Opening and Operations of Bank Deposit Accounts
Opening and Operations of Bank Deposit Accounts:
Deposit mobilization is an integral part of banking activity. Mobilization of savings through intensive deposit collection has been regarded as the major task of banking. Money placed into a banking institution for safekeeping. Deposits are kept in the various accounts in a bank. Mostly the bank’s business is funded through deposits from retail and corporate customers as well as call money from local banks. Other sources of banks fund are paid-up capital, reserve & undistributed profit, borrowings. The management of each bank is aware of the situation and it has already started diversifying sources of funds to reduce the dependency on funds from other banks. Every bank has already introduced several deposit schemes to attract deposits from various customers group. Many a banks are opening branches all across the country to reduce dependence on urban deposits. Meanwhile, a number of banks have built up its alternative channel infrastructure to offer the full suite of ATM’s, POS, Internet Banking, Call center, SMS Banking for its customers.
Deposit Products of NCC Bank Limited:
Different Liability products of the bank along with their features, Schedule of charges etc., are described below.
Special Notice Deposit (SND):
STD is renamed as SND as per Bangladesh Bank Instruction. Nature : 100% Time Deposit. Account holder can withdraw their deposits with prior notice to the Bank. Target Group : Any businessman, firm, Limited Companies, Local Bodies, Corporation, Corporate bodies, Joint stock companies etc. SND account may be opened in the name of Corporate Bodies, Joint Stock Companies and also in the name of Adult individual or jointly who is/are mentally sound.
Current Deposit (CD) Nature :
100% Demand Deposit. Account holder can withdraw their deposits frequently without any limit. Target Group : Any businessman, firm, Limited Companies, Local Bodies, Corporation, Corporate bodies etc.
CD account may be opened in the name of Firm, Corporate Bodies, Joint Stock Companies and also in the name of Adult individual or jointly who is/are mentally sound.
Savings Bank Deposit (SB) Nature :
Hybrid.10% is Demand and 90% is time Deposit. Account holder can withdraw their deposits twice in a week up to a certain limit. Target Group : Any Individual. Savings Bank account may be opened in the name of Adult individual or jointly who is/are mentally sound. It also be open in the name of illiterate persons and minor after observing/completion of necessary formalities. In some cases SB Account may be open in the name of Club, Society or similar Institution.
In case of Savings Bank A/c the depositor(s) may withdraw money from the account twice in a
- week and may withdraw money up to 25% of the balance without notice but withdrawal money exceeding 25%, 07(seven) days prior notice is required. If the depositor persistently withdraws more than twice in a week or a sum exceeding 25% of the balance in the account without notice, the depositor will not get interest for that month. If the balance is turn down below Tk.500 at any day of a particular month then he will not be
- entitled of interest for that month. Considering the deposited amount of the first 6th date of each month, interest will be paid on the
- minimum balance of the said month as per prescribed rate on June and December of each year.
Customer Benefits of SB/CD/SND Account:
Wide network of Branches (121 Branches all over Bangladesh) – Utility payment service
MICR Cheque-book facility – Debit card facilities
Opportunity to apply for – safe deposit locker facility – Online banking service
Transfer of fund from one branch to another branch by DD/TT/MT – Collection of cheques through clearing.
Collect foreign remittance in both T.C. & Taka draft – SMS Banking facilities
Required documents (CD/SND/SB):
Individual account/Joint accounts Photographs of the applicant(S)
- Photograph(s) of nominee
- Copy of Photo ID-NID/DL/Passport
- Proof of address-Copy of utility bills/Physical verification etc
Letter of partnership·
Company account :
Certified true copy of Certificate of Incorporation or equivalent, details of the· registered office, and place of business;
Certified true copy of the Memorandum and Articles of Association, or by- laws of· the client.
Copy of the board resolution to open the account relationship and the empowering· authority for those who will operate any accounts;
List of directors.·
For Public Limited Company :
Certified true copy of Certificate of commencement
- The above documents are mainly common documents. Additional documents is required when and where is applicable.
SDS (Special Deposit Scheme):
Tenor : 01 and 03(Three) years.
Nature : 100% Term Deposit. Account holder can withdraw their deposit (Principal amount) after expiry of maturity of deposit.
Target Group : Any individual person, businessman, firm, Limited Companies, Local Bodies, Corporation, Corporate bodies etc.
Loan facility : In case Lending against pledge of SDS Receipt, interest have to be charged against loan outstanding. This interest rate is fixed and applicable in all cases without further consideration.
Payment of first dividend/interest : The duration of time between deposit and payment of first dividend/Interest must be minimum 30(Thirty) days.
