際際滷

際際滷Share a Scribd company logo

14ib367

Download as DOC, PDF
V
Vikash Kumar-IB

The document discusses various aspects of the banker-customer relationship including: - Key characteristics that define a banker under Indian law. - Correct understanding of terms like "customer", KYC norms, and acceptable identity/address proofs. - Rights and responsibilities of bankers and customers regarding honoring checks, adjusting accounts, maintaining secrecy of accounts, and exercising the right of set-off. - Lawful disclosure of customer information and situations where the dishonor of checks would be justified.

1 of 7
Download to read offline
02 Banker Customer Relationship Caselets: Who is a Banker 1. Banker is defined under Section 5(b) of The Banking Regulation Act. What are the essential characteristics of a banker to satisfy this definition? i Repayable on demand ii For the purpose of investment iii Which undertakes the business of banking. iv To accept deposit from public. v Withdraw able by cheque,draft,order 2. Under which of the following situations, the person will not be treated as a customer of the State Bank of India: Tick Mark _/ i SK Faliman has been maintaining a savings bank account with State Bank of India for the last two weeks. customer ii Sridharan has a fixed deposit receipt for Rs.5,000 that he has been made only three days ago. customer iii Vinit Chopra has purchased demand drafts for eleven times, has got DDs issued five times, in the last two years from the same branch of Bank on paying cash . Is not a customer iv Sewa Singh has been holding 500 shares of SBI for the last 25 years. Is not a customer v Rajinder Kumra signed the account opening form with satisfactory introduction and other formalities and deposited a other bank cheque of Rs.15,000 in his favour for collection as initial amount for the account on 15.09.12 to be sent for clearing . Is he a bank customer on 15.09.12? Is not a customer 3. Which statements of the following are correct and why about KYC Norms: a. KYC guidelines are issued by SEBI for Banks in India. --INCORRECT b. The purpose is to get legal protection for the collecting banker u/s 131 of NI Act.-- CORRECT c. Knowing the customer means whether he is the same person that he claims to be.-- CORRECT d. The introducer has a criminal liability in case the customer introduced by him commits any fraud or wrong doing with bank or other customers thru his account. NOT CORRECT e. The introducer has only a civil financial liability in case the customer introduced by him commits any fraud or wrong doing with bank or other customer.NOT CORRECT f. The introducer has no financial or other liability to the bank or third parties unless he is a party to the fraudulent transactions. --CORRECT g. The KYC norms are to safe guard the country from laundering of drug money or other illegal money or to detect suspicious disruptive activities. --CORRECT 1
h. The KYC norms also help in checking the growth of Benami transactions and for monitoring large value transactions to avoid payment of taxes.--CORRECT 4. As part of KYC, banks insist on documentary proof for identity and residence. Tick mark the documents acceptable as Proof of identity: Proof of residence: i. A Valid Driving Licence i. Driving Licence ii. An Election ID Card ii. Election ID Card iii. A Ration Card with photo iii. Ration Card with photo iv. A Valid Passport iv. A valid passport v. A PAN Card v. PAN Card vi. A Credit Card with Photo vi. A Credit Card with Photo vii. Allotment Letter/ Rent Agreement vii. Allotment Letter/ Rent Agreement viii. LIC Policy For Last Two Years viii..LIC Policy For Last Two Years ix. Credit card statement ix. Credit card statement x. Telephone Bill Electricity Bill x. Telephone Bill Electricity Bill xi. Employer certificate/ID xi. Employer certificate/ID POI:-Documents no. i),ii),iii),iv),v)& vi) . POR:-Documents no. i),ii),iii),iv),v),vii),viii),ix),x). 5. Comment which one of the following is correct and why?: a. Banks are required to issue demand drafts, for Rs.50,000 and above only by debit to customers accounts or against cheques and not against cash. Ans:- Correct. Because The RBI, in a circular dated April 19, 1991, had stated that DDs, mail transfers and travellers cheques for .Rs50,000 and more should be issued by banks only through a debit to the customers account or against cheques and not cash payment. b. The requirement for furnishing PAN stands increased uniformly to Rs.50,000/- or above per transaction for all cash deposits in accounts. Ans:- Correct. c. The banks are required to keep a close watch and record of cash withdrawals and deposits for Rs.10 lakhs and above in accounts in a separate register as well as report transactions of suspicious nature with full details in fortnightly statements to their controlling offices. Ans:-Correct. This guideline is to safe guard the country from laundering of drug money or other illegal money or to detect suspicious disruptive activities 6. State the nature of relationship between banker and a customer in the following types of dealings with the bank: 2
