Bank Internship

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BANKING PRACTICES LAB RECORD
[MBABT 419]
INTERNSHIP TRAINING
at
INDIAN OVERSEAS BANK
Reddiarpalayam Branch, Pondicherry
Submitted by
S. PRAKASH RAJIV
REGISTER NO: 14381044
DEPARTMENT OF BANKING TECHNOLOGY
PONDICHERRY UNIVERSITY
PUDUCHERRY-605014
JANUARY 2015

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DEPARTMENT OF BANKING TECHNOLOGY
SCHOOL OF MANAGEMENT
PONDICHERRY UNIVERSITY
PUDUCHERRY-605014
BONAFIDE CERTIFICATE
Certified that this is the bonafide record of work done by S. PRAKASH RAJIV
(REGISTER NO: 14381044) in the BANKING PRACTICES LAB (MBABT 419) during
the academic year 2014-2015.
LAB IN-CHARGE HEAD OF THE DEPARTMENT
Submitted for the University Practical Examination held on ………………………..
INTERNAL EXAMINER EXTERNAL EXAMINER

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ACKNOWLEDGEMENT
I would like to express my sincere and heartfelt gratitude to my mentor
Mr. C. P. ABDUL GAFOOR, Assistant Professor, Department of Banking Technology,
Pondicherry University, for his valuable suggestions and his timely guidance.
Mere word of thanks would not be sufficient to express my gratitude to the ever
motivating Head of the department, Prof. Dr. K.CHANDRA SEKHARA RAO, for his
valuable advice and moral support during the Banking Practices lab.
I also express my sincere thanks to Mr. A. LAKSHMANASAMY, BRANCH
MANAGER for giving us an opportunity to undergo the training in the Bank. I wish to
acknowledge my sincere gratitude to all the staffs at INDIAN OVERSEAS BANK,
REDDIARPALAYAM BRANCH, PONDICHERRY who have been constantly helping us in
the training.
I also express my thanks to the Dean Dr. R. PRABHAKARA RAYA, School of
Management studies for providing all the necessary facilities in the University to successfully
complete the Training.
Finally, I would like to thank my parents for their constant encouragement and support.
Also, I would like to thank all the teaching, non-teaching staffs of Banking Technology
Department and our beloved friends for extending their help throughout the training.
To save the best for the last, I wish to express my profound gratitude to the almighty God
who gave me the strength to successfully commence as well as complete the Banking Practices
Lab.
Regards,
PRAKASH RAJIV S

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TABLE OF CONTENTS
CHAPTER TOPICS PAGE NO
NO
I BRANCH OPENING 1
1. DAY OPENING 1
2. CASH MANAGEMENT AT OPENING/
CASH BOOKLET/ VAULT 1
3. CASH ESTIMATION AND LOADING IN ATM 3
4. ATM OPERATIONS 8
5. DAY END, BACK UP, SERVER CLOSING,
BRANCH CLOSING 21
6. KEY ISSUES 26
II ACCOUNT OPENING
1. ACCOUNT OPENING/ CLOSING FORMALITIES/
KYC 28
2.1.1 KYC/ ANTI MONEY LAUNDERING 37
2.1.2 INDIVIDUALS/ SOLE OWNER/ JOINT/ NRI 38
2.1.3 SOLE PROPRIETORSHIP 39
2.1.4 PARTNERSHIP 39
2.1.5 COMPANIES 40
2.1.6 TRUSTS 41
III DEPOSIT ACCOUNTS
1. DEPOSIT ACCOUNT OPENING/ CLOSING
- FORMALITIES 56
3.1.1 SAVINGS ACCOUNT 61
3.1.2 RECURRING DEPOSITS 63

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3.1.3 FIXED DEPOSITS 69
3.1.4 NRI DEPOSITS 76
3.1.5 STUDENTS ACCOUNTS 78
3.1.6 SHG 79
3.1.7 PENSION ACCOUNTS 80
3.1.8 DORMANT ACCOUNTS 81
2. KEY ISSUES 81
IV LOAN/ ADVANCE ACCOUNT
1. LOAN ACCOUNT OPENING/ CLOSING
–FORMALITIES 82
4.1.1 CONSUMER LOAN 87
4.1.2 INDUSTRIAL LOANS 89
4.1.3 AGRICULTRAL LOANS 93
4.1.4 GOLD LOANS 99
4.1.5 MICRO CREDITS 103
4.1.6 LETTER OF CREDIT/ GUARANTEES/ LG 108
4.1.7 BILL/ CHEQUE DISCOUNTING 112
4.1.8 DIVERSION OF FUNDS IN LOANS 120
4.1.9 NPA ISSUES 121
2. KEY ISSUES 125
V DELIVERY CHANNELS
1. ALL DELIVERY CHANNEL OPERATIONS 129
5.1.1 DEMAND DRAFTS 129
5.1.2 CHEQUES 131
5.1.3 WITHDRAWAL SLIPS 135
5.1.4 BANK DRAFTS/ BANKERS CHEQUE 137
5.1.5 DEBIT CARDS/ CREDIT CARDS 138
5.1.6 INTERNET BANKING 150

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5.1.7 MOBILE BANKING 155
2. KEY ISSUES 160
VI AGENCY SERVICES
1. PAYMENT AND SETTLEMENT 162
2. RTGS/ NEFT 162
3. CLEARING SERVICES 169
4. CUSTODIAN 176
5. SAFE CUSTODY 188
6. NOMINATION FACILITIES 194
VII BRANCH MAINTENANCE 214
1. MAINTENANCE OF BRANCH PREMISES 214
2. MAINTENANCE OF FILES 215
3. MAINTENANCE OF CARD/ DEMAND/ CHEQUE 217
4. PASSWORD MAINTENANCE AND ADMINISTRATION 239
5. CORE BANKING SYSTEM (CBS) 240
6. NETWORK FAILURE 241

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CHAPTER 1
BRANCH OPENING
1.1 START OF DAY OPERATIONS
The first Supervisory user with Senior Manager Level will be assigned SA-Role for the
day. Such user should do the following activities before starting the business for the day.
 Application Startup
 Day Begin
 Attendance Marking – In case the user is a Supervisory level user, he / she can mark
attendance for one Senior Manager only. After that, the Senior Manager only can mark
attendance to other staff members.
Once the above is over, the system can be used by the authorized users to put through
transactions, create masters etc for the day.
1.2. CASH MANAGEMENT
CHECKING OF CASH BALANCE
Before taking notes and coins into the ‘joint custody’ balance, the supervising official
should check their correctness in the following manner:
He/ She will personally count all notes of denominations of above Rupees Ten and will
verify a portion of all other notes on the "clip system". Under this system a few notes in each
book of notes are clipped together at the top and the remainder is counted by an employee other
than the one responsible for its correctness in the presence of the supervising official who
verifies the total by counting the clipped notes (Notes of the same denomination are bundled
together into books of one hundred pieces each, every ten such books being tied up into a section
of one thousand pieces).
He/ She will have all bags of rupees weighed in his presence and a number of bags
emptied to show that the contents are genuine coins. Out of a few bags he will take and count a

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few pieces and leave the remainder counted in front of him as a similar check to the "Clip
System “for notes, verifying the relative denomination slips in the bags at the same time; he will
also occasionally get this done in the case of small and un current coins.
CHECKING HAND-BALANCE AND CLOSING CASH
The supervising official should satisfy himself each evening that the joint custody
balance corresponds exactly with the entries in the system-generated cash balance printout. He
will also invariably check the entire Head Cashier’s / Cashier’s hand balance of loose notes and
also check the loose packets in hand balance by clip system and initial against the items checked
in the cash balance printout. After the closing cash is checked by the supervising official, he /she
must ensure that the notes and coins held in the Head cashier’s/cashier’s hand balance are kept in
the cash box and locked in his/her presence. He should accompany the Head cashier/cashier to
the safe room when the cash box is kept under joint custody. Before the safe is closed, he/she
should also check the bundles kept in the vault and verify the same with the vault register.
Periodically preferably once a week on different days the officer holding charge of cash should
check the whole of the branch cash balance by test check of different denominations and register
evidence of such check in the cash balance book under his/her signature and date. The First Line
Manager, if he is not in joint custody of cash, should on a surprise date in a month check in detail
all the notes of denominations above Rupees Ten and verify all the other notes on the clip
system. The date of the last such verification should be reported under the appropriate column of
the monthly Manager’s Certificate (AR.15).
EXCESS IN CASH
Any excess in the cash balance must be credited to Sundry Creditors Account on the
same day after the preparation of a credit voucher bearing complete particulars of such excess
cash. Such instances of excess cash should be reported to Regional Office on the same day.
Amounts which have been lying unclaimed for more than six months will be transferred to
Central Office every half year by March and September.

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1.2.2 CASH BOOK
Currency slips of other banks/parties must be removed by the receiving cashier after due
counting and the same replaced with our Bank’s currency slip and pasted with the security
sticker and checked, initialed/signed by the joint custodians.
The cash balance will ordinarily consist of nothing but notes and coin. In the event of any
cash payment being made or any cash deposit being received after the cash books have been
closed for the day , the relative vouchers must be entered the same day in a Register labeled as
''Late Payment and Receipt Reference Register". The entries in this Register should be made by
the Casher and each such entry should be authenticated both by the cashier and the Deputy
Manager or an Officer not below the rank of Deputy Manager authorized by the First Line
Manager who is verifying the closing cash for the day. ANY DEVIATION FROM THIS
INSTRUCTION WILL BE REGARDED AS A SERIOUS OFFENCE.
1.2.3 VAULT REGISTER
The amounts of all notes and coins withdrawn from, or deposited in, the joint custody
portion of the Bank cash balance (i.e. excluding the Head cashier’s/ cashier’s hand balance) will
be entered immediately in the Vault Register under the initials of the joint custodians. The Vault
Register must always remain in the strong-room. From it the withdrawals and deposits will be
entered in the cash analysis book in which the resultant balances will be struck, the entries being
checked and the balances initialed by the head cashier/cashier and the supervising official. At
branches where transactions in the "joint custody “portion of the Bank cash balance are few, a
cash analysis book may be dispensed with, the relative entries being checked from the Vault
Register and the incurrent coin register.
1.3 CASH ESTIMATION AND LOADING IN ATM
Branches should not load the cassette of the ATM, Currency Notes with the following
characteristics:
-Joined by any means

