Page 88 - DCOM208_BANKING_THEORY_AND_PRACTICE

Unit 6: Type of Deposit Account

6.1 Process of Opening Bank Accounts Notes

The procedure for opening a bank account is as follows:
1. Application in the Prescribed Form: The first step towards opening a bank account is to
apply to the concerned bank in the prescribed application form. These forms are printed
and are available in the bank free of cost. The application form holds the data regarding
the name of applicant, his occupation, full address, and sample signatures. Some banks
also require a reference from the applicant.

2. Introduction of the Applicant: A relationship is established between a customer and a
bank when he opens an account in a bank. The bank contracts to honour the cheque drawn
by the customer as long as his account shows a credit balance. Though any person can
apply to open an account in his name but the bank reserves the right to do so after it is
satisfied about the identity of the customer. The banks generally insist on such person or
business enterprise being introduced to the bank by an existing customer of the bank. The
person introducing the account signs on the application form itself along with his full
address. The bank may also call for references that would be consulted about the honesty,
financial standing, integrity and reputability of the applicant.
3. Specimen Signature: When the bank is satisfied with the basic acknowledgements, it
continues with the opening of the account. The applicant is asked to give his two or three
specimen signatures on a prescribed form, generally a card, for the purpose of bank’s
record, so as to use them whenever the need arises. The specimen signatures are compared
with the signatures on the cheques of the customers. If the two signatures differ, the bank
can refuse to honour the cheque.

Notes To open a current account, following documents need to be submitted:

1. A certified copy of the resolution of the Board of Directors for opening of the account.
2. A copy of the Memorandum and Articles of Association of the Company.
3. A copy of the Certificate of Incorporation and Certificate of Commencement of
business.
4. Specimen signatures of the persons authorized to operate the account.
4. To make the Initial Deposit: After all the formalities are completed, the applicant deposits
the initial amount and the banker opens an account in the name of the applicant. Normally,
the minimum amount to be deposited varies from bank to bank. Presently, many banks
accept an initial deposit of ` 500/- for opening a new account.

After the whole procedure of opening a bank account is complete, a welcome kit is provided to
the new account holder.

Self Assessment

Fill in the blanks:

1. The bank may calls for references for consulting about the ..................., ..................., ...................
and ................... of the applicant.
2. Most of the banks accept a deposit of ................... for opening a new account.

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