Mode of payment of monthly dividend : Encashment may be made by PO, DD or transferring to Account. No cash payment will be allowed.
Before 01(one) year: Depositor will not be entitled to get monthly dividend/interest, so amount of dividend /interest paid earlier shall have to be adjusted from the net amount payable.
After 01(one) year but before 02(two) years : Prevailing Interest Rate of SB A/C.
After 02(Tw0) year but before 03(three) years: Prevailing Interest Rate of SB A/C+0.5%
Fixed Deposit Receipt(FDR):
Tenor : 1 month, 3 months,06 months, 12 Month, 2 Year, 3 Year
Nature : 100% Time Deposit. Account holder can withdraw their deposits after expiry of maturity of FDR A/C.
Corporate Deposit All concerned are requested to obtain permission from the EVP, Treasury Division, HO, before booking/renewal of corporate deposit for tk. 1.00 crore and above.
Target Group : Any individual person, businessman, firm, Limited Companies, Local Bodies, Corporation, Corporate bodies etc.
Pre Loan facility : In case of lending against lien of FDR account, interest at the rate of 3% above has to be charged outstanding. This interest rate is and applicable in all cases without further consideration.
SSS (Special Savings Scheme) & DPS:
Tenor : SSS-5 to 8 years and DPS-3 to 8 years
Nature : 100% Term Deposit. Account holder can withdraw their deposit after expiry of maturity of deposit.
Target Group : Any individual person.
Loan facility : Loan may be allowed 80% of the deposited amount after 03 years. Interest will be charged 3% above of the said SSS rate.
Penalty for failure to deposit installment in due time: @2% per month per installment.(On due installment).
For issuance of duplicate deposit book: Tk.100 for each book.
IETD (Instant Earning Term Deposit):
Period : 01 year(Fixed)
Nature : 100% Term Deposit. Account holder can withdraw their deposits after expiry of maturity of Deposit.
Amount : Tk.1.00 lac and above but multiple of Tk.1.00 lac.
Rate of Interest : Existing rate of 12 months FDR – 1%
Payment of interest: Interest to be paid to the customer account after deducting necessary charges/levies etc. at time of accepting deposit. For the purpose customer will have to open/maintain account relationship with the branch.
Target Group : Retired personnel, housewives, widow and wage earners
Loan facility : Loan may be allowed against lien of the receipt upto 75 % of the face value, interest at the rate of 3% above has to be charged outstanding.
Death of account holder: Due money shall be paid to nominee/legal heairs.
Post mature encashment: No auto renewal or no extra benefit for post mature encashment.
Before 06 months: No interest on the deposited amount but interest already paid at the time of opening account will be realized/deducted from the principal amount.
After expiry of 06 months: Interest will paid at existing STD rate and interest already paid at the time of opening account will be realized/deducted from the principal amount.
NCC Bank Youngster Account:
Nature : It is basically a Savings Account for school and high school going students of Bangladesh with added values and benefits.
Age : Any Bangladeshi student enrolled in an enlisted school or high school with Bangladeshi government within the age of 18 years.
Authentication : Photographs of account holder and parents/legal guardian is attested by school authority.
Opening deposit : Initial deposit not less than BDT 100.
Account continuation balance: Zero balance not allowed.
Minimum deposit : Not less than BDT 50 and maximum any amount.
Annual service charge: Free
Withdrawal frequency : Any number of withdrawal and fund transfer is allowed.
Cheque endorsement : Joint signature of account holder and either of any parents or legal guardian is mandatory.
Student A/C to regular SB A/C: Account holder can continue it until attaining 18 years. After 18 years account holder may apply for regular savings account with closer of NCCB
Nomination of legal guardian: Guardians name and signature must be attested by both of the parents on
BDT 150 non judicial stamp and notarized.
Nominee : Mandatory and selected by both of the parents or legal guardian.
Eligibility : Any Bangladeshi student enrolled in an enlist school or high school with Bangladeshi Government within the age of 18 years can open the account at his/her name with Parents or the legal guardian’s written consent by putting signature at account opening form.
Common Documents required for Opening of Deposit Accounts:
All the essential features of a valid contract must be present when a banker opens an account. Every person can open an account with the bank that is competent to contract as per
Contract Act, 1872.
For opening each type of account some documents are commonly required which are mentioned below:
a) Duly filled in Account Opening Forms
b) Proof of identify, verification of the address of the customer
c) Specimen Signature Card
d) Expected Transaction Profile (ETP) Form
e) Duly filled in Know Your Customer Form
f) Photographs of the constituents
g) Photographs of the nominee(s) if any.
h) Other necessary documents depending on the nature of the customer.
