Manual of Operations PDF

Manual of Operations Manual of Operations Revised – 2012 Chapter No. Title 1 Types of Accounts 2 Features of different Accounts 3 Signing Authority/Mandate 4 Current Accounts - Opening of Accounts 5 Curre...

Manual of Operations Manual of Operations Revised – 2012 Chapter No. Title 1 Types of Accounts 2 Features of different Accounts 3 Signing Authority/Mandate 4 Current Accounts - Opening of Accounts 5 Current Accounts - Transfer, Closure and Stopping of Accounts 6 Current Accounts - Change of Status of Accounts 7 Current Accounts - Management of Accounts 8 Current Accounts - Cheque Books 9 Current Accounts – Operations 10 Savings Deposits 11 Fixed Deposits 12 Money Market Accounts 13 Pay Orders 14 Safe Deposit Lockers Compiled by Operations Department Page 1  Manual of Operations CHAPTER 1: TYPES OF ACCOUNTS PART 1: CLASSIFICATION 1.1 Bank’s offer their customers a range of banking facilities which include various types of bank accounts. These accounts fall into three main groups, namely - Current Accounts Savings Accounts Deposit Accounts 1.2 For statistical purposes Current Accounts are classified as Demand Deposits and Savings Accounts and other Deposit Accounts are classified as Time Deposits. Compiled by Operations Department Page 2  Manual of Operations CHAPTER 2: FEATURES OF DIFFERENT ACCOUNTS TABLE OF CONTENTS 2.1 Current Accounts 2.2 Savings Accounts Pass Book Savings Accounts Statement Savings accounts Minors Savings Accounts Senior Citizens’ Accounts 2.3 Fixed Deposits 2.4 Call Deposits 2.5 Savings Certificates 2.6 Money Market Accounts Compiled by Operations Department Page 3  Manual of Operations CHAPTER 2: FEATURES OF DIFFERENT ACCOUNTS PART 1: CURRENT ACCOUNTS 2.1.1 Current Accounts: The main features are:- No interest is payable on these balances Withdrawal is by demand. Cheque books are issued to account holders. Cheques and other instruments are accepted for collection. 2.1.2 The customer’s record of a current account is the bank’s statement sent to him generally at the end of each month but if required at more frequent intervals. The bank’s record is the Central Data base in the computer system. PART 2: SAVINGS ACCOUNTS 2.2.1 Savings Accounts: The types of savings accounts maintained by the Bank are – Pass Book Savings Accounts Statement savings Accounts Minors Savings Accounts Isuru Arunalu Teen Saver Junior Saver Senior Citizens’ Accounts 2.2.2 Savings Accounts: The main features are – Deposits can be made as and when required by the customer. Withdrawals can be made on demand. Interest will accrue on the daily balances and credited monthly. Interest will not be paid for balances less than the minimum balance. The bank retains the right to specify the minimum balance. Cheques will be accepted to the credit of savings accounts on a selective basis, as per the laid down procedure currently in force. Minimum balance to be maintained will be decided and revised by the Bank. Compiled by Operations Department Page 4  Manual of Operations CHAPTER 2: FEATURES OF DIFFERENT ACCOUNTS PART 2: SAVINGS ACCOUNTS (Contd.) 2.2.4 A Pass Book is given to the customer as his record of transactions with the Bank. The bank’s record is the Central Data base in the computer system. For Statement Savings Accounts a periodic statement will be issued to the customer as his record of transactions. Further reference Chapter 10 of the Manual of Operations. 2.2.5 Isuru Minor’s Savings Account: The main features are – Accounts opened for minors The Depositor agrees to make a monthly deposit (Agreed Monthly Deposit - AMD) in the name of the Minor (The beneficiary) for a fixed duration (Agreed Period of Deposit - APD) that will yield a guaranteed sum upon the beneficiary reaching the age of majority. The guaranteed sum is determined by the Bank, and would be indicated at the time of opening the account. The ranges of Agreed Monthly Deposit (AMD) and the Agreed Period of Deposit (APD) are pre-determined by the Bank. The Depositor should be over 18 years of age. The Depositors could also make deposits in lump sums under the Lump Sum Deposit Scheme. The bank undertakes to pay the guaranteed amount to the named Beneficiary upon his/her reaching the age of majority which for the purpose of this scheme will be the eighteenth birthday, provided the monthly deposits for the agreed period has been made regularly. In the event of death or the total and permanent disability of the Depositor during the APD, no further deposits are required to be made and the Bank will pay the guaranteed amount to the Beneficiary subject to the limitations stated in the DOIC on Isuru Minor savings and Lump sum Deposit Scheme. A special pass book is given to the customer with the record of monthly payments made. At the end of the deposit period an Entitlement Certificate indicating the guaranteed amount is issued. Compiled by Operations Department Page 5  Manual of Operations CHAPTER 2: FEATURES OF DIFFERENT ACCOUNTS PART 2: SAVINGS ACCOUNTS (Contd.) 2.2.6 Arunalu Minor Savings Accounts: The main features are – The account could be opened by the parent/guardian/depositor in the name of the minor. The minimum deposit required and the interest payable will be pre- determined by the Bank. There would be no limitations on the subsequent deposits. Withdrawals would not be permitted until the minor reaches the age of 18 years. However, withdrawals may be considered strictly on a case by case basis, where such funds are for either educational or the medical needs of the minor. Such requests should be supported with documentary evidence acceptable to the Bank. 2.2.7 Teen Saver Accounts: The main features are – A savings account for teenagers who are interested in opening and operating their own accounts. The account could be opened and operated by any person who is between the age of 15 and 20 years. The account could be held and special concessions continued until the account holder reaches 21 years of age. An ATM card will be issued with a pre determined upper limit for withdrawals. A quarterly statement of transactions will be issued in place of the Pass Book. 2.2.8 Junior Saver Accounts: The main features are – The accounts to be opened by one of the parents on behalf of the minor, aged between 10-15 years. An ATM card will be issued with a pre determined upper limit for withdrawals. The account could be converted to a Teen saver account upon the minor reaching the age of 15 years. Where the account is not converted, the benefits will continue until the minor reaches 18 years. A quarterly statement of transactions will be issued in place of the Pass book. 2.2.9 A new account opening mandate must be obtained in the event a Minor savings account is being converted to another product. Compiled by Operations Department Page 6  Manual of Operations CHAPTER 2: FEATURES OF DIFFERENT ACCOUNTS PART 2: SAVINGS ACCOUNTS (Contd.) 2.2.10 Senior Citizens’ Accounts: The Bank has introduced a special account for the senior citizens recognizing the importance of meeting their needs and at the same time assisting the elderly and the middle aged. The main features are – Persons of the age 55 years and above are eligible to open these accounts. Their spouses or children can be made joint account holders even though they are below 55 years of age. The rate of interest applicable will always be more than the ordinary savings account. When the account holder reaches 70 years of age a further increase in the interest rate will be offered. A special identity card would be issued enabling the account holder to obtain the concessions / facilities offered under this scheme. Please refer the relevant Domestic Operations Instruction Circulars for further details. PART 3: FIXED DEPOSITS The main features are – The customer contracts to deposit an agreed amount for an agreed period at a fixed rate of interest. Any contractual changes cannot be accommodated during the agreed period and could be incorporated only at maturity. Interest may be paid on maturity or monthly (monthly interest payments will be only for deposits with a maturity period of 12 months or more). The periods for which fixed deposits are accepted are – 3 months 6 months 12 months 24 months 36 months 48 months 60 months Withdrawals, if made before maturity, will entail in the reduction of the interest payable or, if interest has been paid monthly, on the recovery of the additional interest paid. Minimum deposit will be specified by the bank from time to time. Compiled by Operations Department Page 7  Manual of Operations CHAPTER 2: FEATURES OF DIFFERENT ACCOUNTS PART 4: CALL DEPOSITS Main features are – These are deposits for 7 days and over, and 7 days notice should be given for withdrawals. Interest is paid on the day of withdrawal. The rate of interest, decided at the time the account is opened, may be changed by the bank by giving the depositor 7 days notice. Deposits uplifted without the 7 days notice being given is subject to a penalty of 7 days interest. The minimum deposit will be specified by the bank from time to time. Compiled by Operations Department Page 8  Manual of Operations CHAPTER 2: FEATURES OF DIFFERENT ACCOUNTS PART 5: SAVINGS CERTIFICATES The main features are – Interest is paid up front subject to withholding tax according to prevailing tax legislation. The periods for which certificates are issued are 3 months 6 months 12 months 24 months The denominations available are Rs. 500/-, 1,000/-, 5,000/-, 10,000/- , 25,000/-, 50,000/- and Rs.100,000/-. These will be issued in the names of the applicants or anyone else designated by the applicants. Compiled by Operations Department Page 9  Manual of Operations PART 6: MONEY MARKET ACCOUNT The main features are – Interest payable is linked to Inter-Bank Money Market rates and reviewed every week. Minimum Balance: Rs. 100,000/- Interest is payable monthly. A monthly statement is forwarded to the depositor. Withdrawals could be made by transferring funds to the existing current account or over the counter, on proper identification. Compiled by Operations Department Page 10  Manual of Operations CHAPTER 3: SIGNING AUTHORITY/ MANDATE TABLE OF CONTENTS 3.1 Account Relationship 3.2 Mandate. 