UNIT - I

1.Definition
Banking can be defined as the business activity of accepting and safeguarding money
owned by other individuals and entities, and then lending out this money in order to earn a
profit.

However, with the passage of time, the activities covered by banking business have
widened and now various other services are also offered by banks. The banking services
these days include issuance of debit and credit cards, providing safe custody of valuable
items, lockers, ATM services and online transfer of funds across the country / world.

https://www.vskills.in/certification/tutorial/commercial-banking/definition-of-banking/

2. Meaning of Banking
https://www.yourarticlelibrary.com/accounting/bank/banking-company-meaning-licensing-
and-other-details/58816
According to Sec. 5 of the Banking Regulation Act, 1949, a banking company means
the accepting, for the purpose of lending or investment, of deposits of money from the
public, repayable on demand or otherwise and withdrawn by Cheque, Draft, Order, or
otherwise.
https://www.yourarticlelibrary.com/accounting/bank/bank-meaning-and-types-of-banks/
69630
The term bank has originated from the term ‘Banchi’. In olden days, the traders of
Italy who performed the job of exchanging money were known as Banchi or Bancheri
because the table which they used for making payment was called a Banchi. According to
some people, the term bank is derived from the Greek word ‘Banque.’
 A bank deals in money in the same way as a businessman deals in goods. Banks
are business enterprises which deal in money, financial instruments and provide
financial services for a price called interest, discount, commission etc.

A bank is a financial institution that accepts money from the public for the purpose of
deposit and investment and repayable on-demand and withdrawal by cheques, ATM, draft &
order.

The term banking is defined as per the banking regulation act 1949 under section 5(b)
as accepting money for the purpose of lending or investment of deposit of money from the
public, repayable on-demand and withdraw.

3. BANKING REGULATION ACT, 1949- BANKING COMPANY

Introduction
The Banking Regulation Act, 1949 is a legislation in India that regulates all banking
firms in India. Passed as the Banking Companies Act 1949, it came into force from 16 March
1949 and changed to Banking Regulation Act 1949 from 1 March 1966. It is applicable in
jammu and Kashmir from 1956. Initially, the law was applicable only to banking companies.
But, 1965 it was amended to make it applicable to cooperative banks and to introduce other
changes
The Act provides a framework under which commercial banking in India is supervised
and regulated. The Act supplements the Companies Act, 1956. Primary Agricultural Credit
Society and cooperative land mortgage banks are excluded from the Act.
The Act gives the Reserve Bank of India (RBI) the power to license banks, have
regulation over shareholding and voting rights of shareholders; supervise the appointment of
the boards and management; regulate the operations of banks; lay down instructions for
audits; control moratorium, mergers and liquidation; issue directives in the interests of public
good and on banking policy, and impose penalties.
(https://en.wikipedia.org/wiki/Banking_Regulation_Act,_1949)
What do you mean by Indian banking?
Indian banking system meaning

These organizations are in charge of running a payment system, making loans, accepting
deposits, and assisting with investments

Indian banking system meaning

 A banking system is a collection of institutions that provides us with financial services.
These organizations are in charge of running a payment system, making loans, accepting
deposits, and assisting with investments.

The importance of banking system in India

 Insufficient capital formation makes economic development difficult in a country.
Commercial banks are encouraging individuals to save their money and mobilize it for
beneficial uses at this time.
 Credit creation boosts output, boosting economic growth and, in turn, creating a large
number of job prospects.
 Commercial banks promote balanced regional development in India by providing the
required financial infrastructure and money to backward areas.
 By providing timely loans to agricultural farmers, commercial banks aid in the promotion of
the primary sector.
 They offer advanced loans to consumers for the purchase of assets such as residences,
consumer goods, and furniture, among other things, and they encourage individuals to pursue
a higher level of living.
 The banking sector plays a significant part in the Indian economy, as commercial banks
support the Indian government in achieving each aim of the country’s planned economic
development.
 For both internal and external trade, commercial banks offer the necessary financial backing
and infrastructure.

What is the evolution of banking?

The banking evolution in India happened in 3 phases.

 Pre-nationalisation Phase (1947-1969)

 Post-nationalisation Phase (1969-1991)
 Liberalisation Phase (1991-till date)

Which is the first stage of evolution of banking?

