as permissible under the directives of interest rate on FCNR/NRE

deposits operative on the date of maturity of the deposit should be paid. Branches

should follow the changes notified by Central Office from time to time and apply

the ruling rates.

Interest should be paid at the rate of interest applicable in respect of Savings Bank

accounts, from the date of death till the date of settlement of claim in the following cases

a) Credit balances lying in the Savings Bank accounts of individual depositors

b) Credit balances lying in the Current Account and Cash Credit Accounts of

individuals

After computing the amount due, including interest, to the nominee, a receipt as per

Annexure 14must be prepared for the amount to be paid in settling of the claim. The

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nominee must be asked to sign this receipt and return to the branch. Where the amount of

payment is Rupees Five hundred and above, the nominee must be asked to give a

discharge on a Rupee One revenue stamp.

The account in the Ledger or Register must be closed. The relative ledger folio or register

folio entry should additionally carry the following remark in red ink under the full

signature of the official of the department.

The details of the closure must be recorded in the Register of Accounts Opened and

Closed with the remarks “claim paid to nominee” made in the “remarks” column.

The account opening form, specimen signature card, nomination letter, letter of

variation/cancellation of nomination (wherever applicable), death certificate, or any other

proof of death and claim form, receipt from nominee and any other related document

must be preserved in a separate file titled “Claims paid File” and retained in the custody

of the Deputy Manager as a permanent record. The account should be removed from the

Index to the relative ledger.

Branch need not refer the matter to Regional Office or Central Office but settle the claim

at the branch level, if otherwise in order. The claim of the nominee should be settled

irrespective of any claim from the legal heirs or anybody else except in case of receipt of

a Court Order prohibiting such payment.

SETTLEMENT OF CLAIMS IN THE ACCOUNTS OF DECEASED DEPOSITORS

UNDER CAPITAL GAINS ACCOUNT SCHEME, 1988

Claims by the nominees or in their absence the legal heirs who claim the amounts should

apply in Form-H (annexure-15)with prior approval of the concerned Assessing Officer.

Legal heirs will have to produce documentary evidence such as

Relative Pass Book (for account A), Term Deposit receipt (for Account B) etc. as specified by

the above Authority

or

b) Letter of disclaimer or authorization in favor of one of the legal heirs by other legal heirs

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or

c) Succession Certificate

or

d) Letter of Administration in the absence of a registered Will/Probate of the Will

And

The payments made as above shall not affect the right or claim which any person

may have against the person to whom any payment has been made. Branches should refer all

claims under Capital Gains Accounts Scheme, 1988, to respective Regional/Central Office as

appropriate depending on the amount of claim. Payment should be made only on receipt of

specific approval from Regional Office/Central Office.

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CHAPTER 7

BRANCH MAINTENANCE

7.1. MAINTENANCE OF BRANCH PREMISES

DEAD STOCK , FURNITURE &FIXTURES, PREMISES AND STATIONERY

FURNITURE & FIXTURES

As per new Policy decision implemented with effect from 1st October 1998, the entries

relating to Furniture &Fixtures account hitherto held in the books of branches, have been taken

over by respective Regional Offices. As such, no accounting entries in respect of Furniture

&Fixtures Account shall be held in General Ledger by branches.

However, branches should maintain an Inventory Register or system generated history

printouts of Furniture &Fixtures items with details like name and description of item, date of

purchase, original cost, distinctive number etc. to enable physical verification by Branch,

Inspectors of Regional Office/Central Office and Statutory Auditors.

Purchase of New Furniture Branch shall purchase new furniture items as per

discretionary powers and where it is beyond First Line Manager’s discretion, prior approval of

Regional Office / Central Office must be obtained.

Branch should effect payment to the supplier to the debit of their Suspense Account and

seek reimbursement from Regional Office with a detailed Report confirming receipt of the

furniture item. If original instructions from Regional Office are otherwise, branch should

scrupulously follow the same and confirm compliance.

Disposal of old Furniture items After getting prior permission from Regional Office /

Central Office for disposal of old items, branch should take necessary steps for sale / auction as

per norms prescribed by Regional Office. The entire sale proceeds should be credited to

Regional Office on the same day of realisation and a detailed Report should be sent.

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Depreciation on Furniture and Fixtures Depreciation will be provided by Regional Office

at the stipulated rates at the end of each half year viz. 30th September and 31st March of each

Financial Year.

Regional Office should forward the consolidated Furniture &Fixtures statement every

half year viz., September and March to Accounts Department, Central Office. It is the

responsibility of branch to ensure that no balance is held in the following heads of accounts in its

General Ledger.

PHYSICAL VERIFICATION OF FURNITURE AND FIXTURES

Once in six months in a Financial Year the branch Deputy Manager an Officer authorised

by the First Line Manager should physically verify the bank’s furniture at the various quarters of

officers attached to the Branch and also the furniture in the branch premises and furnish an

Inspection Certificate to the effect that all the furniture as per Inventory Register are available.

If there is any shortfall, it must be reported to Regional Office / Central Office

immediately. Records pertaining to such inspection should be maintained by the branch for the

verification of Auditors / Inspectors. Care should be taken by such Inspecting Official to furnish

factual position as this portfolio constitutes an important segment in the bank's Balance Sheet.

Wherever Bank’s own residential blocks are occupied by officers of various branches/

Controlling Offices, Regional Office must, once in six months in a Financial Year, verify

physically about the availability of Furniture and Fixtures supplied and if any item is missing, it

must be brought to the notice of Central Office for appropriate action. Records thereon should be

maintained by Regional Office for the verification of Officials during the course of Management

Audit.