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-With staples or pins
-Sticky, adhesive substances
-Repaired with tape
-With tears exceeding 0.5 inches
-With holes or missing sections
-That is excessively crumpled
-That is dog-eared, with a folded edge exceeding 0.5" thickness
-That is limp or moist
-That are excessively bowed or deformed by prolonged storage
-That is dirty.
B.6.2. for ATM operations, the following General Ledger heads of accounts should be
maintained by ATM branches.
CASH AT ATM
Cash loaded in the cassettes placed in ATM should be to the debit of CASH AT ATM
account.
ATM BACK OFFICE OPERATION
Every day at the cut off time, the ATM Officer along with another authorized staff
member should open the ATM cassette, divert cassette and deposit cassette in the ATM as per
the procedure laid down. Physical verification of cash at ATM should be made and the cash
should be tallied with the figures shown in the computer screen and transaction log. The
cherubs and cash deposit covers fed into ATM by the cardholders should be removed and
entered in the Back Office ATM Register. After taking out a print out of the transaction log
(Journal Print out), the ATM should be closed after observing the laid down procedure. The
denomination of cash at ATM should be recorded in a separate register duly signed by
authorized Staff members and it should be tallied with General Ledger.
The covers containing cash and cherubs should be opened in the presence of two
authorized staff of the branch. Details on the transaction log should be verified and

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cash/cherubs should be passed on to the respective departments at the branch for
credit/collection for the accounts. The contents of the covers should be recorded in a separate
register duly signed by the two authorized staff of the branch. The covers should be preserved.
Cash should be replenished in the ATM to the desired level by debiting Cash at ATM
account.
Cash position of the ATM should be monitored with special attention since cash
shortage will result in ATM closure and disruption of Customer Service.
By studying the cash usage pattern of ATM over a period of time, the average daily
requirement of cash by ATM should be arrived at and the branch should replenish ATM with
sufficient cash to ensure uninterrupted functioning of ATMs.
The branch cashier and ATM Officer should carry out replenishment of ATM cash daily
before the closure of branch Cash Books. In the absence of the Officer-in-charge of ATM, other
officers in the branch should periodically check the cash level of the ATM.
Based on daily cash disbursal through ATM, branch should have an idea of per day
optimum cash requirement, and should load the ATM with adequate cash in the event of
ensuing holidays. If necessary, a separate safe can be provided for holding additional cash for
the holiday period. Such safe should also be under dual custody of two authorized official one
of whom should be the ATM Officer. Under appropriate staff arrangements these officials
should visit the branch on holiday period to ensure adequate cash level at the ATM.
SECURITY OF ATM CASH VAULT KEY
The cash in the ATM Cash Chest should be kept under dual custody of Officer in charge
of ATM and the Officer in charge of the branch Cash Department. The key holding particulars
should be recorded in the Key Movement Register.
The duplicate keys of the ATM Cash Chest should be lodged with the nearby branch as
in the case of other safe keys.
TEST CARDS
a. Branch is supplied with one Test Card, 2 set up cards and one operator card.

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b. Set up cards and operator card are for encrypting various fields in the card. Test Card
should be in the custody of officer in charge of ATM.
c. Sufficient care, as in the case of movement of Cash Key, is to be taken about the
movement of test card, set up card and operator card and all details should be recorded at the
branch.
d. To have dual control, Branch Manager should hold custody of set up cards and
operator card. Password should be available with ATM in- charge.
The four cash bins in ATMs are configured for 1xRs.50, 2xRs.100 and 1xRs.500.
Branches have to load currencies of all three denominations, since the intention of maintaining
50 rupee denomination is to avoid the customer coming to the counter, for small denomination
currency, after withdrawal. Cash can be loaded upto RS.10 lakhs in ATMs and in certain
branches where the daily disbursement has exceeded 5 lakhs we have permitted for 15 lakhs.
While loading cash branch has to sort the currency and load only ATM-FIT currency. The
following precautions to be taken while loading cash to avoid forged / counterfeit currency.
Currency notes have to be physically verified before placing them in the respective
cassettes of the ATMs in the same way a cashier/teller normally verifies the notes before making
cash payments across counter.
Branches should ensure that currency packets received from other banks / institutions as
well as deposits received from customers should not be used unless they are opened and verified
observing the procedures on cash handling and following the laid down norms to detect forged /
counterfeit currency.
Wherever possible, new currency notes are to be used as a marketing tool to encourage
our customers to use ATMs.
While loading cash, Branch has also ensure that journal paper roll is available adequate
enough to service the requests till the next working day; since if journal roll is exhausted the
ATM will not service even though sufficient cash is available in the ATM.

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CASH RECONCILIATION
The cash inside the ATM has to be treated at par with the cash in the safe; hence, it is
mandatory on the part of the branch to tally ATM cash on daily basis. For this purpose the ATM
attached branches are provided with the following reports.
This report is generated whenever the Supervisory Card is used in the ATM for cash
proofing and Host Totals option is selected after ‘Stop Cash Replenishment’. This report
contains the details of transactions which have taken place since the last cash proofing to the
current cash proofing, one row for each transaction, with the status of the transaction. This report
is downloaded to the branch from the switch within 15 minutes from the time of generation of
the report and available under ‘View / Print reports’ and can be selected by giving the report date
and by using search option in CBS.
The ATM Cash report for GL code 3003, ‘Statement of ATM CASH Transactions’ can
be generated from the branch applications for any day, range of days. This gives the list of ATM
cash transactions which were accounted at the branch attached to the ATM. Both the reports
have the necessary details and by cross verifying both the reports the branch can easily reconcile
cash. Any variance found has to be reported to IT department – ATM helpdesk for resolution.
The ATM journal is the final proof of status and the branch should take adequate care to
label and preserve the same for a minimum period as applicable for vouchers. The ATM journal
should be verified where the status of any transaction is marked as suspect. In addition to the
above two reports the branch is provided also the IPG Summary which will give a list of all
transactions under gl code 2526 for the given date, inclusive of ATM transactions.
IPG Reports (ipg4_1) has been added as a new feature under gl module for generation of
various utility based reports on ATM as under.
TODAY PREVIOUS DAY SWITCHDATE
FINANCIAL REQUEST
ALL TXNS PENDING TXNS SUPPLEMENTARY CASHSTATUS OF ATM

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The cash status of ATM report provides information on the cash balance available in the ATMs
attached to the branch apart from status of diagnostics like cash dispenser/card
reader/connectivity/journal printer/receipt printer/cassettes.
1.4 ATM OPERATIONS
Automated Teller Machine (ATM) is used for dispensing cash and also to receive
cash/cheques/requests for statement of account and issue of cheque books round the clock-
throughout the year. ATMs have been installed by our Bank in many centers to enlarge our
clientele. The Bank has multi – branded ATMs of Diedold, NCR, Wincor and Cash link cash
dispensers. The Bank has also arrangements with three consortiums -Cash tree, NFS & VISA,
HARDWARE SETUP
1. Branches in which ATMs are installed should ensure that they are functioning properly and
also to keep the rooms (customer lobby as well as back lobby) clean and tidy.
2. Wherever 1 is installed onsite, the router should be kept in the ATM room only and the leased
line is terminated there.
3. Where ever ATM is installed offsite, separate leased line should be obtained for the offsite
ATM and router should be kept in the ATM room.
4. The UPS connected to the ATM room and supplying power to the router kept in the ATM
room should always be kept ‘ON’ and should never be switch off.
DEBIT CARD MANAGEMENT
DEBIT CARD
Debit Card gives you global access to one’s account whenever and wherever they want.
The Debit Card allows purchasing goods at Merchant Establishments and also gives the freedom
to withdraw cash from ATMs in India and abroad. The customer need not carry cash anymore to
make his purchase and the purchases will be debited to his account instantly.
The cards which were issued for ATM usage were also used for AWB operations. These
cards could be used in the ATMs of IOB / member banks’ of ‘Cash tree’ and ‘NFS’ consortiums.

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To facilitate our customers with global acceptance of their cards at ATMs, Merchant
establishments and for e-commerce transactions, the Bank has entered into agreement with VISA
and from October, 2005 the Bank started issuing VISA Debit Cards.
At present the Debit cards are issued free of charge. As per RBI directives, any
cardholder can use other banks’ ATM for financial/non-financial transactions in his SB accounts,
free of charge 5 times a calendar month. Beyond 5 times, he will be charged Rs.20 per additional
transaction. However, this redate facility is not available for CD/CC account Cardholders.
When a Debit Card is used in an ATM, POS or for e-commerce transaction; the
customer is expected to maintain required balance in his account. In a Debit card usage, the
transaction will be authorized only after debit to the customer’s account. The transaction will not
be approved if the balance in the account is not adequate. The debit cards are convenient way of
carrying money instead of carrying physical cash.
ELIGIBILITY
The following account holders are eligible for issuance of debit card.
Savings Bank – Individuals – Single, A or S, Minor accounts operated by guardian and minor
students under SB-STUDENT scheme.
Current Account - – Individuals – Single, A or S CD – Proprietary Firms (Card will be issued in
the name of the Proprietor) CC- Individuals – single, A or S with prescribed minimum balance.
Legal persons like Incorporated Companies, Trusts, and Partnership firms are not
eligible.
In the case of A or S accounts, separate customer id has to be created for each constituent and
cards can be issued in their name. In the case of Cash credit accounts, the customers who enjoy
cash credit limits against deposits and other readily realizable securities (except shares) for
personal purpose are eligible for Debit Cards. Earlier, in addition to illiterates, the Bank was not
extending the Debit card facility to visually handicapped persons due to the issues involved in
their operation of their account through ATMs. But recently, pursuant to directives from
Government of India, the Bank has decided to extend the facility to Visually impaired customers

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subject to certain additional safeguards (MISC / 242 / 2008-09 dated 9.6.08 issued by
Management Services Department).
OTHER CONDITIONS
The Cardholder should maintain the minimum balance prescribed by the bank and
failure to do so will attract penal or service charges as per bank's rules from time to time or
withdrawal of ATM facility to the Cardholder.
The following services are offered free to the customer for application form, processing,
issue of card, drawl or any other ATM transactions such as balance enquiry, wrong entry, wrong
try etc. Cardholders should be advised that the charges for other services may be varied by the
Bank without reference / notice to them.
When an account is overdrawn by the ATM Cardholder, interest on such overdrafts as
prescribed by the bank should be charged and collected as per the instructions in force for TODs.
During the currency of the ATM card, the SB/CD account of the Cardholder cannot be
closed or transferred to other branch. If the cardholder wants to close his/her SB/CD account,
he/she should surrender the card and give the bank not less than seven working days time from
the date of surrender of the card, for effective closure of the account.
The bank is entitled to terminate ATM facility with immediate effect and the card shall
be impounded upon occurrence of any of the following events.
a. Failure to adhere to or comply with the terms and conditions of ATM facility.
OR
b. An event of default under any agreement of commitment
(Contingent or otherwise) entered into with the Bank relating to
Transactions other than the ATM
OR
C. On the cardholder being adjudicated as insolvent or on the cardholder