As regards genuineness of the document/papers provided by the customer these may be verified from the concerned authorities if necessary:
List of documents:
+Current Valid Passport
+Up-to-date TIN Certificate
+Valid Driving License
+Voter ID Card
+Armed Forces ID Card
+A Bangladeshi Employer ID Card bearing the
photograph and signature of applicant.
+A certificate from any local government
organs such as Union Council Chairman,
Ward Commission etc. (In this case the
certifier should attest applicants’ photograph
along with signature).
+Trade License with photograph can be
accepted for individual’s identification.
In addition to the above documents, interview of the customers, introducer from acceptable person to the bank to be obtained while opening the accounts. Bank should not allow any
transaction unless the address in confirmed.
Special Types of Accounts and their operational procedures
Apart from Individual and Joint A/Cs, Proprietorship A/C, Partnership account and Company / Corporate accounts there are some other special types of accounts also. While
opening these accounts required documents and their modus operandi are as under:
Club/ Societies/ NGO/ Educational Institute/ Association
a. Copy of the Constitution / Byelaws / Deed registered with the competent registration authority of Government of Bangladesh (GOB).
b. Copy of the Registration Certificate issued in favor of the Organization by competent registration authority of GOB.
c. Extract of the resolution, which intended to open the A/C relationship and the empowering authority for those who will operate account with specimen signature attested by the President/ Executive Director/ Head of the Educational Institution.
d. Audited financial statements for latest 3(three) years but in case of a newly constituted organization its projected financial statements (if any).
e. Copy of latest Annual Returns submitted to GOB authority by the organization.
f. The personal identity of all the Members of Executive Committee to be established by any of the document as mentioned in individual / joint customer category.
g. Two recent color photographs of all the signatories duly attested by the President/Executive Director/ Head of the Educational Institution or any valued customer having
h. The personal identity of all key persons of the organization to be established by any of the document as mentioned in individual / joint customer category.
i. Copy of Tenancy Agreement to be attested by the President/ Executive Director/ Head of the Educational Institution where Registered Office of the organization housed at a rented building.
Account of Executors and Administrators:
Executors and administrators are persons who are appointed to conduct the affairs of a person after his death. A person to whom the execution of a will is entrusted by the deceased (testator) is called the executor of the will. The executor has to obtain the confirmation of the will from the court in the form of a letter of probate. If a person dies without leaving a will (intestate), the court appoints a person to look after the property under a letter of administration. The persons appointed to wind up and distribute a Deceased’s Estate are called personal Representatives. Personal Representatives appointed by the Court are called Administrators.
Both the executor and the administrator perform the same duties, i.e., to realize the assets of the deceased and to pay off his debts. The executor is appointed by the will. His powers and authority are vested therein. He has to act according to the directions given in the will, but he is required to obtain a probate (official confirmation of the will) from the court.
a. Executors and Administrators should sign Account opening Form and Specimen Signature Card while opening account in their names.
b. Branches should not open the accounts of Executors / Administrators without prior permission from the Head Office.
c. Executors / Administrators Accounts may be opened before probate is granted, but only for credits until receipt of the probate.
d. The Account Opening Form should be signed by all the Executors, to whom probate has been granted by a competent Court or by all the Administrators if there is more
than one Administrator.
e. While opening the account, the probate or the Letter of Administration should be registered with the Bank by the Executor / Administrator(s) and an attested copy thereof should be retained with the Account Opening form. Also establish the identity of the Executor / Administrator.
f. While opening the account, clear instructions to determine which of the Executors /Administrators is authorized to operate on the account should be obtained under the signatures of all the Executors / Administrators. If there is more than one Executor /
g. The Executors / Administrators should neither be allowed to transfer funds from the account of the Estate to their personal accounts nor should they be allowed to borrow from the Bank in their personal names against securities belonging to the Estate
h. These Accounts must be carefully monitored, as personal representatives and executors may only exercise their powers for a limited period of time.
As regards Trusts, Trustees, Trust deed and other relevant issues are governed by ‘Trust Act, 1882’. A ‘Trust’ is an obligation annexed to the ownership of property, arising out of confidence reposed in a person / group of persons and accepted by him / them for the benefit of another or of another and the owner. The person who reposes or declares confidence is called the author of the trust. The person who accepts the confidence is called the trustee.
The person for whose benefit the confidence is accepted is called the beneficiary. The subject matter of the trust is called the trust property or Trust Money. The beneficial interest of the beneficiary is his right against the trustees as owner of the trust property. The instrument by which the trust is created is called the Trust Deed.