7.2. MAINTENANCE OF FILES

CORRESPONDENCE, RETURNS AND RECORDS

Branches should bear in mind that the Returns/Statements are the effective medium

through which the working of the branch in the primary functional areas is brought to the

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knowledge of Controlling Office and it is the most reliable tool for Regional Office/Central

Office to exercise effective and adequate supervision. Branches and Controlling Offices should

sensitize themselves to the requirements of MIS Policy put in place by Central Office in our

Bank.

Branches should ensure prompt submission of various Returns and incorporate the

correct data/information in line with the related instructions. In small branches, First Line

Manager / Deputy Manager should oversee submission of Returns.

However, in medium and large branches, the Officer-in-charge of Advances or any

other Officer should be entrusted with the responsibility of ensuring timely submission of

Returns under the overall supervision of Manager/Deputy Manager.

Branches should maintain Register labeled as "Returns submitted Register" and the

entries are to be made month-wise. As and when a Return is compiled and submitted to

Regional Office / Central Office, the details should be entered in this Register under the initials

of Manager/Deputy Manager or an authorised official. All the Returns relating to various areas

of branch functioning viz., Deposits, Advances, Foreign Exchange, Customer Service, must be

recorded in this Register.

In terms of the provisions MIS Policy, Departments at Central Office and Regional

Offices are under instructions to display a comprehensive updated list of Returns to be

submitted by branches and Controlling Offices for the compliance and guidance of operational

staff. Branches are required to note the changes / additions notified and ensure prompt

submission of Returns / Statements / Certificates / Data to the Regional Offices, Central Office,

other Competent Authorities specified.

It should be the responsibility of the Branch Manager to maintain a Register titled

"Trade, Industries and Agriculture" wherein reliable information relating to volume and value

of Industrial Production and Agricultural Minerals and also the Imports and Exports of the area

of operation should be recorded.

The information recorded should be reviewed annually from independent enquiries,

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official statistics and other literature published from time to time. Up-to-date information

relating to Population and any Scheme of Agriculture or Industrial development should also be

included in this Register for a proper Appraisal of business potential of the area served by the

Branch.

Branch Statistics Register should be carefully compiled each half year to watch the

comparative progress of the Branch. Any unusual item which affects the amounts or rates for

purposes of comparison between the different years should be mentioned therein.

In the said Register, Managers shall maintain a record of what imports represents their

Sales and Collections and what exports represents their Purchases and encashment. Items

which cannot be related to any particular commodity such as Personal Cheques etc. should be

grouped together as miscellaneous.

7.3. MAINTENANCE OF CARD/ DEMAND/ CHEQUE

CARD SCHEMES

Our Bank had launched our own credit cards (Classic and Gold ) in affiliation with Visa

International with effect from 01.04.2006. Our credit card is a global card, valid not only in India

and Nepal, but also throughout the world. The card will be accepted at over 1.18 lakh outlets in

India and over 130 lakh outlets worldwide. The facility to draw cash using the card is available at

nearly 15000 ATMs in India and over 8.7 lakh ATMs worldwide.

Type of Credit Cards:

Our credit cards are affiliated to Visa International. The following types of cards are issued at

present.

1. Classic Cards: The cards issued with the limit slabs of Rs.10000/-, Rs.25000/- and Rs.50000/-

2. Gold Cards: The cards issued with the limits of Rs.60000/- and above and up to Rs.500000/-

(maximum credit limit)

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DEMAND DRAFTS

DRAFT LEAVES

All Demand Draft (DD) leaves should be kept in the dual custody of the Deputy

Manager and an Officer authorised by the first line Manager.

At the end of each day the joint custodians should ensure that all the DD leaves

utilised for the day have been properly accounted for and further verify that all the

unutilised leaves are intact.

Operational staffs are advised to note that our bank's DD leaves are designed with

certain in-built security features to ensure operational efficiency and also to take care

of the preventive vigilance requirements.

The salient features are furnished here below for the guidance of branches and Regional Offices.

A single new design DD format has been introduced with effect from 1st February

2009 with the following features. Since then issue of Demand Drafts in the old format

of leaves is prohibited.

The existing prefix reading as 98/MDD/O stands deleted. Column hitherto existed for

incorporating details of remittance i.e., Cash/Transfer/Clearing on the face of DD leaf

is dispensed with.

Issue branch name with code number, EC type and check digit are preprinted.

DD number consisting of nine digits is printed horizontally on the top with the font of

the digits in the MICR format.

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Water mark of our bank’s name viz. Indian Overseas Bank followed by bank’s logo

has been inscribed and such water mark will be visible when viewed through light

rays.

Our bank's name viz. Indian Overseas Bank appears at six places in two rows (three

in each row in Hindi and English alternately) with bank’s logo in middle encircled by

a special animation design in yellow colour and the same can be viewed through ultra

violet lamp.

The cages for OT, TT, OL and TL are positioned on the left side just above the MICR

band.

The line appearing just above the authorised signature is having a security check i.e.,

Indian Overseas Bank repeated in micro types and will be visible when viewed

through magnifying glass.

Since February 2007, a circular hologram was hot stamped by security printers at the

printing stage itself. The hologram is affixed in the lower middle portion of the DD

just above the MICR band.

The name of drawee branch of our Bank in Hindi and English is printed on the top

left side on the face of DD and positioned one below the other to provide space for

hot stamping the Hologram. Thus, Bank's name in Hindi is shifted upwards so as to

be in line with the word 'To' and Bank's name in English is printed just below the

Hindi version.

THE HOLOGRAM CONTAINS FOLLOWING FEATURES

“INDIAN OVERSEAS BANK” written in English and Hindi with Bank’s logo in the

centre.

A picture of our Central Office main building is printed at the centre.