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Filing insolvency petition.
OR
d. Demise of cardholder or any one of the joint account holders.
OR
e. Any other event by which bank concludes that allowing possession of card with the cardholder
is detrimental to the image / interest of the Bank.
In the case of joint accounts, the obligations of such executants to the agreement will be
joint and several and notice to any one Joint account holders will be deemed effective
notification to all joint holders.
Any notice sent by post to the last known address of the ATM cardholder by the bank
will be deemed to have been received by the Cardholder on the third day of posting.
The Bank reserves the right to disclose any information as may be necessary or
appropriate in connection with its participation in Electronic Funds Transfer Net Work, in strict
confidence, to any other Institutions, for issuance / cancellation of the card, operations in ATMs
and card holder's account with the bank.
The card holder alone should use the ATM Services and will be responsible for all the
transactions effected by the use of the card, whether authorized by the card holder or not and
shall indemnify the bank for the loss or damage caused to or suffered by the bank by any
unauthorized use of the card or the relative PIN.
The card is and will be at all times the property of the bank and delivered to the
Cardholder in trust and shall be returned by him/her to the bank unconditionally and immediately
upon the bank's request. The bank will not be liable for failure to provide any service or to
perform any obligation where such failure is attributable (whether directly or indirectly) to any
malfunction of ATMs or the card, insufficiency of cash held in ATM, failure of power etc.

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APPLICATION FOR DEBIT CARD, PERSONALIZED AND INSTACARD
The applicant for the ATM Card should apply to the branch in the prescribed application
form F 604(EH) in duplicate after confirming his/her acceptance to and accepting the terms
conditions applicable for ATM facility. The application should be retained at the branch except
except for Student card for which application affixing the photo should be sent to Central office)
and should record the details of application in the ATM application / issue register.
The Bank is issuing two types of VISA Debit cards, Personalized / customized Cards and
Instacards. Personalized cards are cards where the customer’s name is printed on the card and the
card is customized and issued, at the request of the customer, only after submission of
application by the customer, where as an Instacard is a pre-customised card without customer’s
name which is available in dockets, as stock with the issuing branch. These Instacards, which are
non-personalised cards can be issued for all category of customers of CBS branches. Other than
printing of name the functions and usage of both types of cards are similar. Student Cards are
issued to Students of age 16 and above with Photo.
BRANCH OPERATIONS
The details provided by the customer in the application form from the customer are
entered at branch level, through card master program, which is a part of awb module and ATM
option. The users should familiar with various options viz., Issue, Modify, Cancel, View,
Approve, Status-Marking and Quit.
After the data is entered, the officer shall approve the entry. The data then will be
automatically sent to Central office for further processing and card customization. Data will not
be transmitted unless it is approved by an officer.
On specific request from the cardholder or at the time of closing the account, the card
should be cancelled. Neither a Replacement card nor a new card will be issued to the customer.
Status Marking – Various options for marking status such as Suspended, Lost, Hot
listing, Damaged and for issue of New VISA Debit cards are available and the user should use
appropriate options as described in the user manual.

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Safe custody of Instacard Kits has to be scrupulously followed, on the same lines
stipulated in our circular ITEC/1/2006-07 dated 18.6.2006 and COMLET No: 4 /2006-07 dated
23.6.2006.
INSTA CARD
ATM / Debit cards are to be issued on the day of opening account for all category of
customers of CBS branches, whoever do not insist for personalization. The customer will be
given the kit containing PIN and the Debit Card immediately after opening of account, and the
card will be activated within 24 hours of opening of the account.
Stock will be supplied to the CBS branches in individual sealed covers (kits) consisting
of the Debit Card, PIN Mailer, Terms & Conditions Booklet, User Manual, etc.
The stock received has to be entered in the CBS System through the ‘InstaCard Stock
Maintenance’ program. The above cards, when delivered to the customer after opening of SB or
CDCC account, will get attached to the account, through entry in the revised Card Master
Program.
On receipt of the stock, the Officer-in-charge of ATM cards has to physically count the
number of Kits received and ensure the correctness of the stock supplied to the branch. The kits
should not be opened by any branch staff, and has to be intact at the time of delivery to the
customer.
The details of the stock received, namely starting kit number, ending kit number, count,
received from branch are to be entered in system by the officer- in-charge of the ATM cards
using ‘InstaCard Stock Maintenance’ option. InstaCard Stock Maintenance application consists
of Receive and View options and user should get familiarized with these options as detailed in
User manual.
In the eventuality of the branch finding any missing kits in the stock received, or any kit
damaged, the user is to use the option ‘Receive’ and enter the number of missing / damaged
cards individually with the respective status as detailed in the user manual.

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Regional Office, with a copy to card division of Transaction Banking Department for
getting fresh stock of Instacard Kits. Branches cannot take Kits from other nearby branches as it
is validated at the central database.
CUSTOMIZED CARD
Once the service provider completes card customization, the cards relating to each
branch are sent directly from the service provider to the respective branches through courier
service. After dispatch of cards to branches, the individual Pin mailers with the related welcome
letter, Terms & Conditions booklet and charges details are dispatched by the service provider
directly to the customer, through speed-post services. The customer on receipt of PIN mailer has
to collect the Debit Card from the Branch where he is having his account. In case the customer
has not received his pin mailer, branch should obtain a written request for generation of new pin
mailer, deliver the card to the customer and send his request for re-generation of PIN by lodging
complaint in IOBONLINE. On receipt of the request, ATM section at Central Office will
generate a new pin and send it to branch for delivery to customer. On receipt of the Debit cards
consignment from the card customizing service provider, the branch has to verify and confirm
correctness of the physical cards received with the dispatch list from the service providers.
Immediately after receipt of cards, the branch has to enter the card details in the related register.
The guidelines for reducing operational risks in handling of ATM / Debit cards is advised vide
the Common Letter 4 / 2006 – 07 dated 23.6.2006 issued by IT Department.
DELIVERY OF CARD
Branches have to deliver the Debit card to the cardholder after proper identification,
against his acknowledgement in the ATM / Debit card register. Branch has to advise and ensure
that the customer signs his signature at the specified place on the reverse of the card. Branches
should not under any circumstance deliver the card without the customer signing at the reverse of
the card, or, to any other person including the joint account holder.
Branch should never ask the customer to hand over the card, except in cases where the
ATM rejects the card immediately on insertion (without even prompting for the PIN). Branches
should collect the card and send it to CARD DIVISION TBD for verification of the encoding on

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the magnetic stripe. The status of the card should be marked as Suspended immediately on
receipt of the card from the cardholder and before sending it to TBD.
Branches should not insist on production of evidence for having received the PIN mailer
before handing over the card. A format of the register to record the receipt / delivery of Debit
cards / PIN at the branch is enclosed (Annexure I).
In the case of NRIs where a foreign address is provided, branch should first send the card
through a courier. On receiving their confirmation that card has been dispatched, Transaction
Banking Department will send the PIN mailer also to the branch for onward transmission to the
foreign address through a separate courier.
As a precaution, at the time of delivery of Debit Card itself, the customer should be
advised of the importance of the PIN, and should be advised of the safety measures he/she has to
take like
a. Not retaining PIN with the card, so that anybody other than the customer, who gets access to
both the card and PIN can withdraw cash through any ATM.
b. Always change the PIN through PIN change option available in the ATM, after the first
transaction using the original PIN.
c. Always to retain the PIN only in memory and not to retain it in physical format.
d. Other precautions as per the Terms & Conditions booklet issued with each Debit card.
ACTIVATION OF CARD
In the case of both personalized cards and non-personalized Instacards the customer
should be advised to make the first usage of the card in an ATM of our Bank or a consortium
member Bank. With the first successful PIN verification the card gets activated, and only
thereafter the card can be used for merchant transactions. This precaution is required to ensure
that both the card and PIN mailer are properly received by the applicant customer. Any attempt
to use the card at POS machines or for online transactions will fail if the card is not used for the
first time in an ATM.
CARD SECURITY MEASURES

22
The Debit card and PIN mailer for that card should not be held at the branch at the same
point of time under any circumstances, except where specifically authorized by Central Office.
At the time of applying customers should be told to provide their current address and
other contact details including mobile numbers, following all the KYC guidelines. These details
are to be entered, counter-checked and approved in the system and these forms are to be retained
at the branches and filed with the ATM / Account opening forms. This shall address the problem
of PIN mailers being returned undelivered for want of correct / complete mailing address of
customers.
Whenever the VISA Debit Cards / PIN mailers / Instacard Dockets, Student Cards are
received, till delivery of the same, to the customer, they should be preserved under safe and dual
custody at branch level. The cards / PIN / Dockets are equivalent to security items and should be
preserved in the safe room not accessible to anyone other than the custodians of the above items.
RE-ISSUANCE OF PIN
The PIN generated for a Debit Card is not stored anywhere in the system, and hence in
the event of the customer not receiving / forgetting the PIN, only a fresh PIN has to be generated
in the system and sent to the customer. Such requests are chargeable as prescribed.
Original PIN not received by customer
The PIN dispatched through Speed post is not received by the customer due to the following
reasons.
a. The branch is not entering the correct and full address of the applicant with pin code number
in the respective fields at the time of entering the application.
b. The customer has shifted his/her residence and not informed the Bank
c. The customer not available at the time of the visit of the Delivery person and has not left any
information.
d. Normally the postal authorities leave a notice in the case of speed-post to the addressee
informing the consignment, and the customer has not taken enough care to collect the same.