While opening an account in the names of persons in their capacity as trustees the banker should take the following precautions:
a) The banker should thoroughly examine the Trust Deed appointing the applicants as the trustees. The Trust Deed contains the names of the trustees, power vested in them for
administering the trust property and other terms and conditions.
b) The trustees are authorized to act jointly and are not competent to delegate their powers unless the Trust Deed authorizes them to do so.
c) The banker should examine the trust deed to ascertain the powers and functions of the trustees.
d) In case of two or more trustees, the banker should ask for clear instruction regarding the person or persons who shall operate the account.
e) In the absence of such instruction all the trustees must sign the cheques, etc., because the estate is placed under their joint charge.
f) If one or more of the trustees dies or retires, the authority vested in the remaining trustees depends upon the provisions of the Trust Deed.
g) When all the trustees are dead, new trustees may be appointed by the court.
h) The insolvency of a trustee does not affect the Trust property and the creditor of the trustee cannot recover their claims from such property.
i) The banker should take all possible precautions to safeguard the interest of the beneficiaries of a trust, failing which he shall be liable to compensate the latter for any fraud on the part of the trustee.
j) The trustees may borrow money from the banker and pledge or mortgage the Trust property only if the Trust Deed specifically confers such power on them.
The banker should, therefore, grant loans to the trustee after thorough examination of the borrowing powers as given in the Trust Deed.
Accounts of Minors:
As per Contract Act, 1872 since a contract with a minor is void; no account in the name of a minor shall be opened. An account may be opened in the name of a minor jointly with parent
or guardian. The account must be titled as “Minor Account. “The following terms & conditions shall be followed in maintaining & operating minor account:
a) The date of birth of the minor and the date when s/he attains majority will be recorded on the Account opening Form and Account Opening Register.
b) Before authorizing a legal guardian to open an account in the name of a minor, the appointment order issued by Court in his/her name should be examined, and a copy thereof retained with the Account Opening Form.
c) No overdraft should be allowed on a minor’s account.
d) Where a natural / legal guardian operates a minor’s account, this account should be closed on the minor’s attaining majority. The outstanding balance should be transferred to a new account to be operated upon by the erstwhile minor as per a fresh
mandate under his authority. Verification of his signature should be obtained from the natural / legal guardian.
Account of Illiterate Persons:
a. Accounts of illiterate persons may be opened on proper introduction. Such persons will put their thumb impression on the Account opening form (Advice of New A/c), specimen signature card etc. in presence of the Manager /Sub-Manager and the Introducer who will attest the thumb impression mentioning his Current Account Number.
b. Two copies of passport size photographs of the Account holder should be obtained duly attested by the Introducer and admitted by the Authorized officer of the Branch, one of which should be kept attached with the specimen signature card.
c. A letter of undertaking shall be obtained from the Account holder to the effect that he will not operate on the a/c unless he personally comes to the Bank and put his thumb impression on the cheques in presence of the Bank Manager/Sub-Manager who will attest the same on verifying the photograph of the depositor on Bank’s record.
d. The Manager/Sub-Manager should record a Certificate to this effect on the back of the cheque. Precautionary measures should be taken to see that no cheque bearing thumb impression and presented through clearing is paid by the Branch.
Account of Local Authorities / Municipal Corporations etc.
a. The accounts of any government or semi government organizations or a local body may be opened on obtaining the copy of the status or any other law by which the body
was created and is governed.
b. Such accounts should not be opened or in contravention of the provisions of that statute or law.
c. Along with a certified copy of the statute, the following documents are required to open such an account:
i) Account Opening Form
ii) Specimen Signature Card
iii) Mandate, which will authorize the person(s), to operate the Account.
Some Important Issues of Various Types of Account Operations:
KYC: The adoption of effective KYC standards is an essential part of banks’ risk management policies. Banks with inadequate KYC program may be subject to significant risks, especially legal and reputational risk. Sound KYC Policies and Procedures not only contribute to the bank’s overall safety and soundness, they also protect the integrity of the banking system by reducing money laundering, terrorist financing and other unlawful
KYC procedures refers knowing a customer physically and financially. This means to conduct an effective KYC, it is essential to accumulate complete and accurate information
about the prospective customer.
The verification procedures establishing the identity of a prospective customer should basically be the same whatever type of account or service is required. It would be best to
obtain the identification documents from the prospective customer which is the most difficult to obtain illicitly. No single piece of identification can be fully guaranteed as genuine, or as being sufficient to establish identity, so verification will generally be a cumulative process. The overriding principle is that every bank must know who their customers are, and have the necessary documentary evidences to verify this.