Phase 1: The Pre-Independence Phase

The first bank to be established as the Bank of Hindustan was founded in 1770 in
 Calcutta. It closed down in 1832. The Oudh Commercial Bank was India's first
commercial bank in the history of the evolution of banking in India.
Phase 2: The Post-Independence Phase
 After independence, the evolution of the banking system in India continued pretty
much the same as before. In 1969, the Government of India decided to nationalise the
banks under the Banking Regulation Act, 1949.
 Liberalisation Phase (1991-till date)
Pre-nationalisation Phase (1947-1969) Post-nationalisation Phase (1969-
1991) Liberalisation Phase (1991-till date)

NEED FOR BANKS

In a nutshell, banks, shaped by the basic needs of the economy, play a key role to provide
instant on demand access to depositors' funds while servicing long term loans to
borrowers. The unequivocable core and basic principal function of a bank in the economy

It is crucial in providing funds to different priority sectors like small-scale industries,

agriculture, trading enterprises, real estate, etc. The Indian banking system provides people
with financial security for their funds. It is done by offering loans at competitive rates,
paying reliable remittance services, etc.

Need for Banking Systems

The purpose of banking systems is to give security and confidence to the economy. A
banking system operates in line with managing the flow of money between people and
businesses.

The functions of a bank are mentioned below:

 Accepting withdrawals and deposits

 Providing loans

 Offering different types of accounts

 Internet banking features

 Customer support

 Credit and debit cards

 Remittance of funds

 Bill payments
CLASSIFICATION OF BANKS
 Banks are classified into classified into four categories –
1.Commercial Banks
2. Small Finance Banks
3.Payments Banks
4.Co-operative Banks
 Commercial Banks can be further classified into public sector banks, private sector
banks, foreign banks and Regional Rural Banks (RRB). On the other hand, cooperative
banks are classified into urban and rural. Apart from these, a fairly new addition to the
structure ispaymentsbank.(https://www.paisabazaar.com/banking/#co_operative_banks

Bank Classification in India

The table below represents the different types of banks in India and how it is further divided:

1. Central Bank

2. Commercial Banks a) Private Sector Banks

b) Public Sector Banks
c) Regional Rural Banks
d) Foreign Banks

3. Co-operative Banks a) State Co-operative Banks

b) Urban Co-operative Banks

4. Payments Banks

5. Scheduled Banks

6. Non-Scheduled Banks
 7. Small Finance Banks

1) Central Bank

The central bank of India is known as the Reserve Bank of India. The R.B.I. is a financial
institution that is mandated to regulate and oversee all of the other banks in the country.

2) Commercial Banks

Commercial banks are regulated under - the Banking Regulation Act of 1949, and their
business model has been constructed to make profits.

The primary function of the commercial bank is to accept deposits and offer loans to the
public, businesses, and the government. A commercial bank is further divided into the
following:

a) Private Sector Banks

b) Public Sector Banks

c) Regional Rural Banks

d) Foreign Banks

a) Private Sector Banks

Private Sector Banks refer to those banks where most of the capital is in private hands. In India, there are
two types of private sector banks viz. Old Private Sector Banks and New Private Sector Banks. Old private
sector banks are those which existed in India at the time of nationalization of major banks but were not
nationalized due to their small size or some other reason. After the banking reforms, these banks got license
to continue and have existed in India along with new private banks and government banks

Private sector banks are the ones with a major stake or equity being held by private
shareholders. All of the banking rules and regulations laid down by the Reserve Bank of
India (central bank) are applicable to private sector banks.

Here is the list of private sector banks in India:

 1. I.C.I.C.I. Bank R.B.L. Bank I.D.F.C. Bank South Indian Bank

2. IDBI Bank Tamilnad Mercantile Bank YES Bank

3. Axis Bank City Union Bank Karnataka Bank

4. Dhanlaxmi Bank Kotak Mahindra Bank D.C.B. Bank

5. Karur Vysya Bank Federal Bank Lakshmi Vilas Bank

6. H.D.F.C. Bank Nainital Bank IndusInd Bank

7. Bandhan Bank Jammu and Kashmir Bank

b) Public Sector Banks

In the year 2019, our finance minister Nirmala Sitharaman announced the merger of ten banks into
four and this has come in effect from 1st April 2020. Now, there are 12 public sector banks, which are
managed and controlled by the central authority i.e the Reserve Bank of India.
A public sector bank is a nationalized bank, and it accounts for more than 75% of the
total banking sector in the country. They are banks with a majority of the stakes held by the
government.