23
In all the above cases the PIN mailer is returned undelivered to Transaction Banking
Department. In such cases branches need not to mark a request for Re-PIN. Instead they should
deliver the card to the customer observing all usual procedures and report to Transaction
Banking Department through IOBONLINE -BRANCH PRODUCTS- CBS/ATM Helpdesk-
ATM Complaints to ensure that at no point of time both the card and PIN mailer remain with the
branch. On receipt of confirmation from the branch regarding delivery of the card to the
customer, a Re-PIN will be sent to the branch, for delivery to the customer. The branch should
observe prescribed procedures in delivering the PIN-mailer to the customer, against due
acknowledgement.
PIN FORGOTTEN BY CUSTOMER
When a customer has forgotten his PIN and has keyed wrong PIN in any ATM for more
than 5 times his card will be blocked temporarily. In the event of the customer being able to
recollect his PIN, then, if taken up with Transaction Banking Department-ATM Help-Desk, the
blocking can be reset. But, when the customer has forgotten his PIN and is not able to recollect,
then only a New PIN has to be issued to him for further operations. In this case the branch has to
mark the Re-PIN request through the status changing option as detailed in user manual as well as
make a complaint through IOB ONLINE-BRANCH PRODUCTS-CBS/ATM Helpdesk- ATM
Complaints. On receipt of modified data a Re-PIN will be generated to the card and will be sent
to the customer. Once Re-PIN is generated the card status at branch level will get restored to
active. Branch should not keep on marking the status again and again, since this will lead to re-
generation of PIN again and again.
REPLACEMENT CARDS
Replacement cards are issued in lieu of VISA Debit Cards reported damaged or lost. The
cards are issued with a different card number and are issued with a revised validity period. A
new PIN also will be generated for the card and the PIN will be sent to the customer while the
card will be dispatched to the branch. On receipt of PIN mailer, the customer has to collect the
Card from the branch. Any status changing process first takes the user to the address columns of
the customer, the correctness of which branch has to ensure before marking the status. This will
avoid any delay in delivery of the PIN mailer to the customer. Even for Instacards the
replacement cards will be only by way of personalized cards.

24
LOST CARD
Whenever a Debit Card or ATM card is reported lost the branch has to act up on the
instructions immediately, by marking the appropriate status as detailed in the user manual to
avoid the lost card being misused in any merchant establishments or for any online transactions.
Even if the customer reports the loss of the card over phone, the branch has to immediately act
on the complaint by marking the status of the card initially as suspended. In the case of
Suspended status, if the customer is able to trace the card, the branch itself can reactivate the
card by changing the status appropriately, and In the case of card being confirmed Lost, branch
has to mark the status as lost as detailed in the user manual. If the customer calls in person and
reports the loss of his / her Card, then the branch can directly mark the status as Lost as detailed
in the user manual. For such cards, where the status is marked as lost, a replacement card will be
issued to the customer. The branch should have a register to record such cases of card reported
Lost or Damaged, and record the date and time of receipt of such communication from the
customer. In the case of written complaints due acknowledgement should be given to the
customer with date and time of receipt of such intimation.
DAMAGED CARD
Whenever a card is reported ‘Damaged’, the branch has to get the damaged card and
destroy it in the presence of the customer, and mark the status as Damaged through the card
master program as detailed in user manual. On receipt of data from branch, the replacement card
and PIN will be generated and the PIN will be sent to the customer and card will be sent to the
branch in usual course and the cards should be delivered as discussed above in A.8.
CANCELLATION OF CARD
This option to cancel a card should be used by the branch only when the customer wants
to surrender his card once for all, or when the customer is closing his account with the branch.
The account will be permitted to be closed only when the card is cancelled. Once card is
cancelled thereafter the customer is not eligible for any card facility in that particular account.
SUSPENSION OF CARD AND RE-ACTIVATION

25
This option to Suspend the card can be used in situations as explained in A.12.1 when
initial oral complaint is received on loss of card. This option can also be used to temporarily stop
the customer withdrawing money from the account. This is the only option where the branch
itself can re-activate the card by changing the status appropriately as detailed in user manual.
OVERDRAFT DUE TO DEBIT OF CHARGES
The customer is allowed to withdraw the entire balance in his account using his VISA
Debit Card. On rare occasions due to the charges debited to the account if the transaction has
taken place in other bank ATMs, then the balance may result in overdraft when the charges are
debited to the account. In such cases the overdraft has to be treated like regular overdraft and the
branch should take steps as in normal course to contact the customer, to regularize the account,
and advise him to keep adequate balance in his account before withdrawal. In case the customer
is not regularizing the account, the branch is in order in temporarily suspending the card to avoid
further debits due to charges on continued attempts by the customer, in other bank ATMs, for
balance enquiry etc...
DAILY LIMITS OF CARD
Daily limits on the use of the Debit Card at ATMs and Merchant Locations is at present
as follows:
Usage at ATM: between Rs.20, 000/- and Rs.50, 000/- as recommended by the branch
Usage at merchant establishments & internet (jointly) Rs.50, 000/- (per day)
CHARGES ASSOCIATED WITH THE CARD
Issue of New Cards No charges
Renewal of Cards No charges
Annual Fee No charges
Re-issue of Lost / Stolen / Damaged Card Rs.100/-
Re-issue of PIN Rs.20/-

26
For transactions at InstaCash ATMs / VISA / Plus ATMs / Other shared ATM Network (Cash
Tree and NFS)For transactions at InstaCash ATMs /
VISA / Plus ATMs / Other shared ATM
Network (Cash Tree and NFS) –
No charges upto 5 transactions for SB customers
For usage at Merchant Establishments No charges
For usage at Petrol Pumps Surcharge of 2.5% of transaction amount or Rs.10/- (whichever is
higher)
For usage at Railway StationsSurcharge of 2.5% of the transaction amount
For SB Account holders For SB a/c cardholders, First 5 transactions (Financial and Non-
financial txns viz. Balance enquiry/Pin change etc) in a calendar month is free of charge. For
subsequent txn charges will be Rs.20/- per such txn. For CD and CC account Cardholders, all
txns are charged at Rs.20/-per txn from the first txn itself
RENEWAL OF ATM CARD
If the ATM transactions put through by any Card holder is unsatisfactory, viz., frequent
overdrawals, discrepancies in cash deposits etc, the branch concerned should submit a detailed
Report to the ATMCC at Central Office. This information should be given, to ATMCC in
advance at least one month before expiry date.
On expiry of validity period, the ATM Division, ITD, Central Office will renew the card
automatically unless any information of unsatisfactory operations by cardholders is received
from the branches as above.
HELP DESK & COMPLAINTS
Any complaint regarding ATM is to be lodged with the ATM Help Desk at Transaction
Banking Department on all days through 24/7 basis. Also the complaints can be routed to the
Service Providers Help desk number given in the Debit Card for assistance and marking the

27
status. Though action will be taken based on oral complaint, in all cases the customer should be
advised to confirm his complaint at the branch, in writing, on the following working day.
1.5 DAY-END CONSOLIDATION
Before consolidating the cash at the end of the day, the following points have to be
observed. It is the primary duty and responsibility of the Cashiers / Tellers / Special Assistants /
Officials attending to cash related schedule of work to ensure strict compliance to the operational
instructions put in place by Central Office under Clean Note Policy. The said Policy which was
framed by our Central Office in the light of Notification under Section 35A of Banking
Regulation Act issued by Reserve Bank of India. Copies of related circulars { MISC/96/2003-04
dated 28th April 2003 and Government Accounts Department Circular No:5 / 2003-04 dated 3rd
January 2004) are appended to this Chapter for ready reference of Branches and Controlling
Offices.
(I)Cashiers have to segregate notes into soiled/cut and reissuable including ATM-fit and prepare
sections separately for soiled / cut notes and reissuable notes.
(ii)Notes of the same denominations have to be bundled together into books of one hundred
pieces each and bank's currency bundle label has to be placed on the section to go round the note
packet on the left side to cover a major portion of the front and rear of the note packet and tied
firmly with twine. Thereafter, the packet must be secured with twine / paper band / rubber band /
polymer band firmly to ensure that all the notes inside the paper band packet remains intact. It
should be borne in mind that using stapler / sticker / gummed labels / stitching-needle or any
method which tend to damage the currency notes, is prohibited in terms of the provisions of
Clean Note Policy implemented in our Bank. As compliance to the said provisions is legal
requirement, utmost care should be taken by the staff members handling cash.
The branch round rubberstamp must be affixed on the label ends and the label must be signed by
the cashier who has prepared the packet. The band must thereafter be placed in such a manner
that it covers a part of the branch round stamp and cashier’s signature. Every ten such books
must be tied up into a bundle of one thousand pieces.
(iii)Before taking notes in joint custody and depositing them in the Currency Chest, both officials
in joint charge should personally count all notes of denominations above Rupees Ten and will

28
verify, as large a proportion as possible, of all other notes on the "Clip system". Under this
system, a few notes in each book of notes are clipped together at the top and the remainder is
counted by a cashier other than the two cashiers responsible for their correctness.
(iv)The checking officer must ensure that all the leaves are firmly held in the packet and the
security paper band is fixed in the manner as mentioned above.
(v)Branches can retain the reissuable note packets for transactions and remit the non-issuable
note packets into the currency chest. If the branch holds surplus cash, reissuable note sections
can also be remitted into the currency chest.
1.5.2 BACK UP
In terms of instructions currently in force ( Circular - Government Accounts
Department, Central Office Circular No: 6/2003-04 dated 5th January 2004) the Cashier shall be
solely responsible for the quality of the notes from Rupee one to Rupees fifty. In respect of
denominations above Rupees fifty ( i.e. Rupees one hundred, five hundred and one thousand) the
cashier shall remain responsible only jointly for the quantity of notes prepared by him / her along
with Officer / Special Assistant.
In the light of the above, the responsibility in case of shortage detected in the packets (no matter
when it is detected) will be fixed equally on the cashier and the checking officer whose
signatures appear on the label. In other words, the cashier and officer who have originally
made/checked the packet will be accountable for any discrepancy even if they are not the
custodians at the time of detection so long as the seal is intact. If the security bands have not
been disturbed and there is no evidence on the face of the packet to indicate that it has been
tampered with, then in such cases, where a shortage is detected (this can take place when one or
more notes are physically torn out of the section leaving a part of the note stuck inside the
stitched packet) the responsibility for such shortage will be decided on a case to case basis.