3.3 Power of Attorney. 3.4 Third Party authority to operate. 3.5 Weak Signatures 3.6 Specimen Signature Cards. Compiled by Operations Department Page 11  Manual of Operations CHAPTER 03: SIGNING AUTHORITY/ MANDATE Part 1: ACCOUNT RELATIONSHIP 3.1.1 It is duty of a bank to act upon instructions given by customers subject to such instructions being within reasonable/agreed parameters. 3.1.2 These instructions are usually in the form of a directive to the bank by a letter, by completion of withdrawal or deposit forms or by issuing of cheques. 3.1.3 For the bank to authenticate such instructions the customer provides the bank with details of who is authorised to give instructions and specimens of their signatures. 3.1.4 These instructions are recorded on the account opening form known as the Mandate. Part 2: MANDATE 3.2.1 The authority to open and operate on an account should be given by the customer on the bank’s printed mandate forms. 3.2.2 The different types of Mandates have been listed in Chapter 4.5.3. 3.2.3 The completed Mandate forms are valuable documents and once initialed by the Manager should be kept under the control of the Officer in Charge Current Accounts. Mandates should be locked overnight in fire resistant cabinets. 3.2.4 Before the Mandate forms are filed, the Officer in Charge should ensure that they have been correctly completed, and the required documents have been furnished. 3.2.5 The Mandate forms should be filed in numerical order. 3.2.6 If a Mandate has to be removed from the files the Officer-in-Charge Current Accounts should ensure that it is returned without delay and re-filed in the proper place. 3.2.7 Mandates of closed accounts should be removed from the other Mandates and filed in numerical order in a separate filing cabinet under dual control. 3.2.8 In accordance with Prescriptions Ordinance, such mandates should be retained in the bank until the prescriptive period ( i.e. 06 years ), is over. Compiled by Operations Department Page 12  Manual of Operations CHAPTER 03: SIGNING AUTHORITY/MANDATE Part 3: POWERS OF ATTORNEY 3.3.1 A person may give another person authority to act on his behalf in many respects. This granting of authority is usually formalized in the form of a Power of Attorney. A Power of Attorney is a legally executed document, attested by an Attorney at Law or a Notary, granting authority by a person (hereinafter referred to as the ‘Principal’) to another person (herein after referred to as the ‘Attorney’) to act on his or her behalf. 3.3.2 Powers of Attorney should normally be registered with the Registrar General and must bear the Sri Lankan Stamp Duty. If the Branch Manager is confident that the Power of Attorney is a genuine document and is in force it may be accepted without registration. However, Powers of Attorney executed outside Sri Lanka must be registered with the Registrar General. 3.3.3 A general Power of Attorney confers authority over a wide range of acts to the attorney while a special Power of Attorney will confer only limited tasks as specified in the instrument. The bank would accept only specific Powers of Attorney from customers. 3.3.4 If an account is to be operated under a Power of Attorney, the original Power of Attorney should be produced to the bank and a certified copy should be filed with the Mandate. 3.3.5 When a Power of Attorney is submitted to the bank the Principal should be requested to give in writing all the accounts to which the power applies. A general Power of Attorney could be made specific if it is given together with a declaration from the account holder incorporating the conditions listed under 3.3.8 below. 3.3.6 It should be borne in mind that a general Power of Attorney would be accepted only on exceptional circumstances with the prior approval of the Head of Operations or the Head of Legal. 3.3.7 The actual powers conferred on the agent regarding the opening and operation of a bank account should be noted and such information entered on the mandate and the information card. 3.3.8 In accepting a Power of Attorney particular attention should be given to the following and noted. (a) Specific authority to draw or endorse cheques. (b) Specific authority to overdraw for the account of the Principal. (c) Specifically stipulate any other purpose relating to the bank account for which the authority would apply. (d) The terms under which a power may be revoked and the day, if any, on which the power expires. Compiled by Operations Department Page 13  Manual of Operations CHAPTER 03: SIGNING AUTHORITY/MANDATE Part 3: POWERS OF ATTORNEY (Contd.) 3.3.9 Unless specific powers are stipulated overdrafts or other credit facilities should not be granted. 3.3.10 A Power of Attorney becomes void in the following circumstances. i. Death of either the Principal or the Attorney ii. Bankruptcy of the Principal iii. Insanity of either the Principal or the Attorney iv. By the performance of a specified act v. After the lapse of a time period specified in the instrument 3.3.11 Where a Power of Attorney is revoked, any account opened by the attorney on behalf of the principal should also be stopped. 3.3.12 Bank statements should be generated in duplicate for accounts operated under a Power of Attorney and should be sent to the Principal and the Attorney. 3.3.13 Members of the staff are not permitted to operate any accounts as attorney for an account holder other than in the case of their immediate family members. i.e. spouse & children only. 3.3.14 a. If a spouse of a staff member possesses a Power of Attorney for a customer of the Bank, approval of the AGM Operations should be obtained prior to registering such authority with the Bank. b. Each withdrawal/ debit made to an account under such Power of Attorney should have the prior authority of the Manager. Part 4: THIRD PARTY AUTHORITY TO OPERATE 3.4.1 A customer may grant authority to a third party to operate on the customer’s account for a short duration but without that authority being in the form of a Power of Attorney. 3.4.2 This type of authority must be obtained from the customer by the completion of Form No. CA 7 which should be signed by each individual giving this authority. 3.4.3 The signature/s of the customer/s on the form must be verified and initialed by the Officer in Charge - Current Accounts. 3.4.4 For further instructions refer 3.3.5 - 3.3.10 which are also applicable. Compiled by Operations Department Page 14  Manual of Operations CHAPTER 03: SIGNING AUTHORITY/MANDATE Part 5: WEAK SIGNATURES 3.5.1 Extreme caution should be exercised where a customer has a signature which can be easily forged. These include signature in block letters or in a shaky or crowded hand. 3.5.2 In such instances a letter of indemnity signed by the customer should be obtained. 3.5.3 This letter should be filed with the mandate. 3.5.4 Instance where the customer is unable to sign in conformity to the specimen signature given e.g. where each time he signs the signature differs he should be advised to have a few cheques signed in the presence of an officer of the bank and certified by him. In such instances he must be advised of the danger if he loses his cheque book and instructed to keep it under lock and key. Part 6: SPECIMEN SIGNATURE CARDS 3.6.1. The Specimen signature card is the form on which the customers provide the bank with the specimen of their signatures. 3.6.2. The signature card provides for the following details all of which should be recorded: (1) Account Title (2) Account Number (3) Account Type (4) Branch Code (5) National Identity Card No. of each signatory. (6) Name of each signatory (where there are more than one signatory) (7) Account operating Instructions 3.6.3 Care should be taken to ensure that each signature is strictly confined to the space provided. If any part of the signature is placed outside the space provided such part will not be captured by the computer system. 3.6.4 It is also essential that each signature card should bear the date on which it came into force. 3.6.5 Specimen signatures, if placed in the presence of a bank officer, should be authenticated by such officer by placing his signature on the space provided. Compiled by Operations Department Page 15  Manual of Operations CHAPTER 03: SIGNING AUTHORITY/MANDATE Part 6: SPECIMEN SIGNATURE CARDS (Contd.) 3.6.6 Specimen signatures could be witnessed by another customer of the bank when the signature is placed at another location. The signatures card should be authenticated by an officer once the witness’s signature is verified. 