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“Indian Overseas Bank” and: Good People to Grow With” printed in slanting position at

the bottom.

‘Indian Overseas Bank’ written in circles away from the core centre.

A spiral design is positioned in the centre.

‘IOB’ written in English and Hindi in Micro text inside Bank’s logo.

Three flying birds at the top right side.

Chain like design in semi circular shape at the top.

The diameter of the hot stamped hologram is fifteen mm.

Branches, Extension Counters, Regional Offices and Departments at Central Office

should use the new Demand Drafts with hologram. Branches, Extension Counters and all other

offices are prohibited from borrowing/ supplying DD leaves from/ to other Branches/ Extension

Counters/offices. Branches/ Extension counters and other offices are advised to place their indent

depending upon their consumption pattern well in advance say six months to their respective

Regional Office.

APPLICATION FOR DD/MT/TT

An application for a Demand Draft in F.46A or Mail Transfer in F.40 shall be taken as

per the requirement of the purchaser. If an application is received by letter, the date of the letter

will be entered in the form, all particulars of which will be authenticated by a supervising

official, the letter then being pasted to the voucher on record. Applicants for Telegraphic

Transfer should however be required to sign the standard form whenever possible, but action on

written instruction should not be delayed on this account.

Branches while accepting applications for purchase of DDs of smaller value (particularly

by cash) are required to make enquiry and satisfy themselves as to the genuineness of the

purchaser and the purpose of purchasing of small value DDs.

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TRANSFER FROM CONSTITUENT’S ACCOUNT

In order to affect debit to a constituent’s Account, the application must be accompanied

by a cheque in favor of our bank or a letter authorizing to debit the account towards the amount

of Demand Draft/ Mail Transfer/ Telegraphic Transfer and the Bank charges. The cheque or the

letter of authority should be signed by the person(s) authorised to operate the Account.

Where a cheque is not enclosed to Request-cum-Authority Letter for DD/TT/MT but

DD/TT/MT application (F.46A or F.40) is available, after due verification of the authenticity of

such letter, branch should prepare a separate debit voucher with advice and the Request-cum-

Authority Letter should be marked and preserved securely attached with the voucher so prepared.

A Demand Draft/Mail Transfer/Telegraphic Transfer may also be issued against a Letter

of Request authorizing to debit the account towards the amount of Demand Draft/Mail

Transfer/Telegraphic Transfer and the Bank’s charges even if not accompanied by an application

in F.46A or F.40 and in such a case the Demand Draft/Mail Transfer/Telegraphic Transfer

voucher also shall be prepared by the branch.

In exceptional cases, however, a Demand Draft/Mail Transfer/Telegraphic Transfer shall

be issued as per complete details furnished on the cheque itself (duly authenticated by the

Drawer), even if the application is not signed by all the authorised person(s).

The tendering of a cheque in favor of the Bank is no authority to make remittance on the

instruction of a third party by the debit to the drawer’s account and it follows that, when two or

more signatures are necessary for operation on an account, the application must be signed by the

requisite number of parties authorised to operate even if it is accompanied by a cheque which is

properly signed.

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ADVICE TO CONSTITUENTS

Particulars of all DDs which are issued by debit to constituents’ accounts and handed-over or

despatched to third parties must be immediately advised directly to the constituents and not

through their messengers.

DELIVERY OF DRAFTS

Drafts should be delivered against the recipients’ acknowledgment on the reverse of the

relative application forms and delivered on the same day. In other cases, the acknowledgment

should be taken either on the reverse of the form or in a local delivery book specially maintained

for the purpose.

ISSUE BRANCH NAME AND CODE NUMBER

A hole in the relevant digit-cage on both the right and left side of the instrument should

be punched with the help of punching plier. Under no circumstances, the digit-cage should

simply be crossed with pen. Particular care must be taken to see that all the draft forms in use are

branded with the name of the branch with code number before issue, if it is not already printed

thereon.

SPOILT DRAFT LEAF

When a form is spoilt in preparation, the fact must be noted in the office copy of Demand

Drafts Issued Register (DDR 1) under the authentication of the Deputy Manager or an Officer

authorised by the First Line Manager who will himself / herself destroy the spoilt form. The

portion bearing the printed serial number of the spoilt draft in question, should be neatly cut and

pasted in DDR 1 of date.

DDR SYSTEM

Under Demand Drafts Reconciliation (DDR) System, DDs should be issued to the credit

of the DDR account (GL Code 2005). Particulars of all DDs issued on a particular day should be

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recorded in Demand Drafts Issued Register (DDR-1).Regarding payment of DDs the same

should be paid to the debit of DDR account after recording the particulars in Demand Drafts Paid

Register (DDR.2).

Before authenticating a DD, the signing official should check the recordings in DDR-1,

verify the DD on hand and ensure that, the DD number, paying branch name and code, issuing

branch name and code, date of issue and amount both in words and figures are correctly

recorded, the appropriate security cages both on the left hand and right hand side of the drafts are

properly punched and they are as per DD application form.

DDs of value less than Rupees Fifty thousand only are to be issued under one authorised

signature. The single signatory to the DD for value less than Rupees Fifty Thousand should

block-out the space meant for the second signatory (in relevant column of "Authorised

Signatories" on the DD leaf) by means of a square rubber-stamp (of Revenue-stamp size) reading

as X .

This is a preventive vigilance measure and the single signatory's compliance is required

prior to the delivery of DD to the purchaser. DDs for amounts of rupees Fifty thousand and

above, should bear two authorised signatures.

As regards drafts issued by Extension Counter Officer and other branches having single

officer, each draft should be less than rupees Fifty thousand only.