Sr. Nature o f account Role of Banker Role of Customer i A Customer has opened a no frills savings bank account with zero balance with the bank. Debtor Creditor ii A Customer has a locker facility with the bank and has deposited Rs.10,000 in fixed deposit to avail this locker facility. Lessor Lessee iii A customer has deposited an outstation cheque with the bank for collection and credit to his account with the bank. Agent Principal iv Customer has given some document for safe custody to bank Bailee Bailor Give your observations: 7. Padam Singh Rana had an overdraft with HDFC Bank at Noida branch and a Savings bank balance at New Delhi branch. On non payment of overdraft balance of Noida Branch even after expiry of notice, his S/B deposit balance at New Delhi branch was adjusted towards overdraft amount. Whether bank is justified in this action and why? Ans:- YES , the bank can adjusted this overdraft amount according to the Bankers Right of set off. 8. At two different branches of HDFC Bank, balances in accounts were as under : Branch A Rs. 50000 Branch B Rs.20000. Customer issued a cheque for Rs.51000 on branch A for advance payment of purchase of property worth 15 lakh. This cheque was dishonored by the branch ignoring the fact that he had enough balance at the other branch. He lost his reputation and could not buy property and claims Rs.15 lakh for this loss and another 10 lakh for reputation loss. Discuss. Ans:- Here the banks decision is correct, because bamker does not have sufficient money in that account on which cheque is being issued. 9. Sam issued a cheque for Rs. 15000 on 12.09.12. He had Rs.14,500 balance in SB account and had deposited cheques for Rs.20,000 on the morning of 09.09.12 in this account that had not been returned un paid. But the cheque for Rs.15000 was dishonoured by the bank due to oversight of the executive who credited the amount of cheques to some other account. Is bank liable to customer? Ans:-Here mistake has been done by banks side . Sams cheque is being dishonoured because of banks ignorance. 3
10. Ram Kapoor had fixed deposit of Rs.20,000 with the bank branch. He issued a cheque on his savings bank account for Rs.50,000 that had a balance of Rs.49,000. at the same branch. The cheque was dishonored by the bank. Discuss rights and liabilities of both the parties. Ans:- Bankers liabilities: a. Duty to honor cheques of a customer. b. Duty to maintain secrecy of a/cs. c. As and when a cheque is presented before the bank, banker is bound to accept and honour it if it is otherwise in order. Customers right & liabilities: a) The customer cannot draw against cheques/draft/ instruments until these are realized. b) Credit balance of customers account at one branch cannot be applied for the payment of cheques at another branch. 11. Baldev Raj, a reputed businessman had enjoyed overdraft facility up to Rs.20,000 from time to time for the last four years with SBI, Noida branch without any loan agreement in writing due to his reputation and relations. The new branch manager returned a cheque for Rs.50000 as the credit balance in the account was Rs..45000. On complaint by the customer, the branch manger replied that there was no contract in writing, so bank is not liable for consequences for returning the cheque. Discuss the liability of the bank. Ans:-According to the rules over drafting is not allowed, is spite of that Baldev Raj, had enjoyed overdraft facility only because his reputation. Here by rejecting the cheque, bank has taken right decision. 12. Anil Ambani got a compensation of Rs.10 lakh from the court for wrongful dishonour of a cheque for Rs.1,25,000 drawn by him. Would there be any difference in compensation if the cheque amount would have been Rs. 1250 only ? Ans: NO 13. Will dishonor of cheques by the bank be justified and why in the following situations? a. Cheque dated 19.09.12 presented for payment on 18.09.12--- YES, because Cheque should not be post dated i,e bearing a date later than the date of giving cheque,or stale i.e bearng more than six months old and is presented within 6 months of its issue. 4
