PNB Promotion Book PDF 2025-26

 Foreword Pawan Singh General Manager- L&D Centre for Learning and Innovation It is with immense pleasure that I present to you the newest edition of Path-Pradarshak (English Version) 2025-26, a meticulously curated guide developed by the dedicated team at...

 Foreword Pawan Singh General Manager- L&D Centre for Learning and Innovation It is with immense pleasure that I present to you the newest edition of Path-Pradarshak (English Version) 2025-26, a meticulously curated guide developed by the dedicated team at the Staff Training Centre, Jaipur. True to tradition, this edition serves as an invaluable resource for our staff members preparing for their promotion examinations, offering a wealth of up-to-date knowledge on the most recent innovations within the banking sector, alongside critical updates on RBI guidelines, government deposit and loan schemes, and other relevant legal frameworks. Moreover, it captures the dynamic transformation taking place within our industry, emphasizing the rapid digitization of the loan disbursement process, evolving regulations for priority sectors, enhancements in customer service, and the integration of Core Banking Solutions (CBS) with digital banking. Crafted in a clear, accessible format, the content has been structured to ensure ease of understanding, enabling our staff to seamlessly translate this knowledge into tangible improvements in their day-to-day work. c The true value of Path-Pradarshak lies in its dual-purpose design. Not only does it provide a comprehensive toolkit for exam preparation, but it also serves as a deep dive into the operational intricacies of the banking world. It is our hope that this book will empower every employee, equipping them with the tools and insights needed to excel in both their promotion journeys and their professional growth. I would like to take this opportunity to extend my heartfelt appreciation to the dedicated team at the Staff Training Centre, Jaipur, whose unwavering commitment and creative vision have shaped this edition into an extraordinary booklet. Their dedication has resulted in a work of exceptional quality, setting a new benchmark in banking education. I am confident that their continued passion and innovation will propel us to even greater heights. To all staff members preparing for their upcoming promotion exams, I offer my warmest wishes for success. May you achieve great feats in future. (Pawan Singh) GM-L&D Date: 28.10.2024  Preface Dr. Deep Chand Training Head STC Jaipur It is a privilege to present the "Path-pradarshak (English Version) 2025-26", a comprehensive resource developed by the dedicated team at the Staff Training Centre in Jaipur, the iconic Pink City of Rajasthan. This booklet has been thoughtfully designed to support our staff, both as a study companion for promotion exams and as a practical guide to enhance banking practices in their daily roles. The "Path-pradarshak" brings together the most recent updates in banking, including the latest bank circulars, essential legal information for the Indian banking sector, and a range of deposit schemes. It emphasizes the significant advancements in digitization within the credit sector, showcases our latest digital banking initiatives, and highlights the intricacies of Core Banking Solutions (CBS). I would like to extend my heartfelt gratitude to Shri Pawan Singh, General Manager, (L&D), for his invaluable guidance and encouragement in making this booklet exceptional. His c support continually inspires us to strive for excellence. A special note of appreciation is due to the entire team at the Staff Training Centre, whose relentless efforts were instrumental in the preparation of this book. I am confident that "Pathpradarshak (English Version) 2025-26" will not only help you on your path to career advancement but will also serve as a cornerstone for establishing new milestones in your banking journey. With my best wishes for your success and growth. (Dr. Deep Chand) Training Head Date: 28.10.2024  Index PNB Profile as on 30.06.24 1-3 4-6 7-11 12-14 15-19 20-31 32-61 62-67 c 68-123 124-135 P S Guidelines & Agriculture Schemes 136-149 150-159 160-166 167-172 173-190 191-198 199-210 Board of Directors c  Organisational Structure Zonal Audit office (ZAO) : 22 Large Corporate Branches (LCB/ELCB) : 15 Zonal office (22) Zonal Risk Management (Tier-2) centres (ZRMC) : 22 Zonal SASTRA Vertical : 22 Corporate Banking Branches: 15 Circle SASTRA Vertical: 138 Mid coprporate Centre (MCC) : 112 Head office Circle office (138) PNB Loan Point(RAM) : c 146 (Tier-3) (Tier-1) Customer Acquisition Centre(CAC)-57 Government Business Vertical (GBV) – 21 Rural -3934 Semi-Urban- 2491 Domestic Urban - 2001 Branches(10150) (Tier-4) Metro-1724 International foray :2 (Dubai & GIFT City, Ahemdabad ) Development Story of Punjab National Bank: ❖ PNB was born on May 19, 1894. ❖ Punjab National Bank (PNB), India’s first Swadeshi Bank, commenced its operations on April 12, 1895. ❖ Bank’s first branch was opened at Anarkali Bazaar in Lahore. ❖ At this time Bank’s authorized capital was ₹ 2 lac and working capital was ₹ 20,000. ❖ The first Board of 7 Directors comprised of Sardar Dayal Singh Majithia, Lala Lalchand, Kali Prosanna Roy, Lala Harkishan Lal, EC Jessawala, Lala Prabhu Dayal, Bakshi Jaishi Ram, and Lala Dholan Dass, Sh. Dayal Singh Majithia was the first Chairman, Lala Harkishan Lal, the first secretary to the Board and Shri Bulaki Ram Shastri c Barrister at Lahore, was appointed Manager. ❖ During the long history of the Bank, 9 banks have been merged/ amalgamated with PNB. ❖ Post amalgamation of eOBC & eUNI w.e.f 01.04.2020, PNB has expanded its presence across India. ❖ As at the end of June 2024, Bank has total 54860 delivery channels with a network of 10,150 domestic branches, 2 International branches, 12820 ATMs & 32630 Business Correspondents. ❖ PNB is the second largest Public Sector Bank (PSB) in the country. 1  BANKS’S BUSINESS PERFORMANCE Business (Position) Mar’2023 March’2024 June’2024 Global Deposit 12,81,163 13,69,713 14,08,247 Gross Advances 8,84,681 9,83,325 10,28,682 Gross Global 21,65,844 23,53,038 23,54,323 Business CASA Ratio% 42.98% 41,44% 40.08% Q4FY23 Q4FY24 Q1FY25 Income (In Crore) Interest Income 23849 28113 28557 Other Income 3420 4248 3610 Total Income 27269 32361 32167 Expanses (In Crore) Total Interest Paid 14350 17750 18080 Operating Expenses 7053 8195 7505 Total Expenses 21402 25945 25585 Profit & Provisions (In Crore) Operating Profit 5866 6416 6581 Provisions (-TAX) 3831 4828 5269 Profit 1159 3010 3252 Productivity (in Lakhs) Business per 2164 2384 2480 Employee Business per Branch 20953 22525 23326 Net Profit /Employee 4.82 12.64 13.66 Net profit/ Branch 46.64 119.44 128.47 Asset Quality (Position) (In Crore) Standard Advances 807353 91.26% 926982 94.27% 977419 95.02 Gross NPA 77328 8.74% 56343 5.73% 51263 4.98% c Sub-Standard 12227 1.38% 4876 0.50% 5132 0.50% Doubtful 43414 4.91% 39551 4.02% 36072 3.51% Loss 21687 2.45% 11916 1.21& 10059 0.98% Net NPA 22585 2.72% 6799 0.73% 5930 0.60% Provision Coverage 86.90% 95.40% 95.90% incl. TWO Provision Coverage 70.8% 87.9% 88.4% Excluding TWO Banks Subsidiaries, Joint Venture and Associate 2 New Digital Offerings: Debit card for blind and visually inpaired customers PNB Digi Car Loan PNB Digi Home Loan PNB Digital Education Loan Became the first bank to launch PM Vishwakarma Scheme in digital mode Awards & Accolades: c Bank’s Social Media Presence: 3 Functions of RBI ISSUER OF CURRENCY Authorized to issue currency notes. One rupee note is issued by the Central Government under the signature of the Finance Secretary. Arrangements for currency chests for expansion and contraction of currency across the country. (RBI Act-1934 The Reserve Bank of India was Section-22) established on April 1, 1935 Banker to Government: under the recommendations of Reserve Bank of India Central (u/s 20) and acts as banker, the RBI Act, 1934 (known as the representative and advisor to State Governments ( u/s 21-A) John Hilton Young Commission. on Indian Currency and Reserve Bank collects all the income of the Central and State Economy). Governments, pays for the expenses and arranges for the c On January 1, 1949, the Central public debt. Government nationalized the Currency And Regulation of lending: RBI under the Reserve Bank Banks have to maintain CRR (Some percentage of daily balance has to be kept with RBI, the minimum and maximum (Transfer of Public Ownership) limit has been abolished since 2006) (RBI Act-1934 Section- Act 1948 by paying paid up 42) And SLR (Some percentage of net demand and time capital of 5 crores. liability in cash, gold , unencumbered (without charge) as The Reserve Bank is managed by security , maximum-40% ) (Banking Regulation Act-1949 the Central Board of Directors Section 24) as per RBI instructions. comprising four local boards – Currently CRR→4.50% and SLR→ 18%. Mumbai, Delhi, Calcutta and Bankers of Banks : Chennai. RBI consists of 1 Also acts as the banker of the commercial, co-operative and Governor, 4 Deputy Governors regional banks of the country. Refinance facilities to all scheduled banks. (RBI acts as and 15 other Directors. lender of last resort by providing financial assistance). First Governor- O. Smith, Regulation and Control of Credit: first Indian Governor - Dr. C. Reserve Bank of India Regulates credit through various Deshmukh, measures viz. Bank Rate Policy, Open Market Operation, current Governor – Sh. Variable Reserve Ratio or Cash Reserve Ratio, Selective Shaktikant Das. Credit Control and Moral Pressure etc. and helps in achieving the goal of 'Growth with Stability'. 