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1.5 SERVER CLOSING
Every user having a need to work in the CBS system should have an individual
login-id created in the CBS server identifying the user with a branch. For the purpose of Login-
id, the user’s Roll No. as allotted by PAD, Central Office should only be used, which will be
validated by the system with the PAD Salary Database. Wherever the user-id is less than 5 digits,
the roll-no should be prefixed with 0 to make the total digits as 5. In case the user’s roll-no is not
found in the PAD system, the system would not allow the user creation. It is the responsibility of
the Regional Office and PAD, C.O. to ensure that as and when a member is posted to a branch /
Department / Office, the roll no. of the member is attached immediately to the branch in the PAD
Salary Database to enable verification by CBS system. The User-id should be created and
approved by Senior Manager / System Administrator users of the branch as and when any user
joins the branch / office.
All login to the CBS server are controlled by two level authentication, viz. User-id and
Password. Every user should create his/her own password as prompted by the system which
should NOT be revealed to any other person under any circumstances. The password should be
of minimum 5 characters with a maximum of 8 chars and should consist of Alphabet and
Numbers. The password should be changed at frequent intervals but not later than 7 days. As and
when the password is due for change, the system would prompt the user to enter a new password.
Every user should remember the password created by him / her.
At times, users may forget the password created by them as a result they would not be
able to login to CBS system and worI. In such instances, the user should make a written request
to the Branch Chief and request for password change. The Branch Chief should record the letter
in a separate register as per format given in annexures before deleting the existing password of
the user using the ‘del_passwd’ option in user maintenance. Under no other circumstances, this
option should be used by the Branch Officials. Once the existing password is deleted, the user
should login and give a new password. Then the user-id has to be approved by the Senior
Manager / System Administrator before the user would be allowed to login to CBS for working.

30
CBS permits creation of users with various levels and Roles depending on the
designation of the user as well as the responsibilities assigned to the users. The System
Administrator / Senior Manager who creates the user should assign only the relevant level / Role
to the user. In case any user has to be assigned with a higher level / role than what he / she is
eligible, the fact should be recorded in a register with appropriate reasons duly authenticated by
the Branch Chief. Once the exigency is over, the user should be reset to his authorized level /
role without fail. The following list indicates the various level and role authorized in CBS :
Designation Level
All Clerical Staff 11
Head Cashier-II 29
Special Cadre Assistants 31
Assistant Manager (Scale –I) 51
Manager (Scale – II) 51
Senior Manager (Scale – III ) 81
Chief Manager (Scale –IV) 81
Branch Chief 99
Type Description
------- -----------------
S Supervisor
L Client User
M Manager

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E Branch Chief
P Special Cadre Assistant
A User Creator/Administrator
R RCC
N Senior/Chief Manager
F C.O/R.O User
H Head Cashier
I Inspectors
D Concurrent/External Auditors
O Operator
Branch Chief to be assigned to Head of the Branch irrespective of his Grade/Scale. Depending
on the requirement of Management, the levels will be changed by ITD, CO from time to time for
better control and users informed of the changes.
1.5.4 BRANCH CLOSING
The First user Senior Manager level user logging to the System would be assigned with the SA-
Role. This user would have to function both the SA as well as the normal Role as assigned to
him during the day. In case the user has to leave the office before closure of the day’s work in
the system, he / she has to assign the SA-role to another user before leaving office. The user
having SA-role should do all Administration related jobs like Application Start-up, Day begin,
Attendance marking, User Maintenance, User-Reset, Day end, Application Shutdown etc.

32
As part of security implementation, all the users in CBS would be deactivated at
the end of the day. As and when users of a branch / office report for duty next day morning, the
Senior Manager or the SA-user should mark the user as ‘active’ by marking their attendance in
the system. Only then, the user would be allowed to login to the system. Under no circumstances,
the attendance should be marked for all the users irrespective of their physical attendance in the
office / branch. Such act would be viewed as serious lapse and action initiated against the erring
officials.
A select number of branches have been provided with Bio-metric authentication
system as part of enhanced security measure using which the user is authenticated by reading the
Finger print recorded in the system. The system would be implemented at all branches shortly.
Wherever the system is implemented, branch users should take care to maintain the system in
perfect condition and strictly enforce its use without trying to circumvent the system. In case of
mechanical fault the matter should be taken up with the vendors immediately and necessary
repairs carried out to bring the system to working condition. In case of such emergency, request
may be made to ITD, CO to bye-pass the control as an exception. However, it should not be
resorted as a routine feature.
Users should use only those terminals authorized by ITD to get connected to CBS
system. Whenever a user has completed his/her work and does not want the use of the terminal,
he / she has to log out from the programs gracefully (using 0 or Q as the case may be) so that any
other user who might require the terminal can use the same using his/her user-id and password.
In case of the user wants to temporarily log out for a very short duration of time, using ‘F4’ key
the terminal should be locked by the user before leaving his/her seat. To re login, the user should
enter his/her password once more and enter the system. Every user is responsible for the
transactions put through under their User-id and hence the users should ensure that others do not
have access to their password.
1.6 KEY ISSUES
Whenever a staff member is transferred out of the branch or is no more attached
to the branch, the Senior Manager concerned should remove the user from the branch user-list
using User Maintenance Program and record the same in the attendance register also. Under no

33
circumstances, the user-id of a user who is not attached to the branch should be kept open
leading to perpetration of frauds. Any omission on this account will be viewed seriously and any
repercussions thereon will be the sole responsibility of the Senior Manager concerned.
Due to exigencies, Regional Office may depute members from one branch to
another on a temporary basis. In such cases, the branch where the member is originally attached
should ‘De-activate’ the member’s user-id from their branch user list before relieving the
member to the other branch. The branch where the member is going on deputation should create
a fresh login id for the member as per extant guidelines and activate the same. On completion of
the deputation period, the relieving branch should ensure that the user-id is de-activated before
he/she reports for duty at the parent branch.

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CHAPTER 2
ACCOUNT OPENING
2.1 ACCOUNT OPENING /CLOSING
2.1.a) SAVINGS BANK ACCOUNTS
 Individuals–single accounts, or joint accounts of two or more individuals.
 minors by themselves or on behalf of the minors by their guardians
 Following entities Primary Co-operative Credit Society which is being financed by the
bank.
 Khaki and Village Industries Board
 Agriculture Produce Market Committee
 Societies registered under Societies Registration Act, 1860 or any other corresponding
Law in force in the state or Union Territory.
 Companies Governed by the Companies Act 1956 which have been licensed by the
Central Government under section 25 of the Act, or under the corresponding provisions
in the Indian Companies Act 1913 and permitted, not to add to their names the word
"Limited or the words "Private Limited"
 Government departments/bodies/agencies in respect of grants/subsidies released for
implementation of various programmers/schemes sponsored by Central
Government/State Governments subject to production of an authorization from the
respective Central/State Government departments to open savings bank account.
 Development of women and children in rural areas (DWCRA).
 Self-help Groups (SHGs) registered or unregistered, which are engaged in promoting
savings habits among their members.
 Farmers'Clubs - Vikas Volunteer Vahini. (V V)
Branches shall not open Savings Bank account in the name of the following:
a. any trading or business concern, whether such concern is proprietorship, partnership, company
or association.

35
B.Government departments/bodies depending upon budgetary allocations for performance of
their functions.
C.Municipal Corporations/Committees
d.Panchayat Samities
e.State Housing Boards
f.Industrial Development Authorities
g.State Electricity Boards
h.Water / Sewerage / Drainage Boards
i.State Text Book publishing corporations / societies
j.Metropolitan Development Authorities
k.State / District level housing Co-operative Societies.
L.Other banks including Regional Rural Banks, Co-operative Banks and land Development
Banks.
M.Political parties
These Institutions / Organizations are specifically excluded from opening SB
Accounts with Banks and earn interest thereon and hence branches are prohibited from opening
such Accounts.
Introduction of Accounts
Where the applicant for a SB Account submits sufficient proof of identity and
address as prescribed in KYC-AML Policy of our bank and the branch is satisfied with the
bonafides of the applicant and as a respectable person, with such proof of identity and address,
branch may open the account without insisting on an introduction by an existing account holder.
However a Letter of Thanks to the depositor should be sent as envisaged in Chapter.1 on
“Constituents’ Accounts - General”. Branch should be in a position to classify such account
holders under “Low risk-RIP I under KYC Norms / AML Standards.”
With the exception of the above, and “No frills Accounts” all other Accounts should be
introduced as guided in Chapter.1on “Constituents’ Accounts - General”.

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2.1.b) CURRENT ACCOUNT
Instructions relating to the formalities to be observed for opening of an account,
operations in an account and other matters relating to maintenance common for current and
savings accounts have been given in Chapter.1on “Constituents’ accounts – General”.
The additional provisions relating to Current Accounts and Cash Credit accounts (only the
operational part and not credit monitoring) are provided in this chapter. The provisions contained
herein must be read together with those in Chapter.1 on “Constituents’ Accounts - General”.
All formalities connected with opening of an account as detailed in Chapter.1 on
“Constituents’ accounts-General” should be carefully followed. Branch Managers/Second Line
Functionaries/ Departmental Officers must see that the particulars in the account opening forms
signed by constituents are recorded in the computer master and that the forms and all other
documents relating to the opening of the accounts are serially numbered and systematically filed.
The serial numbers of the opening forms, the numbers of the relative specimen signature sheets
and Powers of Attorney or Letters of Authority, must be recorded in the computer master. Any
special instructions affecting the authority of the drawer(s) must be recorded in the computer
master as well as on the specimen signature sheet.
Partnership letters, Joint Hindu Family Letters, Letters of Authority to operate
accounts and copies of partnership deeds, memoranda and articles of association of Companies
and rules of Associations and Societies should be filed with the account opening forms. In the
case of accounts in the names of limited companies, firms, co-operative societies etc., where
such documents are numerous, a separate file should be maintained for each account to facilitate
reference.
Branches should adhere to the KYC Norms / AML Standards as detailed in our
KYC policy. Branches should obtain KYC forms for the legal persons (entities) as well as the
constituents of the legal persons ( e.g. partners, directors, office bearers , power of attorney ,
mandate holders etc) . Branches should also obtain address proof and identify proof from all
parties to an account to complete the customer acceptance policy and customer identification
procedure, in respect of legal persons branches should additionally obtain documents like

