Customers’ Deposit Accounts

Unit IV
Deposit Accounts
 Fixed Deposit
 Current Account Deposit
 Saving Deposit
 Recurring Deposit
Opening & Operations of Fixed Deposit
Account
 Application Form
 FDR
 Payment of Interest
 Interest on overdue deposit
 Advance against Fixed
deposit
 Surrender of deposit
receipt before the maturity
date
 FDR is not a negotiable
instrument
 Deposit in Joint Names
 Cheques against FD
 Exemption from Stamp
duty
 Loss of FDR
 Change of Names
Opening of Current & Savings Accounts
 Application Form
 Photograph
 Introduction or reference
 Specimen Signature
 Steps for improving customer services
in Banks
Customer service has great significance in the banking industry. The
banking system in India today has perhaps the largest outreach for
delivery of financial services and is also serving as an important
conduit for delivery of financial services. While the coverage has
been expanding day by day, the quality and content of dispensation
of customer service has come under tremendous pressure mainly
owing to the failure to handle the soaring demands and
expectations of the customers
 1. Policy for general management of
the branches
 Infrastructure facility
 Providing entirely separate enquiry counters
 Displaying indicator boards at all the counters in English, Hindi as
well as in the concerned regional language.
 Providing customers with booklets consisting of all details of service
and facilities
 Reviewing and improving upon the existing security system in
branches.
 Rewarding the best branches from customer service point of view by
annual awards
 Customer service audit, Customer surveys.
 Training of staff in line with customer service orientation
2. Customer Service Committee of the Board
3. Banking Ombudsman Scheme
4. Board Meeting to Review and Deliberate on Customer Service
5. Standing Committee on Customer Service
6. Branch Level Customer Service Committees
7. Cheque Collection Policy
8. Customer Compensation Policy
9. Customer Grievance Redressal Policy
10. Basic Savings Bank Deposit Account (BSBDA)
11. IT-enabled Financial Inclusion
 Banking Ombudsman Scheme
 ‘Banking Ombudsman’ means any person appointed under
Clause 4 of the Scheme.
 The Reserve Bank may appoint one or more of its officers in the
rank of Chief General Manager or General Manager to be
known as Banking Ombudsmen to carry out the functions
entrusted to them by or under the Scheme.
 The appointment of Banking Ombudsman under the above
Clause may be made for a period not exceeding three years at a
time.
 The Banking Ombudsman shall receive and consider
complaints relating to the deficiencies in banking or other
services filed on the grounds mentioned in clause 8 and
facilitate their satisfaction or settlement by agreement or
through conciliation and mediation between the bank
concerned and the aggrieved parties or by passing an Award
in accordance with the Scheme
 Insurance of Bank Deposit
 In India, the bank deposits are covered under the insurance
scheme provided by Deposit Insurance and Credit Guarantee
Corporation (DICGC), a wholly owned subsidiary of the
Reserve Bank of India.
 DICGC is a statutory body, created by an act of parliament in
1961.
Banks are insured by the DICGC
 Commercial Banks
 Cooperative Banks
 Primary cooperative societies are not insured by the DICGC.
 What does the DICGC insure?
The DICGC insures all deposits such as savings, fixed, current,
recurring, etc. except the following types of deposits.
 Deposits of foreign Governments
 Deposits of Central/State Governments
 Inter-bank deposits
 Deposits of the State Land Development Banks with the State co-
operative bank
 Any amount due on account of any deposit received outside India
 Any amount, which has been specifically exempted by the corporation
with the previous approval of Reserve Bank of India
 When a bank covered by Deposit insurance scheme of
DICGC fails, or undergoes liquidation or is merged with
another bank; the DICGC pays the amount due to depositors
via the officially appointed liquidator in a time bound
manner.
 All claims are settled by DICGC within two months from the
receipt of the claim from the liquidator.
Maximum Deposit amount insured by
the DICGC?
 The maximum amount per depositor with same capacity and
same right insured is Rs. 1 Lakh including Principal and
Interest.
 The deposits kept in different branches of a bank are
aggregated for the purpose of insurance cover and a
maximum amount upto Rupees one lakh is paid.
 The insurance cost is borne by the bank which is insured. The
DCGIC charges 10 paise per Rs. 100 as insurance premium.
Deposit Account Scheme for Abroad
 FCNR (Foreign Currency Non-Resident)
 NROE (Non- Resident Ordinary Resident)
 NRE (Non Resident External )
 Types of NRI Accounts
 Non-Resident Ordinary Rupee Account (NRO Account)
 Non-Resident (External) Rupee Account (NRE
Account)
 Foreign Currency Non Resident (Bank) Account –
FCNR (B) Account
 Non-Resident Ordinary Rupee Account
(NRO Account)
Any person resident outside India may open NRO account with an
authorised dealer or an authorised bank for the purpose of putting
through bona fide transaction in rupees.
Opening of accounts by individual/ entities of Pakistan and entities of
Bangladesh require prior approval of Reserve Bank of India.
NRO accounts may be opened / maintained in the form of current,
savings, recurring or fixed deposit accounts.
● Savings Account - Normally maintained for crediting legitimate dues
/earnings / income such as dividends, interest etc. Banks are free to
determine the interest rates.

● Term Deposits - Banks are free to determine the interest rates.