3.6.7 As per existing guidelines, the specimen signature/s should then be captured to the system. The date of input should then be entered in the space provided, initialed by the teller doing the input and also initialed by an officer who will check on the screen to ensure that the signature/s has/have been captured correctly. It should be noted that no signature card should be filed unless all the required particulars are given and it bears the date and the signature of the officer authenticating it. 3.6.8 There may be occasions where customers will change their signatures or change the operating instructions resulting in the cancellation of signature cards. All such cancelled signature cards should be removed from the regular signature card file and filed with the mandate. These cards should bear the date on which they were cancelled. 3.6.9 The signature cards of closed accounts should be attached to the mandate and filed with the mandates of closed accounts. Compiled by Operations Department Page 16  Manual of Operations CHAPTER 4: OPENING OF CURRENT ACCOUNTS TABLE OF CONTENTS 4.1 General 4.2 Introduction 4.3 Interview 4.4 Account opening procedure. 4.5 Account opening forms (Mandates) 4.6 Documents required 4.6.1 Sole Accounts 4.6.2 Joint Accounts 4.6.3 Sole Proprietorship 4.6.4 Partnership 4.6.5 Limited Liability Companies 4.6.6 Club, Societies etc. 4.6.7 Miscellaneous 4.6.7.1 Co – operative Societies 4.6.7.2 Executor’s & Administrators’ A/C 4.6.7.3 Trust Accounts 4.6.7.4 Government Accounts 4.6.7.5 Government Corporations Compiled by Operations Department Page 17  Manual of Operations CHAPTER 4: OPENING OF CURRENT ACCOUNTS PART 1: GENERAL 4.1.1 Any person who has attained age of 18 or is married can open an account. Regarding Rupee Current Accounts to be opened for foreign nationals, reference should be made to Exchange Control Regulations currently in force. 4.1.2 Current accounts may be opened for minors too provided they are mature enough to use a cheque book responsibly. However, it is essential that a note be made that it is a minor’s account and that no overdrafts should be permitted. Considering the legal and/or other implications to the Bank, opening current accounts to minors is discouraged and would require the prior approval of the Head of Operations. 4.1.3 The authority to open a current account should be given to the Bank on the Bank’s prescribed account opening form. 4.1.4 An account should be opened only after the completion of required introduction procedures and all necessary documents have been obtained. 4.1.5 Current accounts for staff members of other banks or their spouses could be opened at the discretion of the Branch Manager. Care should be exercised not to overdraw such accounts. 4.1.6 Staff – As per existing guidelines Permanent employees in the grades of Junior Executive Assistants and above, including Confidential Secretaries and Bank’s Security Officers may open current accounts. Any other employee requiring opening a current account should get the prior approval of the Head of Operations. PART 2: INTRODUCTION 4.2.1 It is essential that a prospective new account holder’s identity is established and a satisfactory introduction obtained. 4.2.2 Failure to do so may leave the Bank without the protection provided by Section 82 of the Bills of Exchange Ordinance. The Bank is also bound to comply with the Prevention of Money Laundering Act and the Know Your Customer principles currently in force. 4.2.3 4.2.4 The Introduction may be given by a customer of the Bank who maintains a satisfactory current account or a person of undoubted standing. As per existing guidelines the Manager himself may provide the introduction if he is aware that the prospective account holder is a person of repute and standing and has no doubt about his identity. Compiled by Operations Department Page 18  Manual of Operations CHAPTER 4: OPENING OF CURRENT ACCOUNTS PART 2: INTRODUCTION (Contd.) 4.2.5 If the person introducing the account does not personally call at the Bank, he or she should be contacted and confirmation obtained. If the person introducing calls over at the Bank and signs in the presence of an Officer, such Officer should make a note on the Mandate that it has been signed in his presence and then placed his/her signature. 4.2.6 Any person who has maintained an account in an unsatisfactory manner or had an account closed for unsatisfactory conduct, should not be permitted to introduce an account, open an account in his name or in a different capacity such as a proprietary, partnership etc., or even as an Attorney for an existing account. Any exception should be with the prior approval of the Head of operations. Prior to opening the account, a search should be carried out in the CIF sub system to ensure that instructions given under 4.2.5 are complied with. Please refer ICBS User Manual for further guidance. PART 3: INTERVIEW 4.3.1 All prospective new customers should be interviewed by the Branch Manager or an Executive Officer delegated by the Manager. 4.3.2 The interview is important as it will help the Bank to avoid the opening of accounts which could prove to be troublesome and also help to gather information about the customer’s type of business and what services could be offered. 4.3.3 Where the Officer interviewing is not the Manager and he is of the opinion that the application to open an account should not be entertained, he should refer the matter to the Manager before rejecting the application. PART 4: ACCOUNT OPENING PROCEDURE 4.4.1 Once the Branch Manager/ Executive Officer is satisfied that the prospective account holder is a suitable person he should be given the necessary forms to be perfected, if necessary explaining what is required and also informing him of the initial deposit required. 4.4.2 There is strict rule regarding the initial deposit and Managers are free to use their discretion depending on the location and the value of the prospective customer. However, current accounts should not be opened with small initial deposits unless under exceptional circumstances. Compiled by Operations Department Page 19  Manual of Operations CHAPTER 4: OPENING OF CURRENT ACCOUNTS PART 4: ACCOUNT OPENING PROCEDURE (Contd.) 4.4.3 Once the perfected forms are received the Officer- in-Charge of Current Accounts should check and ensure that all required details are given on the account opening forms and that all other required documents including the KYC forms have been obtained. Any subsequent changes to the data provided in the mandate must be supported with documentary evidence. Note. In terms of Section 92 A.A. of the Inland Revenue Act No. 28 of 1979 as amended by Act No. 16 of 1985 all residents of Sri Lanka over the age of 16 and who are liable for Income Tax should indicate their National Identity Card Number on Current account opening Forms. Thereafter the name and the date of opening should be entered in the pre numbered list provided for this purpose and the next available number allotted to the account. 4.4.4 Once the account number has been allotted this should be entered in the account opening form. 4.4.5 The Customer should be given a cash deposit slip with the account number entered and requested to make his deposit. While it is preferable that the initial deposit should be in cash, a cheque payable to the new account holder may be accepted, in which case he should be given the cheque book only after realization of the cheque. 4.4.6 The Customer Information File should be set up in the CIF sub-system prior to the opening of the account as detailed in the ICBS User Manual. The CIF is a unique number allocated to a customer. Therefore it is essential to avoid creating multiple CIFs for a single customer even if the customer may require opening and operating accounts at different locations of the branch network. 4.4.7 The particulars on the Mandate should, thereafter, be fed to the computer by the teller. 4.4.8 On completion of the CIF the teller should proceed to set up the account in the Transaction Sub-system as detailed in the ICBS User Manual. 4.4.9 The teller should also note the system generated CIF number and the allocated account number in the respective spaces provided for on the Mandate. He should then initial the Mandate to confirm input of data. 4.4.10 As per existing guidelines a system request should then be placed to order the cheque book and the customer must be informed of the time he should call over to collect the cheque book. Compiled by Operations Department Page 20  Manual of Operations CHAPTER 4: OPENING OF CURRENT ACCOUNTS PART 4: ACCOUNT OPENING PROCEDURE (Contd.) 4.4.11 Thereafter the officer handling current accounts should check the account input data on the screen and sign on the space provided on the Mandate confirming the accuracy of data. 4.4.12 Account opening forms should be duly initialed by the Manager before they are filed thus complying with the Printout Audit requirements. PART 5: ACCOUNT OPENING FORMS (MANDATES) 4.5.1 There are different types of Mandates for the different types of customers, namely, individual, partnership etc. 4.5.2 It should be ensured that the correct Mandate is obtained and also that it has been filled properly. 