4  Regulation and Control of Banking System: The entire banking system of the country works under the regulation and control of the Reserve Bank. Reserve Bank has following powers: 1. License : Every bank set up in India has to obtain a license from the Reserve Bank. 2. Arrangement: The Reserve Bank constantly monitors the arrangement of other banks. 3. Liquid Reserve: Under Section 24 of the Banking Regulation Act, every bank has to keep 18 % of its total deposits in cash and approved securities. The Statutory Liquidity Ratio (SLR) is a minimum percentage of a bank's deposits that must be kept in liquid assets, such as cash, gold, or government securities. The Reserve Bank of India (RBI) fixes the SLR rate, which can be a maximum of 40% 4. Branch Expansion: Any bank has to take the permission of the Reserve Bank before opening its new branch in any part of India. 5. Inspection : Under Section 35 of the Indian Banking Act, the Reserve Bank has extensive inspection rights, Under which the Reserve Bank can do a complete investigation of any bank's capital, funds, cash-amount, loan and their securities, management and system etc. and if no possibilities of rectification of irregularities, RBI can arrange liquidation or merger. 6. Liquidation and Merger: The Reserve Bank can apply to the court under Section 38 of the Banking Act for the liquidation of banks with very bad financial condition to those whose economic condition is relatively better, after closing their regular business for 6 months ( Moratorium), plans to merge it with a strong bank. Manager of Foreign Exchange Reserves – The Reserve Bank of India buys and sells foreign currencies with the objective of keeping the foreign exchange rate stable and also safeguards the foreign exchange reserves of the country. Direct Action - If a bank does not follow the policy of the Reserve Bank or does not accept its advice , then the Reserve Bank can take direct action against it. Information publication - An important function of the Reserve Bank of India is also to publish information about the country's currency , debt market , currency, finance , economic condition and banking and co-operative movement. Agricultural Credit System- To study agricultural requirements under the agricultural credit system, to advise the c Central and State Governments. Other tasks: The Reserve Bank of India performs many other developmental functions. These functions include approval and implementation of loans for agriculture (which are transferred to NABARD) , trading of government securities and trade bills , lending for government purchases and sale of valuables, etc. It also acts as the representative of the Government of India to the International Monetary Fund (IMF) and represents India's membership. Some important provision of the Act :- Section 2: Scheduled Bank tomeans a bank included in Second Schedule of RBI Act. Section 17 Various business done by RBI has been shown. Section 18: RBI provides emergency loans to banks at a concessional rate. Section 20: Banker to the Government. Section 21 : Authorized for Government business in India. Section 22 : Authorized to issue bank notes. Section 24 : Note Of Denominations (2 , 5, 10, 20, 50, 100, 500, 1000, 2000 (Recently RBI withdraws Rs 2,000 notes from circulation) , 5000, 10000), maximum denomination of 10000 notes can be printed. Government of India may discontinue issue of such denomination notes. Section 26 : The notes issued by RBI are legal tender, it is guaranteed by the Central Government. Notes issued by RBI in section 29 are exempt from stamp duty on them under the Indian Stamp Act Huh. Section 31 : Prohibits issue of note payable to bearer. 5  Section 42 scheduled banks are required to keep certain percentage of their daily balance in cash with RBI in current account, this is called cash reserve ratio. Under Section 42C , RBI has the power to add or delete the name of any bank from the Second Schedule. Policy Rates are as follows ( as on 04/10/2024.) : (Visit https://www.rbi.org.in for latest rates) Policy Repo Fixed Reverse Standing Deposit Marginal Standing Bank CRR SLR Rate Repo Rate Facility Rate Facility Rate Rate 6.50 % 3.35% 6.25 % 6.75% 6.75 % 4.50% 18.00% c 6 NEGOTIABLE INSTRUMENTS ACT, 1881 The main objective of the Act is to legalise the system by which instruments contemplated by it could pass from hand to hand by negotiation like any other goods. Amendments in the act has come three times: Negotiable Instruments (Amendments and Miscellaneous Provisions) Act, 2002, Negotiable Instruments (Amendment) Act, 2015, Negotiable Instruments (Amendment) Act, 2018. MEANING OF NEGOTIABLE INSTRUMENTS: The act does not define the term ‘Negotiable Instruments’. Section 13 of the act provides for three kind of Negotiable instruments namely, Bills of Exchange, Promissory Notes & Cheques payable either to bearer or order. NI is payable to Order when : c expressed to be so payable when it is expressed to be payable to a specified person and does not contain the words prohibiting its transfer. NI is payable to the Bearer when : express to be so payable When the only indorsement or last indorsement is a blank indorsement. CHARACTERISTICS OF NEGOTIABLE INSTRUMENT: It is in writing It is signed Freely transferrable from one person to another Title should be defect free NI must contain unconditional order or promise to pay money only Sum payable, time payable and person to whom payment is made should be certain Instrument should be delivered. Only drawing of instrument does not create liability. PRESUMPTIONS AS TO NI Unless contrary proved correct the following presumptions hold true: Consideration : NI is drawn for something in return Date : NI should bear a date on which it is drawn Acceptance : NI should be accepted within a reasonable period after it is drawn and before maturity Transfer : NI should be transferred before maturity Stamp : NI should be duly stamped Holder : Holder of NI is holder in due course 7  Some of the important provisions of the Act are as follows Section 4: A promissory note is an instrument in writing containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only to or to the order of a certain person or to the bearer of the instrument. Parties to Promissory Notes 1. Drawer/Maker/Debtor/Payer: The person who makes the promise 2. Drawee/Bearer/Creditor/Payee: The person to whom the amount is payable Section 5 : A Bill of Exchange is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to or to the order of a certain person or to the bearer of the instrument. Parties to Bill of Exchange 1.Drawer:The maker of the bill of exchange 2.Drawee: Person directed by the drawer to pay 3.Payee: person named in the instrument to whom or to whose order the money/instrument is directed to pay. Section 6: CHEQUE: A cheque is like a bill of exchange drawn on a specified banker and expressed to be payable otherwise than on demand and it includes electronic image of a truncated cheque and cheques in electronic form. A Cheque is payable on demand. Features and Parties to Cheque a. Drawn on specified banker b. Payable on demand c. Other features same as bills of exchange Parties to Bills of Exchange a.Drawer -person who makes the cheque b.Drawee –specific banker on whom the cheque is drawn c c.Payee –person named in the instrument on whom the cheque is drawn d.Drawee in case of need –name of a person in addition to name of a drawee. Types of Cheques : Order Cheque: One person or more is specified on the cheque as payee or endorsee. Negotiated by endorsement and delivery. Bearer cheque: No person is specified in the cheque as payee or endorsee, or the words 'to bearer' appear on the cheque. Negotiated by delivery only. Crossed cheques Specific direction to the drawee financial institution not to pay the cheque over the counter. Bearer Cheque: Cheque is bearer written and can be negotiated only by delivery. Cheques drawn in different inks, scripts and handwritings: Such Cheques would be paid, if otherwise in order and the paying bank is in a position to read and understand the instructions of the drawer. Cheques without date: Such cheques are to be returned by the Bank. A holder can complete an inchoate cheque by filling in the date and take the payment of the cheque. A cheque bearing a date being a holiday can be paid on the next working day. Cheque bearing impossible date: A cheque bearing an impossible date means the cheques drawn with a date, which never happens to exist. For example: November 31 or February 30, which may be paid on November 30 and February 29/28 respectively, as the case may be. Ante-dated Cheques: An ante-dated cheque is one, which bears a date prior to the actual date of signing the cheque or opening of an account. It can be paid till it becomes a stale cheque. 