b. ii. Cheque dated 15.03.12 presented for payment on 18.09.12----YES, because Cheque should not be post dated i,e bearing a date later than the date of giving cheque, or stale i.e bearing more than six months old and is presented within 6 months of its issue. 14. Discuss whether the banker is lawfully justified in disclosing the customers information: i. The statement of account is given to the Income Tax Inspector on his instructions.-- JUSTIFIED ii. The Sub inspector from a local police station is shown the account details for three years of a person under criminal investigation.--JUSTIFIED iii. The credit information is passed on to another bank and based on this the other bank rejects his loan application.---JUSTIFIED iv. The balance in account is disclosed to the wife of the depositor without his consent. NOT JUSTIFIED v. The information of account and facilities is disclosed to the guarantor before signing the guarantee.---JUSTIFIED 15. Which one of the following is correct in respect of right of Lien: a. A scooter mechanic can hold the scooter repaired by him if the repair charges have not been paid. It is not a case of particular lien.---CORRECT b. If debt is not paid, Bank can sell the securities under lien without giving a reasonable notice for sale to the debtor. ---INCORRECT c. Bank can exercise lien for debt in single name on fixed deposit in joint names.--- INCORRECT d. Bank has a lien on safe custody articles like shares or bonds, or money tendered for remittance to some other person or securities held in trust or securities left with bankers by mistake. --INCORRECT 16. Which ones of the following are correct in respect of right of set off: a. X has to pay overdraft of Rs.50,000 but has defaulted. Bank can recover this amount from a joint account in the name of X and his wife Y.--- INCORRECT, If the individual account of a person shows debit balance, such dues cannot be recovered from his joint account with others. 5
b. X Enterprises (X is the proprietor of this firm ) owes Rs.10000 to bank. There is a credit balance of Rs.12,000 in SB account in personal name of X. Bank can exercise right of set off.----YES. c. Money owed by father can be recovered from the account of his minor son under guardian ship of the father.---NO, because where a person has an account in the capacity of a guardian of minor under 18 years of age, it is not to be treated in the same right as his own account with the bank. 6
b. X Enterprises (X is the proprietor of this firm ) owes Rs.10000 to bank. There is a credit balance of Rs.12,000 in SB account in personal name of X. Bank can exercise right of set off.----YES. c. Money owed by father can be recovered from the account of his minor son under guardian ship of the father.---NO, because where a person has an account in the capacity of a guardian of minor under 18 years of age, it is not to be treated in the same right as his own account with the bank. 6

More Related Content

14ib367

  • 1. 02 Banker Customer Relationship Caselets: Who is a Banker 1. Banker is defined under Section 5(b) of The Banking Regulation Act. What are the essential characteristics of a banker to satisfy this definition? i Repayable on demand ii For the purpose of investment iii Which undertakes the business of banking. iv To accept deposit from public. v Withdraw able by cheque,draft,order 2. Under which of the following situations, the person will not be treated as a customer of the State Bank of India: Tick Mark _/ i SK Faliman has been maintaining a savings bank account with State Bank of India for the last two weeks. customer ii Sridharan has a fixed deposit receipt for Rs.5,000 that he has been made only three days ago. customer iii Vinit Chopra has purchased demand drafts for eleven times, has got DDs issued five times, in the last two years from the same branch of Bank on paying cash . Is not a customer iv Sewa Singh has been holding 500 shares of SBI for the last 25 years. Is not a customer v Rajinder Kumra signed the account opening form with satisfactory introduction and other formalities and deposited a other bank cheque of Rs.15,000 in his favour for collection as initial amount for the account on 15.09.12 to be sent for clearing . Is he a bank customer on 15.09.12? Is not a customer 3. Which statements of the following are correct and why about KYC Norms: a. KYC guidelines are issued by SEBI for Banks in India. --INCORRECT b. The purpose is to get legal protection for the collecting banker u/s 131 of NI Act.-- CORRECT c. Knowing the customer means whether he is the same person that he claims to be.-- CORRECT d. The introducer has a criminal liability in case the customer introduced by him commits any fraud or wrong doing with bank or other customers thru his account. NOT CORRECT e. The introducer has only a civil financial liability in case the customer introduced by him commits any fraud or wrong doing with bank or other customer.NOT CORRECT f. The introducer has no financial or other liability to the bank or third parties unless he is a party to the fraudulent transactions. --CORRECT g. The KYC norms are to safe guard the country from laundering of drug money or other illegal money or to detect suspicious disruptive activities. --CORRECT 1