4.5.3 The different types of Mandates available are for – Sole Account Joint Account Sole Proprietorship Partnership Limited Liability Companies Clubs and Societies. Miscellaneous PART 6: DOCUMENTS REQUIRED 4.6.1 Sole Accounts: Documents to be provided by the prospective customer:- Mandate Signature card AML/KYC documents 4.6.2 Joint Accounts: Documents to be provided by the prospective customers Mandate Specimen Signature cards AML/KYC documents Special Instructions: The operating instructions should be obtained without any ambiguity, i.e. whether it is to be operated by all of them, any two of them or any one of them and so on. Compiled by Operations Department Page 21  Manual of Operations CHAPTER 4: OPENING OF CURRENT ACCOUNTS PART 6: DOCUMENTS REQUIRED (Contd.) 4.6.3 Sole Proprietorship: Document to be provided by the prospective customer: Mandate Specimen Signature card The signature should be placed on the firm’s rubber stamp that indicates that he is the Proprietor of the Firm as specified in the Signature User Manual. Original and a photo copy of the Business Registration Certificate. AML/KYC documents. Special Instructions: The photo copy of the Business Registration Certificate should be certified as a true copy by the Officer in Charge of Current Accounts and should be filed with the Mandate. The Officer should ensure that the names of the Proprietor and “firm” agree with those on the Business Registration Certificate. 4.6.4 Partnership Documents to be provided by the Prospective customer: Mandate Specimen Signature cards Original and a photo copy of the Business Registration Certificate. AML/KYC documents Customer Information cards Special Instructions: Partnership Agreement (CA15) The Mandate and the Partnership Agreement (CA15) must be signed by all partners mentioned in the Business Registration Certificate. The photo copy of the Business Registration Certificate should be checked with the original and certified by the Officer in Charge Current account as a true copy and filed with the Mandate. The names of the firm and the partners should agree with those on the Business Registration Certificate. Compiled by Operations Department Page 22  Manual of Operations CHAPTER 4: OPENING OF CURRENT ACCOUNTS PART 6: DOCUMENTS REQUIRED (Contd.) 4.6.5 Limited Liability Companies: Documents to be provided by the Prospective customer: Companies incorporated after May 03, 2007 Mandate Specimen Signature cards Articles of Association or Model Articles Certificate of Incorporation – photo copy to be filed with the Mandate. Certified list of directors obtained from the Registrar of Companies. (Form 01) Board resolution/ copy of the resolution certified by a Director and the Company Secretary incorporating the operating instructions. Customer information forms of all the Directors and Authorized Signatories. AML/KYC documents. Companies incorporated before May 03, 2007 (Re- registered companies) Certified copy of the prescribed application form for re registration of an existing company (Form 40) Certificate of Incorporation with the new number – Photocopy to be filed with the Mandate Certified copy of the prescribed form to notify any changes of Directors and /or Secretaries (Form 20). A fresh Board Resolution to continue with the existing account incorporating changes, if any, in the operating instructions. Customer information forms of all the Directors and Authorised Signatories. AML/KYC documents Special Instructions: It should be ensured that the operating instructions are clear and unambiguous and can be complied with. Instructions such as ‘B’ to sign in the absence of ‘A’ should not be accepted. All Directors of the company must place their signatures on the mandate. Resolution by circulation is acceptable only if it is permitted by the Articles of Association. Compiled by Operations Department Page 23  Manual of Operations CHAPTER 4: OPENING OF CURRENT ACCOUNTS PART 6: DOCUMENTS REQUIRED (Contd.) 4.6.6 Clubs, Societies etc. Documents to be provided by the prospective customer: Mandate Specimen Signature cards Copy of Rules/ By–laws/ Constitution of the Society/ Club/ Association duly certified by the President and the Secretary. Certified copy of the Resolution regarding opening of the account and its operation. Certified copy of the Minutes of the Meeting/s at which the present office Bearers were elected. AML/KYC documents Special Instructions: The Officer in Charge Current Accounts should ensure that the operating instructions given conform to the provisions in the Rules/By-Law/Constitution of the Society Club / Association. The operating instructions should be by designation and not by name e.g. By the Treasurer with either the President or Secretary. The Officer Bearers who have been authorised to operate the account should be those who have been elected as indicated on the certified copy of the Minutes of the Meeting. Instructions which the Bank will find difficult to follow should not be accepted e.g. any withdrawal over Rs. 5,000/- should be approved by the Committee. 4.6.7 Miscellaneous This account opening form should be used for all other accounts for which special forms have not been provided. e.g.: Corporations, Government institutions, Trusts, Executors, Non Governmental organizations etc. In addition to the mandate form and signature cards, the other documents required will vary with the type of account being opened. Some of these accounts and the documents required are given below. Compiled by Operations Department Page 24  Manual of Operations CHAPTER 4: OPENING OF CURRENT ACCOUNTS PART 6: DOCUMENTS REQUIRED (Contd.) 4.6.7.1 Co-operative Societies Documents Required Mandate form Signature Card Copy of the Rules/By-Laws of the Society duly certified by the President and the Secretary. Certified copy of the Resolution regarding the opening of the account and operations thereon. The resolution should conform to the regulations laid down in the By-Laws of the Society. Certified copy of the Minutes of the Meeting at which current office bearers were elected Customer information form of all the Authorised Signatories. AML/KYC documents Special Instructions The following documents should be certified by the Assistant Commissioner of Co-operative Development. (a) Mandate form and Signature Cards in duplicate. (b) Copy of Rules/By Laws All documents should be forwarded to the bank through the offices of the Asst. Commissioner of Co-operative Development. 4.6.7.2 Executors’ & Administrators’ Account Documents to be obtained Mandate Specimen Signature Cards Original and copy of the Probate or Letters of Administration. The copy should be certified as a true copy by the Officer in Charge Current Accounts Department. Customer information form of all the Executors. Special Instructions The account should be styled “Administrator/Executor of the Estate of the late- Mr. / Mrs. ………. If there is more than one executor all executors must sign the Mandate. The operating instructions should strictly be in accordance with the Probate. Compiled by Operations Department Page 25  Manual of Operations CHAPTER 4: OPENING OF CURRENT ACCOUNTS PART 6: DOCUMENTS REQUIRED (Contd.) 4.6.7.3 Trust Accounts Documents required Mandate Signature Card Original Trust Deed with a photo copy obtained and the photo copy certified by the Officer in Charge Current Accounts and filed with the Mandate. Customer information form of all the Trustees. AML/KYC documents. Special Instructions If the Trustees are not known to the Bank, an introduction should be obtained as detailed in Chapter 4, Part 2 above. Prior approval from Head Office should be obtained to open Trust Accounts. For this purpose, a copy of the Trust deed and any other related document should be forwarded to the Head of Legal Department for verification. The account should be opened only after obtaining expressed approval. All Trustees named in the deed should sign the Mandate. The bank cannot be a party to any misapplication of the funds in a trust account. The omission of the words “Trust Account” does not free a bank from this obligation if it is aware that the account is in fact a “Trust Account”. If a bank parts with money in a Trust Account to a third person, in circumstances that it must have known that it was a misapplication of funds, the bank may still be held liable even if no benefit accrues to it. The fact that a customer transfers money from a Trust Account to his private 0account does not itself necessarily place the bank to inquire, but if such transfers subsequently turn out to be a breach of trust the question of bank’s liability would depend upon circumstances under which the money was transferred. A bank cannot retain any benefit from any wrongful dealing with any funds it knows to be subject to a trust e.g. if Trust funds are applied in reduction of an overdraft/loan on the private account of a Trustee the bank would be answerable to the beneficiaries. The Trustees may do anything for which the trust instrument provides but if it is silent, their powers are restricted and they may delegate their powers only in accordance with the provisions of the Trust Ordinance. Compiled by Operations Department Page 26  Manual of Operations CHAPTER 4: OPENING OF CURRENT ACCOUNTS PART 6: DOCUMENTS REQUIRED (Contd.) Trustees must all act together. They have no individual powers and they cannot delegate their authority to any other party even to one of themselves, unless the trust instrument so provides. All Trustees must join in the signing of cheques unless expressly stated in the Trust Deed that one Trustee may sign cheques on behalf of the others. Countermand of payment of a cheque may be effectively made by any one of the Trustees. 