8  Stale Cheques: A stale cheque is the one, validity period of which, on the date of presentation, has already expired and due to that it cannot be paid. Validity Period of a Cheque: As per RBI directions dated 04/11/2011 (U/s 35 A BR Act) w.e.f 01.04.2012, cheques, demand draft & banker’s cheques presented after 3 months from their date, cannot be paid by the Banks. Revalidation of cheques : After a cheque becomes stale, it can be revalidated, any no of times. The fresh validity runs from the date of revalidation. Post-dated cheque: The cheque, which bears a date after the date on which it is drawn, and the date has not fallen due till presentation is called a post-dated cheque.Such cheques become effective on the date mentioned on the body of the cheque. The drawer of such a cheque can be sued by the holder after the mentioned date only. Different types of dates on cheques: Cheque Issued on Cheque dated as Type of Cheque October 25, 2024 October 1, 2024 Ante dated October 25, 2024 October 27, 2024 Post dated October 25, 2024 July 1, 2024 Stale CTS – 2010 STANDARD: Purpose: Achieving standardization of cheques. Features of CTS Cheques: Branch address with IFSC code printed on top Date in dd/mm/yyyy format with boxes. A pantograph that shows “VOID/COPY” New rupee symbol instead of bilingual c format. "Please sign above" is mentioned at the bottom Watermark “CTS INDIA” Ultraviolet logo of the Bank to be visible in UV lamps. Sec. 7 – Drawer and Drawee: The maker of a bill of exchange or cheque is called a “drawer” The person thereby directed to pay is called a “drawee” The name of any person may be given in a bill as ‘drawee in case of need’. His liability arises only when the bill is not accepted by the drawee named in the bill. Sec. 9 – Holder in due course: Any person who for consideration became the possessor of a promissory note, bill of exchange or cheque if payable to bearer, or the payee or endorsee thereof, if payable to order before the amount mentioned in it became payable and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title. Sec. 10 Payment in due course: Payment in accordance with the apparent tenor of the instrument in good faith and without negligence to any person in possession thereof under circumstances, which do not afford a reasonable ground for believing that he is not entitled to receive payment of the amount therein mentioned. Sec. 14 Negotiation: When a promissory note, bill of exchange or cheque is transferred to any person so as to constitute that person the holder thereof. The instrument is said to be negotiated. 9 Sec. 15 Endorsement: Signing on the face or back of a negotiable instrument or on a slip of paper annexed to the negotiable instrument called allonge by the holder of a negotiable instrument for the purpose of negotiating such a negotiable instrument. Types of Endorsements: Section 16 (1) – Endorsement in blank: Mere signature of the endorser on the back of an instrument. For example, if A gives B a cheque of 1,000 payable to order, and B merely puts his signature on the back of the cheque and delivers it to C, such an endorsement is a blank endorsement. Endorsement in full – When the endorser makes a direction to pay the amount specified in the cheque to a certain person or his order then the endorsement is in full. For example Pay Ram or Pay Ram or to his order. Sec. 22 Maturity – The maturity of a promissory note or bill of exchange is the date at which it falls due. Days of grace: Every promissory note or bill of exchange which is not expressed to be payable on demand, at sight or on presentment, is at maturity on the third day after the day on which it is expressed to be payable. Section 23 to 25 – Calculating Maturity: Case Date of maturity NI payable on stated number of months Corresponding day of the relevant month (i.e., date on which after date negotiable instrument is drawn + stated number of months) + 3rd day Corresponding day of the relevant month* (i.e., Date on which NI payable on stated number of months negotiable instrument is presented for sight + stated number of after sight months) + 3rd day NI payable on a stated number of days Date on which negotiable instrument is drawn + stated number of days after date + 3rd day NI payable on stated number of days after Date on which negotiable instrument is presented for sight + stated sight number of days + 3rd day c Section 50 – Restrictive Endorsement – when the right of negotiation is restricted or excluded by the endorsement. (An example of a restrictive endorsement is the "For Deposit Only" stamp used by most companies on the back of a received check. This stamp effectively limits further action on the cheque by the stated payee to only being able to deposit it). Section 52 – Sans Recourse Endorsement – The endorser can endorse the instrument in such a manner as to escape his liability. This is known as ‘Sans Recourse’ endorsement, or ‘without recourse’ endorsement. Thereafter if he again becomes the holder the instrument, all the intermediate endorsers shall be liable to him. An endorser, who endorses without recourse, cannot be held liable, if the instrument is dishonoured. Section 56 – Partial Endorsement: The endorser transfers only a part of the amount of the instrument to the endorsee. Example: A is the holder of an instrument for Rupees 1,000. He endorses the instrument as Pay to B or his order the sum of Rupees 500. Then such an endorsement is a partial endorsement and hence is not a valid endorsement. Conditional Endorsement: The endorser may make his own liability on the instrument subject to a condition. The condition can be the happening of a contingent event or make the right of the endorsee to receive the payment upon the happening of such an event. e.g. pay to X if he returns from abroad. Facultative Endorsement – The endorsee must give notice of dishonour to the endorser, but the endorser may waive this right in writing to the endorsement as ‘Notice of dishonour waived’. The endorser, however, remains liable to the endorsee for non-payment of the instrument. 10  Forged endorsement – Where the endorsement is forged (signed by somebody other than the person) all endorsees subsequent to the forged endorsement do not deliver any title if he derives title through a forged endorsement. Liability of endorser – In case of dishonour of an instrument, each endorser is liable to the holder. Discharge of endorser’s liability – An endorser is not liable for the instrument when any subsequent endorser destroys his remedy against prior parties. Sec. 17 – Ambiguous Instrument – When an instrument due to its faulty drafting, can be construed as a promissory note or bill of exchange it is called an ambiguous instrument. Sec. 18 – Amount stated differently in figures and words – if the amount undertaken or ordered to be paid is stated differently in figures and in words, the amount stated in words shall be the amount undertaken or ordered to be paid. Sec. 36 – Liability of Prior Parties – Until the instrument is duly satisfied, every prior party to a negotiable instrument has a liability towards the holder in due course. Sec. 40 – Discharge of endorser's liability – Where the holder of a negotiable instrument, without the consent of the endorser, destroys or impairs the endorser's remedy against a prior party, the endorser is discharged from liability to the holder to the same extent as if the instrument had been paid at maturity. Sec. 87 – Effect of Material Alteration – Material alteration of the Instrument renders the same void as against anyone who is a party thereto at the time of making such alteration. Crossing of Cheques: Section 123 – General Crossing is when a cheque bears across its face an addition of the words “and company” or any abbreviation thereof, between two parallel transverse lines, or two transverse lines simply, either with or without the words ‘not negotiable’ that addition shall be deemed a crossing and cheque shall be deemed to be crossed generally. Section 124 – Special Crossing is when a cheque bears across its face an addition of the name of a banker, either with or without c the words ‘not negotiable’ that addition shall be deemed a crossing and the cheque shall be deemed to be crossed specially. Section 125 – who can cross a cheque - When a cheque is uncrossed, the holder may cross it generally or specially. Sec. 138 – Dishonour of cheque – When any cheque drawn by a person is returned by the bank unpaid, such person shall be deemed to have committed an offence and shall be punished with imprisonment for a term which may extend to two years, or with fine which may extend to twice the amount of the cheque, or with both. Sec. 146 – Bank’s Returning Memo – Bank’s Returning Memo shall be prima-facie evidence for the dishonour of the cheque. 