Interest rates offered by banks on NRO deposits cannot be higher than
those offered by them on comparable domestic rupee deposits.

● Account should be denominated in Indian Rupees.

Contd…
● NRI/PIO may remit from the balances held in NRO account an amount
not exceeding USD one million per financial year, subject to payment of
applicable taxes
● The limit of USD 1 million per financial year includes sale proceeds of
immovable properties held by NRIs/ PIOs.
● Other than current income and the limit of USD 1 MN per financial year
applicable to NRIs/PIOs, balances in NRO accounts cannot be repatriated
without the prior approval of RBI.
● The accounts may be held jointly with residents and / or with non-resident
Indian
● The NRO account holder may opt for nomination facility.
● Loans to non-resident account holders and to third parties may be granted
in Rupees by Authorized Dealer / bank against the security of fixed deposits
subject to certain terms and conditions
Non-Resident (External) Rupee Account (NRE
Account)
●
NRE account may be in the form of savings, current, recurring
or fixed deposit accounts (with maturity of minimum one year).
Such accounts can be opened only by the NRI (as defined under
Regulation 2(vi) of Notification No. FEMA 5/2000-RB dated
May 3, 2000) himself and not through the holder of the power
of attorney.
● NRIs may be permitted to open NRE account with their
resident close relatives (relative as defined in Section 6 of the
Companies Act, 1956) on ‘former or survivor ‘basis. The
resident close relative shall be eligible to operate the account as
a Power of Attorney holder in accordance with the extant
instructions during the life time of the NRI/PIO account holder.
● Balances held in the NRE account are freely repatriable.
● Accrued interest income and balances held in NRE
accounts are exempt from Income tax and Wealth tax,
respectively.
● Authorised dealers/authorised banks may at their
discretion/commercial judgement allow for a period of
not more than two weeks, overdrawings in NRE savings
bank accounts, up to a limit of Rs.50,000 subject to the
condition that such overdrawings together with the
interest payable.
Contd…
● Savings - Banks are free to determine the interest rates.
● Term deposits – Banks are free to determine the interest rates of term
deposits of maturity of one year and above. Interest rates offered by banks
on NRE deposits cannot be higher than those offered by them on
comparable domestic rupee deposits.
● Eligible debits are local disbursements, transfer to other NRE / FCNR
accounts of person eligible to open such accounts, remittance outside
India, investments in shares / securities/commercial paper of an Indian
company, etc.
● Loans can be extended against security of funds held in NRE Account
either to the depositors or third parties without any ceiling subject to
usual margin requirements.
● Such accounts can be operated through power of attorney in favour of
residents for the limited purpose of withdrawal of local payments or
remittances through normal banking channels to the account holder
himself.
 Foreign Currency Non Resident (Bank)
Account – FCNR (B) Account
● NRIs are eligible to open and maintain these accounts.
● FCNR (B) accounts are only in the form of term deposits of 1 to 5 years
● All debits / credits permissible in respect of NRE accounts, including credit of
sale proceeds of FDI investments, are permissible in FCNR (B) accounts also.
● Account can be held in any freely convertible currency.
● Loans can be extended against security of funds held in FCNR (B) deposit either
to the depositors or third parties without any ceiling subject to usual margin
requirements.
● The interest rates are stipulated by the Department of Banking Operations and
Development, Reserve Bank of India. With effect from March 1, 2014, in respect of
FCNR (B) deposits of maturities, 1 year to less than 3 years, interest shall be paid
within the ceiling rate of LIBOR/ SWAP rates plus 200 basis points for the
respective currency/ corresponding maturity. For FCNR(B) deposits with maturity
of 3-5 years interest shall be paid within the ceiling rate of LIBOR/ SWAP rates
plus 300 basis points. On floating rate deposits, interest shall be paid within the
ceiling of SWAP rates for the respective currency/ maturity plus 200 bps/ 300 bps,
as the case may be. For floating rate deposits, the interest reset period shall be six
months.
Contd…
● When an account holder becomes a person resident in India, deposits
may be allowed to continue till maturity at the contracted rate of interest,
if so desired by him.
● Terms and conditions as applicable to NRE accounts in respect of joint
accounts, repatriation of funds, opening account during temporary visit,
operation by power of attorney, loans/overdrafts against security of funds
held in accounts, shall apply mutatis mutandis to FCNR (B).
NRI can open joint account with a resident close relative (relative as
defined in Section 6 of the Companies Act, 1956) on former or survivor
basis. The resident close relative will be eligible to operate the account
as a Power of Attorney holder in accordance with extant instructions
during the life time of the NRI/ PIO account holder.
FCNR
 NRI’s (individuals / entities of Bangladesh / Pakistan
nationality / ownership require prior approval of RBI)
 Any permitted currency i.e. a foreign currency which is
freely convertible.
 Term Deposit only
 For terms not less than 1 year and not more than 5 years.
Any person resident outside India may open NRO account with an
authorised dealer or an authorised bank for the purpose of putting through
bona fide transaction in rupees.
Opening of accounts by individual/ entities of Pakistan and entities of
Bangladesh require prior approval of Reserve Bank of India.
NRO accounts may be opened / maintained in the form of current,
savings, recurring or fixed deposit accounts.
● Account should be denominated in Indian Rupees.