37
partnership deed, memorandum and articles of association, resolution etc., without fail. Based on
the customer acceptance policy and identification procedure branches should categorise the
accounts on risk perception as Low risk – RIP I, Medium risk – RIP II, High risk - RIP III,
exceptionally high risk – RIP IV as detailed in KYC policy and monitor the accounts
accordingly.
Documents for Individuals (natural persons) and legal persons (entities)
Customer identification details (for individuals/Proprietor/Partners/ coparceners/ Directors /
Authorised Signatories ) :
a.Passport alone where the address on the Passport is the same as the address on the account
opening form
Or
b.Any one document from each of the under noted TWO lists, for a photo ID and proof of
address
List I - photo proof List II – address proof
1 Passport where the address
differs
1 Current telephone bill /Postal
identity card/ Current Pass Port
2 PAN Card 2 Letter from any recognized
public authority
3 Voters Identity Card 3 Bank account passbook/
statement
4 Driving license 4 Latest electricity bill

38
5 Identity card
( subject to Bank’s satisfaction)
5 Letter from employer to
Bank’s satisfaction
6 Letter from recognized public
authority Or Public servant
verifying the photograph to
Bank’s satisfaction
6 Property tax book / Receipt
7 Registered lease deed
8 Ration card
Any one or more document(s)
which provide customer
information to Bank’s
satisfaction
Additional documents required , ( Legal persons – entities)
For the partnership firms
Registration Certificate if registered
Partnership deed
Power of Attorney grantedto a partner or an employee of the firm to transact business On Firm’s
behalf (as provided in the partnership deed , otherwise all partners should be involved in all the
transactions )
Telephone bill in the name of the firm / partners
Any Officially valid documents identifying the partners and the persons holding the power of
attorney and their (PA) addresses
For Limited Companies
A copy of the Certificate of Incorporation duly certified by a Director or Secretary of the
Company

39
A copy of the Certificate of Commencement of business duly certified by a Director or Secretary
of the Company ( for Public LTD Companies only)
A copy of the Memorandum and Articles of Association certified to be true and upto date by a
Director or Secretary of the Company
Resolution of the Board of Directors to open an account and identification of those who have
authority to operate the account ( specimen annexed)
Power of Attorney granted to Company’s Manager(s),/ officers/ Employees to transact business
on its behalf
Copy of the PAN allotment letter / PAN card
Copy of the Telephone Bill
For Trusts / Association/ Clubs / Societies
Trusts Associations / Clubs / Societies
1.Certified copy of the trust deed
2.If a charitable trust, a certified copy of the
certificate from Charity commissioner
3.Where there is no trust deed, a certified
copy of the order from a competent Court
4.Certified copy of the resolution
regarding opening and conduct of the bank
account
5.List of present trustees with bio data of
each trustee
6.Certified copy of a certificate under IT
act wherever the deed provides for use of
1.Certified True copy of the Rules, Regulations,
Bye-Laws (as the case may be)
2.Certified True copy of Certificate of Registration
in case of Registered bodies
3.(original to be verified)
4.A certified true copy of the Resolution certified
(by the Chairman of the meeting of the Governing
Board or Managing Committee or Like Body, at
which it was passed)
5.A copy of the Balance sheet in the case of Co-
operative Society, if available
6.Certificate of Registration if registered

40
Trust money for business activities.
7.Certificate of Registration if registered
8.POA to transact business if applicable
9.Any officially valid document to identify
the Trustees, Settlers, beneficiaries and
those holding Power of attorney,
Founders/ Branch Managers / Directors
and their addresses
10. Telephone bill
7.POA to transact business if applicable
8.Any officially valid document to identify the
committee members, office bearers, Directors and
their addresses
9.Telephone bill
2.1 c) CLOSING OF ACCOUNTS
When a customer approaches a branch with a request for closing his account, it is
necessary for the branch to ascertain the reasons for the closure of the account.
If it is on account of poor service, reported by the customer, then steps must be taken to see that
the quality of service is improved and the customer is persuaded to retain his account with us. If
the request is due to the customer’s transfer to another station where our Bank has a branch, the
branch should suggest that the account can be transferred to the other place. If the closure is
inevitable, then the following procedure must be followed.
On receipt of the letter from the customer requesting closure of the
account(Request letter format appended), the signature on the letter should be verified with the
specimen on record. It must be noted that the letter requesting closure of the account must be
signed by all the joint account holders, irrespective of the mandate (such as either or survivor,
any one or survivor etc.). However, where all the joint account holders authorize the Bank in
writing to close the account on the instruction of one of them, the account may be closed on the
basis of a letter signed by the person named in the authorization letter. The letter must be
circulated to the other departments of the branch to ascertain whether there are any

41
liabilities/dues to the branch from the customer. On the same letter department officers should
initial and convey the liabilities / dues or no liabilities / dues to the branch /bank. The letter
should then be referred to the Branch Manager for instructions.
After receipt of the letter, duly approved by the Manager for closure of the
account, the department should proceed to close the account and deal with the balance payable to
the customer after adjusting our dues as per his/her instructions.
In the case of accounts bearing interest, the amount of interest should be
calculated at the rate and for the period upto which such interest is payable and applied to the
account.
In the case of cheque operated accounts if there are any cheques issued by the
customer but not yet presented, the customer must be requested to make suitable arrangements
for meeting them, as otherwise, they will be returned unpaid.
Where the customer has come in person he/she should be asked to draw a cheque
for the net amount payable to him/her and the cheque should be paid in the usual manner. Where
a customer has sent a blank cheque duly signed by him/her through a third party with a proper
letter of authorization to receive the payment on his/her behalf after establishing authenticity of
such instructions , the departmental officer should inform the third party the amount payable so
that he/she can fill up the amount in the cheque and present it for payment. The departmental
officer may render any assistance that the third party may require in filling up the cheque. The
cheque should then be paid in the usual manner.
After closure of the account, the account should also be removed from the
account master.
The pass book must be updated and closed with the notation “Account closed on

42
___________. Unutilized cheque leaves from---------- to -----------------returned” and returned to
the customer.
The unutilized cheque leaves returned must be dealt with as stated in
The Account Opening Form and the specimen signature card of the customer
should be cancelled by drawing a line across the face of the form and writing in red ink in bold
letters "ACCOUNT CLOSED". Such forms should be stitched along with the day’s vouchers.
An entry should be made in the Accounts Opened and Closed Register and the running number
of live accounts should be reduced.
The account must be removed from the index by drawing a line over the entry.
The noting if any, in the standing instructions register should also be similarly deleted. For the
same purpose, a letter of cancellation of standing instructions should be obtained from the
customer.
If the customer has not made any arrangements for meeting the cheques issued by
him but had not been presented before his request for closing the account, any cheque presented
on the account after closure of the account should be returned with the reason "Refer to Drawer".
REQUEST FOR CLOSURE OF ACCOUNT (FORMAT)
Place:
Date:
To The Branch Manager
Indian Overseas Bank
__________________ Branch
Dear Sir,

43
Request for closure of account
Name of the A/C :
Type of Account :
Account Number :
=======================================================
I/We am/are having the captioned account with your branch for the
last_____________ years.
I/We request you to close the above deposit account for the following
reason/s.
a)
b)
I/We enclose herewith the unutilized cheque leaves for the purpose.
Yours faithfully,
2.1.1 KYC NORMS / AML STANDARDS
Along with the application form as under noted branches should obtain KYC-
CROP form from all individuals / parties to the account including mandate holders / power of
attorney holders. Branches should also obtain KYC-CROP form for the entities ( legal Persons )
like Partnership, Company, Associations, clubs etc., and do the risk classification . However if
the customer has already been subjected to due diligence for KYC / AML for the Current
account or Savings bank account, the process need not be repeated for term deposits. However
the risk classification as ascertained from the Savings bank or Current account department
should be noted in the application form along with Customer ID provided by the computer
system for such CA / SB account.

44
2.1.1.1 KYC AN ANTI MONEY LAUNDERING INSTRUMENT
Banks were advised to follow certain customer identification procedure
for opening of accounts and monitoring transactions of a suspicious nature for the purpose of
reporting it to appropriate authority. These ‘Know Your Customer’ guidelines have been
revisited in the context of the Recommendations made by the Financial Action Task Force
(FATF) on Anti Money Laundering (AML) standards and on Combating Financing of Terrorism
(CFT). Detailed guidelines based on the Recommendations of the Financial Action Task Force
and the paper issued on Customer Due Diligence (CDD) for banks by the Basel Committee on
Banking Supervision, with indicative suggestions wherever considered necessary, have been
issued. Banks have been advised to ensure that a proper policy framework on ‘Know Your
Customer’ and Anti-Money Laundering measures is formulated with the approval of their Board
and put in place.
This Master Circular aims at consolidating all the instructions/guidelines issued
by RBI on Know Your Customer (KYC) norms/Anti-Money Laundering (AML)
standards/Combating Financing of Terrorism (CFT)/Obligations of banks under PMLA, 2002.
The Master Circular has been placed on the RBI website (http://www.rbi.org.in).
2.1.2 CURRENT ACCOUNT FOR INDIVIDUALS (BUSINESS PURPOSE)
 One Identity proof from: PAN Card, Passport, Voter Identity Card, Driving License,
Adhaar Card.
 One Address proof from: PAN Card, Passport, Voter Identity Card, Driving License,
Adhaar Card.
 Recent Color Photograph
 PAN/Form 49 A along with Form 60 if applied for PAN
 Account opening Cheque from existing Savings/Individual Current Account

45
2.1.3 SOLE PROPRIETORSHIP FIRM
First & Second entity proof from: Trade license, APMC/ Mandi license or TAN
registration certificate. View complete list of documents Please note that both the documents
cannot be same.
Apart from the above list, second entity proof can also be: Latest copy of Electricity Bill or
registration of firm with EPFO/ ESIC View complete list of documents
 Address proof in the name of proprietor or proprietorship firm (if communication address
is different or other than address mentioned on entity proofs)
 Proprietorship Letter as per the bank’s format
 Identity proof of proprietor View complete list of documents
 Account opening cheque from existing account of proprietorship firm or from savings /
individual current account of proprietor (in case of a new firm)
 Residence address proof of the proprietor (if account opening cheque is collected from
proprietor's savings / Individual current account)
 PAN Card in the name of the Proprietor or Form 49 A along with Form 60 (if applied for
PAN)
 No objection certificate (if proprietorship firm is enjoying credit facility from any other
bank (s))
2.1.4 PARTNERSHIP FIRM
 Partnership deed
 Partnership letter as per the bank’s format
 Entity proof* of partnership firm from:
 Trade License
 Shops & Establishments Certificate/Licence
 APMC/Mandi Licence
 TAN Registration Certificate. *View complete list of documents
 PAN Card in the name of firm or Form 49 A along with Form 60 (if applied for PAN)
 Address proof* in name of the firm from (if address is different or not given on the Entity
proof):

