Page 76 - DCOM208_BANKING_THEORY_AND_PRACTICE

Unit 5: Banker Customer Relationship

unusually large transactions and all unusual patterns, which have no apparent logical or Notes
visible lawful purpose. Transactions that involve large amounts of cash inconsistent with
the normal and expected activity of the customer will be subjected to detailed scrutiny.
After due diligence at the appropriate level in the Bank, transactions of suspicious nature
and/or any other type of transaction notified under PML Act, 2002 will be reported to the
appropriate authority and a record of such transactions will be preserved and maintained
for a period as prescribed in the Act.

Branches would be maintaining a close watch on cash transactions (whether deposits or
withdrawals) of ` 10 lakh and above in all deposit and loan accounts and recording the
same separately in the prescribed register. Besides, the branches would also be reporting
all cash transactions of ` 10 lakh and above with full details to their controlling offices
through a periodical statement, on fortnightly basis. The controlling offices would
scrutinize the same and, if required, make enquiries from the branches in case the cash
deposit/withdrawal is not in consonance with the known profile of the customer and
follow up with the branches till logical end. In case, the controlling offices find that the
report is in order, no further action would be taken and the designated officer in RO/ZO
would close the report.
4. Risk Management: The Board of Directo of the bank should ensure that an effective and
efficient KYC program is put in place by establishing appropriate procedures and ensuring
their proper execution. It should cover proper management supervision, segregation of
responsibilities, systems and controls, training and other related matte. Responsibility
should be explicitly apportioned within the bank for ensuring that the bank’s policies and
procedures are carried out effectively.
Banks must have an ongoing employee training programme so that the membe of the staff are
adequately trained in KYC procedures. Training requirements should have different focuses for
frontline staff, compliance staff and staff dealing with new custome. It is crucial that all those
concerned fully undetand the principle behind the KYC policies and enforce them systematically.

Notes In December 2012, RBI eased the mandatory KYC norms for banks so that opening
a bank account will be simple and hassle free.

Self Assessment

Fill in the blanks:

1. The two components of KYC norms are ...................... & ......................
2. The objective of KYC policies is to ......................
3. Transactions involving .................................... will be subjected to detailed scrutiny.

5.3 Special Types of Accounts

A financial account between a bank and a customer is known as a bank account. Deposit accounts
are those accounts which are opened with the purpose of holding credit balances whereas loan
accounts are opened with the purpose of holding debit balances. Accounts are categorized by the
function rather than nature of the balance they hold, e.g. savings account.

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