CDD: Customer Due Diligence (CDD) combines the Know Your Customer (KYC) procedure, transaction monitoring based on the information and data or documents collected from reliable and independent sources. The CDD obligations on banks under legislation and regulation are designed to make it more difficult to abuse the banking industry for money laundering or terrorist financing. The CDD obligations compel banks to understand who their customers are to guard against the risk of committing offences under MLPA, 2012 including ‘Predicate Offences’ and the relevant offences under ATA, 2009. Therefore, banks
should be able to demonstrate to their supervisory authority to put in place, implement adequate CDD measures considering the risks of money laundering and terrorist financing.
Such risk sensitive CDD measures should be based ona)
Type of customers;
b) Business Study Material on “GB (Advance)” for NCC Bank Limited 43 relationship with the customer;
c) Type of banking products; and
d) Transaction carried out by the customer.
EDD: Banks should conduct Enhanced CDD measures, when necessary, in addition to normal CDD measures. Bank should conduct Enhanced Due Diligence (EDD) under the
Individuals or legal entities scored with high risk;
Individuals who are identified as politically exposed persons (peps), influential persons and chief executives or top level officials of any international organization;
Transactions identified with unusual in regards to its pattern, volume and complexity which have no apparent economic or lawful purposes; Enhanced CDD measures includes:
Obtaining additional information on the customer (occupation, volume of assets, information available through public databases, internet, etc) and updating more
regularly the identification data of customer and beneficial owner.
Obtaining additional information on the intended nature of the business relationship.
Obtaining information on the source of funds or source of wealth of the customer.
Obtaining information on the reasons for intended or performed transactions.
Obtaining the approval of senior management to commence or continue the business relationship when applicable.
Conducting regular monitoring of the business relationship, by increasing the number and timing of controls applied and selecting patterns of transactions that need further examination.
Making aware the concerned bank officials about the risk level of the customer. Politically Exposed Persons (PEPs): It refer to “Individuals who are or have been entrusted
with prominent public functions by a foreign country, for example Heads of State or of government, senior politicians, senior government, judicial or military officials, senior
executives of state owned corporations, important political party officials.”
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The following individuals of other foreign countries must always be classed as PEPs:
i. heads and deputy heads of state or government;
ii. ii. senior members of ruling party;
iii. iii. ministers, deputy ministers and assistant ministers;
iv. members of parliament and/or national legislatures;
v. members of the governing bodies of major political parties;
vi. members of supreme courts, constitutional courts or other high-level judicial bodies whose decisions are not subject to further appeal, except in exceptional circumstances;
vii. heads of the armed forces, other high ranking members of the armed forces and heads of the intelligence services;
viii. heads of state-owned enterprises.
CDD Measures for PEPs: Banks need to identify whether any of their customer is a PEP.
Once identified banks need to apply enhanced CDD measures that is set out in 6.3 of this guidelines. Moreover, they need to perform the following-
(a) Banks have to adopt the Risk Based Approach to determine whether a customer or the real beneficial owner of an account is a PEP;
(b) Obtain senior managements’ approval before establishing such business relationship;
(c) Take reasonable measures to establish the source of fund of a PEP’s account;
(d) Monitor their transactions in a regular basis; and
(e) All provisions of Foreign Exchange Regulation Act, 1947 and issued rules and regulations by Bangladesh Bank under this act have to be complied accordingly.
‘Influential persons’(IPs): It refers to, “Individuals who are or have been entrusted with prominent public functions, for example Heads of State or of government, senior politicians,
senior government, judicial or military officials, senior executives of state owned corporations, important political party officials.” The following individuals must always be
classed as Influential persons:
(a) Heads and deputy heads of state or government;
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(b) Senior members of ruling party;
(c) Ministers, state ministers and deputy ministers;
(d) Members of parliament and/or national legislatures;
(e) Members of the governing bodies of major political parties;
(f) Secretary, Additional secretary, joint secretary in the ministries;
(g) Judges of supreme courts, constitutional courts or other high-level judicial bodies whose
decisions are not subject to further appeal, except in exceptional circumstances;
(h) Governors, deputy governors, executive directors and general managers of central bank;
(i) Heads of the armed forces, other high ranking members of the armed forces and heads of
the intelligence services;
(j) Heads of state-owned enterprises;
(k) Members of the governing bodies of local political parties;
(l) Ambassadors, chargés d’affaires or other senior diplomats;
(m) City mayors or heads of municipalities who exercise genuine political or economic power;
(n) board members of state-owned enterprises of national political or economic importance.
Mandate: A mandate is an authority given by the account holder in favor of a third person to do certain acts on his behalf. An account holder issues this with a direction to banker
authorizing the person to operate the account on his/her behalf.
Power of Attorney: It is a document executed by one person called donor or principal in favour of another person called done or agent to act on behalf of the former strictly as per
authority given in the document. Power of Attorney is of two types:
i) Specific i.e. power given for a specific purpose
ii) General i.e. general authority to operate on behalf of the giver for a length of time.