46
 Latest Three months Bank Account Statement along with account opening cheque
 Latest copy of Electricity Bill
 Latest copy of Telephone Bill
 Property Tax bill along with Tax payment receipts
 Water Tax bill along with Tax payment receipts
 Identity and Address proof of all partners. View complete list of documents
 Partnership Registration Certificate (if partnership firm is registered with Registrar of
Firms)
 Account opening cheque from existing account of partnership firm or from savings
account of partner (in case of new firm)
 No objection certificate (if partnership firm is enjoying credit facility from any other
bank(s))
2.1.5 COMPANIES
2.1.5.1 PRIVATE/PUBLIC LIMITED COMPANY
 Certificate of Incorporation
 Board Resolution (BR)
 Memorandum of Association (MOA) & Articles of Association (AOA)
 Certificate of Commencement of Business (COB) (only for Public Ltd Company)
 Latest list of directors as per the bank’s format
 Communication address proof in the name of company (if different than that mentioned
in the Certificate of Incorporation):
 Trade License
 Shops & Establishments Certificate/Licence
 APMC/Mandi Licence
 TAN Registration Certificate
 Latest Three months Bank Account Statement. View complete list of documents
 Registered address proof of the company (if different than that mentioned in the
Certificate of Incorporation)
 Identity proof of all authorized signatories View complete list of documents

47
 Proof of appointment of current director/s (if his/her name is not available in first list of
Director/s)
 Proof of resignation of Director/s (if name of that Director/s is not available in latest list
of Director/s)
 PAN Card of the company or Form 49 A along with Form 60 Only (for New Companies
which are less than 90 days)
 Share Holding Pattern of the company as per the bank’s format
 No objection certificate (if Company is enjoying credit facility from any other bank (s))
2.1.6 TRUSTS
2.1.6.1 NRI ACCOUNT
In terms of Section 2 (w) of FEMA "Person resident outside India"means a person who
is not resident in India. Person includes an individual, a Hindu undivided family, a company, a
firm, an association of persons or a body of individuals whether incorporated or not.
1.An Indian Citizen who stays abroad for employment/carrying on business or vocation outside
India or stays abroad under circumstances indicating an intention for an uncertain duration of
stay abroad is a non-resident. Persons going abroad for studies are treated as Non-Resident
Indians (NRIs) and are eligible for all the facilities available to NRIs. Educational and other
loans availed of by them as residents in India will continue to be available as per FEMA
regulations.
1.1.Persons posted in U.N.Organisations and officials deputed abroad by Central/State
Government and Public Sector undertakings on temporary assignments are also treated as non-
residents.
1.2.Non-resident foreign citizens of Indian Origin are treated on par with non-resident Indian for
opening and maintaining accounts and for making investment.
‘Person of Indian Origin’means a citizen of any country other than Bangladesh or Pakistan, if

48
a)he at any time held Indian passport;
or
b)he or either of his parents or any of his grand- parents was a citizen of India by virtue of the
Constitution of India or the Citizenship Act, 1955 (57 of 1955);
or
c)the person is a spouse of an Indian citizen or a person referred to in sub-clause ( a ) or (b);
1.3.Overseas Corporate Bodies (OCBs) have been derecognized as an eligible ‘class of investor’
under various routes/schemes available under extant Foreign Exchange Management
Regulations.
1.4.In case of doubts/clarifications regarding the NRI status of individuals approaching branches
to open accounts, branches should take up with D &A Section, Foreign Exchange Department,
Central Office. Further, FAQ on various entitlements of NRI/PIO published in the website of the
Reserve Bank is also made available in the home page of our TREASURY (FOREIGN) and
branches may refer to the same.
ACCOUNTS OF CERTAIN NON-RESIDENTS TREATED AS RESIDENT ACCOUNTS
Although the under noted categories of persons, firms, companies, etc., are
treated as resident outside India under FEMA, their rupee accounts with ADs in India are
regarded as resident accounts and hence branches may open such accounts and allow free
operation of accounts, provided the requirements under FEMA 1999 are complied with.
(i)Indians, Nepalese or Bhutanese resident in Nepal or Bhutan.
(ii)Offices and branches situated in Nepal or Bhutan of any business carried on by a company or
a Corporation incorporated or established under any Law in force in India, Nepal or Bhutan.
(iii)Offices and branches in Nepal or Bhutan of any business carried on as a partnership firm or
otherwise by Indians, Nepalese or Bhutanese.

49
3.For opening accounts in the names of Pakistani and Bangladesh nationals, branches should
obtain prior approval of Reserve Bank of India and the approval details should be recorded in the
relative account opening forms and Ledger/Register folios/ system records.
4.All the Indian branches of our Bank can open and maintain the following categories of Rupee
Accounts in the names of Non-Resident Indians (NRIs) and Person of Indian Origin.
i)Ordinary Non-Resident Rupee Accounts (NRO Accounts)
ii)Non-Resident (External) Rupee Accounts (NRE Accounts)
A comparative chart containing the salient features and conditions governing credit/debit
transactions of the above four types of accounts are furnished as Annexure-I. Before opening
accounts under these schemes, branches should ensure that the applicants satisfy the criteria laid
down for the residential status under FEMA 1999.
5.Branches should be guided by instructions contained in the following while opening and
allowing operations in non-resident rupee accounts:
i)Foreign Exchange Management (Deposit) Regulations, 2000 issued under FEMA 1999 and
Notification No. FEMA 5 /2000-RB dated 3rd May 2000 .
ii) Master circulars and AP (DIR) Circulars issued by Reserve Bank of India
iii) Circulars issued by Central Office.
(Regulations governing maintenance of and operations on non-resident rupee accounts by
authorised Co-operative/Commercial banks have been given separately by Reserve Bank of India
in Memorandum ABM).

50
2.1.6.2 OPENING OF ACCOUNTS IN THE NAMES OF NRIs
Any Non-Resident of Indian Origin or Nationality who desires to open account with the
branch, may send the prescribed application duly completed and signed - verified by his/her
Bank/Indian Embassy/Notary Public/our Bank’s Account holder along with remittance to the
branch.
Alternatively, photocopies of passport giving passport number, signature, photographs
and date of issue/expiry date of passport may be sent by the prospective account holder.
Branches are permitted to open NRE accounts for Indians before proceeding abroad
with zero balance in the account after verifying Passport, Visa and Air ticket for the journey and
give them the Account Number.
Branches opening rupee accounts in the names of minors, joint accounts should ensure
observance of the usual precautions for opening of accounts, issue of pass book/statement of
accounts, issue and despatch of cheque books, operation of accounts, standing instructions, etc.
Branches should choose the correct type of non-resident account in the CBS package, for
different categories of non-resident accounts opened/maintained by them.
Details such as names of NRIs, their nationality, Indian contact address, overseas
address, passport particulars, name and address of the introducer/identifying overseas
bank/branch, operational/payment instructions like E or S, F or S, A or S, nominations etc.,
should be recorded in the account master in CBS packages authenticated properly by the
authorised official.
Branch should send the deposit receipt through registered post to the NRI depositor at
the address given in the application/account opening form. The deposit receipt should not be
handed over to agents/middlemen/third parties. The branch should ensure that complete postal

51
address of the NRI depositor has been furnished in the account opening form and should exercise
special care, if the address is incomplete or only post box number has been furnished.
The Account opening forms, specimen signature cards, should be properly filed,
preserved and produced for verification by our Internal Inspectors/Reserve Bank of India
Inspectors/External Auditors when required.
In terms of Policy Document on KYC-AML, Non–resident customers are placed under
RIP – Three (high risk) category in the Risk Perception Matrix. Hence branches should apply
due diligence with the available information provided by the customer and the estimation arrived
on the additional information gathered through interaction with the customer. Suitable STTL
(Single Transaction Threshold Limit)may be fixed as applicable to the risk level.
REMITTANCES
Branches handling inward remittances received for opening/credit to non-resident
accounts and outward remittances made to the debit of non-resident accounts should ensure that
the remittances received/made are in conformity with the permitted methods prescribed under
FEMA 1999.
Branches should ensure that each inward remittance is promptly acknowledged to the
NRI and relative credit is made to the account without delay, observing procedural guidelines for
handling inward remittances. Similarly, the requests for foreign outward remittances should be
promptly attended to by branches.
NAD branches opening/maintaining accounts should note to handle purchase
transactions under prior report to the designated AD branch. For sale of foreign exchange on
account of NRI customers, the NAD branch should take up with the designated AD branch,
which will arrange for release of exchange in the form of draft, mail transfer, telegraphic
transfer, foreign currency TCs/Notes, etc. In this connection, branches are advised to ensure
compliance of procedural aspects contained in relevant chapters of this volume.

