Retail Banking Accounts

8/13/2019 Retail Banking Accounts

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Retail Banking Accounts....1

RETAIL BANKING

RETAIL BANKING ACCOUNTS

SYED FAZAL AZIZ

2


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Retail Banking Accounts

Types of Relationship Broad Customer segments & their expectations.

Who is a customer?

A question asked frequently.But__________ Never defined completely.

With the passage of time and more scientific

study of social and economical demands themeaning / definition of a customer (legally) finetuned.


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Evolution__________ Definition of

customer.

In Great Western Railway Company v.

London and County Banking Co. Ltd.(1901. A.C 414) Lord Davey remarkedthat a customer is a person who has

"some sort of account. Either depositor current account or some similarrelation" with a banker.


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To constitute a customer, there must be somerecognisable course of habit of dealing in the nature ofregular banking business." The most important point thatestablishes relationship is "duration" according to SirJohn Paget: but it was ruled off in the case of Landbrokev. Todd of Justice Bailhache who declared that "In my

opinion a per-son becomes a customer of a bank whenhe goes to the bank with money or a cheque and asks tohave an account opened in his name, and the bankaccepts the money or cheque and is prepared to openan account in the name of that person: after that he is

entitled to be called a customer of the hank." He furtheradds. "I think such a person becomes a customer themoment the bank receives the money or cheque andagrees to open an account."


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This was confirmed by the Privy Council whenLord Dunedin delivered the .judgement. It was

pointed out that the word 'Customer' signifies arelationship in which duration is not of theessence.

Therefore:

For a bank customer the habit of dealing is notessential.

Duration and frequency of operation in the accountdoes not effect the relationship / meaning ofcustomer.


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Qualification of a Customer

Relationship between customer and theBank

It is a contract between two parties

Who can enter into a contract?

Defines?

Contract Act 1872 (as adopted by GOP)

SECTION II


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As per contract Act

A minor cannot enter into an agreement all suchagreements are VOID in nature.

An insane personsection 12 of Contract Act

says that A person is said to be of sound mind for the purpose

of making a contract if at the time when he makes it.

he is capable of understanding it and of forming a

rational judgement as to its effect upon hisinterests."


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A person who have been debarred from enteringinto any contract under law. (Though there are

several reservations regarding un-dischargedbankruptcy) proclaimed offender etc. etc.

However:

An exception has been allowed to open an accountof a minor in the practice of banking. The account is opened jointly in the name of minor and

guardian. Upon the orders of a competent court of law

Appointing guardian and setting terms and conditions ofconduct of account (operation)


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Rights and Duties of a Customer

RIGHTS: The customer has the followinguniversally accepted rights:

(a) to draw cheques against his credit balance.

(b) to receive statement containing a copy of hisaccount with the banker.

(c) to sue the bank for the cost. loss and damageswhen his cheque is wrongfully dishonoured:

(d) to sue when the banker has not maintained thesecrecy of his account.

(e) to claim for and receive the profit I return on hisdeposits as promised by the bank.


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DUTIES: The customer has the following duties to-

wards his banker:

Section 72 of the Negotiable instruments Act. 1881. lays

down that the customer must present the cheques for

payment and collection within the business hours of his

banker.

Section 84 of the Negotiable Instruments Act, 1881. lays

down that the customer should see that the cheque and

other instruments are presented for payment within a

reasonable time from the date of their issue. He should keep his cheque book under Iock and key so

that no unauthorised person gets access to it.


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Customer Segments

Customer(s)

IndividualsFirms/Business

concernsGovt Deptt. Society

Proprietary Concerns

Regd./Un-Regd.Joint Stock Companies

Public Ltd.

Pvt. Ltd.