4.6.7.4 Government Accounts Documents to be completed Mandate Signature Card Letter of Authority signed by the Deputy Secretary to the Treasury. This is not required if the Mandate is signed by the Deputy Secretary to the Treasury. Special Instructions Letter from the Deputy Secretary to the Treasury should contain the names, designation and specimen signatures of the officers authorised to draw cheques together with operating instructions. 4.6.7.5 Government Corporations Documents Required Mandate Specimen Signature Cards Copy of the Act of Parliament setting up the Corporation. Copy of the Gazette Notification naming the Directors of the Corporation. Copy of the Resolution of the Board of Directors regarding the opening and the operations of the account, certified by the Chairman and the Secretary of the Board. Special Instructions The Resolution regarding the operations on the account should include the full names and designations of those empowered to operate the account. Compiled by Operations Department Page 27  Manual of Operations CHAPTER 4: OPENING OF CURRENT ACCOUNTS PART 6: DOCUMENTS REQUIRED (Contd.) 4.6.7.8 Non-Governmental Organizations Non Governmental organizations are involved in the provision of financial or material assistance as well as in the implementation of development projects or programs. It is felt necessary to lay down procedures to ensure that their account operations fall within the framework designed by the government for the conduct of business of the NGOs in Sri Lanka and that the funds channeled through these accounts are not associated with Money Laundering, Terrorist Financing or any other activity undermining national interest. According to the gazette circular no MOFP/ERD/2007/01 of the Ministry of Finance and Planning dated March 19, 2007, the under mentioned conditions must be fulfilled by all NGOs operating in Sri Lanka. NGOs operating in the country have to be registered with the NGO Secretariat of the Ministry of Social Services and Social Welfare. In order to comply with the above, NGOs which wish to operate in Sri Lanka must obtain prior clearance from the Centre for Non Governmental Sector (CNGS) of the Ministry of Finance and Planning. Documents Required Mandate and Signature Cards in duplicate. Customer information forms of all the Authorised Signatories. AML/KYC documents Where the NGO is a branch or a liaison office of an institution incorporated oversea, a letter/ Resolution from the parent body should be obtained: 1. affirming the appointment of the office bearers who are authorized to operate the bank account opened with us and 2. undertaking to give prior notice to the Bank regarding any changes in the operating instructions and/or authorized signatories. Special Instructions Photocopies of the Registration Certificate issued by the Ministry of Social Services and the Clearance Certificate issued by the Ministry of Finance. These should be checked with the originals and certified by the Officer in Charge Current account as a true copy and filed with the Mandate. Compiled by Operations Department Page 28  Manual of Operations CHAPTER 5: TRANSFER, CLOSURE & STOPPING OF A/Cs TABLE OF CONTENTS 5.1 General 5.2 Transfer of Account 5.3 Closure of Account 5.4 Accounts Closed at Customer’s Request 5.5 Accounts Closed as required by the Bank 5.6 Stopping Accounts Compiled by Operations Department Page 29  Manual of Operations CHAPTER 5: TRANSFER, CLOSURE & STOPPING OF A/Cs PART 1: GENERAL 5.1.1 An account may be closed or transferred to another branch at the request of the customer. 5.1.2 In certain circumstance the bank may require an account be closed or transferred to another branch. 5.1.3 Sometimes the bank may be required to stop an account (suspend operations on an account). PART 2: TRANSFER OF ACCOUNTS 5.2.1 The request from the customer to transfer his account must be given to the bank in writing, duly signed by the customer. 5.2.2 The request should clearly indicate the Account No/s, the branch to which it is to be transferred and the effective date. 5.2.3 The request should also be signed in the same manner as in the request to open the account i.e. Sole account by the customer Joint account by all the joint account holders Sole Proprietorship by the proprietor Partnership by all partners Clubs, Societies, NGOs etc. by a resolution passed and duly certified by the Chairman/President and Secretary or the governing body. Limited Liability Companies by a resolution passed by the Board of Directors duly certified by a Director and the Secretary. 5.2.4 The Officer in Charge of Current Accounts should satisfy himself that the request has been properly signed and where necessary the required resolution has been passed. He should initial against the signature/s to indicate that he has done so. 5.2.5 The consent of the Manager of the recipient branch should be obtained prior to the transfer of the account. After which the account should be transferred in the following manner. Compiled by Operations Department Page 30  Manual of Operations CHAPTER 5: TRANSFER, CLOSURE & STOPPING OF A/Cs PART 2: TRANSFER OF ACCOUNTS (Contd.) 5.2.6 The transfer should be effected by amending the branch code in the computer system to that of the new branch. The Mandate, together with the other documents filed with it, the specimen signature cards and also the request to transfer the account should be sent to the new branch along with a covering letter. 5.2.7 The customer should be informed that the account has been transferred and requested to return the unused cheque leaves in his possession and to call over at the new branch for his new cheque book. The procedure to be followed in the disposal of returned cheque leaves is given in the chapter on Cheque Books. 5.2.8 Where the account is overdrawn by way of a temporary/casual overdraft the customer should be requested to settle the overdraft prior to it being transferred to another branch. 5.2.9 Where Overdraft facilities and/or loan facilities have been granted the consent of the Manager of the new branch should be obtained prior to the transfer of accounts. In transferring accounts, where Overdraft facilities and/or loan facilities have been granted, in addition to the Mandate, other related documents and the specimen signature cards, the approved limit/s together with the securities should be forwarded to the new branch. An entry should be made in the Securities out Register that the securities have been transferred to …………… branch. 5.2.10 If, after the transfer of the account any cheques drawn on the old branch are received action should be taken as follows:- If a cheque is presented for payment over the counter the cheque should be duly processed as a regular inter branch transaction. However, if funds available are insufficient to meet the cheque, it should be returned with the remark” Refer to Drawer” If a cheque is presented in the Inward Clearing, the image will appear in the verification queue of the old branch. In which event the branch to which the account was transferred to should be informed to scrutinize the image and approve the cheque Compiled by Operations Department Page 31  Manual of Operations CHAPTER 5: TRANSFER, CLOSURE & STOPPING OF A/Cs PART 3: CLOSURE OF ACCOUNTS 5.3.1 An account could be closed either on the Instructions of the account holder or as required by the bank. 5.3.2 Where the customer maintains an account in a manner that is considered unsatisfactory, the bank may require the customer to close the account. 5.3.3 As Inoperative current accounts carrying small balances are un-remunerative and also impede operational efficiency, it is necessary that such accounts are weeded on a regular basis. The procedure to be followed is given in Part 5 - Sections 5.5.1 to 5.5.6 PART 4: ACCOUNTS CLOSED AT CUSTOMER’S REQUEST 5.4.1 The request from the customer to close his account must be given to the Bank in writing duly signed by the customer. 5.4.2 The request should be signed in the same manner as in the request to open the account vide 5.2.3. 5.4.3 It is the duly of the Officer in Charge, Current Accounts to satisfy himself that the request has been properly signed and where necessary the required resolution has been passed which he should indicate by initialing against the signature. 5.4.4 Together with the request to close the account, the customer should also surrender the unused cheque leaves in his possession. 5.4.5 The procedure to be followed in the disposal of returned cheque leaves is given in the Chapter 8 on Cheque Books. 5.4.6 Once the regularity of the request has been ascertained and the cheque leaves received, the customer should be requested to draw a cheque for the balance in the account, (less any charges due to the bank) thus closing the account. 5.4.7 If he has no unused cheque leaves, the balance in the account (less any charges due to the bank) should be transferred to Pay Order Account and Pay Order issued, which should be cashed for the customer. 5.4.8 The specimen signature card should be attached to the mandate. The mandate should then be marked “Account closed on…..” and filed with the mandates of closed accounts, after complying with the Printout Audit requirements.. Compiled by Operations Department Page 32  Manual of Operations CHAPTER 5: TRANSFER, CLOSURE & STOPPING OF A/Cs PART 5: ACCOUNT CLOSED AS REQUIRED BY THE BANK (Contd.) 