NO DRAFT ADVICE REQUIRED

Under New DDR System, no advice need be prepared. The draft should be prepared with

carbon impression on the reverse of it. Care should be taken to record correct code number and

name of the paying branch both in the draft and in DDR-1. Regarding branches coming under the

CCO centres, DDs must be drawn on the respective Central Clearing Office.

Branches are not permitted to draw DDs on any of the branches coming under the CCO

centres. The DDs so drawn on CCOs are payable at all local branches attached to the respective

CCO.

In case customer wants the DD to be issued on a specific branch within such CCO

centre, issuing-branch should draw DD draft on CCO and also incorporate on the DD the name

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of such specified branch. For this purpose, the issuing branch should indicate the name of the

branch in red ink on the top right-hand side of the draft as "Also payable at ..............................

branch". The paying branch should follow the usual procedure laid down for payment of drafts.

DDS/MT’s/TT’s BY OVERSEAS BRANCHES

Payment of DDs/MTs/TTs issued by our overseas branches is delinked from FETS from

1st October 2001. The procedure is the same as in the case of payment of DDs/MTs/TTs drawn

by Indian branches. Overseas Branches (except Colombo) will issue Indian Rupee DDs and MTs

on CCOs only in CCO centres.

PAYMENT OF DD’s DRAWN ON CCO’s

Core Branches located in Core CCO centres have to pay DDs / MTs by accessing their

CCO / DDR module through core net work. In such cases branches should not debit Local DD

Reimbursement Account (GL Code.2520).

PAYMENT OF DRAFTS DRAWN ON BRANCHES

a) The paying / drawee branches functioning in non-CCO centres should pay the DDs

drawn on them only to the debit of DDR account in their books and ensure that the debit

is recorded in DDR Paid Summary DDR 2.

b) In case of rupee TT received from our overseas branches, the concerned branch should

debit their TT Payable account after ensuring that the cipher is tallied and credit

beneficiary's account and wait for IBSA from Treasury (Foreign) Department, Central

Office. The paying branch need not submit any claim. If TT payable entry is not

eliminated within seven days, branch should contact Treasury (Foreign) Department,

Central Office for obtaining IBSA/CMP-4.

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ISSUE OF DEMAND DRAFTS

The Officer assigned with the role function of issue of DDs should authenticate a DD

after ensuring the compliance to the following essential particulars:

a) Name of drawee- branch and code number thereof

b) DDR running serial number

c) Date

d) Specimen signature number is entered correctly. DDs should not be signed by officers on

probation who do not hold Power of Attorney as their signatures are not circulated and

not available for verification. The authorised signing officials must put their Specimen

Signature Number beneath the signatures on the DD and desist from indicating their

names below the signature on the DD.

e) Punching of appropriate cages is done meticulously with the plier and the punched holes

are clear and without any hinges to check fraudster from meddling with the cages as also

to prevent giving scope for inflating the value of the DD. Branches are cautioned that

marking of cages with pen (or by any other method other than punching by plier) should

never be resorted to, lest it defeats the very purpose of cage mechanism.

f) Amount in words and figures are written legibly and correctly.

The DD Issuing-branch should arrange to paste transparent self- adhesive tape of

standard quality on the figures of value of DD written on each DD issued. The tape should be

securely pasted by the clerical-staff who writes the DD (both manually and through system) in

the manner specified, before placing the same i.e. the Demand Draft instrument to the

Authorised Signatory for his / her verification and signature.

Such affixing of adhesive tape should never be done on the Payee's name, amount of DD

in words and other features of DD. The Authorised signatories to the DD should ensure the

pasting of tape on the figure of value of DD before putting their signatures.

The single signatory to the DD for value of less than rupees Fifty thousand should block-

out the space meant for the second signatory ( in relevant column of "Authorised Signatories" on

the DD leaf ) by means of a square rubber-stamp of Revenue stamp size reading as X .

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Issuing branch should exercise vigilant caution when requests for multiple drafts of small

values are received (particularly by cash ) and ensure verification of the identity of the purchaser.

Computerized branch having DDR package, while issuing drafts should ensure that the

checksum is generated by the system.

Branches should not issue drafts on Administrative Offices. However, Administrative

Offices are permitted to issue DDs on their CCO/Local Branch for making payments.

Demand Drafts / Mail Transfers / Telegraphic Transfers for Rupees Fifty thousand and

above should be issued by branches only to the debit of concerned customer’s account and not

against cash payment. Similarly payment of Drafts / Mail Transfers / Telegraphic Transfers for

Rupees Fifty thousand and above should be routed through the account maintained by the

beneficiary with a bank and not in cash.

Single draft for value less than rupees ten lakhs only may be issued by branches headed

by Chief Manager. Regarding issue of single DD of value rupees ten lakhs to less than rupees ten

crores, branches should take up with IBR Division, Central Office through their respective

Regional Office furnishing the details and obtain prior permission.

Branches headed by AGM and above cadre are authorised to issue single DD of value

less than rupees ten crores. In other words, at branches, no single DD can be issued for the value

of rupees ten crores and above.

Branches are advised to note that for DDs of Rupees Fifty thousand and above, the

applicant must furnish Income Tax Permanent Account Number and it should ensured that this

information is provided in the DD application form.

The Drafts should invariably be crossed before handing over to the customer except in

cases where specific request has been made for an uncrossed draft.

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DDR.1-DD Issue summary

The system generated DDR-1should be compiled for each day. The day’s total of DDs

issued should be made at the end of the day and recorded. Unused space of DD issue column, if

any, in DDR-1 for the day should be blocked for security reasons by drawing two parallel lines.

The day-end total of DDs issued as reported in DDR-1 through system generated report should

be taken to Day Book as credit for DDR Account in General Ledger.