Here is a list of public sector banks in India:

1. Bank of Maharashtra Indian Bank

2. Bank of Baroda Canara Bank

3. State Bank of India Central Bank of India

4. Union Bank of India Indian Overseas Bank

5. UCO Bank Punjab & Sind Bank

6. Bank of India Punjab National Bank

c) Regional Rural Banks

A regional bank is a scheduled commercial bank, but it is established to provide credit to the
weaker section of the society, such as marginal farmers, small businesses, and agricultural
labourers. They would typically operate at a regional level in different states of the country
and have branches in selected urban areas.
d) Foreign Banks

A foreign bank is one that has its headquarters in a foreign country but operates in India as a private
entity. These banks are under the obligation to follow the regulations of its home country as well as the
country in which they are operating. Given below is the list of foreign banks operating in India

A foreign bank is a bank with its headquarters in a foreign country but also operates in other
parts of the country as a private entity. These banks need to follow the regulations of the
home country as well as the country where they operate.

Here is a list of foreign banks that operate in India:

1. Australia and New Zealand Banking Group Ltd.

2. National Australia Bank Westpac Banking Corporation

3. Bank of Bahrain & Kuwait BSC AB Bank Ltd.

4. Credit Agricole Corporate & Investment Bank

5. Societe Generale Deutsche Bank HSBC Bank

6. PT Bank Maybank Indonesia TBK Mizuho Bank Ltd.

7. Sumitomo Mitsui Banking Corporation M.U.F.G. Bank, Ltd.

8. Coöperatieve Rabobank U.A. Sonali Bank Ltd.

9. Bank of Nova Scotia Industrial & Commercial Bank of China Ltd.

10.BNP Paribas Doha Bank Q.P.S.C. Qatar National Bank (Q.P.S.C.)

11.JSC VTB Bank Sberbank United Overseas Bank Ltd

12.FirstRand Bank Ltd Shinhan Bank Woori Bank

13.Barclays Bank Plc. Standard Chartered Bank

14.The Royal Bank of Scotland plc

15.American Express Banking Corporation Bank of America

16.Citibank J.P. Morgan Chase Bank N.A Kookmin Bank

17. S.B.M. Bank (India) Limited K.E.B. Hana Bank Industrial Bank of Korea

18.Bank of Ceylon D.B.S. Bank India Limited Credit Suisse A.G.

19.C.T.B.C. Bank Co., Ltd. Krung Thai Bank Public Co. Ltd.

20.Abu Dhabi Commercial Bank Ltd. Mashreq Bank P.S.C.

 21.First Abu Dhabi Bank P.J.S.C. Emirates Bank NBD

3) Co-operative Banks

A Co-operative Bank is one that is registered under the Co-operative Societies Act of 1912
and is run by an elected managing committee. It works on a non-profit no-loss basis, and it
will mainly serve entrepreneurs, small businesses, self-employment, and more in urban areas.

In the rural areas, they will mainly function to finance agriculture-based activities like
farming, livestock, and hatcheries. There are mainly these types of Co-operative Banks:

a) State Co-operative Banks

b) Urban Co-operative Banks

a) State Co-operative Banks

A State Co-operative Bank is a federation of the central Co-operative banks that will act as a
custodian of the Co-operative banking structure in the State.

b) Urban Co-operative Banks

The Urban Co-operative Bank is the primary Co-operative bank located in urban and semi-
urban areas. The banks essentially lent to smaller borrowers and businesses centred around a
community, locality, and more.

4) Payments Banks

The payments banks are a relatively new banking model in the country that has been
conceptualized by the RBI. This bank is allowed to accept a restricted deposit. This amount
is limited to Rs. 1 lakh for a customer.

The bank also offers services such as ATM cards, net banking and more.

5) Scheduled Banks

These banks are covered under the 2nd Schedule of RBI Act 1934, and they need to have a
paid-up capital of Rs. 5 lakh or more.
6) Non-Scheduled Banks

The non-scheduled banks are local area banks that are not listed in the 2nd Schedule of the
RBI Act 1934.

7) Small Finance Banks

It Is a niche small finance bank in India with the objective of providing financial inclusion to
sections of society that have not been served by other banks. The core customers of this bank
are inclusive micro industries, unorganized sector entities, marginal farmers, and more.