5.5.1 The bank may close an account other than at a request from the customer for one of the following reasons. (a) Where the account is maintained in an unsatisfactory manner i.e. cheques returned for want of funds or frequent stop payments being made where it is obvious that it’s being done to avoid the cheques getting returned unpaid for lack of funds. (b) Where the account is inoperative and carries a small balance, making its maintenance un-remunerative to the bank. (c) Where an account remains inoperative and has an overdrawn balance resulting from the charging of commission. In all instances where a current account is closed as a requirement of the bank, it is essential that the customer is informed of the bank’s decision in writing under registered cover. 5.5.2 Where an account is inoperative and carries a balance less than the stipulated minimum, a letter should be sent under registered cover, requesting the customer to maintain the required minimum balance. The customer should also be informed that if the required minimum balance is not maintained a service charge will be levied. (Specimen of the letter to be sent to the customer is given in Annexure i). If a remittance as required is not received the system generated service charge will reduce the balance in the account until the balance becomes zero. The branch should monitor and close such zero balance accounts periodically. or, In the event the customer has not responded within the stipulated 14 days it should be referred to the Head of Operation for approval. Upon receiving approval, the account should be closed by transferring the balance to the Commission account Current Accounts and the account holder advised accordingly. (Specimen of the letter to be sent to the customer is given in Annexure ii). 5.5.3 Where an account remains inoperative with an extremely low balance, in terms of existing instructions such accounts can be closed by transferring the balance to the Branch Profit & Loss Account and the account holder advised accordingly. Compiled by Operations Department Page 33  Manual of Operations CHAPTER 5: TRANSFER, CLOSURE & STOPPING OF A/Cs PART 5: ACCOUNT CLOSED AS REQUIRED BY THE BANK (Contd.) 5.5.4 Where an account is considered unsatisfactory, prior notice should be given to the customer under registered cover that the conduct of his account is unsatisfactory and if there are any further cheques returned for lack of funds, the bank will be compelled to close the account. (Specimen of the letter to be sent to the customer is given in Annexure iii). 5.5.5 Other than for a valid reason, this advice should be sent on the return of the 3rd cheque for lack of funds. If there are further cheque returns a letter should be sent to the customer under registered cover that since he still continues to maintain his account in an unsatisfactory manner, the bank has no option but to close his account giving notice of 14 days. The customer should also be advised to return the unused cheque leaves in his possession to enable the bank to remit to him the balance in his account. (Specimen of the letter to be sent to the customer is given in Annexure iv). 5.5.6 On the 15th day the balance should be transferred to Pay Order A/c and a Pay Order issued in favour of the account holder. The Pay Order should be dispatched to the customer according to 5.5.4. 5.5.7 Where an account remains inoperative for a period of three months and has an overdrawn balance resulting from the charging of commission the account should be closed for bad conduct with a memo to the CIF, after reversing the commission and the overdraft interest thereon to the respective Profit & Loss accounts without reference to the Regional Office or Head Office. The customer should be advised accordingly. 5.5.8 When an account is closed for unsatisfactory conduct, the customer status should be classified ‘undesired customer’ in the CIF subsystem, thereby preventing the person from opening accounts at other branches in the network. The person who introduced the account should also be notified the fact that the account he/she introduced has been closed for unsatisfactory conduct and to refrain from introducing such accounts in future. Compiled by Operations Department Page 34  Manual of Operations ANNEXURE I REGISTERED POST ………………………………….. ………………………………….. ………………………………….. ………………………………….. Dear Sir/Madam, CURRENT ACCOUNT NO. ……………………… We observe that there have been no operations in your above Current Account since…………………………….. and the balance lying to the credit of your account is Rs………………………… Please advise us whether you wish to continue this account and if so, please send us a minimum remittance of Rs………………….. without delay. Please note that accounts carrying an average balance of less that Rs…………. is subjected to a service charge of Rs. …………. a quarter. Yours faithfully, MANAGER Compiled by Operations Department Page 35  Manual of Operations ANNEXURE II REGISTERED POST ………………………………….. ………………………………….. ………………………………….. ………………………………….. Dear Sir/Madam, CURRENT ACCOUNT NO. ……………………… We write with reference to our previous correspondence dated …. ………. and observe that we have not received any response from you to date. Therefore, we have closed your account on ……………… Please make arrangements to surrender the unused cheque leaves in your possession, if any, upon receipt of this letter. Yours faithfully, MANAGER Compiled by Operations Department Page 36  Manual of Operations ANNEXURE III REGISTERED POST ………………………………….. ………………………………….. ………………………………….. ………………………………….. Dear Sir/Madam, CURRENT ACCOUNT NO. ……………………… CHEQUE NO………... FOR RS. ………………… CHEQUE NO. ………. FOR RS. ……………….. This is to advise you that the above cheques were returned unpaid by us due to the lack of sufficient funds in your account to meet the commitment. In terms of Banking Act Regulations it is an offence to issue cheques unless you have sufficient funds in your account to meet them. In the event any cheques are being returned in future for the lack of funds, we shall have no alternative but to close your account. Yours faithfully, MANAGER Compiled by Operations Department Page 37  Manual of Operations ANNEXURE IV REGISTERED POST ………………………………….. ………………………………….. ………………………………….. ………………………………….. Dear Sir/Madam, NOTICE OF CLOSURE CURRENT ACCOUNT NO. ……………………… We observe that the captioned account continues to be operated in an unsatisfactory manner. Therefore we have decided to close the account on …………. You are advised to refrain from issuing cheques hereafter and to make arrangements to surrender the unused cheque leaves in your possession, if any, upon receipt of this letter. Yours faithfully, MANAGER Compiled by Operations Department Page 38  Manual of Operations CHAPTER 5: TRANSFER, CLOSURE & STOPPING OF A/Cs PART 6: STOPPING ACCOUNTS 5.6.1 Account may be stopped in consequence of any one of the following occurrences. (a) On receipt of notice of the death of the account holder. (b) On receipt of a Court Order – Enjoining Order. (c) On receipt of a notice of attachment from the Inland Revenue Department or such other authority. (d) On receipt of a notice of an act of bankruptcy by the account holder. (e) On receipt of notice of winding-up or liquidation under the Sri Lanka Companies Act. (f) On receipt of a Court Order appointing a receiver or liquidator. (g) On receipt of a notice of insanity of the account holder (h) On the instructions of the Anti Money Laundering Compliance Officer, in terms of the provisions of the Anti Money Laundering Legislation. 5.6.2 Where the account is stopped as a result of death of account holder the notice need not be official provided the news is received from a reliable source. 5.6.3 After notice of death is received no further debits should be permitted to the account. 5.6.4 Where the account is stopped upon the receipt of a notice from a court of law or the Department of Inland Revenue or such other authority indicating a specific value and if the amount covered by such notice is less than balance in the account, the account need not be stopped but the amount specified should be set aside. The details of procedure to be followed in respect of all the above occurrences are given in Chapter 6. Compiled by Operations Department Page 39  Manual of Operations CHAPTER 6: CHANGE OF STATUS OF ACCOUNT TABLE OF CONTENTS 6.1 Explanatory Note 6.2 Dormant Accounts 6.3 Re-activation of dormant accounts 6.4 Deceased accounts 6.5 Insolvency/Bankruptcy 6.6 Lunacy 6.7 Enjoining Orders 6.8 Income Tax Notices Compiled by Operations Department Page 40  Manual of Operations CHAPTER 6: CHANGE OF STATUS OF ACCOUNT PART 1 EXPLANATORY NOTE 6.1.1 The status of an account may change due to several factors. e.g. (a) Inactivity of the account, for a period of time (b) Death of an account holder (c) Insolvency/Bankruptcy/Lunacy of the account holder (d) Receipt of notice from the Inland Revenue Department/Enjoining Orders 6.1.2 On the occurrence of any of these events the status of the accounts changes, resulting in the need for the bank to follow a certain course of action. This chapter deals with the course of action, which has to be followed by the bank on the occurrence of any of these events. Appropriate system changes for each of these events are detailed in the Domestic Operations Instructions Circular on ‘Placing of Stops, Holds and Cautions’. Compiled by Operations Department Page 41  Manual of Operations CHAPTER 6: CHANGE OF STATUS OF ACCOUNT PART 2 DORMANT ACCOUNTS 6.2.1 A current account is considered to be dormant if there have been no operations thereon for a period of one year. Such accounts will be categorized dormant automatically by the system. 