Power of Attorney, when presented to the Branch, should be scrutinized on the following points: Study Material on “GB (Advance)” for NCC Bank Limited
a) It is regular (i.e. that it is operated exactly within the specific objects laid down).
b) It is still in force.
c) It is definite and not conditional or provisional.
d) The identity of the attorney is verified.
e) It is not restricted by such conditions as “during my absence” or during the period of my inability to attend”. These restrictions are not acceptable and such a power of Attorney should not be witnessed.
f) It is stamped in accordance with the provisions of the Stamp Act applicable in the area of operation.
g) It covers the purpose for which it is tendered, especially with regard to the opening of the account and the borrowing powers.
The authority embodied in a Power of Attorney must be rigidly interpreted.
Where the identity of the executants is not known, a Notary Public, or the matter to be referred to supervising authority should attach his signature.
Cancellation of Power of Attorney The Power of attorney is cancelled / terminated under the following circumstances:
a) When the Principal is notified as insane, insolvent or deceased.
b) When the notice of cancellation of Power of Attorney is received from the Principal.
c) At the expiry of the period it covers.
d) On completion of the purpose for which it was drawn up.
Insolvency of Joint Account Holder: The insolvency of the joint account holders terminates the joint relationship. In such an event, all operations on the joint account should be stopped unless fresh instructions are received from the remaining solvent account holders, duly signed by them jointly with the official assignee of the insolvent account holder.
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Insanity of Joint Account Holder: Insanity of a joint account holder has the same effect on the account as insolvency. The balance in the account is held to the order of remaining
account holders jointly with the receiver of the insane account holder.
Dispute between Joint Account Holders: It is always advisable to have a clear instruction from the joint account holder duly signed by them while opening the account to avoid any complicacy in making payment that may arise as a future dispute by any one of the joint account holder.
Garnishee Order: Garnishee order refers to the order issued by a court attaching the funds of the judgment debtor (i.e., the customer) in the hands of a third party (i.e., the banker). The
term ‘garnishee’ refers to the person who has been served with the order. This Garnishee proceeding comprise of two steps. As a first step ‘Garnishee Order Nisi’ will be issued.
’Nisi’ means ‘unless’. In other words, this order gives an opportunity to the banker to prove that this order could not be enforced.
If the banker does not make any counterclaim, this order becomes an absolute.
This ‘Garnishee Order absolute’ actually attaches the account of the customer.
If it attaches the whole amount of a customer’s account, then, the banker must dishonor the cheque drawn by that customer. He can honor his cheques to the extent of the amount that is
not garnished. Hence, the banker should go through the terms of the order very carefully.
Garnishee Order – Banker’s Responsibilities
Payment of cheques: In Cash payment of cheques, if order is received after debit of account, but before payment of cash, better course would be to refuse payment, with appropriate objection. While in case of cheques received in clearing, order received before the stipulated returning time of clearing, and then the cheques must be returned. If the transfer of amount, internally is done in another customer A/C the credit can be cancelled and cheque be returned unpaid, provided credit is not advised.
Right to set-off: When a bank has a prior right to set-off then the bank is not bound by the garnishee order where lien is marked on Fixed Deposit receipts, it cannot be attached by this
order. However the fact of right off should be intimated to court and order must be vacated.
It should be noted that any excess over the lien marked is attachable by the garnishee order.
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Joint Accounts: A garnishee order received against a joint account should clearly specify the full details of the account. This should include specifying all the names of the joint account holders against whom the order is served. If the order mentions only one of the joint accounts as judgment debtor, a joint account is not attached. Reference should immediately
be made to the Head Office seeking their instructions in such cases.
Trust accounts: The outstanding in the trust account cannot be attached, if the judgmentdebtor has deposited the money as a trustee.
Partnership Accounts: The personal account of a partner can be attached for the firm’s debt because partners are jointly and severally liable for the firm’s debts. But the firm’s account
cannot be attached for individual debts of the partners.
Liquidator: When a company is the judgment-debtor, an order attaching the accounts of the liquidator cannot be passed, because the money does not belong to the company but to the
When the garnishee order does not name the customer correctly or with sufficient accuracy, to enable the bank to identify the account in its books, the bank is not bound to act upon it and is not responsible for passing cheques till the order is amended.
In cases where customer is having more than one accounts in the bank’s branch, one is in debit and the other is credit balance, the net result if in credit can be attached. The order will not attach only the credit balance account. But if the debit balance is in a loan account, which has not been recalled by the bank, on the date of service of order, credit into another account cannot be adjusted.