PROCEDURE AT PAYING BRANCH

When our Bank’s draft is presented at the paying branch for payment it should be verified

for safety checks by the officer-in-charge and handed over to the clerk for necessary

accounting.

The safety checks are

a) The draft whether issued in the new design format and has the name of the issuing branch

and code number.

b) the DD should have a preprinted nine digit number

c) Punching at the right hand side for the correct digit code and at the correct security cage

on the left hand side of the DD.

d) Signatures of the officers of the issuing branch must tally with the specimen on records

e) Draft must have the carbon copy impression on the back. However this not applicable for

a computer generated draft.

f) words and figures of the amount of DD must tally

g) DD is neither post/anti dated nor out of date and bear the date of issue

Utility Programme for viewing DD issue details.

All branches covered by the network and Central Clearing Offices will be able to use this

utility programme named ‘DDR ISSUE’ which is available in IOBONLINE under "Product

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Links". A detailed user manual for using the program is available in the "User Manuals from

Information Technology Department, Central Office" on IOBONLINE.

Whenever a draft is presented for payment, the Supervisory staff should use this facility

and cross-check the DD details. The actual transaction for effecting the payment has to be done

in the system as per instructions in force. After the payment of DD the user at the paying

Branches / CCOs should note to opt "Mark Paid" to enable alert mode to the subsequent enquiry

for the same DD by other users.

Usage of DD view programme

User-staff are advised to note that this facility is an additional supporting tool. The details

available to the user through this utility programme will facilitate verification of issue details.

The decision to honour or otherwise pertaining the DDs shall be taken based on such verification

and other guidelines relating to safeguards to be taken at the time of payment of drafts put in

place by Central Office.

Branches in CCO Centres while making payment of drafts drawn on their CCOs should

also opt the "Mark Paid" button to indicate the draft as paid. When these drafts are processed at

CCO, the user at CCO will get a message "CAUTION: Draft Already Marked as Paid by

…………….. (Branch name)", if the draft was processed already and paid by a branch.

This utility programme is available only to Supervisory Staff of branches / Central

Clearing Offices. To enable the login, branches should contact their respective RCCs with the

roll number of the Supervisory Staff attached to their branch. Once the RCC registers the users,

authorized supervisory staff can login to the system. Users logging in for the first time should

change their password immediately and then proceed for enquiry of draft details or else the

system will not allow them to proceed further. This password should be kept secret and should

not be divulged to anybody under any circumstances.

In as much as the utility entirely relies upon the data received from all the networked

branches, it is the responsibility of all Networked branches to ensure that the "data file" transfer

at the time of "Application Shutdown" is successful every day. In case of failure, branches

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should send the data through the utility specifically provided for File Transfer to Regional Office

/ Central Office.

It is reiterated that this programme is a supplemental tool (like checksum) available to

networked branches which would enable them to cross-check the details of a particular DD when

the same is presented for payment and satisfy them as to its genuineness.

Branches are advised to note that non-availability of this facility as well as the data, for

any reason whatsoever (like loss of connectivity) cannot be a basis for non-honoring of DDs if

they are otherwise found to be in order.

Networked branches/Extension counters and CCOs are required to make best use of this

facility to guard against payment of fake/fraudulent drafts.

Branches are advised note the additional Preventive Vigilance measures as detailed

below. Operational staffs while handling DDs at branches / offices are required to meticulously

comply with the following instructions.

a) Paying branch should continue to ensure scrupulous observance to the operational

instructions governing payment of DDs put in place by Central Office while effecting

payment of DDs.

b) Paying branch should verify whether the transparent tape affixed on the Figures' of the

value of DD by the issuing branch is intact and that it does not contain additional tape

one on the other.

c) Paying branch should continue to verify the issue details on-line or contact the branch

over phone wherever necessary.

d) The Passing Authority at the Paying branch should ensure strict adherence to the

following instructions pertaining to Pre Passing and Post-passing procedures.

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PAYMENT OF DEMAND DRAFTS: PRE PASSING COMPLIANCE

The Passing Authority should subject all the Demand Drafts to ultra violet lamp scrutiny.

In respect of Demand Draft of value more than Rupees Twenty Five Thousand, as a record for

having verified under ultra violet lamp, the Passing Authority should affix, after due verification,

a rubber-stamp reading as ”UV Verified” on the reverse side of the Demand Draft under

authentication with date.

On getting warning messages if any, prompted by the computer system while verifying

checksum of a Demand Draft, the Passing Authority should make discreet enquiries about the

discrepancy and ensure the genuineness of Demand Draft. A comprehensive record of such

enquiries should be incorporated on the reverse side of the Demand Draft by the Passing

Authority under authentication with date. It should be noted that tallying or non-tallying of

checksum alone cannot be the deciding factor for paying or rejecting a draft.

The appearance of security-band in the form of wavy-boxes with the words “Indian

Overseas Bank” inscribed, on the body of Demand Draft leaf should be ensured by the Passing

Authority.

Passing Authority should continue to verify the ‘issue particulars’ in all cases of Demand

Drafts of value exceeding Rupees One Lac and such other Demand Drafts as deemed fit through

‘IOBONLINE’ wherever available and record such verification details on the reverse side of the

Demand Draft under authentication with date.

PAYMENT OF DEMAND DRAFTS: POST PASSING COMPLIANCE

Passing Authority is required to follow-up and obtain written confirmation within forty

eight hours of transaction wherever any oral clarification has been obtained from the DD issuing-

branch on a reference made while effecting payment.

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Passing Authority should record the details of enquiries made and the response of

Demand Draft issuing branch, on the reverse side of Demand Draft under reference, without

omission, under authentication with date.