11 Section 5-A: Approved securities means such securities which are authorized by the Central Government under section 20 of the Indian Trust Act , 1882. Section 5-B: The definition of banking includes: "Banking means the acceptance of money , in the form of deposits , from the public for the purpose of lending or investment. " and repayable on demand or otherwise The Banking Companies Act, by cheques , drafts , and orders or otherwise. , 1949 came into force on Section 5-F: Demand Liabilities – which is paid on demand , Time Liabilities 16.03.1949. – which are repaid after a certain period of time. With effect from 01.03.1966, Section 5-N: Secured loan or advance means a loan against which a the Banking Companies Act, 1949 is known as the Banking security ( asset ) has been mortgaged and the market/ releasable value of Regulation Act, 1949. that asset should not be less than the loan amount. Implemented in Jammu and c Section 6-1: Banking Describes the forms of business that can be carried Kashmir since 1956, it is out by a banking company - such as accepting deposits , lending , currently applicable all over borrowing , accepting bills , buying/selling foreign currency , lockers , LC India. It is not applicable to primary Issuance , mortgage , insurance business on comission , acting as a trustee agricultural societies, co- and any other business function given as per the official gazette of the operative land mortgage banks Government of India etc. and non-agricultural credit Section 6-2: Restriction on Business The above section Prohibits a societies. banking company from doing any work other than those given in 6-1. Section 7: Use of the word Banking – In India, one of the words “Bank” , “Banking” or “Banking Company” is used in the name of a banking company (company doing banking business). Section 8: Restriction – no banking company shall directly or indirectly deal in the buying or selling or bartering of goods, except in connection with the realisation of security given to or held by it, or engage in any trade, or buy, sell or barter goods for others. Section 9: Immovable property cannot be held for more than 7 years except for own use , which can be further extended by 5 years by RBI. Section 10: Tenure of Management – (Chairman , Director) – 5 years , which can be extended for another 5 years. As per a government notification dated November 17, 2022, the term for the appointment has been extended to 10 years, from the earlier 5 years, subject to superannuation age of 60 years. Section 11 & 12 - Paid up capital: Foreign Bank - 15 lakh minimum (20 lakh for business in Mumbai or/and Calcutta), Domestic Bank - 5 lakh minimum. 12  Ratio of Authorized Capital, Subscribed Capital & Paid up capital - 4:2:1 A shareholder cannot have a maximum of 10% Banking Law Amendment Act 2012 voting rights irrespective of the size of the shareholder's holding. The Banking Law Amendment Act, Section 13- Commission & Brokerage: The bank cannot pay 2012 came into force on January 18, 2013. commission , brokerage or discount more than 2.5% of the paid In consultation with the Government up value of one of its shares. of India, the RBI can remove the Section 15- Bank cannot pay dividend before capitalized board of directors of any banking expanses are written off. company for 6 months. This period Section 17-1: The Bank shall, before the declaration of any can be extended up to a maximum dividend, transfer an amount equal to 20% of the profits of each of 12 months. year to a reserve fund. (RBI has increased it from 20% to 25% Section 3 of the Banking Companies with effect from 31-03-2001.) (Acquisition and Transfer Undertaking) Act 1970 and 1980 has Section 18: Cash Reserve- Non-Schedule bank will have to been amended under which keep at least 3% of its demand and time liabilities in cash reserve nationalised banks can increase their or current account with RBI. authorized capital through bonus Section 19 : Allows the bank to form a subsidiary company. shares and rights issue with the Section 19(2): No bank shall hold shares in any company in approval of the central government excess of 30% of its paid up share capital + reserves or 30% of and RBI, removing the ceiling which the paid up share capital + reserves of that company. was earlier Rs 3000 crore. Section 20: Bank Loan cannot be given by pledging one's own The Deposit Education and Awareness Fund (DEAF) has been set shares. c up under Section 26A. Section 21: RBI may issue directions to banks for laying down Prior to holding 5% or more share policy for advances. capital and voting rights in any Section 21-A: Interest charged by a bank after February 15 , banking company, approval from 1984, can not be made the subject of inquiry by the court on the RBI will have to be obtained. ground that the interest charged is excessive. Cooperative societies will have to Section 22 : License from RBI is necessary for banking business take permission from RBI for in India. banking business. A penalty of up to Rs 3 crore has Section 23 : Permission from RBI is required for opening new been made for giving false branch and transfer of branch at the present place of business. information to RBI. Section 24 : Every bank has to keep some percent of its net Bill proposed a penalty of up to Rs demand and time liability in the form of cash , gold and 200,000 for not providing the unencumbered (on which no charge is recorded) security , which required information or account is a maximum of 40 percent, on the last Friday of the second book to the RBI, if the mistake fortnight of every month. continues; the penalty amount can Section 26 : Unclaimed deposits of 10 years and above have to be increased by Rs 50000. Voting Rights: To make investment be sent to RBI within 30 days from the end of every calendar attractive, voting rights in private year. sector banks have been increased section 31 : Banks have to submit balance sheet and audit report from 10% to 26%. The voting rights within 3 months from the end of the reporting period, RBI can of the government in public sector extend this time by another 3 months. banks have been increased from the present 1% to 10%. 13 Section 35 : RBI has the right to inspect banks and give them necessary instructions , RBI has given instructions under section 21 and section 35 to round off rupee transactions to the nearest rupee. section 35a : RBI can give instructions to banks in public interest. Section 35 AA : On the orders of the Government of India, the RBI can direct a banking company to proceed with the bankruptcy resolution process under the Insolvency and Bankruptcy Code-2016. Section 35 AB : RBI can give directions to the bank for disposal of bad accounts. Section 36 : If necessary , RBI can dismiss the chairman or employee of a bank. Section 45 : Can apply to the Central Government for suspension of business of any banking companies and preparing a scheme for its reconstitution or amalgamation. Section 45(Y): Preservation of Bank Records - The Central Government in consultation with the RBI is empowered to make rules with respect to the preservation of records , a/cs and other documents. Payments made under section 45Z : instrument can be returned to the customer by keeping the true copy of the instrument. Section 45(ZA) : Nomination in deposit accounts. Section 45(ZC) : Nomination in Safe Custody Accounts. Section 45(ZE): Nomination in Locker Accounts. Section 47A : Violation of RBI instructions can be fined by RBI. Section 49A : No person other than a banking company / RBI / SBI can accept money in the form of deposit, which can be paid through cheque. c 14 As per banking parlance, a Customer is defined as a person who holds a deposit account, loan account, locker or goods safe As per the KYC policy of RBI, a custody account with a bank. customer may be defined as: As per the guidelines of 'Know Your Customer' by the Reserve A person or entity that maintains Bank of India, a customer can be said to be a person who has an account with the Bank and /or an account with the bank or has any other kind of relationship has a business relationship with the Bank; with the bank. One on whose behalf the a/c is When a a person become a customer, a legal relationship is maintained (the beneficial owner) Beneficiaries of transactions created between the bank and the customer. The relationship conducted by professional can be in form of : intermediaries, such as Stock Brokers, Solicitors etc. as Debtor & Creditor - When the customer is a depositor, permitted by the Law, and Any person or entity connected he is called a creditor or the bank is called a debtor. with a financial transaction which Similarly, in a bank draft, the drawee is the creditor and can pose significant reputational c the bank is the debtor. (Purchaser of the draft is creditor or other risks to the bank, for and bank is debtor). example - a wire transfer or issue of a high value demand draft as a Creditor & Debtor – If the customer takes a loan from the single transaction. bank, then he is called a debtor and the bank is called a creditor. Trustee & Beneficiary - When a person deposits some money in the When does the bank customer relationship bank and leaves it without any order, end? then that person becomes the When the customer closes the account beneficiary and bank trustee. himself, after giving the notice. Similarly, in a bank draft, the payee is When the bank closes the account after the beneficiary and the bank is the the expiry period of notice by giving trustee. notice. Agent and Principal - When a When the client dies/goes customer deposits a Cheque in the bankrupt/become insane. bank, after taking payment, the bank When a garnishee or attachment order deposits it in that person's account comes into the customer's account. (Collection of Cheque), then the (Temporary) customer becomes the principal and the bank agent. 