This type of bank is licensed under Section 22 of the Banking Regulation Act 1949 and it is
governed by the Provisions Act of 1934.

1. AU Small Finance Bank Ltd.

2. Utkarsh Small Finance Bank Ltd.

3. Fincare Small Finance Bank Ltd.

4. Ujjivan Small Finance Bank Ltd.

5. Jana Small Finance Bank Ltd.

6. ESAF Small Finance Bank Ltd.

7. Suryoday Small Finance Bank Ltd.

8. Equitas Small Finance Bank Ltd.

9. Capital Small Finance Bank Ltd.

10.North East Small Finance Bank Ltd.

customer

A customer is a person who maintains an account with the bank, without taking into
consideration the duration and frequency of operation of his account.

According to Sir John Paget’s view ―to constitute a customer there must be some
recognizable course or habit of dealing in the nature of regular banking business” ‖

 https://shodhganga.inflibnet.ac.in/bitstream/10603/114179/4/chapter-4.pdf

1. SPECIAL TYPES OF CUSTOMER

1. Minors
A minor is a person who has not completed 18 years of age. In case a guardian of his
person or property is appointed by a court of law before he completes his 18 years, the period
of minority is extended to the completion of 21 years. As per section 11 of the contract act a
minor is incompetent to contract but section 26 of the Negotiable Instrument Act allows a
minor to draw, endorse, deliver and negotiate a negotiable instrument.
2, Married women

A married woman can enter into contract and bind her personal (separate) estate. A banker
may, therefore, open an account in the name of a married woman. A married woman is
competent to enter a valid contract. Therefore, banker opens an account in the name of a
married woman. In the case of a debt taken by a married woman her husband shall not be
liable except in the following circumstances:

o If she borrows money for the necessities of her life

o If she borrows for the necessaries of her household
o If she acts as an agent of her husband