Branches and Controlling Offices are required to note that the Pre-Passing and Post-

Passing procedures put in place as Preventive Vigilance measures are to help the Operational

Staff to strengthen the process of verification of the day-to-day transactions, and to ensure the

correctness / genuineness of the Demand Drafts while processing them for payment.

Regional Offices are advised to verify during branch visits, compliance to the Pre-

Passing and Post-Passing procedures by branches through random checks and ensure that the

above instructions are adhered to by all the branches under their control on an on-going basis.

The Paying authority at branch should exercise due alertness to pick-up any warning-

signals while verifying the Demand Draft presented for payment and should never hesitate to

seek clarification if need be, from the issuing branch. Paying branches are cautioned not to

overlook the Preventive Vigilance measures both in-built and manual, put in place by Central

Office as any dilution in compliance is likely to lead to serious operational risks besides putting

the bank to financial loss.

In terms of the software devised by our Information Technology Department, Central

Office, under DDR package while issuing each DD a unique check-sum arrived by the system is

incorporated on the DD with the prefix "CS”. At the time of making payment, the system would

cross-verify the check-sum.

During branch visits, Officials from Regional Office should undertake test-check of few

paid Demand Drafts to verify branch compliance to the Systems and Procedures including

Preventive Vigilance measures put in place by Central Office for payment of Demand Drafts.

Deficiencies observed should be brought to the immediate attention of branch for rectification.

Branches, CCOs and Regional Offices are reminded that the degree of sophistication and

complexities of frauds in DD related instances are alarming and the fraudsters continue to be on

prowl to encase the complacency of operational staff. The fraudsters should never be allowed to

pursue and they should be jettisoned. Operational staff should respond to the requirements of the

frauds prone environ and weed out the fraudsters through strict adherence to the Systems and

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Procedures as also the Preventive Vigilance measures put in place by Central Office.

PAYING BRANCH - DDR.2

After verifying in the manner stipulated by Central Office and satisfying himself / herself

about the correctness the Paying Authority should hand-over the DD received for

payment to the clerk who is authorised to handle the same.

The clerk should then record the details of the DD in DDR.2 (Demand Drafts Paid

Register) in the system exercising due care to enter all the details correctly especially

with regard to the draft nine digit number, issuing branch code, date of issue, date of

payment and amount.

The authorised Paying authority at the branch should check the entries in the system

maintained DDR-2and ensure that the details are recorded correctly before releasing the

DD for payment.

The DD should then be entered in the cash / transfer module in the system and passed by

the officer for payment. Utmost caution should be exercised in paying the draft as no draft advice

will be received.

Punching in the digit cage should invariably be verified before payment. Branches may

accept and record Passports/Postal Identity Cards or Identity Cards of Armed Forces personnel

for the purpose of identification of payees of Demand Drafts up to Rupees Twenty five thousand

only.

On payment of draft, cash or transfer paid stamp with date as appropriate should marked

on the face of the DD with cancellation of signatures as done for passing of cheques.

The system generated day’s total of our Bank’s DDs paid should be made at the end of

day and authenticated by the Paying authority after verification. The unused space of DDs paid

column in DDR-2for the day should be blocked for security reasons, by drawing two parallel

lines. The total of DDs paid as reflected in DDR-2 should be taken to Day Book as Debit to DDR

Account in General Ledger.

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Payment of drafts drawn on CCOs Core Branches located in Core CCO centres should

effect payment of DDs / MTs by accessing their CCO / DDR through core network and should

not debit Local DD Reimbursement Account (GL Code.2520).

DDR SUMMARY

The daily transactions in DDR account should be reported in respect of ‘Drafts Issued’ in

DDR-1 and ‘Drafts Paid’ in DDR-2. At the close of business, the summated total of DDR-1 and

DDR-2 and the total amounts of rectification passed, if any, should be incorporated in the

relevant columns of the covering summary viz. DDR-3. The details of rectification should be

recorded in DDR-5 and be annexed to DDR-3 summary together with DDR-1 and DDR-2.

The closing balance of the previous working day in the covering summary should be

taken as the opening balance to arrive at the closing balance of the current day. Branches should

transmit their DDR summaries / data to their respective Regional Offices on the same day.

It is the responsibility of the Officer-in-charge of DD Section at the branch under the

guidance of Deputy Manager, to ensure that the day-end system generated printouts of DDR are

extracted, verified, authenticated and neatly filed in a separate file for verification by the

Auditors / Inspectors.

DDR Rectification

If errors are noticed after the relevant summaries have been mailed, the correction of

entries should be advised using the Rectification Summary.

The Rectification Summary should contain all the relevant details of the draft/summary in

question, with a suitable narration as to how the correction was effected. Totals of the

rectification entries should be shown on the debit/credit side at the appropriate place in the DDR

covering summary, and should be supported by the rectification summary.

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REVALIDATION OF DRAFTS

A draft on expiry of six months from the date of issue becomes stale and requires

revalidation. Drafts should be revalidated invariably at the written request of the applicant of the

draft.

Application for revalidation from the payee may be considered only if it is forwarded

through the payee’s banker. The issuing branch should also ensure that the duplicate of the draft

to be revalidated has not been issued by it in the meanwhile.

The Officer-in-charge of DD section at the issuing branch should mark in red ink as

"Revalidated for six months from .................. (date)"on the face of the DD and authenticate the

same. The revalidation should be noted against the relative entry in DDR-1 of that date and in the

relative original voucher under advice to drawee branch.

REPLACEMENT DRAFTS

Revalidation of DD should be restricted to one occasion only. After first revalidation, if

the draft still remains outstanding for more than six months, the draft should be surrendered for

cancellation. Branches are prohibited from revalidating DDs which are more than three years

old.