15  Bailee and Bailor - If a person deposits his goods with the bank and the bank take the responsibility of monitoring those goods (as in case of safe custody or deposit) of articles), then the customer becomes the depositor and the bank becomes the depositee. Under the Indian Contract Act 1872, the bank will have to take proper care of the goods. Lessor and Lessee - When a locker is given by the bank to a customer, the bank becomes the lessor and the customer the lessee in this regard. Duties of the Banker In order to complete the bank-customer relationship , the bank has to fulfill some obligations towards the customer , which are as follows- Honoring Cheque issued by the customer – A bank is bound to honor cheque issued by its customer provided the customer has sufficient funds in his account, the funds are sufficiently payable to pay the cheque, and There should be a formal expectation of honoring the cheque. Keeping the secrecy of the customer's account - The bank is bound to keep the information about its customer's accounts and transactions completely confidential. This is a statutory obligation of the bank and continues even after the account is closed. It is also the responsibility of the bank to collect Cheque and bills and to submit periodic statements. Honoring Cheque issued by the customer – A bank is bound to honor Cheque issued by its customer provided the customer has sufficient funds in his account, the funds are sufficiently payable to pay the cheque, and There should be a formal expectation of honoring the cheque. Maintaining the secrecy of the customer's account, this is a statutory obligation of the bank and continues even after the account is closed. It is also the responsibility of the bank to collect checks and bills and to submit periodic statements. Banker's Rights Right of lien c Right of set off Right of appropriation Lien (Claim/Entitlement) Lien is the right of the Creditor, under which he can keep the goods or securities of the Debtor until he receives the entire amount to be paid by the debtor. It does not include the right to sell. Lien is the right of the bank under which the bank can keep the goods or securities kept with it until the amount due is fully repaid. Lien is of two types, special and general. Special Lien: According to section 170, the special lien is available to the bank only for one transaction. The transaction under this entitles the creditor to retain only those goods and securities in respect of which the amount is payable. For example, a tailor may hold a piece of cloth brought to him to be stitched until he has received the fee for sewing it. General lien: According to section 171, general lien is the right of lien when the bank can retain the securities or goods taken by it in any form until the time when all the bank's payment obligations of the customer are over. Bank's lien is also known as general lien under the Indian Contract Act. The special feature of this lien right is that it becomes available to the bank as soon as the customer bank relationship is established and the bank gets the right to sell the common securities held by it. This lien of the bank does not come under the Limitation Act. When the bank intends to exercise such a right, it is required to give proper notice to the customer. 16 Lien can be used: When the goods and securities are given by the customer to the bank by virtue of being a bank. When the goods and securities are in the name of the customer. When the goods/securities are in the possession of the bank and any loan granted by the bank has been repaid and others are yet to be repaid. The loan to be recovered should have been under the law. It is not necessary to have limitation here. Negative Lien: When the goods or securities remain in the ownership of the customer and the customer writes to the bank that these goods or securities belong to him, there is no other charge on them and he will get permission from the bank before selling them or charge on them in future, then it is called negative lien. Right of set off Whenever the same customer has two accounts in one or more branches of the bank, in which one is a loan account and the other is a deposit account, then the bank adjusts these two accounts among themselves, then it is called the right of adjustment or right of set off. Is. The following conditions are necessary in this : Both the accounts should be in the same name. The debt to be recovered should be just. Before using it, it is necessary to inform the customer by the bank. Right of appropriation Under the Indian Contract Act 1872, debtor who has to repay more than one debt of the creditor, to inform in which account the amount being returned should be deposited. When a debtor who has more than one loan to repay pays some amount to the lender, then the lender should credit the amount to the loan account as stated by him. If the borrower does not specify in which account the amount should be deposited, the lender c can deposit the amount in any loan account. Here the lender first deposits the amount in the account which is given first. Here the lender is required to give notice to the borrower. Garnishment order Section 60 of the Code of Civil Procedure, 1908 provides for garnishee orders. If a debtor does not pay the amount to a creditor, then that creditor can approach the court and obtain a garnishee order on the bank. Judgment Debtor: The debtor on whom the order is passed. Judgment Creditor: For whom the order is passed i.e. the creditor. ( Decree holder or Garnisher ) Garnishee: The bank on which the order is issued. (Debtor’s debtor) Order Nishee: The court asks for account and amount information from the bank. Order Absolute: The order is passed by the court in which the amount to be paid is also mentioned. After receipt of garnishee order, the bank and customer relationship is temporarily terminated. However, even after receipt of the garnishee order, the bank can exercise the 'right of set off ' rule. Applicable Not Applicable All Deposit Accounts (Including FD & In case of Cash Credit and Overdraft (Limit) RD) The account should be in the same The operation in the account is done as an agent. name and capacity. On credit balance of cash credit and In joint accounts the order is issued in the name of one, overdraft not paid proportionately 17  not on future deposits Attachment order _ The attachment order is issued by the Income Tax Officer under Section 226(3) of the Income Tax Act, 1961. Such order is applicable to all deposits which are deposited in the bank at the time of receipt of the order or have been deposited in the bank even after the receipt of the order or the order applies to joint accounts, paid proportionately can go. Applicable Cannot apply All Deposit Accounts (Including FD & RD) In case of available balance in shape of Cash Credit and Overdraft (Limit) The account should be in the same name The operation in the account is done as an agent. and capacity Pay proportionately to joint accounts On Credit Balance of cash credit and overdraft Even on the amount deposited in future Difference between garnishee order and attachment order: Particulars Garnishee Attachment Issuing Authority Competent Court Revenue/Tax authority Under which Act Civil Procedure Code Sec 60 Relevant Act say Sec. 226 of Order 21 Rules 46. Income Tax Act for Income Tax. Depositor called Judgment debtor Assesse Bank called Judgment debtor’s debtor Assesses’s debtor c Stages of order In two stages i.e. order nisi Issued as a payment order. and order absolute Issued to recover Personal dues of creditor Dues of the government Amount May be mentioned specifically Must be mentioned specifically Applicable to which account Clear amount with the For all. At the time of or after or garnishee (Bank) at time of order receipt Applicable to which account All deposit accounts including All deposit accounts including FD FD not due not due Right of set off Available for lawful and due Available for lawful and due debts debts Joint accounts, order single Not applicable Applicable pro-rata name Account of A, order in his Applicable Applicable name Order in Partnership’s name Applicable Applicable and account in partner’s name Joint account, order same Applicable Applicable joint names Order in name of partner, Not applicable for accounts in Not applicable for accounts in name trustee, executer, liquidator, name of firm, trust, company of firm, trust, company i.e. accounts director of a company, etc i.e. accounts in fiduciary in fiduciary capacity etc. capacity etc. 18 Deceased Applicable. Execution Applicable proceeding can’t be stopped after death Insolvent Not applicable Not applicable Undrawn CC or DD limit Not applicable Not applicable Order received Preference to attachment Preference to attachment simultaneously or is pending for payment. Failure to implement the Contempt of court Assessee in default order Applicability on FDR as Not applicable Not applicable collateral security c 19 In India, the Prevention of Money-Laundering Act, 2002 KYC Policy 2024: and the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005, form the legal framework on Know Your Customer (KYC) Norms Anti-Money Laundering (AML) and Countering Money-Laundering (AML) standards Financing of Terrorism (CFT). In terms of the provisions Combating of financing of terrorism of the PML Act, 2002 