Autonomous Bodies Semi Autonomous Bodies Local Bodies Clubs Cooperative Societies

Companies Ltd. By Guarantees


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Bank Account Types and

their Likely UsersTypes of Account

PLS A/c PLS Term DepositPLS

SNTDRCurrent A/c Call DepositNIDA

FC Saving/FC

Current

FC Term

Individuals / Joint

Salaried

Widows

House Wives

Pardanasheen

Ladies

Blind & visually

impaired persons

Individuals

(partnership JointA/cs

Business concerns

Govt. Deptts.

Club / Societies /

Trust

Institutions


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Business Accounts:Current A/c. ---- NIDA A/c.---- F.C A/c

Definition of BusinessAn individual, firm or corporate entity engage in

commercial activity as permissible under law,

abiding all moral / ethical values and socialnorms of the society to earn profit.

Current A/c

Can be opened by an individual, in his name orjointly.

To carryout day today business a firm company,

society or Trust have to maintain a Current A/c.


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Maintenance of an account is a mandatory

requirement: a) To documented the economic activities.

B) To prevent tax evasion and illegal activities.

CLASSIFICATION OF CUSTOMERS (BUSIENSS)

Partnership A/cs. What is partnership?

An agreement either written or oral between two or more

persons to carryout business called partnership.

Each individual is termed as PARTNER.

Collective group constitute a FIRM


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Partnership

Autonomous Bodiesself governing corporate bodies andinstitutions in public sector working under the direction of FederalGovernment in Pakistan

Requirement to open a partnership account

CNIC of all Partners.

Partnership Deed (Certified Copy). Attested copy of RegistrationCertificate with Registrar of Firms.

Original Authority letter favoring persons authorized to operatethe Account. In case the partnership is unregistered, this factshould be clearly mentioned on the Account Opening form.

Undertaking from partners involved for responsibility of conduct ofaccount individually and jointly.

Account Opening Form should bear the signature of all thepartners.


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A partner cannot open a Bank account on behalf o the firm in hisown name.

JOINT STOCK COMPANIES: A joint Stock company is an association of individuals for the

purpose of profit, possessing a common capital contributed bythe members constituting it, such capital commonly divided intoshares of which each possess one or more and which aretransferable by the owner

(Companies Act 1984 Section 2)

PRIVATE LTD COMPANY:

A Private Limited Company is a company where the right totransfer the shares of its members is restricted, and publicsubscription in the shares of the company is prohibited under its

Articles. The maximum number of its members is 50. A company limited by shares may register its own Articles of

Association; and the minimum number of members to form sucha Company is fixed.


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PUBLIC LTD COMPANY:

No restriction for sale, purchase and transfer ofshares

COMPANY LTD. BY GUARANTEE:

The liability of the members of the company is

limited to a fixed amount of money.

Non-profit earning entity

Purpose of formation to promote, culture, sports,

commerce etc. Stock Exchange

Sindh Club (Ltd.)


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PRIVATE/PUBLIC LIMITED COMPANIES:

Cert i f ied cop ies o f:

Certificate of Incorporation,

Certificate of Commencement of Business,

Memorandum & Articles of Association,

List of Directors,

Board of Directors Resolution,

CNICs of all the Directors.

Power of Attorney / Mandate (If required).


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CLUB, SOCIETIES AND ASSOCIATIONS:

Non-Trading Organizations. Registered under Societies Act - 1866

Cert i f ied cop ies o f:

Certificate of Registration.

By-Laws/Rules & Regulations, Constitution.

Resolution of Governing Body for accountopening.

An undertaking signed by all authorized persons

when any change takes place in the personsauthorized to operate in the account, the bankerwill be informed immediately.


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TRUST ACCOUNT

"A Trust' is an obligation annexed to the ownership of property

and arising out of a confidence proposed in and accepted by himfor the benefit of another, or of another and the owner".

A Trust may be created for any lawful purpose

It has following constituents:

The person who declares the confidence and is called the

"Author of the Trust. The person who accepts the confidence and is called the

"Trustee".

The person who benefits from the confidence and is called the"beneficiary".

The subject matter of the 'Trust that it is called 'Trust property" or"Trust money" or "Beneficial interest".