Prior approval of IBR division, Central Office is required for payment of stale DDs over

three years from the date of issue. In such cases branches are required to forward their request to

their Regional Office for onward transmission to IBR Division, Central Office with their

recommendations.

At the request of applicant of the draft and against surrender of original draft, branch may

issue a fresh DD in the name of the same payee only, subject to recovery of applicable charges.

ATTESTATION OF SIGNATURES

Sometimes, customers while purchasing drafts in their own interest request branches to

attest their signatures so as to avoid difficulties in encashment of DDs at the drawee-branches.

Such request when received from well-known customers, the DD issuing branch may obtain

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his/her signature on the reverse side of the draft, attest such signature and return to customer

cautioning against misplacement.

In case where the drafts are drawn on Central Clearing Offices, the customer must be

requested to identify the branch through which he / she would like to encase the draft for

payment. After ascertaining his/her preference the draft will be marked with the words "Also

payable at ................ branch" indicating the name of the branch where the draft is to be presented

for payment. Branches are advised to note that the attestation under reference is not applicable

for non-individual payees.

NO REFUSAL OF PAYMENT OF DRAFT

The payment of genuine DD cannot be refused. By issuing DD, the Bank undertakes a

liability which it is bound to discharge at the instance of the person on whose favor it has issued

the DD. Hence by refusing payment of a DD on the grounds like payment countermanded by the

drawer, drawer’s signature needs confirmation, draft not drawn on correct form etc., the Bank is

exposed to risk of claim of damages and unnecessary legal action.

If the drawee branch finds any discrepancy in DD, they should immediately contact the

drawer branch over phone or through Telegram / Fax and ascertain the position. In the meantime,

they could explain the difficulty to the payee or the collecting Bank orally and request them to

present it a day or two later. If the payee or the collecting bank insists on written return-memo,

drafts can be returned with the remark "Clarification awaited. Please present again".

The draft issuing branches on their part should give top priority to answer queries from

drawee branches pointing out the discrepancies in the draft and such clarification should be sent

by Telephone/Telegram/Fax on the same day followed by dispatch of confirmation copy of

communication.

CANCELLATION OF DRAFT

At the request of the applicant of the DD, the amount of DD may be refunded to him/her

by cancellation, against his/her receipt on the back of the DD under words “Received payment

by cancellation”.

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If the amount is over Rupees Five thousand, such receipt should be obtained on a revenue

stamp from the applicant of the DD. The cancellation should be noted on the face of the related

original DD application under full signature of officer with date of cancellation.

Before payment is made, any endorsement on the DD must be cancelled by the endorser

and any special crossing by bank concerned must have been cancelled. If a draft bears

negotiation marks, stamp or crossing, branch should ask the applicant to get the consent of the

payee before cancelling the same.

The drawee branch should be advised of such cancellation by a letter. The exchange

collected at the time of issue of a draft should not be refunded.

Cancelled DD should be paid in cash or through credit to original applicant’s account subject to

the amount of ceiling in force.

The cancelled DD should be debited to the DDR account through DDR-2of the issuing

branch. A cancelled draft is to be treated as being paid by the issuing branch which should record

its own code number and name as paying branch in DDR-2. Proceeds of cancelled DD of value

of Rupees Fifty thousand and above should be credited to the concerned customer’s account and

should never be paid in cash.

When an application requesting cancellation of demand draft is received without

enclosing the original draft or the replacement draft (where it has been issued already) the

cancellation should be treated as if branch is issuing a new replacement draft and necessary

formalities including obtention of Indemnity, clearance from drawee-branch and IBR Division ,

Central Office should be followed.

REPLACEMENT OF LOST DRAFT

When a draft is reported lost and a replacement draft is asked for, issuing office should

immediately notify by Letter/Telegram/Telex, the branch on which the draft is drawn and

enquire whether it is paid or not. Full particulars of the draft must be furnished in the

letter/Telegram/Telex.

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CHEQUE TRUNCATION SYSTEM CLEARING (CTS)

Cheque Truncation System (CTS) is an Image Based clearing system introduced by RBI

(Presently at Delhi), which replaces the existing clearing system of Instrument Based clearing.

The purpose of introducing the new system is to:

Reduce the existing time taken for the clearance of cheques for both the local and the

outstation cheques.

Improve the efficiency and quality of the services offered by banks in the area of the

Cheque Clearing– both to customers of banks and for internal improvements in areas

such as clearing reconciliation, risk management, systemic efficiency etc.

Lodgments

Under CTS lodgment is to be done in 2 stages.

a) Lodgments of cheques in CBS environment. Lodgments are to be done by clerical staff.

Approvals are to be done by Supervisory staff.

b) Once the approval of instruments is done, the Branch user shall generate and upload the

data of lodgment to the CTS system available in the branch.

c) Scanning of cheques to be done in a stand-alone machine provided for the purpose and to

be done by clerical staff. Approval is to be done by Supervisory staff by logging in as

Supervisor in the Stand-alone machine provided for this purpose.

d) The system will balance the amount lodged in CBS with the amount of the scanned

instruments and also attach the digital signature to the images as required by RBI.

For lodging the instruments, branches should use the CTS lodgment programs only.

While lodging cheques, the branches should enter the MICR details of the cheque only. For

example, for lodging of a cheque drawn on IOB, Jan path, New Delhi, enter ‘110’ (micro city

code for New Delhi),’020’ (micro bank code for IOB), 004(micro branch code for Jan path

branch) instead of entering the alpha codes as done in MICR clearing.