and the PML Rules, 2005, as activities norms (CFT) and amended from time to time by the Government of India, The policy guidelines issued on bank Regulated Entities (REs) are required to follow certain obligations under the Prevention of customer identification procedures while undertaking a Money Laundering Act (PMLA), 2002, transaction either by establishing an account-based These guidelines are known as 'Know Your relationship or otherwise and monitor their transactions. Customer (KYC) Policy, 2024'. c Definitions Beneficial Owner: Natural person, who alone or jointly with any other person, or through one or more Juridical Persons, controls the Ownership interest of different types of entities. Let's do Here the meaning of ownership interest is explained by the table given below - customer is Beneficial Owner and his control over Ownership Interest will be as follows A Company Controlling ownership interest” means ownership of/entitlement to more than 10 percent of the shares or capital or profits of the company. “Control” shall include the right to appoint majority of the directors or to control the management or policy decisions including by virtue of their shareholding or management rights or shareholders agreements or voting agreements. A Partnership firm One entitled to more than 10% of the capital or profits. An unincorporated holding more than 15% in property, capital or profit. In case of non- association or body of fulfillment of this condition , Natural Person holding the post of Senior individuals (includes Managing Official will be the beneficial owner. societies ) A trust the author of the trust, the trustee, the beneficiaries with 10 percent or more interest in the trust and any other natural person exercising ultimate effective control over the trust through a chain of control or ownership. 20 Central KYC Records Registry (CKYCR) KYC means an entity defined under Rule 2(1) of the Rules, to receive, store, safeguard and retrieve the KYC records in digital form of a customer. Digital KYC: means the capturing live photo of the customer and officially valid document or the proof of possession of Aadhaar, where offline verification cannot be carried out, along with the latitude and longitude of the location where such live photo is being taken by an authorised officer of the RE as per the provisions contained in the Act. Digital signature: Authentication of e-records of subscribers by electronic means/methods. Know Your Client (KYC) Identifier: A code issued by the Central KYC Records Registry. UCIC: Unique Customer Identification Code, unique customer-id alloted for existing customers as well as new customers. All accounts of every customer will be linked to UCIC only. Equivalent e-document: means an electronic equivalent of a document, issued by the issuing authority of such document with its valid digital signature including documents issued to the digital locker account of the customer as per rule 9 of the Information Technology (Preservation and Retention of Information by Intermediaries Providing Digital Locker Facilities) Rules, 2016. NON-PROFIT ORGANIZATIONS NPO) means any entity or organisation, constituted for religious or charitable purposes referred to in clause (15) of section 2 of the Income-tax Act, 1961 (43 of 1961), that is registered as a trust or a society under the Societies Registration Act, 1860 or any similar State legislation or a company registered under Section 8 of the Companies Act, 2013 (18 of 2013). Transaction : "Transaction" means a purchase , sale , loan, pledge, gift, transfer , delivery or arrangement thereof and includes: Opening an account ; Deposit , withdrawal , exchange or transfer of funds in any currency , whether by cash or cheque , pay order or other instruments or by electronic or other non-physical means ; Safe Deposit Box or Safe Deposit use of any other form of safe deposit ; c Entering into any fiduciary relationship ; Payment made or received, in whole or in part , for any contractual or other legal obligation ; Or Establishment or creation of a legal person or legal system. "Suspicious transaction" means such "transaction" which includes attempted transaction, acting in good faith or not o Any transaction involving money obtained by crime. o Transactions involving unusual or undue complexity. o Transactions that have no economic basis or bona fide purpose. o or transactions involving terrorism of any kind. Officially Valid Document (OVD) ( officially valid document ) Means- Passport driving license Proof of possession of Aadhaar number ( issued by UIDAI ) Voter ID card issued by the Election Commission of India Job card issued under NREGA, duly signed by an officer of the State Government. Letter issued by National Population Register in which name , address has been given. 21  The address is not updated in the OVD submitted by the customer, the following documents or equivalent e-document will be considered as OVD of proof of address for limited purpose- Utility bill (electricity, telephone, post-paid mobile phone, piped gas, water bill) which is not more than 2 months old. Property or Municipal tax receipt Pension Payment Orders should be written PTA. Letter issued by employer regarding accommodation of allotment Further, at the time of opening the accounts of such customers, the branches shall obtain an undertaking from the customers along with the AOF/OVD. It is required to be taken that the customer shall deposit the OVD with the updated address within 3 months failing which the operations in his account will be Debit Freeze. Video based Customer Identification process (V-CIP): an alternate method of customer identification with facial recognition and customer due diligence by an authorised official of the RE by undertaking seamless, secure, live, informed-consent based audio-visual interaction with the customer to obtain identification information required for CDD purpose, and to ascertain the veracity of the information furnished by the customer through independent verification and maintaining audit trail of the process. Such processes complying with prescribed standards and procedures shall be treated on par with face-to-face CIP for the purpose of this Master Direction. Customer: means a person who is engaged in a financial transaction or activity with the Bank and includes a person on whose behalf the person who is engaged in the transaction or activity, is acting. Walk-in Customer: means a person who does not have an account based relationship with the Bank, c but undertakes transactions with the Bank. Customer Due Diligence (CDD): means identifying and verifying the customer and the beneficial owner using reliable and independent sources of identification. Non Face to Face Customer: Means those customers who open accounts without visiting the branch/offices of the banks or without meeting the officials of the banks. FATCA (Foreign Account Tax Compliance Act) this is a US tax law that requires foreign financial institutions to provide Tax compliance information on US citizens or companies owned by them. CRS (Common Reporting Standards" (CRS): OECD (Organization for Economic Co-operation and Development) The Council had approved the ' Common Reporting Standard ' (CRS) on 15 July 2014. The CRS exercises its jurisdiction to obtain account information from financial institutions and automatically exchanges that information with official bodies in other countries on an annual basis. Politically Exposed Persons" (PEPs) : Politically Exposed Persons” (PEPs) are individuals who are or have been entrusted with prominent public functions by a foreign country, including the Heads of States/Governments, senior politicians, senior government or judicial or military officers, senior executives of state-owned corporations and important political party officials. Wire Transfer: Transaction through electronic means is called wire transfer. If the transaction sender and recipient bank are in the same country, then it is called Domestic Wire Transfer. If the sender and receiver bank of the transaction are in different countries , then it is called cross border wire transfer. 