6.2.2 Operations on a Dormant Account other than credits to the account need the approval of the Manager of the Branch or, in large branches, the Executive Officer in Charge of Current Accounts, who should place his initial on the source document indicating his approval. 6.2.3 A deposit to a dormant account could be permitted by providing an ‘A’ grade system override, without changing the status of the account. 6.2.4 Caution/extreme care should be exercised when a cheque from a Dormant Account is presented for payment. If the bona-fides of the transaction cannot be established, such cheque should be returned with the remark “Payment postponed pending drawers’ confirmation”. PART 3: RE – ACTIVATION OF DORMANT ACCOUNTS 6.3.1 A Dormant account is considered to be re-activated by a debit or a credit to the account made by the account holder or on his instructions. N.B. Internal debits to a Dormant Account for any reason do not re-activate it. 6.3.2 If a cheque drawn on a Dormant Account is presented for payment or a request is made in writing, under the customer’s signature to debit a Dormant Account such cheque/debit request should be referred to the Manager, who will authorise the re-activation of the account after satisfying himself that the signature/s on the cheque/letter is/are genuine. If the cheque is authorised for payment or authority given for the debit instructions to be carried out, before such debits are posted to the dormant account the status of the account should be changed to ‘active’ by carrying out the required system procedure. The change of status to an account, where appropriate, should always be supported with a source document which must be filed with the account mandate. Compiled by Operations Department Page 42  Manual of Operations CHAPTER 6: CHANGE OF STATUS OF ACCOUNT PART 4: DECEASED ACCOUNTS 6.4.1 When the Bank receives notice of death of a customer who has either a Sole Account or an account in the name of a firm of which he/she is the sole proprietor, the authority to pay cheques drawn on the bank is determined. 6.4.2 The status of the account should be changed to ‘Deceased’ by carrying out the required system function (refer DOIC 09/07 dated July 14, 2009) and any cheques presented for payment should be returned unpaid with the remark “Drawer deceased”. 6.4.3 If the account is overdrawn any balance lying to his/her credit in any other account/s should be set-off against the overdrawn balance and thereafter, if the account still remains overdrawn, a claim should be made on the estate of the deceased. 6.4.4.1 Where the account is in credit or where it is overdrawn but becomes a credit balance after setting off any balance lying to his/her credit in any other account/s, the balance may be released to the legal heirs of the deceased according to provisions of the Civil Procedures Code (Amendment) Act No. 11 of 2010. 6.4.4.2 Provided all the heirs sign an affidavit and an indemnity declaring that they are the only heirs of the deceased, the deceased died intestate and the value of the estate is less that Rs. 4,000,000/-. 6.4.4.3 Where there is a Last Will or the value of the state is Rs.4,000,000/- or more, any monies can be released only on receipt of the Probate and/or Letter of Administration. 6.4.5 In the case of a joint accounts the surviving joint account holder/s could continue operating the account as, under the rule of survivor-ship and the bank gets a valid discharge in respect of the payments made to the surviving joint account holder/s. 6.4.6 In the case of Partnerships, the account if in credit may be allowed to be operated by the surviving partners. A new certificate of registration will have to be furnished deleting the name of the deceased partner and the name/s of new partner/s brought in. 6.4.7 If an account is overdrawn the rule in Clayton’s Case will apply and the bank’s claim on the estate of the deceased will be reduced as every credit will go on reduction of the overdraft outstanding. Thus, if the bank has to rely on the security of the estate of the deceased party for the recovery of the overdrawn amount, the account must be stopped, and a fresh account should be opened for the partnership/joint account holder/s. Compiled by Operations Department Page 43  Manual of Operations CHAPTER 6: CHANGE OF STATUS OF ACCOUNT PART 4: DECEASED ACCOUNTS (Contd.) 6.4.8 If the security of the surviving partner/s or joint account holder/s is sufficient to secure the overdrawn amount, the account may be allowed to continue without being stopped. 6.4.9 Where cheques are presented for payment signed either by the deceased partner or the deceased joint account holder, they should be paid only if authorised by the other partner/s or joint account holder/s. If no authority is made available such cheques should be returned with the remark “Drawer Deceased”. PART 5: INSOLVENCY/BANKRUPTCY 6.5.1 An account should be stopped in consequence of any one of the following occurrences. a. On receipt of a notice of an act of bankruptcy by the account holder/s. b. On receipt of a notice of the winding – up or liquidation under the Sri Lanka Companies Act or Court Order appointing a liquidator. c. On receipt of a notice of insanity of the account holder. Cheques drawn on such accounts have to be returned with the remark ‘Drawers mandate determined’. 6.5.2 When notice of an act of bankruptcy is received, provided it is before notice of presentation of a petition, (a) On credit accounts, all cheques drawn by the customer in his favour may be paid. (b) On overdrawn accounts no cheques should be paid because debts contracted after notice of an act of Bankruptcy cannot be recovered from the Trustee. 6.5.3 Once notice is received of the presentation of a petition against the customer the bank should stop all operations relating to his account. 6.5.4 Where one party to a joint account becomes bankrupt, then the account should be stopped irrespective of whether it is in credit or debit as the mandate is determined. Compiled by Operations Department Page 44  Manual of Operations CHAPTER 6: CHANGE OF STATUS OF ACCOUNT PART 5: INSOLVENCY/BANKRUPTCY (Contd.) 6.5.5 The bankruptcy of one or some of several partners automatically brings about the dissolution of the partnership (unless the partnership deeds stipulates otherwise). Consequently a new mandate is required. 6.5.6 Where a partnership account is in credit it may be allowed to continue as it is the responsibility of the solvent partners to account to the Trustee in Bankruptcy. 6.5.7 Where a partnership account is overdrawn and where it is required to retain the right of proof against the estate of the bankrupt partner or against the security deposited by him the account must be stopped. 6.5.8 If a notice is received that a Receiving Order has been made against the partnership, it operates against each of the partners. Ultimately every partner is adjudicated bankrupt and this also brings about bankruptcy of the partnership. 6.5.9 In all the above instances the status of the account should be changed by carrying out the relevant system option, as per existing guidelines. The status changes should be supported by a appropriately worded caution message as well. PART 6: LUNACY 6.6.1 Where the banker receives notice of a customer’s mental disorder, his authority to pay cheques and to act upon the customer’s mandate is terminated. 6.6.2 Where a receiver has not been appointed it may be difficult for the bank to decide whether the customer is so mentally disordered that he does not understand the nature of the transaction in to which he enters. 6.6.3 The danger for the bank is that, if incapacity is wrongly presumed, then liability may attach for dishonouring cheques. It may therefore be safer to honour cheques unless the customer has been diagnosed mentally unstable by a Consultant Physician or admitted to a mental hospital and/ or a receiver is appointed. 6.64 Where the bank is advised that a receiver has been appointed the customer’s account should be stopped. Thereafter the Receiver’s authority should be examined and if in order, a new account in the name of the Receiver should be opened, unless otherwise directed in the authority. Compiled by Operations Department Page 45  Manual of Operations CHAPTER 6: CHANGE OF STATUS OF ACCOUNT PART 7: ENJOINING ORDERS 6.7.1 An Enjoining Order is an order from a Court of Law obtained by a judgment creditor ordering that a debt owing to or accruing due by a third party (the bank) to the judgment debtor (the customer) at the time of service of the notice be paid to the Court. 6.7.2 Immediately on receipt of the notice the customer should be advised about the Order. 6.7.3 The notice may attach all sums owing by the bank to the customer, or may be for a specific amount. 6.7.4 If the order attaches all debts owing or accruing due to the customer without limit then all his accounts must be stopped. 6.7.5 If an amount is stated then the bank can earmark the amount attached and allow the customer to operate on the excess. 6.7.6 If the account concerned is overdrawn there is nothing to attach and Court should be so informed accordingly. 