The instrument by which a Trust is declared, is called the"Instrument of Trust".


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Opening and Operation of the Account

The account should be opened in the name ofTrust and all the trustees should sign the account-

opening form.

Attested copy of

Certificate of Registration,

CNIC of all the trustees.

Certified copy of Instrument of Trust.


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EXECUTERS AND ADMINISTRATORS ACCOUNT

Executor

An EXECUTOR is a person to whom the execution of a will isentrusted by the testator.

Executor derives his authority from the will.

Admin is t ra tor

An ADMINISTRATOR is a person appointed by a court of law to

look after the estate of a person who died without leaving a will orthe persons he appointed are incapable of acting as executors.

Opening and Operations of Account.

Attested photocopy of identity cards of Executor Administrators.

Certified copy of Letter of Administration or Probate.

Probate or Letter of Administration

It is a certified copy of a will issued under the seal of the court.i.e. High Court, District Judge's Court, or First Class Sub-Judge'sCourt in Sindh.


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National Income Daily Account

In view of the present competitive atmosphere in the Bankingsector different Banks introduced a new type of account with theirbranded names but have the common characteristics that:

Bracketed in Saving Account

But

Contains the characteristics of Current Account.

Profit is paid on daily product basis

Profit is paid on daily product basis.

Profit applicable on these types of accounts are higher than theprofit paid on PLS Account.

Customers have to maintain minimum sum of Deposit.

Other terms and conditions are same as of PLS / CurrentAccount for opening, maintaining the Account.


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Saving Accounts

PLS ACCOUNT Profit paid on half yearly basis.

Zakat is deducted

Number of transactions is not restricted

PLS A/Cs are opened for individuals (single or joint).

Charitable Institutions Provident and other Funds of benevolent nature of

Local Bodies

Autonomous Corporations

Companies

Associations

Educational Institutions Firms etc. etc.

No. restrictions on maintaining the upper limit of deposit andwithdrawals of amount


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PLS Account

Individual Joint Blind & Visually

ImpairedPersons

Minor Account

Salaried Widow Housewives Pardanasheen

Ladies

Literate

Illiterate


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INDIVIDUAL / JOINT Identification Documents

Purpose

Source of Income (Salaried, Self-employees, Business,Student, Mustahqeen-e-Zakat etc. etc)

Verification of Credentials / Documents

Allowing opening / operation or otherwise.In case of Pardanasheen ladyLiterate.

Treated at par with literate male customers

Pardanasheen ladyIlliterate

Accounts may be opened in the joint names with an adultmale member payable either or survivor.

Lady will affix her mark, right hand thumb impression Jointlysigned by the joint Account Holder


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BLIND AND VISUALLY IMPAIRED PERSONS

A Joint Account can be opened of blind and visuallyimpaired persons with visually literate.

Purpose of visually literate person:

To facilitate operation of the Joint Account

Have No claim or interest to the funds in the Joint Account.

Presence of both visually blind and Joint Partner is

necessary for operations in accounts.

MINOR ACCOUNTS. Can be opened joint with an adult.


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DEPOSIT ACCOUNT

Banks, DFIs and National Saving Center accepts deposit for a

period ranges from 3 months to 10 years. Banks accept Deposit Account in Pak Rupee + Foreign Currency

(Dollar based).

Payment of Profit made either

Monthly

Half Yearly

On maturity

Deposit Accounts have condition of Minimum / Maximuminvestment on single party basis.

MONTHLY / HALF YEARLY PROFIT PAYMENT DEPOSITACCOUNTS

These types of account are only for Individuals (single or joint)category of customers.

Private and public limited companies, local, autonomous andsemi autonomous bodies can not open these types of account.


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SPECIAL PURPOSE ACCOUNTS

Government Revenue Collection Accounts.

Office Accounts.

Accounts for collection of Zakat for CharitableOrganization

Accounts for collection of Donations