22 Objective KYC Policy has been formulated to develop a robust mechanism to achieve the following objectives- KYC procedures also enable the bank to know/understand its customers and their financial practices better, which in turn helps in managing the associated risks. KYC norms / AML standards / CFT measures and PMLA, 2002 to enable the bank to comply with the bank's obligation and to co-operate with various government institutions to deal with related issues. KYC The policy will include the following 4 key elements- Customer Acceptance Policy (CAP); Risk Management; Customer Identification Procedures (CIP); and Monitoring of Transactions CUSTOMER Acceptance Policy The Bank has framed a Customer Acceptance Policy , as per this policy the Bank will ensure that No account is opened in anonymous or fictitious / benami name. No account is opened where the Bank is unable to apply appropriate Customer Due Diligence (CDD) measures, either due to non-cooperation of the customer or non-reliability of the documents / information furnished by the customer. STR shall be filed if necessary, when it is unable to comply with the relevant CDD measures in relation to the customer. No transaction or account based relationship is undertaken without following the CDD procedure. The mandatory information sought for KYC purpose while opening an account and during the periodic updation, is specified. Additional information, where such information requirement has not been specified in KYC Policy of the Bank, is obtained with the explicit consent of the customer. c The CDD procedure is to be applied at the UCIC level. Thus, if an existing KYC compliant customer of Bank desires to open another account with the same Bank, there shall be no need for a fresh CDD exercise. CDD Procedure is followed for all the joint account holders, while opening a joint account. Circumstances, in which a customer is permitted to act on behalf of another person / entity, are clearly spelt out. No account is opened where identity of the customer matches with any person or entity, whose name appears in the sanctions lists indicated in Chapter IX of the Master Direction of RBI on KYC as amended from time to time. Where Permanent Account Number (PAN) is obtained, the same shall be verified from the verification facility of the issuing authority. Where an equivalent e-document is obtained from the customer, the digital signature has to be verified as per the provisions of the Information Technology Act, 2000 (21 of 2000). Where Goods & Services Tax (GST) details are available, the GST number shall be verified from the search/ verification facility of the issuing authority. Risk management The Bank will follow a risk based approach to risk management , which includes- The customer will be classified as low, medium and high risk based on the Bank's assessment and risk perception. Risk categorization will be done on the basis of information about the identity of the customer , his/her social/economic status , nature of business activity , and information about the business and location of the customer, geographical risk covering customers as well as transactions, type of 23  products/services offered, delivery channel used for delivery of products/services, types of transaction undertaken – cash, cheque/monetary instruments, wire transfers, forex transactions, etc. While considering customer’s identity, the ability to confirm identity documents through online or other services offered by issuing authorities may also be factored in. The risk categorisation of a customer and the specific reasons for such categorisation shall be kept confidential and shall not be revealed to the customer to avoid tipping off the customer. Periodic Updation Periodic update in high risk customer category in 2 years , Timely update in medium risk customer category in 8 years , Timely update in low risk customer category over 10 years. In case of individual account: case of no change in KYC details, a self-declaration letter is given by the customer through customer's registered email , registered mobile number , ATM or digital channel. In case of change of address, the address details along with the self-declaration letter are provided by the customer through customer's registered email , registered mobile number , ATM or digital channel, the correctness of which is verified by the bank within 2 months , through various means like address verification letter. Fresh KYC documents may be obtained in case the minor customer attains majority, fresh photograph , signature wherever required. In accounts other than personal account: case of no change in KYC details, a self- declaration letter is given by the Company through c registered email , registered mobile number , ATM or digital channel. If required, the information of persons authorized to operate the account should also be updated. In case of change in KYC, the entire action will be taken as for opening a new account. Additional measures : In case the customer's account is not KYC compliant , a temporary freeze (only deposits allowed) can be imposed on the account by issuing two notices of 10 days each within 30 days. The account may be frozen (only The following conditions are available in an deposits allowed) even if the customer account opened through e-KYC through does not submit PAN or Form 60 or its equivalent documents Is. If the Aadhar OTP: instrument is received from the Specific consent of the account holder customer that he does not want to provide the document, then in this case required the bank can close the account. The balance can never exceed 1 lakh. The sum of deposits of all accounts of that customer throughout the year Customer Identification Process should not exceed 2 lakhs. Customer Identification Procedure means Term Loan (TL) cannot exceed completion of customer due diligence measures to Rs.60000/- for one year. identify and verify the customer and the beneficial According to the KYC policy in one owner. year, if there is no CDD, the deposit The bank has to identify the customers in the account will be closed immediately and following situations- debits will not be allowed in the loan account. 24  When starting an account-based-relationship with a customer. For a person who is not an account holder of the bank but avail banking services. When the Bank doubts the authenticity or adequacy of the customer identification data held by it. While selling third party products as an agent, its own products (banks' own products), While paying credit card dues, While selling or reloading prepaid or travel cards , and selling any other product above Rs.50,000. Walk-in customer i.e. while carrying out one or several transactions involving an amount of Rs.50000 or more by a non-account holder customer (whether conducted as a single transaction or several transactions that appear to be connected). When the bank has reason to believe that a customer (account holder or walk-in) is intentionally converting a transaction into a series of transactions of less than Rs.50000. The bank will ensure that introduction is not sought while opening the account. Video Based Identification: The bank may undertake V-CIP to do the following: In case of new customer onboarding for individual customers , Small Account: If a person does not have In case of Proprietorship Firm to identify the any of the specified documents (OVD) and Proprietor , Authorized Signatory and Beneficial wants to open an account, then a 'Small Owner in case of Legal Entities customers. Account' can be opened, in which the In case of CDD of the Proprietorship firm , the bank following limits will apply: shall also obtain e-document equivalent to proof of activity in respect of the Proprietorship firm as The total of all deposits in a mentioned in section 28 in addition to the CDD of the financial year shall not exceed one Proprietorship. lakh rupees. c V-CIP for conversion of existing accounts opened in The total of all withdrawals and non-face to face mode to face to face mode using transfers in a month shall not Aadhaar OTP-based e-KYC authentication. exceed ten thousand rupees (Rs. V-CIP can be done for updating of KYC for eligible 10000/-). customers. At no time will the balance exceed fifty thousand rupees (Rs. Customer Due Diligence ( CDD) (in case of individuals) – 50000/-). Section 15 The bank will receive self-attested Customer Due Diligence (CDD) procedures (in case of photographs. individuals) The account will remain in Bank while establishing an account-based relationship with operation for a period of initial 12 any person or transacting with any person who is the months, which may be extended beneficial owner , authorized signatory or power of any legal for a further period of 12 months, entity be an attorney holder , The CDD will obtain the following provided that the account holder documents from the said persons as part of the process- submits evidence of applying for Aadhaar Number – any OVD during the 12 months of opening the said account. Required where he / she intend to receive any benefit The entire exemption provisions or other subsidy under any scheme notified under will be reviewed after 24 months. section 7 of the Aadhaar (Targeted Delivery of Foreign remittance is not allowed. Financial and Other Subsidies, Benefits and Services) Act, 2016. 