  • 2. h. The KYC norms also help in checking the growth of Benami transactions and for monitoring large value transactions to avoid payment of taxes.--CORRECT 4. As part of KYC, banks insist on documentary proof for identity and residence. Tick mark the documents acceptable as Proof of identity: Proof of residence: i. A Valid Driving Licence i. Driving Licence ii. An Election ID Card ii. Election ID Card iii. A Ration Card with photo iii. Ration Card with photo iv. A Valid Passport iv. A valid passport v. A PAN Card v. PAN Card vi. A Credit Card with Photo vi. A Credit Card with Photo vii. Allotment Letter/ Rent Agreement vii. Allotment Letter/ Rent Agreement viii. LIC Policy For Last Two Years viii..LIC Policy For Last Two Years ix. Credit card statement ix. Credit card statement x. Telephone Bill Electricity Bill x. Telephone Bill Electricity Bill xi. Employer certificate/ID xi. Employer certificate/ID POI:-Documents no. i),ii),iii),iv),v)& vi) . POR:-Documents no. i),ii),iii),iv),v),vii),viii),ix),x). 5. Comment which one of the following is correct and why?: a. Banks are required to issue demand drafts, for Rs.50,000 and above only by debit to customers accounts or against cheques and not against cash. Ans:- Correct. Because The RBI, in a circular dated April 19, 1991, had stated that DDs, mail transfers and travellers cheques for .Rs50,000 and more should be issued by banks only through a debit to the customers account or against cheques and not cash payment. b. The requirement for furnishing PAN stands increased uniformly to Rs.50,000/- or above per transaction for all cash deposits in accounts. Ans:- Correct. c. The banks are required to keep a close watch and record of cash withdrawals and deposits for Rs.10 lakhs and above in accounts in a separate register as well as report transactions of suspicious nature with full details in fortnightly statements to their controlling offices. Ans:-Correct. This guideline is to safe guard the country from laundering of drug money or other illegal money or to detect suspicious disruptive activities 6. State the nature of relationship between banker and a customer in the following types of dealings with the bank: 2
  • 3. Sr. Nature o f account Role of Banker Role of Customer i A Customer has opened a no frills savings bank account with zero balance with the bank. Debtor Creditor ii A Customer has a locker facility with the bank and has deposited Rs.10,000 in fixed deposit to avail this locker facility. Lessor Lessee iii A customer has deposited an outstation cheque with the bank for collection and credit to his account with the bank. Agent Principal iv Customer has given some document for safe custody to bank Bailee Bailor Give your observations: 7. Padam Singh Rana had an overdraft with HDFC Bank at Noida branch and a Savings bank balance at New Delhi branch. On non payment of overdraft balance of Noida Branch even after expiry of notice, his S/B deposit balance at New Delhi branch was adjusted towards overdraft amount. Whether bank is justified in this action and why? Ans:- YES , the bank can adjusted this overdraft amount according to the Bankers Right of set off. 8. At two different branches of HDFC Bank, balances in accounts were as under : Branch A Rs. 50000 Branch B Rs.20000. Customer issued a cheque for Rs.51000 on branch A for advance payment of purchase of property worth 15 lakh. This cheque was dishonored by the branch ignoring the fact that he had enough balance at the other branch. He lost his reputation and could not buy property and claims Rs.15 lakh for this loss and another 10 lakh for reputation loss. Discuss. Ans:- Here the banks decision is correct, because bamker does not have sufficient money in that account on which cheque is being issued. 9. Sam issued a cheque for Rs. 15000 on 12.09.12. He had Rs.14,500 balance in SB account and had deposited cheques for Rs.20,000 on the morning of 09.09.12 in this account that had not been returned un paid. But the cheque for Rs.15000 was dishonoured by the bank due to oversight of the executive who credited the amount of cheques to some other account. Is bank liable to customer? Ans:-Here mistake has been done by banks side . Sams cheque is being dishonoured because of banks ignorance. 3
