Enhancement of limit for grant of instant credit
RBI vide its directive DBOD No.BC.181.09.07/007/99-2000
dated 29.5.2000 enhanced the limit for immediate credit
of outstation as well as local cheques from Rs.5000/-
to Rs.7500/- subject to the customer maintaining a satisfactory
operated account. According to the guidelines banks should
not wait for the customer's request for the facility but
should as a matter of normal course, provide the service.
October 13, 2000
Your Cheque Book
Here are a few things you should know if you hold a cheque
1> A cheque is a written instruction you give to your
banker to make payment by debit to your account on demand.
2> Cheque is a valid payment instrument from the date
shown on the face of it. By banking practice six months
is treated as normal validity of a cheque.
3> A Bearer cheque is payable to the holder. An Order
cheque is payable to the person on whose favour it is
drawn or subsequent endorsees. So banks seek identification
of the person receiving payment of an order cheque.
4> Banks verify the signature on the cheque with your
specimen signature on record before making payment.
5> Take proper care of your cheque book. A signed bearer
cheque getting into wrong hands would mean a loss!
6> Report loss of cheque to your bank immediately and
give Stop Payment instruction to them.
7> Do not issue cheques without adequate balance in
the account or arrangements to pay. Dishonour of cheque
for insufficiency of funds or exceeding amount arranged
to be paid, is a criminal offence punishable with imprisonment
for a period upto one year or with fine which may extend
to twice the amount of the cheque. Top
SAVINGS BANK ACCOUNT
What is a Savings Account ? A Savings bank account is
the most common operating account for individuals and
others for non-commercial transactions. A Savings account
helps people to put through day-to-day banking transactions
besides earning some return on the savings made. Banks
generally put some ceilings on the total number of withdrawals
permitted during specific time periods. Banks also stipulate
certain minimum balance to be maintained in savings accounts.
Normally a higher minimum balance is stipulated in cheque
operated accounts as compared to non-cheque operated accounts.
Banks as a rule do not give overdraft facility in a saving
account, but allow occassional overdrawings to meet contingencies.
Who can open a Savings Account ?
* by a person in his / her name;
* by two or more persons in their joint names payable
- both or all of them or the survivor or survivors of
- either or any more of them or the survivor or the survivors
of them; OR
- former / latter or survivor of a particular person during
his lifetime or survivors jointly or survivor.
* Certain non-profit welfare organizations are also permitted
to open Savings bank accounts with banks.
What a bank asks for while opening an account
Banks are required to know true identity of the person
wanting to open an account. Banks also seek introduction
of the person from an existing account holder. Banks require
photograph of the person to be kept on record for future
identification purpose. In terms of government notification
w.e.f. 01.11.1998, banks have to obtain PAN numbers (issued
by Income Tax Dept.) of the account holder at the time
of opening of the account. In the absence of PAN number
customer should give a declaration in the prescribed format
(form no.60 or 61 as the case may be).
Important Note :
Please fill nomination form while opening the account.
It helps in settlement of dues in the event of death of
the account holder. (See Nomination
Facility for more details)
What the Customer needs to know while opening
a Savings Account ?
Ask the bank officials about :
* Minimum balance requirements.
* Penal provisions if the balance falls below the minimum
stipulated amounts or return of cheques issued or instruments
sent on collection.
* Collection facilities etc. offered and charges applicable.
* Details of charges, if any for issue of cheque books
and limits fixed on number of withdrawals, cash drawings,
Interest @ 3.5 % p.a. with effect from 1/3/2003 . The
amount of interest will be calculated for each calendar
month on the lowest balance in credit of any account between
the close of the tenth day and the last day of each month.
Most banks pay interest on a half yearly basis.
FIXED OR TIME DEPOSITS
are deposits accepted by banks for a specified period
of time. In terms of RBI directives the minimum period
for which term deposits can be accepted is 15 days. The
banks generally do not accept deposits for periods longer
than 10 years.
1> Banks pay interest on term deposits based on the
period of deposits and normally pay higher interest for
longer term deposits.
2> Banks have full discretion to fix their interest
rates on deposits and these rates are varied from time
to time depending on market conditions.
3> Changes made in interest rates from time to time
do not alter the interest paid on the existing deposits.
4> When banks quote a certain percentage of interest
per annum for a given period it is understood that interest
payments are made on a quarterly basis (see IBA Master
5> The depositor can collect interest on every quarter
or its discounted value at monthly rests or avail quarterly
compounding benefits and receive principal and interest
6> RBI has now permitted banks to quote a higher rate
of interest for individual deposits more than Rs.15 lacs.
7> Banks are allowed to levy a penalty for premature
encashment of deposits at their discretion. Banks generally
pay interest on such deposits as applicable for the period
which deposit has been kept with the bank (less penalty
8> Bank allow loans against the fixed deposits on demand.
Margin retained over the deposit outstanding and interest
rate charged thereon are decided by the bank and may vary
from bank to bank.
Opening of a time deposit Account
the requirements as given under savings bank account apply
to time deposits also. However, photographs are not insisted
for deposits below Rs.10,000/-. Also the requirements
regarding furnishing of PAN number applies only to time
deposits over Rs.50,000/- made in cash.
Time deposits -
To suit the needs
of the customers banks have introduced innovative variations
in the basic time deposit format. Flexible deposit is
one such innovation. In this case a given deposit is split
into units of smaller amounts for accounting purposes.
This enables the customer to encash any number of units
prematurely at any time during the currency of the deposit
and earn the contracted rate of interest on the balance
Please fill up nomination
forms while placing a term deposit with your bank (please
see nomination facility hyperlink)
are cheque operated accounts maintained for mainly business
purposes. Unlike savings bank account no limits are fixed
by banks on the number of transactions permitted in the
Account. Banks generally insist on a higher minimum balance
to be maintained in current account. Considering the large
number of transactions in the account and volatile nature
of balances maintained overnight banks generally levy
certain service charges for operating a Current account.
In terms of RBI directive
banks are not allowed to pay any interest on the balances
maintained in Current accounts.
However, legal heirs of a deceased person are paid interest
at the rates applicable to Savings bank deposit from the
date of death of the account holder till the date of settlement.