6.7.7 It should be noted that cheques previously deposited to the customer’s account which have not been cleared are not attached. 6.7.8 If the notice is in a sole name, but the account is held jointly the funds in such an account are not attached. 6.7.9 To attach the funds in a joint account all the names of joint account holders, should be stated. 6.7.10 Similarly partnership money is not attached unless the order is made against all the partners or is in name of the partnership. 6.7.11 If the notice is not withdrawn during the stipulated time the attached amount or whatever is available should be remitted to the Courts within the specified period. Compiled by Operations Department Page 46  Manual of Operations CHAPTER 6: CHANGE OF STATUS OF ACCOUNT PART 8: INCOME TAX NOTICES 6.8.1 Under Section 180 of the Inland Revenue Act No.10 of 2006 as amended by Inland Revenue Amendment Acts No. 10 of 2007 and 09 of 2008, Banks are required to pay the Inland Revenue Department, when noticed to do so, specified sums of money due from tax defaulters who maintain accounts with the Bank. This section, which is very important to the Bank, is quoted below. 6.8.2 (1) Where tax payable by any person is in default and it appears to the Commissioner - General to be probable that any other person, owes or is about to pay money to the defaulter or his agent; or (a) holds money for or on account of the defaulter or his agent; or (b) holds money on account of some other person for payment to the defaulter or his agent; or (c) has authority from some other person to pay money to the defaulter or his agent, the Commissioner-General may give to such person notice in writing (a copy of which shall be sent by post to the defaulter) requiring him to pay any such monies not exceeding the amount of the tax in default to the officer named in such notice. The notice shall apply to all such monies which are in his hands or become due from him as at the date of receipt of such notice or come to his hands or become due from him or are about to be paid by him at any time within a period of three months after the date of such notice. 6.8.2 (2) Where a person holds money for or on account of the defaulter and any other person or persons jointly ( in this section referred to as the ‘joint account holder or holder’) the Commissioner General may give a notice under subsection (1) to such person, requiring him to pay the amount of the tax in default or part thereof to the officer named in such notice, out of the monies or such part of the moneys in the joint account which the Commissioner General is satisfied is attributable to the contributions made by the defaulter and is so certified by the Commissioner General: Provided that every person remitting money in compliance with a notice issued under subsection (1), shall intimate such fact to every other joint account holder. Notwithstanding any provision in the Prescriptions Ordinance (Chapter 68), no action shall be instituted for the recovery of such money or part of such money after the expiration of three months from the date of notice issued by the Commissioner General. Compiled by Operations Department Page 47  Manual of Operations CHAPTER 6: CHANGE OF STATUS OF ACCOUNT PART 8: INCOME TAX NOTICES (Contd.) 6.8.2 (3) Any person who has made any payment in pursuance of this section shall be deemed to have acted under the authority of the defaulter and of all other persons concerned, and is hereby indemnified in respect of such payment against all proceedings, civil or criminal notwithstanding the provisions of any written law, contract, or agreement. (4) Any person to whom a notice has been given under subsection (1) who is unable to comply therewith owing to the fact that moneys referred to in that subsection do not come into is hands or that no such moneys become due from him within the period referred to in that subsection, shall within fourteen days of the expiration thereof given notice in writing to the Commissioner-General appraising him of the facts. (5) Where any person to whom a notice has been given under subsection (1) is unable to comply therewith and has failed to give notice to the Commissioner-General as provided in subsection (4) or where such person has deducted or could have deducted the tax to which the notice relates or any part thereof and has not paid over as required by the Commissioner-General the amount of such tax or part thereof within fourteen days after expiration of the period referred to in subsection. (1) such person shall, if he is an individual be liable, or where such person is a company or body of person, whether corporate or unincorporated, the secretary, manager or other principal officer of such company or body shall be personally liable for the whole of the tax which such person has been required to deduct and such tax may be recovered from such individual, secretary, manager or other principal officer, as the case may be, by all means provided in this Act. 6.8.2 (6) For the purpose of this section, the expression ‘defaulter’ shall be deemed to include the agent of the person who is in default and the provisions of this section shall apply in any case where the tax which would have been payable by any person if he were alive is in default; and for the purposes of the application of those provisions in any such case, the expression ‘defaulter’ in subsection(1) means – a) the executor or administrator of a deceased person; b) any person who takes possession or intermeddles with the property of a deceased person; or c) any person who has applied or entitled to apply to a District Court for the grant of resealing of a probate or letters of administration in respect of the estate of a deceased person. Compiled by Operations Department Page 48  Manual of Operations CHAPTER 6: CHANGE OF STATUS OF ACCOUNT PART 8: INCOME TAX NOTICES (Contd.) 6.8.3 The points that should be borne in mind in connection with this notice are:- (a) It applies to all moneys which are in the hands of the Bank at the time of receipt of the notice - this includes Savings Deposits Accounts and Fixed Deposits Accounts held in the same name. (b) If the balance/s in the account/s is/are insufficient to meet the claim any credits coming into the account for the next 3 months are also payable to the Department of Inland Revenue up to the extent of the amount claimed. (c) The Bank is bound to make payment or inform the Commissioner- General the reasons of its inability to make the payment (there being no funds available) within 14 days after the expiry of the three months period. (d) Failure to make payments or inform the Commissioner-General regarding the in ability will make the principal officer of the corporate body personally liable for the whole of the tax. 6.8.4 It should be clearly understood that for the notice to be effective the information (name stated) in the notice and the information (name) as recorded in the books of the bank must be identical. If there is any discrepancy the Commissioner - General should be informed that there is no account in the name of the person mentioned in the notice. 6.8.5 If the balance in the account/s is sufficient to meet the claim the amount payable should be earmarked for payment to the Department of Inland Revenue and the customer advised by registered post or by telephone that a notice from the Inland Revenue has been received and that the specified sum has been earmarked to meet the claim. 6.8.6 Even where the balance is insufficient to meet the full claim the customer must be advised by registered post or by telephone that a notice has been received from the Inland Revenue Department and that the entire balance in his account and any credits coming to the account within the next three months will be earmarked to meet the claim. 6.8.7 Where an account is overdrawn, whether within limit or not, nothing is payable to the Department of Inland Revenue and Commissioner should be advised there are no moneys due to customer from the bank. Compiled by Operations Department Page 49  Manual of Operations CHAPTER 6: CHANGE OF STATUS OF ACCOUNT PART 8: INCOME TAX NOTICES (Contd.) 6.8.8 Where the balance in the account is sufficient to make full payment or part payment of the claim made and where the customer does not take action to have the notice withdrawn the amount available for payment should be remitted to the Commissioner - General of Inland Revenue within 14 days after expiry of the 3 month period. 6.8.9 Even though an Inland Revenue order is valid for three months from the date of issue, irrespective of whether the account has sufficient funds or not, the order should be responded to within 14 days of receiving it. Compiled by Operations Department Page 50  Manual of Operations CHAPTER 7: CURRENT ACCOUNTS - MANAGEMENT OF CCOUNTS TABLE OF CONTENTS 7.1 Change of Title of Account – Marriage 7.2 Change of Title of Account – Change of Name 7.3 Sole Account Converted to Joint Account/Increase in number of Joint Account Holders 7.4 Joint Account Converted to Sole Account/Reduction in number of Joint Account Holders 7.5 Change in Account Operating Instructions 7.6 Change of Address 7.7 Banker’s Secrecy – Status Reports Compiled by Operations Department Page 51  Manual of Operations CHAPTER 7: CURRENT ACCOUNTS - MANAGEMENT OF ACCOUNTS PART 1: CHANGE OF TITLE OF ACCOUNT - MARRIAGE/DIV