  • 4. 10. Ram Kapoor had fixed deposit of Rs.20,000 with the bank branch. He issued a cheque on his savings bank account for Rs.50,000 that had a balance of Rs.49,000. at the same branch. The cheque was dishonored by the bank. Discuss rights and liabilities of both the parties. Ans:- Bankers liabilities: a. Duty to honor cheques of a customer. b. Duty to maintain secrecy of a/cs. c. As and when a cheque is presented before the bank, banker is bound to accept and honour it if it is otherwise in order. Customers right & liabilities: a) The customer cannot draw against cheques/draft/ instruments until these are realized. b) Credit balance of customers account at one branch cannot be applied for the payment of cheques at another branch. 11. Baldev Raj, a reputed businessman had enjoyed overdraft facility up to Rs.20,000 from time to time for the last four years with SBI, Noida branch without any loan agreement in writing due to his reputation and relations. The new branch manager returned a cheque for Rs.50000 as the credit balance in the account was Rs..45000. On complaint by the customer, the branch manger replied that there was no contract in writing, so bank is not liable for consequences for returning the cheque. Discuss the liability of the bank. Ans:-According to the rules over drafting is not allowed, is spite of that Baldev Raj, had enjoyed overdraft facility only because his reputation. Here by rejecting the cheque, bank has taken right decision. 12. Anil Ambani got a compensation of Rs.10 lakh from the court for wrongful dishonour of a cheque for Rs.1,25,000 drawn by him. Would there be any difference in compensation if the cheque amount would have been Rs. 1250 only ? Ans: NO 13. Will dishonor of cheques by the bank be justified and why in the following situations? a. Cheque dated 19.09.12 presented for payment on 18.09.12--- YES, because Cheque should not be post dated i,e bearing a date later than the date of giving cheque,or stale i.e bearng more than six months old and is presented within 6 months of its issue. 4
  • 5. b. ii. Cheque dated 15.03.12 presented for payment on 18.09.12----YES, because Cheque should not be post dated i,e bearing a date later than the date of giving cheque, or stale i.e bearing more than six months old and is presented within 6 months of its issue. 14. Discuss whether the banker is lawfully justified in disclosing the customers information: i. The statement of account is given to the Income Tax Inspector on his instructions.-- JUSTIFIED ii. The Sub inspector from a local police station is shown the account details for three years of a person under criminal investigation.--JUSTIFIED iii. The credit information is passed on to another bank and based on this the other bank rejects his loan application.---JUSTIFIED iv. The balance in account is disclosed to the wife of the depositor without his consent. NOT JUSTIFIED v. The information of account and facilities is disclosed to the guarantor before signing the guarantee.---JUSTIFIED 15. Which one of the following is correct in respect of right of Lien: a. A scooter mechanic can hold the scooter repaired by him if the repair charges have not been paid. It is not a case of particular lien.---CORRECT b. If debt is not paid, Bank can sell the securities under lien without giving a reasonable notice for sale to the debtor. ---INCORRECT c. Bank can exercise lien for debt in single name on fixed deposit in joint names.--- INCORRECT d. Bank has a lien on safe custody articles like shares or bonds, or money tendered for remittance to some other person or securities held in trust or securities left with bankers by mistake. --INCORRECT 16. Which ones of the following are correct in respect of right of set off: a. X has to pay overdraft of Rs.50,000 but has defaulted. Bank can recover this amount from a joint account in the name of X and his wife Y.--- INCORRECT, If the individual account of a person shows debit balance, such dues cannot be recovered from his joint account with others. 5
  • 6. b. X Enterprises (X is the proprietor of this firm ) owes Rs.10000 to bank. There is a credit balance of Rs.12,000 in SB account in personal name of X. Bank can exercise right of set off.----YES. c. Money owed by father can be recovered from the account of his minor son under guardian ship of the father.---NO, because where a person has an account in the capacity of a guardian of minor under 18 years of age, it is not to be treated in the same right as his own account with the bank. 6
  • 7. b. X Enterprises (X is the proprietor of this firm ) owes Rs.10000 to bank. There is a credit balance of Rs.12,000 in SB account in personal name of X. Bank can exercise right of set off.----YES. c. Money owed by father can be recovered from the account of his minor son under guardian ship of the father.---NO, because where a person has an account in the capacity of a guardian of minor under 18 years of age, it is not to be treated in the same right as his own account with the bank. 6