Code for Banking Practice
Member Banks of the Indian Banks' Association (the Association)
agree to observe and abide by the following Ground Rules:
2) PRIZES AND GIFTS
Member Banks shall not give prizes, gifts, donations,
etc., or any direct or indirect benefits in the purchase
price or in respect of any other transactions relating
to securities, bonds, etc., as consideration or with a
view to getting or retaining a deposit and or advance
account. Promotional schemes duly approved by the Boards
of respective banks may, however, be launched within the
regulatory framework of the Reserve Bank of India. However,
it may be customary to distribute gifts (cost of such
gift article should not exceed Rs.250/- per piece) at
the time of Diwali or New Year to the valued customers.
Bank's policy in this regard be approved by the Board.
3) ASSOCIATION WITH CHIT FUNDS/SPECULATIVE VENTURES
Member Banks shall not associate themselves with chit
fund companies, which conduct lottery, gift schemes, etc.,
or any other speculative ventures. Member Banks shall
also not encourage or lend their names to promote speculative
ventures of any nature. However, it would be in order
for banks to open current accounts, fixed deposits, etc.
of such companies in the banks' normal course of business.
4) DEPOSIT RECEIPTS
When Member Banks issue deposit receipts against cheques/drafts/pay-orders
drawn on local banks, the banks may pay interest on such
deposits from the date on which the relative instrument
gets credited/adjusted in the bank's account at the clearing
house (RBI, SBI, etc.).
5) SAVINGS BANK ACCOUNT
Member Banks shall not open savings bank accounts in the
name of the institutions which have been listed out in
the Annexure to this Code and also as amended from time
6) INTRODUCTION OF ACCOUNTS
All deposit accounts, whether savings, current or term
deposits, shall be properly introduced.
7) PRINTING OF CUSTOMER'S LOGO, ETC., ON CHEQUE LEAVES
Member Banks shall not print or allow the customers to
print any logo, advertisement, etc., on the cheque leaves.
However, this prohibition need not be extended to dividend/
interest warrants or refund orders in view of their limited
8) COLLECTION OF TERM DEPOSIT RECEIPT ON MATURITY
The Term Deposit Receipt (TDR) received for collection
from another bank shall not be renewed by the TDR issuing
bank and delivered to the customer directly. The TDR issuing
bank shall either pay to the collecting bank or else,
the instrument shall be returned, if the issuing bank
has any valid reasons not to pay.
9) RENEWAL OF OVERDUE DOMESTIC TERM DEPOSIT
Renewal of overdue domestic term deposit (from maturity
date of overdue deposit) shall be for a period extending
upto at least 15 days beyond the actual date of renewal.
If the renewed overdue domestic deposit is tendered for
premature foreclosure/encashment before completion of
minimum 15 days from the actual date of the renewal, no
interest be paid for the overdue period even if the total
overdue period from the date of maturity of the old deposit
receipt exceeds 15 days.
10) PAYMENT OF INTEREST ON TERM DEPOSIT MATURING ON HOLIDAYS
If the noted due date of a term deposit falls on a holiday,
Sunday, non-business working day, interest be paid for
such intervening day(s), at the originally contracted
rate, till the succeeding working day.
11) MATURITY VALUE CERTIFICATE (MVC)
Member Banks shall not issue Maturity Value Certificates
(MVCs) under any circumstances to any person who approach
bank branches with offer to procure substantial rupee
12) NEGATIVE PUBLICITY
Member Banks shall not make publicity of adverse/weak
position of other banks, in order to wean away the customers
of the affected banks.
13) INTEREST PAYMENT
(a) The statements with regard to the rate of interest,
method of interest calculation, etc. in any publicity
literature, advertisement and other forms of publicity
on deposit scheme/s of banks shall be precise and intelligible.
(b) Member Banks may follow the Master Charts relating
to payment of interest on deposits prepared by the Association
from time to time for fixing maturity values; for payment
of monthly income, annuities, etc.
14) GENERAL CONVENTIONS FOR DOMESTIC DEPOSITS
(a) Member Banks may not accept any deposits for a period
longer than 10 years. However, banks may accept deposits
for periods exceeding 10 years in terms of orders of competent
courts or in the case of minors where interests of minors
are involved, provided banks are convinced that it is
necessary to do so. Individual banks may decide in this
matter based on asset liability management policies being
(b) Interest on deposits for fixed term may be paid, credited,
transferred or reinvested with frequency not less than
the quarterly rests. However, payment of monthly interest
may be allowed, if required, by discounting the quarterly
interest accrued (refer to the Association's Master Charts).
(c) Interest on deposits where the terminal period (month/
quarter/half year etc., as the case may be) is incomplete
shall be paid on maturity.
(d) On deposits repayable in less than three months or
where the terminal quarter is incomplete, interest would
be paid for the actual number of days on the basis of
365 days in a year.
(e) Where the interest is paid at discounted value on
monthly basis during the currency of the deposits: If
the terminal quarter or half years consists of one month
(e.g. deposit is for 37 months), interest therefore (i.e.
for 37th month) shall be paid at actuals (i.e. one third
of quarterly or one-sixth of half-yearly interest).
(f) Where the terminal incomplete quarter or half year
(i) one month and over, but less than two months
(ii) two months, and
(iii) two months and over but less than three months,
interest shall be paid as under:
(i) for one month and over but less than two months (e.g.
deposit for 37 months and 15 days); or
(ii) two months (e.g. deposit of 38 months) - At discounted
value for the first month (i.e. 37th month) and at actuals
for the terminal incomplete month (i.e. 15 days) or second
month (i.e. 38th month), as the case may be;
(iii) for two months and over but less than three months
(e.g. deposit for 62 months and 15 days) - At discounted
value for first and second months (i.e. 61st and 62nd
month) and at actuals for the terminal incomplete month
(i.e. 15 days).
15) TERMS OF ACCEPTANCE OF DEPOSITS
(a) Member Banks shall not issue an incomplete term deposit
receipt which does not clearly mention the amount actually
deposited, period for which the deposit is placed/accepted
and the rate of interest payable as also periodical rest
at which interest is payable.
(b) In case of Reinvestment Plan Deposit, Recurring Deposit
and Cash Certificate in addition to the particulars stated
in the above para, banks shall also mention the maturity
value and periodical rest at which the interest shall
16) OVERDRAFT IN SAVINGS BANK ACCOUNT
No overdraft limit on a regular basis be permitted in
saving bank account.
The Committee constituted by the Association to ensure
the observance/compliance of the Code by the banks shall
be empowered to investigate and follow up the cases of
violation of the Code by Member Banks that may be brought
to its notice.
Member Banks shall not violate any of the Ground Rules
merely because some other Member Bank/s has/have violated.
They shall, instead, instruct their branch managers or
any other officials that on their coming across any case
of violation by other banks, they shall bring the same
to the notice of their head office, which will take up
the matter with the Association. For this purpose, every
Member Bank shall nominate a designated officer who shall
liaise between the bank's branches and the Association
in the matter. The Association shall consider the complaint
on violations received from the designated officer of
the complainant bank. Member Banks shall give immediate
effect to the suggestions given by the Committee in respect
of any matter related to violation of this Code.