The bank cannot appropriate the credit balance towards the contingent liabilities of the customer, when a garnishee order is served.
Right of set-off:
A banker, like other creditors, possesses the right of set-off, which enables him to combine two accounts in the name of the same customer and adjust the debit balance
in one account with the credit balance in the other. This right to combine two accounts is known as the right of set-off.
Minor as Partner:
While opening the account of a partnership firm in which a minor has been admitted as partner, the date of birth of the minor should be recorded on the Account
Opening Form. However, the minor is not liable to the liabilities of the firm. Ordinarily, a minor should give notice within a specified time on the attaining majority or on his obtaining
knowledge that he is admitted to the benefits of a partnership, that he has elected to be liable Study Material on “GB (Advance)” for NCC Bank Limited or not to be liable as a partner in the firm.
If he fails to give notice, he becomes the partner
after the expiry of the specified period. Branches should consult the local lawyer to determine the period within which a minor should elect to become a partner after attaining majority and should obtain his signature if the minor fails to give notice after the expiry or the specified period.
Accounts in which no operation either deposit or withdrawal takes place for a period of one year should be treated as inoperative account and thereafter these accounts to be transferred to “DORMANT” account. The first withdrawal from such account should be allowed with prior permission from the Manager / Sub-Manager only when the account holder personally approaches for the purpose and after being properly satisfied about the identity of the account holder. The account should be retransferred to Regular Client/s A/c Ledger and then
operation be allowed.
Reactivating Dormant Accounts:
a) Normal operations are not expected in Dormant Accounts. If a cheque is presented for payment in a Dormant Account is should invariably be referred to the Manager /Authorized Officer of the account Branch, who should satisfy himself as to the
genuineness of the drawing.
b) Customer may request to account Branch for activation of his/her dormant account at first for verifying the genuineness.
c) Account activation in the system is customer-initiated debit to the account. The account will be regular at the end of day processing of the debit transaction date.
As soon as any authenticated information is received by the bank as to the death of a constituents, the operations of the concerned account is to be stopped immediately. Since then the account would have been termed as deceased account. The procedures of handling such account are described below:
Application of Interest in Deceased Accounts: As per Bangladesh Bank BCD Circular # 18 dated 27th May 1984, the Scheduled Banks are advised to follow the following Guidelines in
connection with application of interest on Deposit and Loan account of the Deceased.
Savings Bank Account: Interest on the balance of Savings Bank Accounts will be paid upto the date of withdrawal / closing of the accounts as admissible under Savings Bank Accounts
rules, irrespective of the date of expiry of the depositor.
Term Deposit Accounts: Premature encashment: In such cases deposit should be deemed to have been made up to the date of withdrawal and not up to the date of death. Interest should Study Material on “GB (Advance)” for NCC Bank Limited be paid and recovery of penal interest made in accordance with prevalent instructions regarding premature encashment.
Encashment at Maturity: Interest should be paid up to the date of Maturity at the rate applicable for the relevant TDR.
Encashment beyond Maturity: Interest up to the period of maturity should be paid at the rate applicable for the relevant TDR. Interest for the period beyond the date of Maturity upto
the date of withdrawal should be paid at the rate applicable for the Savings Bank Accounts with checking facility.
Bank account holders having deposit accounts in their individual names or in joint names of two or more individuals can appoint a nominee to their accounts. A person who receives the
benefit in case of death of the account holder is a nominee. The account holder(s) chooses or nominates his/her nominee at the time of opening the bank account. The account holder can
nominate one or more person as his/her nominee.
Nomination is a facility that enables a deposit account holder(s) (individual or sole proprietor) or safe deposit locker holder(s) to nominate an individual, who can claim the proceeds of the deposit account(s) or contents of the safe deposit locker(s), after the death of the original depositor(s) or locker holder(s). The benefit of nomination is that in the event of death of an account holder(s) or locker holder(s), the bank can release the account proceeds or contents of the locker to the nominee(s) without insisting upon a Succession Certificate, Letter of Administration or Court Order and the bank’s liability is duly discharged on
payment to the Nominee.
As regards Choice for the payment of deposited money, The Bank Company Act, 1991under sec.103 provides – (1) Where an individual has, or several persons have jointly deposited
money with a banking company in his or in their name, that individual depositor may separately or, as the case may be, the group of depositors may jointly, in the way prescribed,
choose a person to which, in the case of the death of the individual depositor or of all of the joint depositors, the deposited money shall be given:
Provided that the said individual depositor or the said group of depositors may at any time cancel their choice and choose, in the way prescribed, another person.