3. Illiterate Person:
Illiterate persons cannot sign their names and hence the bankers take their thumb
impression as a substitute for signature and a copy of their recent photograph. The
application form and photograph should be attested by an approved witness.
For withdrawing money he must attend personally and affix his thumb impression in the
presence of an official of the bank for identification.
An illiterate person means a person who can’t sign his name. While opening of an
account of such a person is unavoidable, the banker should obtain ( 1) Left thumb impression
on the account opening form and specimen sig nature card in the presence of an authorized
bank official (2) Details of identification marks should be noted on the account opening form
and specimen signature card (3) At least two copies of photograph duly attested by any
account holder/authorized bank official.
1. Lunatics
A person of unsound mind cannot make a valid contract. So, the bankers should not open
an account in the name of a person of unsound mind. But a customer may become lunatic
after opening an account with the bank. All transaction in the account of person declared to
be unsound mind must bs stopped when a banker receives notice that an account holder is of
unsound mind.
2. Trustee
Trusts are created by the settler through executing a Trust Deed. A trust account can be
opened after obtaining and scrutinising the trust deed. The Trust account has to be operated
by all the trustees jointly unless provided in the trust deed. A cheque favouring the Trust
shall not be credited to the personal account of the Trustee. According to the Indian Trusts
Act, a ‘trust’ is an obligation annexed to the ownership of property, and arising out of a
confidence responded and accepted by the owner or declared and accepted by him for the
benefit of another and the owner. The person who responses the confidence is called the
author of the trust. The trustee is the person in whom the confidence is responded. The
person for whose benefit the trust is formed is called beneficiary.
 A banker must be cautions in opening/operating a trust account as the trustees are
responsible for public money.
3. Executors and administrators:
Executors and Administrators are allowed to open bank account. Formalities are to be
observed while opening the account in the name of executor/administrator:
An Executor is a person named in the will of a deceased person to administer his estate
after his death. ... An Administrator is a person appointed by the Court to wind up the estate
of the deceased when a person dies intestate (meaning that a person dies without leaving
behind a will).
4. Joint account:
A joint account is an account which is opened by two or more persons jointly. It’s simply
a joint debt such an account is opened by them for the convenience of the operation of the
account as well as for the withdrawal of money after the death of any one of them.
Bank account in the name of two or more individuals (account owners) who jointly
(equally) share its concomitant rights and liabilities. Joint holders of an account are regarded
in law as together making up the 'owner.' Any action against them (pertaining to that
account) is made against jointly and not individually (severally). Two types of joint accounts
are: (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.
Tenants-in-common account (usually owned by two or more business partners or
directors) 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. See also
jointly and severally. (http://www.businessdictionary.com/definition/joint-account.html )
5. Joint Hindu Family
Joint Hindu Family (JHF) (also known as Hindu Undivided family) is a legal entity and is
unique for Hindus. It has perpetual succession like companies; but it does not require any
registration. The head of JHF is the Karta and members of the family are called co-parceners.
The JHF business is managed by Karta.
 HUF (Hindu undivided family) account is open in the name of Karta(head) of
the family. ... it is a process of dividing income to the individual person of the family and the
Karta is the primary holder of the account. HUF account is a joint account.
(joint hindu family bank account)
Karta of a HUF is the senior most male member of the family and in financial terms he
can also be called manager of the family. In this account a corpus is created where every
family member can pool their income. The corpus will be handled by or authorized to handle
by Karta (head of the family). Signature of karta will be required for every transaction from
the bank. These accounts are similar to individual saving bank accounts; there will be various
tax benefits that are available for an individual’s account while the income of members is
being pooled in HUF account. http://tips.thinkrupee.com/articles/what-is-huf-account.php
6. Partnership firm
A partnership is not a legal entity independent of partners. It is an association of persons.
Registration of a partnership is not compulsory under Partnership Act. However, many banks
insist on registration of a partnership. In any case, ie stamped partnership deed or Partnership
letter should be taken when an account is opened for a partnership. The partnership deed will
contain names of the partners, objective of the partnership, and other operational details,
which should be taken note of by the bank in its dealings.
A firms account should always be opened in the name of the firm and not in the
name(s) of the individual partner (s) because a partner does not have (implied) authority to
open a bank account on behalf of the firm in his own name.
7. Joint stock Company
A joint stock company is an artificial person and it has a separate legal entity. So, a bank
account may be opened on its own name. A joint stock company may either be a Private
Limited Company or a Public Limited Company.
A company is registered under companies Act has a legal status independent of that of the
share-holders. A company is an artificial person which has perpetual existence with limited
liability and common seal. Memorandum and Articles of Association, Certificate of
Incorporation, Resolution passed by the Board to open account, name and designations of
persons who will operate the account with details of restriction placed on them are the
essentials documents required to open an account.
11.Clubs, Societies and Charitable Institution
While club, societies and charitable institutions open the account with bank it must be
ensured that they are incorporated. These organisations are directed by their byelaws or its
constitution which will specify how they are to operate. To open a bank account a resolution
of the managing committee is required. It should detail who are the signatories the manner in
which the account should be operated .Before permitting a society or club to borrow the bank
should be ensured the borrowings is permitted.
If the person appointed to operate the account dies or resigns operation must stop till
the the society, club nominate /appoint another person.
1.https://indianmoney.com/articles/who-can-be-the-customer-of-a-bank
2. https://www.trotal.com/2017/02/banking-operation-types-of-customers.html
3.http://derechobancario2015.blogspot.com/2015/06/special-type-of-customers.html
4. https://accountlearning.com/6-important-types-of-bank-deposit-customers/

1. Minors
A minor is a person who has not completed 18 years of age. In case a guardian of his
person or property is appointed by a court of law before he completes his 18 years, the period
of minority is extended to the completion of 21 years. As per section 11 of the contract act a
minor is incompetent to contract but section 26 of the Negotiable Instrument Act allows a
minor to draw, endorse, deliver and negotiate a negotiable instrument.
2, Married women

A married woman can enter into contract and bind her personal (separate) estate. A banker
may, therefore, open an account in the name of a married woman. A married woman is
competent to enter a valid contract. Therefore, banker opens an account in the name of a
married woman. In the case of a debt taken by a married woman her husband shall not be
liable except in the following circumstances:

o If she borrows money for the necessities of her life

o If she borrows for the necessaries of her household
o If she acts as an agent of her husband

