Chapter 3

Deposit Department

3.0 Deposit Department

Banking is a service industry. The lifeblood of banking is the deposit, without which no bank can function and earn profits. In order to accelerate growth and increase market shares, the banks operation have been reorganized on function lines. The Sales and Marketing have been separated from operations. The Sales staff makes effort to acquire fresh, cheap/low cost deposits and markets new products in accordance with the policies advised by Head Office (HO) from time to time. The Operational Staff is engaged in operational work which includes providing prompt, efficient and personalized service to costumers so that the deposits acquired by the Sales Team are retained. The branch staff works under the direction and supervision of Branch Sales Manager. He heads the branch. In United Bank Limited, in order to increase the volume of deposits and motivate staff member as well, incentive awards for Sales and Operation Staff are announced. This facility Pay-for-Performance culture and results in achieving a customer focused organizational structure. As soon as an account is opened, the responsibility to retain this account rests with the Operational Staff.

3.1 Types of Bank Account

Some important accounts depending upon the needs of the customers provided by UBL along with their characteristics/features are given below: 3.1.1 PLS-Saving Account PLS stands for profit and loss sharing. Any eligible citizen in Pakistan can open this account with a minimum RS.100/-as the initial deposit. There is no limit no the maximum amount of money that can be depositing in a PLS-Saving Account.
17

Chapter 3 There are following features of PLS Saving Account:

Deposit Department

Profit or loss is worked out and distributed on half yearly basis i.e. as on 30th June and 31ST December each every year. The rate of profit is not fixed it keeps on changing.

This is a cheque account, thus cheque can be drawn against this account The statement of accounts is supplied to the account holders where accounts are computerized Withdrawal from PLS-Saving accounts are allowed not more than eight times in a calendar month for a total amount not exceeding Rs.15000/-. In case of withdrawal of larger amounts, seven days notice must be given in writing

3.1.2 Current Account Current account can be opened with minimum balance of Rs. 500/-. Business and local government bodies keep this type of account with the bank. These are payable to the customer whenever they are demanded. There are following features of Current Account:

There is no restriction for withdrawal of money from this account The bank does not allow any profit on these deposit/ accounts Cheques can be drawn on such accounts The customers are required to maintain a minimum balance, failing which incident charges are deducted from such accounts On behalf of this account the bank can grant credit/loan to the customer

3.1.3 PLS-Term Deposit Account The deposits that can be withdrawn after a specified period of time are referred to as term deposits. The period for which the bank keeps these deposits ordinary varies from three months to five years in accordance with the agreement made between the customer and the banker. This account can be opened with a minimum of Rs. 1,000/18

Chapter 3 There are following features of Term Deposit Account:

Deposit Department

The bank does not give credit facilities on this account Drawing of cheques is not allowed in this account Terms deposits are issued only in multiples of Rs. 1,000/This account can be opened either by depositing cash or by conversion of an existing interest bearing deposit Profit and loss is determined and distributed half yearly i.e. as on 30th June and 31st December each year The depositors are issued term deposits receipts If the receipt is enchased before the date of maturity without completing the minimum period of six months, the deposit is withdrawn from the PLS system and the depositor is not entitled to sharing any profit or loss A week before maturity the depositor is advised through a letter. If received is neither in cashed nor renewed by the maturity date, its amount is transfer to over due term deposit account There are different current profit rates or overdue term deposit account for a specified period

3.1.4 Deposit at Call A call deposit is withdrawn at call or demand. No prier notice is needed to be given to the bank to withdraw the deposit money. There are following features of Deposit at Call Account: A call deposit receipt (CDR) is issued. No cheques can be drawn on this account. No profit and loss is credited/debited

19

Chapter 3 3.1.5 National Income Daily Account (NIDA)

Deposit Department

The national income daily account (NIDA) is a PLS saving scheme containing features of a current account, having a minimum balance of Rs. 250000/- and no maximum limit. There are following features of NIDA:

This account is for both individuals and corporate clients There is no restriction on withdrawal from this account Profit is paid on half yearly basis No Zakat and wealth tax is deducted from this account

3.2 Opening of Account

The opening of account is the establishment of banker-customer relationship. By opening an account at a bank a person becomes a customer of the bank. The producer, which is adopted by UBL in the opening of a new account, is given below:

The first and the most important step before opening of an account is the formal and informal introduction of the customer with the banker. The banker should determine the prospective customers integrity, respectability, occupation and the nature of business by introductory references given at the time account opening. Negligence in this informal preliminary investigation may result in serious consequences Before filling the account form the customer is asked to provide two attested passport size photographs along with the National Identity Card photocopy. A prescribed printed account opening form is supplied to the applicant. The form is filled in and signed by the applicant. In case the applicant is an illiterate person, the banker himself fills the form according to the information provided by the applicant When an account is opened the customer gives the banker a specimen of the form of signature, which would appear, on all of his cheque to express his authority for the payment of cheque drawn on his bank

20

Chapter 3

Deposit Department

The specimen is generally taken on a card specially designed for the purpose, and rules for the customers, full name and account number are entered on it. If bank has reasons to doubt the genuineness of a signature, he should either confirm it for his satisfaction or return the cheque with the remark signature differs. A person is not disqualified to become a customer of the bank merely because of his illiteracy. Instead of specimen signature, the left hand thumb impression from male, and right hand thumb impression from female account holder is taken on the cards as well as on the account opening form.

