Page 84 - DCOM208_BANKING_THEORY_AND_PRACTICE

Unit 5: Banker Customer Relationship

Notes
The Administrative Office keeps calling the branch for information regularly and both the
branch manager and second man remain busy in providing such information. As such,
they hardly have time for attending to custome.
The branch timings have been changed from 8.30 a.m. to 8.30 p.m. for the last 4 months but
there has been no significant increase in business. In fact, very few custome are aware of
the services offered during these extended hou.
The printer of the branch remains out of service most of the time. The staff is rude in
attending to custome and they do not have any contingency plan in case of failure of
connectivity. In fact, all the staff vanish from their seats when there is no connectivity.
The Accounts Opening Forms and other relevant forms are not available on the counter
and the custome are seen moving from one counter to the other for obtaining cash deposit
and withdrawal forms.
The managerial staff is not aware of even the basic menu options of the CBS software.
This branch is surrounded by Citibank and two other nationalized banks. There are more
than 10 banks in one-kilometre radius.
A few office of the branch have a complaint with respect to PAF assessments rated by the
final authorities. Though they are very hardworking and have contributed their might
they were given only a good rating. This has affected their morale.
Question
As a Manager/Sr Manager posted at administrative office, you had visited both the branches
along with your senior officials. Now the authorities have posted you at the second
branch with a lot of hope and anticipation. Give a presentation on your strategy for the
branch for the next one year.
Source: Iyengar. G Vijayaragavan, (2009), “Introduction to Banking”, Excel Books India.

5.5 Summary

The Banking Regulation Act, 1949 defines ‘Banking’ as accepting for the purpose of lending
or investment of deposits of money from the public, repayable on demand or otherwise
and withdrawal by cheque, draft order or otherwise (Sec.5b) and says that any company
which transacts the business of banking is a ‘Banking Company ‘(Sec.5 c).
A customer is one who has a (Saving/Current/Fixed) deposit account irrespective of its
debit or credit balance with the bank. Even an agreement to open an account makes one a
customer.

The various relationships between the bank and the customer are: Debtor- creditor, Trustee-
beneficiary, Agent- principal, Bailor-bailee and Lesser-lessee.

KYC or “Know your Customer” is a term used for customer identification which involves
making reasonable efforts to determine true identity and beneficial ownehip of accounts,
source of funds, the nature of customer’s business etc., in turn, helping the banks to manage
their risks cautiously.
The framework of KYC norms mainly incorporates the following four key elements:
Customer Acceptance Policy; Customer Identification Procedures; Monitoring of
Transactions; and Risk management.

Two types of demand deposit accounts are: current account and savings account; and Two
types of time deposit account are fixed account and recurring deposit account.

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