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Branch should ensure that all cheques that are entered in CBS system are scanned without

fail. Under CTS system collecting branches are responsible for the genuineness of the cheque.

The onus of proving the genuineness of the cheque lies with the collecting bank and not the

paying bank.

In respect of cheques issued by Government Departments (‘B’ type cheques), branches

should note to send the instrument also to CCO, besides the image, in the respective clearing

zone.

RETURN MARKING OF THE INWARD CHEQUES

The branch can mark payment/return of the images as they desire to pay / return.

CANCELLATION OF OUTWARD RETURNS

When they want to cancel any return already marked they can mark it themselves. If the

system does not permit them to do so then they should contact CCO and get their confirmation

that the fate of the instrument has not been conveyed to RBI and then proceed for cancellation of

return marking.

PRESERVATION OF CHEQUES

Branches participating in CTS clearing are responsible for preserving the cheques

deposited by their customers. Since only the image is travelling to RBI, the physical cheques are

to be kept under the custody of the presenting branch. These cheques are to be preserved for a

period of 8 years.

SYSTEM MAINTENANCE

Branches are to take proper care of the CTS systems available with them like scanners,

stand-alone machine with the CTS software etc. Also they should, in coordination with RCC

should maintain these CTS related systems.

ADMINISTRATIVE ROLE

CCO should coordinate with RBI for the smooth functioning of CTS system. It should

take up with RBI for any extension required by any of the branches for presenting the cheques or

for informing the fate of the inward images received. It should take up with RBI for blocking the

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branches under its jurisdiction, which may not be in a position to participate in CTS clearing due

to circumstances beyond their control.

7.4 PASSWORD MAINTENANCE AND ADMINISTRATION

All login to the CBS server are controlled by two level authentication, viz. User-id and

Password. Every user should create his/her own password as prompted by the system which

should NOT be revealed to any other person under any circumstances. The password should be

of minimum 5 characters with a maximum of 8 chars and should consist of Alphabet and

Numbers. The password should be changed at frequent intervals but not later than 7 days. As and

when the password is due for change, the system would prompt the user to enter a new password.

Every user should remember the password created by him / her.

At times, users may forget the password created by them as a result they would not be

able to login to CBS system and worI. In such instances, the user should make a written request

to the Branch Chief and request for password change. The Branch Chief should record the letter

in a separate register as per format given in annexures before deleting the existing password of

the user using the ‘del_passwd’ option in user maintenance. Under no other circumstances, this

option should be used by the Branch Officials. Once the existing password is deleted, the user

should login and give a new password. Then the user-id has to be approved by the Senior

Manager / System Administrator before the user would be allowed to login to CBS for working.

Users should use only those terminals authorized by ITD to get connected to CBS

system. Whenever a user has completed his/her work and does not want the use of the terminal,

he / she has to log out from the programs gracefully (using 0 or Q as the case may be) so that any

other user who might require the terminal can use the same using his/her user-id and password.

In case of the user wants to temporarily log out for a very short duration of time, using ‘F4’ key

the terminal should be locked by the user before leaving his/her seat. To re login, the user should

enter his/her password once more and enter the system. Every user is responsible for the

transactions put through under their User-id and hence the users should ensure that others do not

have access to their password.

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7.5. CORE BANKING SYSTEM (CBS)

CENTRAL CLEARING OFFICE PACKAGES IN CBS

For the exclusive use of Central Clearing Offices which are part of Core Banking

Solution, separate set of programs have been provided in CBS. Users at CCO should ensure that

they use the specific program only for their daily routine. Though the nature of job at CCOs

generally covers clearing lodgment, realization, collection cheques and realization, payment of

Drafts etc. taking into view the volume and other accounting system, specific programs have

been provided.

Generally the following modules are implemented for Central Clearing offices:

‘awb’, ‘clg’, ‘ddr’, ‘gl’, ‘ibsa’, ‘lba’ and ‘sc’

Wherever, speed clearing system is in vogue, besides the above modules ‘sb’ and ‘cdcc’

will also be implemented to enable the central clearing offices to post, pass the Cheques as per

extant guidelines. The Clerical staff as well as the Supervisory Staff handling Speed clearing

should ensure that the guidelines are followed.

Local Branches Account (‘lba’) is specific module exclusive for Central Clearing Offices

to put clearing related transactions related of the local branches. CCOs have to advise ITD, the

IBR code and MICR code of all the branches coming under their jurisdiction for maintenance in

the system.

Provision is given to branches to view their account transactions with CCO. Using this

program, branches should take necessary steps to ensure that reconciliation of their books with

CCO is done on a regular basis and the LBA account is always tallied.

The balance available in the LBA against each branch will be initialized whenever the

program is invoked by CCO and the related E-ibsa and Funds transfer entries will be posted and

passed automatically. Central Clearing Offices should send the Funds transfer advices to

branches and follow it up for earlier elimination of the entries. Branches receiving E-ibsa should

note to respond the same on the next day.

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7.6. NETWORK FAILURE

MAINTENANCE OF HARDWARE / SOFTWARE

Under computerized environment proper upkeep of computer systems, maintenance of

network and backup and Business Continuity plan play a major role to ensure the smooth

functioning of the system.

CCO is responsible for the hardware / software of CHI as well as CH available at CCO.

CCO should take utmost care to maintain the systems at peak performance level always as the

entire clearing operations are now done through CTS at the centres where it has been

implemented. They should also take care of the Scanners provided to them.

CCO should ensure that the network connection between CCO and RBI as well as CCO

and branches are working properly.

Backup and Business Continuity Plan

CCO should ensure backing up of data and programs daily and preserving the same. Also

they should, in coordination with RCC should maintain the DRS at their centre with the latest

backup being available there.