Bank Accounts&

Customers

Common types of accounts

Savings accountThey are payable on demand but with some restrictions. Cheque facility is allowed on this type of deposits. Banks pay low rate of interest. It is the most common type of account.

Current accountThe depositor can withdraw money whenever he wants, there are no restrictions. They are payable on demand through cheques. No interest is paid on this type of deposits.

Fixed accountMoney is deposited for a specific period of time say 3 or 5 years. They are not payable on demand, no cheque facility is provided on these deposits. Banks pay high rate of interest. Loan facility is provided on these deposits

NRI accounts

In India banking terminology, the term NRI Account refers to funds deposited by a Non-Resident Indian or NRI with a financial institution authorized by the Reserve Bank of India to provide such services. A Non-Resident Indian is an Indian citizen who primarily resides outside of India.

NRI banks accounts are available in different types. Here, we are mentioning the accounts which are widely used in India.

Three types of NRI Accounts which are widely used in India:

NRE Savings/Fixed Deposit AccountNRO Savings Fixed Deposit AccountFCNR Fixed Deposit Account

Types of NRI Bank accounts

The Non Resident External (NRE) Savings Account

The Non Resident External (NRE) Savings Account is open for Indians residing abroad. This Account will help you to transfer foreign earnings easily to India. NRE account can be opened in any banks as Savings and Fixed deposit accounts. There is no tax & no wealth tax on interest earned from all these accounts. The currency maintained in this account is Indian Rupee. The funds from overseas can be easily transferred to India. Nomination is allowed in NRE Accounts.

 NRO Savings Fixed Deposit Account

NRO account can be opened as the Savings or Fixed Deposit account. Currency maintained in this account is Indian Rupee. Joint Account can be created with any Indian Resident. Interest earned in this account is 30% taxable and surcharge and education cess will be included. It is applicable for both savings and fixed deposit accounts. The account can be utilized to pay any bill and expenses in India. Enjoy the convenience of banking at any of our branches in India. Nomination is allowed in NRO Accounts. Can deposit Indian Currency in to this account.

FCNR Fixed Deposit Account Earn Indian Interest Rates on your Foreign Currencydeposits with our Foreign Currency Non-Resident Fixed Deposit. The entire deposit (principal and interest) is exempt from tax. The deposit can be jointly opened with any other NRI. You can get an overdraft on your Savings / Current account against your FCNR Fixed Deposit. Nomination Facility is available. Joint accounts with Indian Residents not allowed.

Joint account is a bank account shared by two or more individuals. Any individual who is a member of the joint account can withdraw from the account and deposit to it. Usually, joint accounts are shared between close relatives or business partners.

Types of Customers(joint and minor accounts)

Two Types of Joint Accounts

(1) Joint-tenancy account (owned usually by a married couple)

In which either owner may individually exercise full rights to make deposits or withdrawals on his or her signatures. In case of either owner's death, the survivor automatically takes the sole control of account assets without probate.

In which signatures of all owners are required to exercise certain rights such as making withdrawals. In case of one or more owners' death the other owner(s) may take control of account assets only in accordance with the terms of agreement entered between them before such eventuality. A company account operated by two or more signatories as a means of accounting control or security is not a joint account in the legal sense.

(2) Tenants-in-common account (usually owned by two or more business partners or directors)

Minor AccountA type of savings account that is setup by an adult to be used by a minor. This type of banking account does not provide all of the privileges that a normal account would, but does allow the minor to make withdrawals and deposits. Some banks require that the minor’s account be linked to a primary account, so that the adult can be held accountable for any improper uses of the account. Normal maintenance fees are usually waived until the minor reaches the age of 18.

Section 3 of the Indian Majority Act, 1875 A person under the age of18 years is called a Minor.

If a guardian is appointed by the court the age of majority is 21 years. Here the name of minor is wards.

