Bank Account Opening Procedures

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Why do banks follow the practice of opening an account only when the applicant is properly introduced?

To ensure the integrity, financial stability, and reliability of the applicant.

What is the importance of the person introducing the applicant to the banker being a respectable person?

To ensure the credibility and reliability of the reference or introduction.

Why should the bank take extraordinary care in accepting the introduction or reference from any person?

To prevent fraud and ensure the honesty and reliability of the account holder.

What is the purpose of obtaining the signature of the person introducing the applicant in the presence of an officer?

To verify the identity and credibility of the person introducing the applicant.

How does proper introduction and reference help in preventing fraudulent activities in banking?

It helps the bank to entertain only honest, reliable, and responsible individuals, preventing fraud and overdrawal of money.

What are the risks involved for a bank if the introduction process is not done properly?

The bank cannot avail itself of the statutory/legal protection, may incur liability, and may be unable to realize money or face attachment of deposits by the court.

What is the purpose of the specimen signature provided by the applicant?

To protect the bank against forgery by tallying the signature on the cheque with those on the card.

What is the minimum initial deposit required for opening a savings account with a cheque book?

Rs. 1000

What document is issued by the bank to the customer after the account has been opened and an account number has been allocated?

A pass book

What is the purpose of a pass book for the customer?

To know the position of his account and the record of transactions between the bank and the customer.

Study Notes

Account Opening Process

  • Banks require a proper introduction before opening an account to ensure the authenticity of the applicant and prevent fraudulent activities.

Importance of Introducer

  • The person introducing the applicant must be respectable and reliable, as they vouch for the applicant's identity and credibility.
  • The introducer's reputation is crucial, as it helps the bank assess the applicant's trustworthiness.

Introduction and Reference

  • Banks must exercise extreme caution when accepting an introduction or reference from any person to avoid potential risks.
  • It is essential to verify the introducer's credentials and ensure they are respectable and reliable.

Signature Verification

  • The person introducing the applicant signs in the presence of a bank officer to confirm their introduction.
  • This process helps the bank verify the introducer's identity and ensures accountability.

Prevention of Fraudulent Activities

  • Proper introduction and reference help prevent fraudulent activities in banking, such as identity theft and fake accounts.
  • Verification of the introducer and applicant helps the bank identify and mitigate potential risks.

Risks of Improper Introduction

  • If the introduction process is not done properly, the bank may face risks such as:
    • Fraudulent accounts
    • Identity theft
    • Financial losses

Specimen Signature

  • The applicant provides a specimen signature to facilitate future authentication of transactions.
  • This signature is used for verifying the applicant's identity and authorization.

Initial Deposit and Account Opening

  • The minimum initial deposit required for opening a savings account with a cheque book varies depending on the bank's policies.
  • After opening an account, the bank allocates an account number and issues a document to the customer.

Passbook and Account Management

  • A passbook is issued to the customer after the account has been opened, allowing them to track transactions and manage their account.
  • The passbook serves as a record of all transactions, helping the customer monitor their account activity.

Learn about the procedures and requirements for opening a bank account, including the process of identifying potential account holders and the role of customer references and bank opinions.

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