52
While handling foreign currency notes/coins on account of NRIs, branches should be
guided by the general instructions regarding purchase/encashment of foreign currency notes
contained in Chapter on ‘Foreign Travels’ of the volume.
The purchase/sale transactions (in foreign exchange) in opening/maintaining non-
resident accounts in the names of NRIs by both AD branches and NAD branches shall be
reported to TREASURY (FOREIGN) only by AD branches, in accordance with the procedure
laid down for such reporting.
Branches should properly record and promptly execute the various standing/special
instructions of NRIs for local disbursements under advice to account holders. While executing
the instructions of the customers, branches should ensure that debits/credits made to these
accounts are permitted debits/credits under FEMA 1999.
LOANS AND OVERDRAFTS
Branches granting loans/overdrafts to NRIs against the security of NRO/NRE deposits
should ensure compliance of guidelines contained in Notification No. FEMA 5/2000-RB dated
3rd May 2000 read with subsequent amendments and Volume II of Book of Instructions as well
as circulars issued by Central Office, regarding maximum amount of loan, interest rate, margin,
purpose etc.
Advances against FCNR/NRE deposit to the depositor himself or to a third party should
be granted up to a maximum of Rs.100.00lacs only, only under his specific request/mandate and
after verifying the authenticity of the signature of the depositor. If the NRI availing the loan is on
a visit to India, the loan documentation could be completed at the branch, where he proposes to
avail of the facility. If the NRI seeks to avail of loan from the branch in India, when he is abroad,
the loan document (60 H) should be sent to the NRI abroad with a request to execute the

53
documents at an Overseas Branch or at the branch office of the Correspondent of our Bank and
arrange to forward the documents along with the deposit receipt (carrying the undated discharge
of the depositor/s) through the overseas branch/office of the correspondent bank where the
documents were executed. A copy of the passport of NRI should also be called for along with the
application and discharged deposit receipt.
The covering letter of the overseas branch/Correspondent bank forwarding the
documents should confirm that the depositor had called on them and executed the documents in
their presence. On receipt of documents, branch can affix and effectively cancel the revenue
stamp on the reverse of deposit receipt where the undated discharge of the depositor/s appears
and proceed to grant the loan. The proceeds of loans so granted could be credited to the NRO
account only of the NRI availing the loan. Under no circumstances, the loan proceeds should be
credited to NRE/FCNR accounts of NRIs or repatriated abroad.
Branches have to propose to their Regional Office for sanction of loan against NRE
deposits to third parties.
Branches should not grant advances to third parties against NRE/FCNR B deposits on
the basis of Power of Attorney.
In case of any loan / overdraft availed by a resident and who subsequently became a
person resident outside India, in terms of Reserve Bank guidelines under FEMA 1999, it is left to
the discretion and commercial judgment of the authorised dealer / branch to allow continuance of
such facilities. In such cases, payment of interest and repayment of loan may be made by inward
remittance or out of legitimate resources in India of the person concerned. As per Reserve Bank
guidelines, authorised dealers at their discretion / commercial judgment, are permitted to allow
overdrawing in NRE SB account for a period not more than two weeks, up to a limit of
Rs.50,000 subject to the condition that such overdrawing together with the interest payable
thereon are cleared/repaid within the staid period of two weeks, out of inward remittance through
normal banking channels or by transfer of funds from other NRE/FCNR accounts. However,
branches should be guided by our Bank’s discretionary powers for various branches

54
communicated from time to time, before considering such requests from their NRI customers.
Branches should note that the loan/overdraft facilities granted to NRIs in India against
the security of NRO/NRE/FCNR B deposits could be adjusted—
(a)by foreign inward remittance, or
(b)from the proceeds of deposits held as security, or
(c)to the debit of the NRO/NRE account of the borrower.
When a loan granted to a NRI against the security of his/her NRE/FCNR deposit is
adjusted out of the rupee resources held in NRO account, branches should note to recover
interest as laid down by Central Office in ‘Interest Rate on Advances’ circulars.
At the time of sanctioning credit facility against the NRE/FCNR deposits, branch should
necessarily obtain instructions from the depositor, well before the due date, for adjustment/roll
over of the facility on the due date. Branch should send deposit maturity notice along with details
of the facility outstanding and the instructions already in place. If any change in instructions is
given by the depositor, branch should take note of the same.
As any interest rate movement/exchange rate movement will result in complaints from
customers, branches should take adequate care on this issue.
BLOCKED ACCOUNTS
The Reserve Bank of India has powers to ‘block’ accounts in India of any person,
whether an individual, firm or company resident outside India and to direct that payment of any
sums due to that person shall be made to such blocked account. A blocked account means an
account opened as a blocked account at any branch or office in India of a bank authorised in this
behalf by Reserve Bank of India. No blocked account may be opened by a branch or an existing

55
‘free’ account blocked, except under directions of Reserve Bank of India. No blocked account
should be un blocked by a branch except under specific direction from Reserve Bank of India.
The Reserve Bank of India will issue special directions regarding operations on
individual blocked accounts at the time of authorizing opening of such blocked accounts.
Submission of STAT 2 return to the Reserve Bank for blocked accounts has been
dispensed with.
Annexures:
I– Comparative chart showing the salient features of NRO and NRE deposit schemes.
II– Account Opening Form for NRE Account.
ANNEXURE I
RUPEE ACCOUNT OF NON-RESIDENTS OTHER THAN BANKS
NON-RESIDENT (ORDINARY) – NRO NON-RESIDENT (EXTERNAL) – NRE
1.WHO CAN OPEN:
Any person resident outside India (other
than a person resident in Nepal and
Bhutan) (Opening of accounts of
individuals / entities of Pakistan /
Bangladesh nationality / ownership as
well as erstwhile OCBs require prior
approval of Reserve Bank of India).
Non-Resident individuals of Indian Nationality
or origin (Opening of NRE accounts in the
names of Pakistani / Bangladeshi individuals /
entities require prior approval of Reserve Bank
of India).
2. SOURCE OF FUNDS :
Proceeds of remittances received in any Remittances received from abroad in an

56
permitted currency from abroad or any
permitted currency tendered by the account
holder during his temporary visit to India or
transfers from rupee accounts of Non-
Resident Banks.
Legitimate dues in rupees of account holder
in India.
Transfer from NRE/FCNR accounts.
Designating existing account as NRO, of a
person proceeding abroad (other than Nepal
or Bhutan) which would give him the status
of a NRI.
approved manner in freely convertible
currency, Transfer from NRE/FCNR accounts.
Accounts may be opened in the name of any
eligible NRI during his temporary visit to India
against tender of foreign currency, TCs issued
in his own name or notes and coins tendered
provided the branch is satisfied that the status
of the person continues to be a non-resident.
Branches should ensure that TCs and currency
notes tendered by the account holder have in
fact been brought by him from abroad and not
acquired locally.
Transfers from NRO account to NRE account
are permitted subject to the ceiling of USD 1
million already available for repatriation from
NRO accounts
3. TYPE OF DEPOSIT:
SB, CD, Term Deposit SB, CD, Term Deposit
4. GL CODE :
Same as ordinary deposit. SB NRE – 1301
CD NRE – 1501
NRE TD (S) – 1101
TD NRE (L) – 1151
5. PERIOD OF DEPOSIT :
TD - 15 days to 120 months TD – 12 months to less than 60 months
6. INTEREST :
SB &TD–As applicable to domestic deposits. SB - 3.5 % p.a.
TD-BASED ON LIBOR

57
Depending on period of deposit
(For current rates refer circular issued by
Central Office). No additional interest is
payable on deposit accounts of staff members.
7. JOINT ACCOUNT :
Allowed with resident. - Joint NRE accounts in the names of two or
more non-resident individuals is permitted
provided all the account holders are persons of
Indian Nationality or Origin. If the spouse of an
NRI is a foreign national, the status of such a
person will be that of a Person of Indian Origin.
However, such persons are permitted to have
only joint bank accounts along with the spouse.
Residents can also be joint account holders in
NRE account son a ‘former or survivor’ basis.
8. REPATRIATION :
Not reparable except for the following in the
account – 1) Current income. 2) Up to USD 1
million per financial year for any bonafide
purpose out of the balances in NRO
account/sale proceeds of assets in India
acquired by way of inheritance/ legacy
inclusive of assets acquired out of settlement
subject to certain conditions.
Freely reparable.
9. NOMINATION :
Nominee can be a person resident in India or
a person resident outside India. In the case of
Non-resident nominee, the amount entitled to
him from the account(s)/deposit(s) of a
Nominee can be a person resident in India or a
person resident outside India. In the case of
Non-resident nominee, authorised dealers are
allowed to remit funds lying in the account of

58
deceased person will be credited to his NRO
account and the repatriation will be subject to
the overall ceiling of USD 1 million per
financial year, subject to taxes.
the deceased account holder.
10. TAX :
Tax at the rate of 30 % on the interest income
is to be deducted at source and remitted to
Government. If the Non-Resident is from any
of the countries with whom Double Taxation
Avoidance Agreement is entered into, the
applicable rate will be deducted.
Income from interest on monies standing to the
credit of NRE accounts is exempt from Income
Tax. Balances held in the accounts are exempt
from Wealth Tax. Gifts made to close relatives
in India from out of balances in such accounts
are also free from Gift Tax. (These Tax
exemptions are available only in respect of
NRE accounts maintained by NRIs and any
fresh directive issued will prevail)
11. PREMATURE CLOSURE :
If the deposit is up to Rs. 5 lakhs, applicable
interest for the period run prevailing on the
date of deposit is payable without foreclosure
charges. 1% less than the rate applicable for
the period the deposit has run prevailing on
the date of deposit, additional interest for
bulk deposits of Rs.15 lakhs and above, is not
payable on foreclosure.
In case of an overdue deposit renewed with
overdue interest, is closed prematurely before
completing the minimum period for which
such deposits are accepted from the date of
renewal, no interest is payable on the
renewed deposit and the interest paid for the
overdue period should also be recovered.
1% less than the applicable interest for the
period the deposit remained with the bank
prevailing on the date of deposit. Additional
interest, if any, payable on bulk deposit of
Rs.15 lakhs and above is not payable.
If an overdue deposit renewed with interest
payment for the overdue period, is closed
prematurely before completing the minimum
period for which such deposits are accepted
from the date of renewal, no interest is payable
on the deposit and the interest already paid for
the overdue period should also be recovered.

59
12. RENEWAL OF DEPOSIT :
Can be done as per Rules as applicable to
domestic deposits.
Renewal of deposit can be done as long as the
depositor’s status is NRI. Renewal must be
made within 14 days from the due date to get
retrospective effect and must be renewed for
the minimum period prescribed. If the overdue
period is less than one year, the interest rate for
one year prevailing on date of maturity or
renewal, whichever is lower, is to be applied.
13. CHANGE OF STATUS :
NRO accounts should be redesignated as
resident accounts on the return of account
holder to India, provided the branch is
satisfied that the account holder has returned
to India for taking up employment, business
or vocation or for any other purpose
indicating his intention to stay in India for an
uncertain period. Where the account holder is
on a temporary visit to India, the account
should continue to be treated as Non-resident
even during such visits.
NRE accounts should be redesignated as
resident rupee accounts or as RFC accounts (if
eligible) at the option of account holder
immediately upon the return of account holder
to India provided the branch is satisfied that he
has returned to India for taking up employment
or for carrying on a business or vocation or for
any other purpose with an intention of residing
in India for an uncertain period.
Where the account holder is only on a short
visit to India, the account may continue to be
treated as NRE account even during his stay in
this country.
In respect of funds held in fixed deposits in
NRE accounts, interest will be payable at the
rate originally fixed, provided the deposit is
held for the full term even after conversion into
resident account.
14. OPERATIONS IN THE ACCOUNT :
Branches may allow transactions in NRO
14. OPERATIONS IN THE ACCOUNT :
Branches may allow transactions in NRE

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