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in

Code Monitoring Study Deposit Accounts

BCSBI recently carried out a Study relating to implementation of the Code provisions
relating to different aspects of Deposit Accounts by branches of select member
banks. The findings of the study are furnished below:
S.
No
1.

Code Provision

Survey Findings

Opening of Deposit Accounts:

I. The observations reveal that the
banks generally adhered to the
Code provisions. However, the
practices followed differed. While
some banks provided the required
information
in
the
Account
inform
about
number
of Opening Form, others gave
transactions, cash withdrawals, information on the back-flap of
etc. that can be done free of savings bank pass books.
charge within a given period;

As per para 8.1.1 of the Code of Bank's

Commitment to Customers (the Code"),
when an individual opens a Deposit
Account (Savings / Current), Banks are
required to:
i.

ii.

iii.
iv.
v.

2.

inform about the kind of charges, if

any, in case of exceeding such
limits. (Details of the charges are
required to be included in the Tariff
Schedule);
inform the rate at which interest is
paid on savings deposits and its
periodicity.
minimum
balance
to
be
maintained and penalty for nonmaintenance thereof.
Other charges, for example,
charges for cheque book; ATM /
debit card; etc.

II. In order to ensure that the

practices followed by banks are in
consonance with the provisions of
the Code, it is desirable for
member banks to bring out Most
Important Terms and Conditions
(MITCs) on the product, which can
be given to the customer at the
time of opening the account.

Nomination facility in Deposit

Accounts:
In terms of para 8.1 - Deposit Accounts

i. Most of the banks had put in

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(c) of the Code, Banks are required:

i.
ii.

place a system to record fact of

nomination in the passbook /
to record the fact of nomination on
statement and Fixed Deposit
the passbook / account statement
Receipt (FDR).
/ FDRs.

at customer's request, banks are

required to indicate the name of ii. As regards giving option to the
the nominee on the pass book / customer to indicate name of the
statement of account / FD receipt. nominee in the pass book / FDR, it
was observed that only a few
banks had made provision in the
Account Opening Form (AOF).
iii. Banks are, therefore, advised
that the account opening form
(AOF) should have a provision for
exercising such an option.

Transaction Details in
Passbook/Statement:
As per para 8.1.1 - Savings / Current
Accounts - Statements - item (e) of the
Code, Banks are required to ensure, that
the entries in the pass book / statements
are brief and intelligible.

i. In case of debit entries, all banks

were generally observed to be
giving the instrument number and
name of the payee.
ii. Banks need to make efforts to
provide the name of the drawer in
case
of
credit
transactions
especially in view of increasing
usage of personalized cheques
with drawers name printed.

Term Deposits:
Specific option for disposal of term
deposits on maturity should be
provided in the AOF. The AOF
should also indicate the term of
auto renewal in case there is no
specific instruction from the
Wherever such instructions are not depositor for disposal of term
obtained, banks should ensure sending deposit on maturity.
Banks, as per para 8.1.2 (a) Term
Deposit - of the Code, are required to
obtain instructions in the application form
from the customer for disposal of term
deposit at maturity.

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of intimation of impending due date of

maturity, well in advance, to the
depositor, as a rule.
5

Term Deposits:
In terms of para 8.1.2 - Term Deposit (b) and (c) of the Code, Banks are
required to inform the customer the
procedure for withdrawal of term deposit
before maturity as also the interest rates
applicable and penalty, if any, for
premature withdrawal.

Term Deposits: RBI Guideline:

As per regulatory instructions, premature
withdrawal of Term Deposit requires the
consent of all the joint depositors when
all of them are alive and that of the
surviving depositor and the legal heirs of
the deceased in case of death of one of
the depositors. If the joint depositors
prefer to allow premature withdrawal of
the deposit to the surviving joint
holder(s), it would be open to banks to do
so, provided the depositors have given a
specific joint mandate to that effect.

The procedure for withdrawal of

term deposit before maturity
should be incorporated in the TDR
/ Advice whether or not it is
indicated in the AOF which is
retained by the bank.

I. The Study revealed that only a

few banks had provided the
required option to the depositors
at the time of acceptance of
deposit.
II. Many Branch Managers were
observed to be unaware of these
regulatory instructions despite
their reiteration by RBI vide
circular dated 16 August 2012.
III. We, therefore, advise that
suitable steps be taken for offering
the
option
and
obtaining
necessary joint mandate from the
willing depositors, at the time of
acceptance of deposit itself.

Inoperative/Dormant Accounts:
As per para 8.1.6 (a) of the Code, relating
to inoperative / dormant accounts, banks
are required to, inter alia, inform the
customer three months before his
account is classified as inoperative or

I. Many branches were observed

to be non-compliant.
II. We advise that the Code
provisions should be adhered to in
letter and spirit by all the branches

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dormant and the consequences thereof.

9

of the banks.

Settlement of claims in respect of

accounts of deceased depositors:
As per para 8.7.1 (b) of the Code, relating
to settlement of claims in respect of
deceased deposit accounts, where the
deceased depositor had not made any
nomination, banks are required to adopt
a simplified procedure for repayment to
legal heirs of the deceased depositor and
are also required to fix a minimum
threshold limit for the balance in the
account of the deceased depositors, up
to which claims in respect of the
deceased depositors could be settled
without insisting on production of any
documentation other than a letter of
indemnity.

I. Although banks policies were

found to be in consonance with
the provisions of the Code,
practices followed by branches
differed and it was observed that
the same were not in conformity
with the policy, inasmuch as some
of the branches were found
insisting on production of various
documents while settling claims of
small value within the threshold
fixed by the bank.
II. We, therefore, advise that
implementation of the policy of the
bank in letter and spirit may be
ensured so that claims within the
threshold limit in respect of the
deceased depositors are settled
without insisting on production of
any documentation other than a
letter of indemnity.