3. Illiterate Person:
Illiterate persons cannot sign their names and hence the bankers take their thumb
impression as a substitute for signature and a copy of their recent photograph. The
application form and photograph should be attested by an approved witness. For withdrawing
money he must attend personally and affix his thumb impression in the presence of an
official of the bank for identification.
An illiterate person means a person who can’t sign his name. While opening of an
account of such a person is unavoidable, the banker should obtain ( 1) Left thumb impression
on the account opening form and specimen signature card in the presence of an authorized
bank official (2) Details of identification marks should be noted on the account opening form
and specimen signature card (3) At least two copies of photograph duly attested by any
account holder/authorized bank official.
8. Lunatics
A person of unsound mind cannot make a valid contract. So, the bankers should not open
an account in the name of a person of unsound mind. But a customer may become lunatic
after opening an account with the bank. All transaction in the account of person declared to
be unsound mind must bs stopped when a banker receives notice that an account holder is of
unsound mind.
9. Trustee
Trusts are created by the settler through executing a Trust Deed. A trust account can be
opened after obtaining and scrutinising the trust deed. The Trust account has to be operated
by all the trustees jointly unless provided in the trust deed. A cheque favouring the Trust
shall not be credited to the personal account of the Trustee. According to the Indian Trusts
Act, a ‘trust’ is an obligation annexed to the ownership of property, and arising out of a
confidence responded and accepted by the owner or declared and accepted by him for the
benefit of another and the owner. The person who responses the confidence is called the
author of the trust. The trustee is the person in whom the confidence is responded. The
person for whose benefit the trust is formed is called beneficiary.
A banker must be cautions in opening/operating a trust account as the trustees are
responsible for public money.
10. Executors and administrators:
Executors and Administrators are allowed to open bank account. Formalities are to be
observed while opening the account in the name of executor/administrator:
An Executor is a person named in the will of a deceased person to administer his estate
after his death. ... An Administrator is a person appointed by the Court to wind up the estate
of the deceased when a person dies intestate (meaning that a person dies without leaving
behind a will). executor and administrator in banking
11.Joint account:
A joint account is an account which is opened by two or more persons jointly. It’s simply
a joint debt such an account is opened by them for the convenience of the operation of the
account as well as for the withdrawal of money after the death of any one of them.
 Bank account in the name of two or more individuals (account owners) who jointly
(equally) share its concomitant rights and liabilities. Joint holders of an account are regarded
in law as together making up the 'owner.' Any action against them (pertaining to that
account) is made against jointly and not individually (severally). Two types of joint accounts
are: (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.
Tenants-in-common account (usually owned by two or more business partners or
directors) 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. See also
jointly and severally. (http://www.businessdictionary.com/definition/joint-account.html )
12.Joint Hindu Family
Joint Hindu Family (JHF) (also known as Hindu Undivided family) is a legal entity and is
unique for Hindus. It has perpetual succession like companies; but it does not require any
registration. The head of JHF is the Karta and members of the family are called co-parceners.
The JHF business is managed by Karta.
HUF (Hindu undivided family) account is open in the name of Karta(head) of
the family. ... it is a process of dividing income to the individual person of the family and the
Karta is the primary holder of the account. HUF account is a joint account.
(joint hindu family bank account)
Karta of a HUF is the senior most male member of the family and in financial terms he
can also be called manager of the family. In this account a corpus is created where every
family member can pool their income. The corpus will be handled by or authorized to handle
by Karta (head of the family). Signature of karta will be required for every transaction from
the bank. These accounts are similar to individual saving bank accounts; there will be various
tax benefits that are available for an individual’s account while the income of members is
being pooled in HUF account. http://tips.thinkrupee.com/articles/what-is-huf-account.php
13.Partnership firm
A partnership is not a legal entity independent of partners. It is an association of persons.
Registration of a partnership is not compulsory under Partnership Act. However, many banks
insist on registration of a partnership. In any case, ie stamped partnership deed or Partnership
letter should be taken when an account is opened for a partnership. The partnership deed will
contain names of the partners, objective of the partnership, and other operational details,
which should be taken note of by the bank in its dealings.
A firms account should always be opened in the name of the firm and not in the
name(s) of the individual partner (s) because a partner does not have (implied) authority to
open a bank account on behalf of the firm in his own name.
14.Joint stock Company
A joint stock company is an artificial person and it has a separate legal entity. So, a bank
account may be opened on its own name. A joint stock company may either be a Private
Limited Company or a Public Limited Company.
A company is registered under companies Act has a legal status independent of that of the
share-holders. A company is an artificial person which has perpetual existence with limited
liability and common seal. Memorandum and Articles of Association, Certificate of
Incorporation, Resolution passed by the Board to open account, name and designations of
persons who will operate the account with details of restriction placed on them are the
essentials documents required to open an account.
11.Clubs, Societies and Charitable Institution
While club, societies and charitable institutions open the account with bank it must be
ensured that they are incorporated. These organisations are directed by their byelaws or its
constitution which will specify how they are to operate. To open a bank account a resolution
of the managing committee is required. It should detail who are the signatories the manner in
which the account should be operated .Before permitting a society or club to borrow the bank
should be ensured the borrowings is permitted.
If the person appointed to operate the account dies or resigns operation must stop till
the the society, club nominate /appoint another person.
1.https://indianmoney.com/articles/who-can-be-the-customer-of-a-bank
2. https://www.trotal.com/2017/02/banking-operation-types-of-customers.html
3.http://derechobancario2015.blogspot.com/2015/06/special-type-of-customers.html
4. https://accountlearning.com/6-important-types-of-bank-deposit-customers/
 2. Know Your Customer (KYC)