25  he decides to submit his Aadhaar number voluntarily to a bank or any RE notified under first proviso to sub-section (1) of section 11A of the PML Act; or the proof of possession of Aadhaar number where offline verification can be carried out; or the proof of possession of Aadhaar number where offline verification cannot be carried out or any OVD or the equivalent e-document thereof containing the details of his identity and address; or (ac) the KYC Identifier with an explicit consent to download records from CKYCR; and PAN Number or Form-60 As defined in the Income Tax Rules, 1962. a recent photograph At least one document or equivalent e - document related to declared profession, activity , nature of business or financial status , annual income , total turnover (in case of no document self- declaration letter can also be taken) Certified copy of any OVD ( Certified copy ) , containing details of his identity and address. If biometric e-KYC authentication cannot be done on account of injury, illness or old age or any other reason , of a person who is desirous of receiving any benefit or subsidy under any of the schemes notified under the Aadhaar clause, the bank customer In addition to obtaining an Aadhaar number , for identification , through offline verification or obtain a certified copy of any other OVD, or equivalent e - document from the customer. PAN card and voter identity card ie Voter Identity card should be verified from the following websites, and the print of online verification of the said document should be kept on record along with the related account opening form (AOF). c CDD Measures for Sole Proprietorship Firms CDD Measures for Sole-Proprietary firms of sole proprietorship firms CDD of will be done. Apart from this , any two of the following documents or their equivalent i.e. Equivalent e-document will also be obtained as proof of business or activity in the name of the firm- Registration certificate including Udyam Registration Certificate (URC) issued by the Government. Certificate/License issued by the municipal authorities under the Shop and Establishment Act , Sales and Income tax return, CST / VAT / GST certificate Certificate / registration document issued by Sales Tax / Service Tax / Professional Tax authorities IEC (Importer Exporter Code) issued to the proprietary concern by the office of DGFT / License / certificate of practice issued in the name of the proprietary concern by any professional body incorporated under a statute. Complete Income Tax Return (not just the acknowledgement), duly authenticated / acknowledged by the Income Tax authorities. Utility bills viz. electricity, water, landline telephone bills. In cases where the REs are satisfied that it is not possible to furnish two such documents, REs may, at their discretion, accept only one of those documents as proof of business/activity. Provided REs undertake contact point verification and collect such other information and clarification as would be required to establish the existence of such firm, and shall confirm and satisfy itself that the business activity has been verified from the address of the proprietary concern. 26 CDD Measures for Legal Entities Opening the account of a Company, a certified copy or equivalent e-document of each of the following documents shall be obtained- Certificate of incorporation; Memorandum and Articles of Association; Company 's Permanent Account Number A resolution from the Board of Directors and power of attorney granted to its managers, officers or employees to transact on its behalf Documents, as specified in Section 16, relating to beneficial owner, the managers, officers or employees, as the case may be, holding an attorney to transact on the company’s behalf the names of the relevant persons holding senior management position; and The registered office and the principal place of its business, if it is different. opening the account of Partnership Firm , certified copy or equivalent e-document of each of the following documents will be obtained- Registration certificate , Partnership deed, PAN (Permanent Account Number) of the firm Documents, as specified in Section 2, relating to beneficial owner, managers, officers or employees, as the case may be, holding an attorney to transact on its behalf The names of all the partners and Address of the registered office, and the principal place of its business, if it is different. For opening the account of Trust certified copy / certified copy or equivalent e-document of each of the c following documents shall be obtained- Registration certificate , Trust deed; Permanent Account Number or Form No.60 of the trust Documents, as specified in Section 2, relating to beneficial owner, managers, officers or employees, as the case may be, holding an attorney to transact on its behalf the names of the beneficiaries, trustees, settlor, protector, if any and authors of the trust The address of the registered office of the trust; and List of trustees and documents, as specified in Section 16, for those discharging the role as trustee and authorised to transact on behalf of the trust. For opening an account of an unincorporated association or a body of individuals , a certified copy or equivalent e-document of each of the following documents shall be obtained- Resolution of the managing body of such association or body of individuals Permanent Account Number or Form No. 60 of the unincorporated association or a body of individuals Power of attorney granted to transact on its behalf Documents, as specified in Section 2, relating to beneficial owner, managers, officers or employees, as the case may be, holding an attorney to transact on its behalf and Such information as may be required by the RE to collectively establish the legal existence of such an association or body of individuals. 27  Explanation: Unregistered trusts/partnership firms shall be included under the term ‘unincorporated association’. Explanation: Term ‘body of individuals’ includes societies. Judicial Persons For opening the account , certified copies of the following documents will be obtained- Document showing name of the person authorised to act on behalf of the entity Documents, as specified in Section 2, of the person holding an attorney to transact on its behalf and Such documents as may be required by the RE to establish the legal existence of such an entity/juridical person. Provided that in case of a trust, it shall be ensured that trustees disclose their status at the time of commencement of an account based relationship or when carrying out transactions as specified hereunder: a) Transaction of an amount equal to or exceeding rupees fifty thousand, whether conducted as a single transaction or several transactions that appear to be connected, or b) Any international money transfer operations. Enhanced Due Diligence Procedure Enhanced Due Diligence (EDD) for non-face-to-face customer onboarding (other than customer onboarding in terms of Section 3): Non-face-to-face onboarding facilitates the REs to establish relationship with the customer without meeting the customer physically or through V-CIP. Such non-face-to-face modes for the purpose of this Section includes use of digital channels such as CKYCR, DigiLocker, equivalent e- document, etc., and non-digital modes such as obtaining copy of OVD certified by additional c certifying authorities as allowed for NRIs and PIOs. Following EDD measures shall be undertaken by REs for non-face-to-face customer onboarding (other than customer onboarding in terms of Section 3): o a) In case RE has introduced the process of V-CIP, the same shall be provided as the first option to the customer for remote onboarding. It is reiterated that processes complying with prescribed standards and procedures for V-CIP shall be treated on par with face-to-face CIP for the purpose of this KYC policy. o b) In order to prevent frauds, alternate mobile numbers shall not be linked post CDD with such accounts for transaction OTP, transaction updates, etc. Transactions shall be permitted only from the mobile number used for account opening. RE shall have a Board approved policy delineating a robust process of due diligence for dealing with requests for change of registered mobile number. o c) Apart from obtaining the current address proof, RE shall verify the current address through positive confirmation before allowing operations in the account. Positive confirmation may be carried out by means such as address verification letter, contact point verification, deliverables, etc. o d) RE shall obtain PAN from the customer and the PAN shall be verified from the verification facility of the issuing authority. o e) First transaction in such accounts shall be a credit from existing KYC-complied bank account of the customer. o f) Such customers shall be categorized as high-risk customers and accounts opened in non-face to face mode shall be subjected to enhanced monitoring until the identity of the customer is verified in face-to-face manner or through V-CIP. Accounts of Politically Exposed Persons (PEPs) 28  o Banks shall have the option of establishing a relationship with PEPs (whether as customer or beneficial owner) provided that, apart from performing normal customer due diligence: o Banks have in place appropriate risk management systems to determine whether the customer or the beneficial owner is a PEP; o Reasonable measures are taken by the Banks for establishing the source of funds / wealth; o the approval to open an account for a PEP shall be obtained from the senior management; o all such accounts are subjected to enhanced monitoring on an on-going basis; o in the event of an existing customer or the beneficial owner of an existing account subsequently becoming a PEP, senior management’s approval is obtained to continue the business relationship; o These instructions shall also be applicable to family members or close associates of PEPs. Client Account operated by Professional Intermediaries: Banks while opening Client Account operated by Professional Intermediaries shall ensure that: o Customers will be identified when a customer account is opened by a professional intermediary on behalf of a customer. o bank will have the option of holding 'pool' accounts managed by professional intermediaries on behalf of entities such as mutual funds, pension funds or other types of funds. o Banks will not open accounts with pr