The customer is asked by the banker to deposit the initial money in his new account. In order to deposit money with the bank, the customer is provided with a paying slip. This is double-foiled slip and is filled by the customer. This slip contains: Name of the account holder Date of deposit Account number Amount being deposited both in words and Figures. In case of cheques, the cheques number Signature of the depositor The depositor after filling the slip, hands over the slip along with the money to cashier. The cashier counts the currency notes and enters the amount in the Cash Receipt Register and puts a Received cash stamp on the slip and then returns in to the depositor. An authorized officer then countersigns this slip. Then the counterfoil of the slip is returned to the depositor. At last the amount is created to the account of the depositor. After depositing money, the account holder is provided with a Chequebook. This Cheque can be used to withdraw the money from the account. The chequebook contains 10, 25, 50, or 100 leaves. The account holder is also provided with a passbook. The passbook contains the entries of the account from the books of bank. This passbook provides the

21

Chapter 3

Deposit Department

information that how much transactions taken place in his account in a given period of time. However, as the accounts are computerized in United Bank of Pakistan, a statement of account is supplied to the account holders at periodic intervals and it acts as an alternative to pass book.

3.3 Withdrawal of Money

Money from an account can be withdrawn by writing a cheque issued by the bank. There are following three types of Cheques: 3.3.1 Bearer Cheque Anybody can withdraw money by putting his signature on the back of the cheque in case of a bear cheque. The banker does not make so many precautionary measures while making payment on a bearer cheque. 3.3.2 Order Cheque An order cheque is payable only to a specific person whose name is written on the face of the cheque. The banker makes sure that only that person, whose name is written on the cheque, receives the payment. 3.3.3 Cross Cheque When two parallel transverse lines are drawn across the face of a cheque, the Cheque become a cross cheque. Payment on such a cheque would credit the proceeds to his customers account after realization. Crossings normally done to avoid any fraud which may occur in case of a Cheque is lost.

22

Chapter 3 3.3.4 Payment of a Cheque

Deposit Department

The bank has separate ledgers for current and saving accounts, those are feed in the computer system. These ledgers contain the account numbers, name of the account holder and the amount of balance of each account. The deposit in charge debits the given amount on the cheque to the drawers account. The account holder presents the cheque to an authorized officer who first checks posting in the ledger and if necessary tallies the signature with the specimen signature provided. The officer enters the amount of cheque in the computer system and signs on the cheque with red ink and passes it to the cashier for payment. The cashier enters the amount of the cheque in the payment register and calls and makes payment to customers. The officer will pay cheque up to Rs. 25,000/- cheque above Rs. 25,000/- will be acquired by operational manager. 3.3.5 Dishonor of a Cheque A banker may refuse to pay a cheque if any of the following happen 3.3.6 Funds Insufficient A common reason for which cheque may be returned is that the credit balance in the customers account is not enough to pay the cheque. If it is decided to pass the cheque, a temporary over draft is created. An entry of this effect is made in the Temporary Overdraft Register. Mark-up is charged for the period the overdraft remains outstanding. If a cheque is to be returned for the want of funds, the remark generally used is REFER TO DRAWER 3.3.7 Drawers Signature Differ When the drawer does not sign the cheque or the signature on the cheque does not tally with the specimen signature supplied to the banker, the cheque will be dishonored

23

Chapter 3 3.3.8 Post Dated Cheque

Deposit Department

Post dated cheques are those which are presented for payment before due date. If the banker pays a post cheque earlier than the due date, his losses the protection granted by law, and shall have to bear any loss that may arise out of his action. Hence, the post-dated Cheque is not paid. 3.3.9 Stale Cheque According to the banking rules, payment of a cheque must be paid with in the period of six months. Those Cheques, which are presented after the period of six months, are called stale. The payment is not made in case of a stale cheque. 3.3.10 Mutilated Cheque When a cheque is torn, worn out or does not give sufficient evidence of the customers intention, it is called a mutilated cheque. The banker will not honor the mutilated cheque. 3.3.11 Amount Differ The banker will also refuse to make payment when the amount written in words does not match with the amount in figures. 3.3.12 Crossed Cheque A crossed cheque cannot be honored over the counter to any person but a collecting banker.

3.4 Unauthorized Material Alterations

Material alteration in relation to cheque includes any alteration of the date, the sum payable, the time of payment, the place of payment, the addition of place of payment without the acceptors asset. Therefore a banker does not pay a cheque bearing apparent material alteration
24

Chapter 3 3.4.1 Death of a Customer

Deposit Department

When the banker receives the notice of the death of his customer, he should henceforth stop all operations including making payment from the deceases account. 3.4.2 Stop Payment If the banker receives a notice or a phone call from the account holder to stop payment, the banker will not pay the cheque. 3.4.3 Customers Insanity and Insolvency If the Customer develops an unsound mind or becomes insane, or the banker came to know the insolvency of his customer, he should not honor his customers cheque anymore.

25