KYC means “Know Your Customer”. It is a process by which banks obtain

information about the identity and address of the customers. This process helps to ensure that
banks’ services are not misused. The KYC procedure is to be completed by the banks while
opening accounts and also periodically update the same.

Know Your Customer, commonly referred to as KYC, enables banks and financial
institutions to verify the identity of their customers. You only need to do this once as a first-
time investor. https://cleartax.in/s/kyc-check-kyc-status

Know Your Customer is a process of a financial entity verifying the identity of

customers and evaluating their appropriateness, along with the prospects of unlawful
purposes and practises.

Money laundering is one of the significant menaces in a country’s economy. Financial

institutions and the government are always on the watch for such illegal activities. Mandating
KYC formalities for banking or investment transactions is an effective way to prevent this.

Why you should do KYC?

When you get your KYC done, you inform the bank about your identity, address and
financial history. This helps banks to ensure that the money invested in it is not for money
laundering/illegal activities.

KYC is also mandatory for making mutual fund investments. However, it is not required to
carry out the KYC before investing in different fund houses each time.
https://www.paisabazaar.com/aadhar-card/what-is-kyc/

What are the Documents Required for KYC?

Investors need to submit the following documents along with their Know Your Client
application form and a passport size photograph.

KYC Documents Individuals

 Passport.
 Voter's Identity Card.
 Driving Licence.
 Aadhaar Letter/Card.
 NREGA Card.
 PAN Card
What are the Documents Required for KYC?
KYC or ‘know your customer’ is a mandatory verification procedure carried out
by financial institutions with the goal of minimising illegal activities. Since 2004,
the Reserve Bank of India has prohibited individuals to open a bank
account, trading account or demat account without fulfilling the KYC procedure
for KYC.

For any kind of financial transaction, you need to go forth with the KYC process.
Once the KYC verification process is done, you have to give the financial
institution that has conducted the test information about your identity, address,
and financial history. This can aid the bank in knowing that the money you chose
to invest was not for any illegal activities.

A list of documents are required for the KYC verification process, which almost
takes just a few mins or hours to complete. These documents are listed below:
Banking in 21st century

Banking sector in the 21st century is undergoing rapid transformation with global
connectivity and technological transformations. The pace and dynamism of the sector
along with the perpetual challenges that the banking industry offers makes it one of the most
sought-after career choices.

Banking is one of the few careers where we can first, get an opportunity to develop
products to meet internal process requirements and attain operational efficiencies and
second, understand how people interact with the world also about human behaviour. This
concept of design thinking within banking sector provides an individual with a holistic
environment to grow.

Banking industry in India has been growing at a rate of 8.5% per year. This has been
supplemented with an increase in the working population, rising disposable incomes and the
penetration of the internet over the past few years. As a banker, one can be a part of
the Indian growth story and at the same time contribute to individual growth and to the
economy alike.

Dynamic training at the banks can help one acquire a skill set that can be valuable in
shaping a manager’s career. As organizations become flatter and more agile, learning on the
job in banking is more encouraged and facilitated. Long-term career plans can be better
charted out with the all-inclusive nature of the experience and the cross-team interactions
with colleagues, customers and the stakeholders from all domains.

If one has a hunch for innovation and impact, current trends in banks give one just a
platform for that. One can define the problem, analyze, ideate solutions,
prototype and implement them. Impact of such innovations can have far-reaching
consequences and one can actually witness transformation at the grass root levels. Few other
industries provide such an extensive platform across different verticals for driving such
change.