Natural Guardianship of minor-Savings bank account can be opened by minor, represented by his natural guardian, Here ,natural guardian is father

PARTNERSHIP FIRM’S ACCOUNT

A partnership is not regarded as an entity separate from the partners. The Indian Partnership Act, 1932, defines partnership as the “relation between persons who have agreed to share the profits of the business, carried on by all or any of them acting for all.” A partnership firm is thus established by an agreement amongst the partners. This agreement may be oral or written. The object of constituting a partnership firm must be –To carry on a business which may be conducted by all the partners or by any of them on behalf of the rest, andTo share the profit of such business amongst themselves.

A banker should take the following precautions while opening an account in the name of a partnership firm:

1. Number of partnersThe banker should very carefully examine the partnership deed, which is the charter of the firm, to acquaint himself with the constitution and business of the firm.2. Title of the firm’s accountA firm’s account should always be opened in the name of the firm and not in the name of the individual partners.3. Opening of an accountAn account in the name of the firm may be opened by a banker on receipt of an application from one or more of the partners. Banks, however, insist that all the partners should join to open the firm’s account.

4. The partnership letter or mandateThe banker should take a letter signed by all the partners stating;•the names and address of the partners;•the nature of the business undertaken by the firm and;•the names of the partners who will operate the account on behalf of the firm and will have the authority to draw and accept bills and mortgage the property of the firm.5. Revocation of authority to operate the accountThe authority given in favour of a particular partner/partners to operate the firm’s account may be withdrawn by any of them by giving a notice to the banker.

6. Cannot delegate his authority A partner authorised to operate the firm’s account cannot delegate his authority to another person without the consent in writing of all other partners.

7. Enquiry If a cheque payable to the firm is endorsed by a partner in his own favour and is deposited by him to be credited to his personal account, the banker should do so after making an enquiry about it from other partners and after being satisfied about it.

Company AccountsCompanies usually go for current account as they need to withdraw cash at any time. They are not investing their money with the bank so they do not care about no interest being given by the bank for their deposits.

Setting up a Company Bank Account

A Limited Company is a separate legal entity to that of its directors and shareholders and it will need its own bank account. Setting up a bank account is a relatively straightforward affair, having said that there are a number of choices that may affect your decision as to who you sign up with and there is certainly no shortage of deals out there to confuse you further.

All banks must comply with stringent Money Laundering Regulations and therefore will need to carryout a series of checks before opening the new account. You should keep the documents you have received when your company was registered safe as these will need to be produced before the account is opened. Most banks like to see an original copy of your certificate of incorporation (printed on the correct paper), a copy of your memorandum and articles and any share certificates that have been issued. You may also be required to show your passport to confirm your identity

Non - trading association account

Non trading associations usually open a savings account with a bank. Savings Bank account is a form of demand deposit account, opened mainly for the purpose of saving and not for any business purpose, subject to restrictions on the number of withdrawals during any specified period. Number of withdrawals in a savings bank account permitted is fifty per half year in a financial year. For accounts opened in the middle of the half year permissible withdrawals will be calculated prorate. If the numbers of withdrawals exceed the permitted limit, a service charges advised from time to time will be levied.

Opening of accountsSaving bank account may be opened in the names of individuals–single accounts, or joint accounts of two or more individuals. Any trading or business concern, whether such concern is proprietorship, partnership, company or association shall not open Savings Bank account. Application to open a Savings Bank Account should be made on the Bank's prescribed forms duly completed with his name, address and occupation. Each applicant will be required to sign a declaration to the effect that he has read and accepted the Savings Bank Rules.

Types Of Accounts The applicants can opt for opening of an account either with chequebook facility or without chequebook.

Deposits There is no restriction on number of deposits that can be made into the account. Withdrawals The accountholder can withdraw money personally from her/ his ordinary Savings Bank Account by using Bank’s standard withdrawal form. Overdrafts Overdrafts in Savings Bank accounts may be permitted under exceptional circumstances with prior arrangements only. Standing Instructions The account holder can request the Bank for effecting periodical payment of insurance premium; membership fees etc. by debit to her/ his account on payment of service charges.

Payment of Interest Interest at the prescribed rate will be calculated for each calendar month on the lowest balance at the credit of an account between the close of the tenth and the last working day of the month. Transfer & Closure Of Account Accounts may be transferred between branches of the Bank at the request of the account holder(s).