(2) The person chosen under sub-section (1) being a minor, the individual depositor or the joint depositors may, in the prescribed way, direct who shall, in the case of the death of the
individual depositors or of the joint depositors, receive the money during the period of minority of the chosen person.
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(3) Notwithstanding anything contained in any Act for the time being in force or in any will or any kind of document regarding the allotment of properties, the person chosen under subsection (1) or directed under sub-section (2) shall, after the death of the individual depositor or as the case may be, of all of the joint depositors, attain all the rights the individual depositor or the joint depositors had on that deposit, and every other person shall be deprived of those rights.
(4) Where a banking company has made payments in accordance with this section, all its obligations in respect of the deposit concerned shall be deemed fulfilled:
Provided that no right or claim that any person may have or make against the person to whom the deposited money has been paid under this section shall be prejudicial to the
provision of this subsection.
Payment to the Heirs of the Deceased (Where there is no nominee)
a) In case of death of Account Holder, his/her heirs shall inform the Bank immediately in writing or by electronic media.
b) In support of their application they will submit death certificate or any other evidence of death.
c) Paper news may be a source of knowing about the deceased.
d) The message received either verbal or in writing, the Bank shall take the fact into account and proper instruction “Drawer Deceased” shall be marked in the system by the
e) The heirs shall apply to the Bank for Balance certificate of the Deceased for submitting to the court in support of their Succession Certificate.
f) After getting Succession Certificate the heirs shall apply to the Bank for releasing the money in their favor as per court order along with other supporting documents. The Branch will keep photocopy duly attested by an authorized officer after seeing the
g) The Branch shall check the genuinely of the Succession Certificate from the office of the issuing Authority.
h) The heirs of the deceased in an affidavit or through Notary Public will inform their identity to the Bank and that they are the legal heirs and they will indemnify the Bank for any loss or damage that may arise in future as well as confirm the individual in whose favor the payment is to be released as per Court Order.
i) Any client acceptable to the Bank will identify the Heirs of the Deceased and may stand Guarantee or sign an indemnity Bond to compensate the Bank for any loss or damage that may arise in future. Study Material on “GB (Advance)” for NCC Bank Limited
j) Before releasing Payments to the heirs in case of complicated issues, the Branch shall obviously refer the same for the Head Office approval and/or Legal Opinion.
k) Payment must be made through Payment Order. No matter, how small the amount involved the Branch shall in no way make cash payment to the Beneficiaries.
l) In case the deceased selects the nominee before his death, the Bank shall act accordingly.
m) Any event of confusion or suspicion, the matter must be dealt with caution and the Head Office and/or Legal Advisors should be informed immediately.
n) The procedures shall be applicable in case of credit balance held against all types of Deposit Accounts.
Documents Required: The following are the documents needed while releasing the fund to the heirs of the Deceased Account Holder. Depending upon the circumstances the Branches will advise the heirs to submit the relevant documents require by the Bank.
a) The Death Certificate issued by the Hospital Authority.
b) The Death Certificate issued by the Police Station.
c) The Certificate issued by the Chairman of Union Council or Ward Commissioner with or without citing the name of the successors.
d) Death Certificate issued by any other competent Authority.
e) Graveyard Certificate.
f) Succession Certificate issued by the Court (The authenticity of the same shall be verified from the concerned Office).
g) Selection of Payee out of present heirs by the Court.
h) Passport of the successors or any other proof their respective identity.
i) Affidavit or Notary Public submitted by the heirs.
j) Marriage certificate issued from Marriage Register’s Office (in case of spouse).
k) Indemnity from the successors or Guarantee from third party.
l) The payment order may be issued in favor of the pay(s) mentioning the name of his/her/their deceased husband/wife or father as applicable Unclaimed Deposits
Note: As regards unclaimed deposits relevant circulars in relation to maintenance of unclaimed deposit account of the bank which is also stipulated in section 35 of the bank
company act 1991 (amendment up to 2013) to be followed which is placed in annexure-5.
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Moreover, a detailed list stating the list of files and documents along with the time limit for maintenance of bank records are placed in annexure-6 for compliance.
An instruction circular letter of the bank regarding procurement of fresh and renewal of corporate deposits is also placed in annexure-7.
Questions and Answer Indications:
1. What risk does a banker incur in opening an account with Trustees and Executors? What precautions will you take in such cases?
2. Mention the formalities of opening an account in the case of local authorities and Municipal Corporation.
3. Define Mandate and Power of attorney.
4. Under what circumstances a Power of attorney may be cancelled?
5. What is Garnishee Order?
6. State the banker’s responsibilities under Garnishee Order?
7. Differentiate between Dormant and Unclaimed deposit account.
8. Mention the document required for payment to the heirs of the deceased.