Page 57 - DMGT303_BANKING_AND_INSURANCE

Banking and Insurance

Notes Government Companies; (51% or more shares held by the government)
Documents required for opening account
Memorandum of association

Articles of association
Certificate of incorporation
Certificate of commencement of business
Third party cheques drawn by the company should not be collected to the personal account
of the directors.
Insolvency/death/insanity of a director do not affect the functioning of a company.

3.5 Code of Conduct (KYC norms)

The bank branches are required to obtain a declaration from the prospective account holder in
the following manner:
“That I/we/am/are not enjoying any credit facility with any other bank/any other branch of
your bank and I/we undertake to inform you , in writing as soon as any credit facility is availed
of by me/us from any other bank/any other branch of your bank”.
OR
“That I/we/am/are enjoying any credit facility with other bank(s)/ other branch of your bank
as per details given in the enclosed sheet.”
In case the account holder is enjoying any credit facility from any other bank, the concerned
lending bank(s) should be duly informed.
According to the RBI guidelines, bank branches should ensure scrupulously that they do not
open current accounts of entities, that they enjoy credit facilities (fund-based or non-fund-based)
from the banking system without specifically obtaining a no-objection certificate from the
lending bank(s).
RBI has also clarified that banks may open current accounts of prospective customers in case no
response is received from the bankers after a minimum waiting period of a fortnight.

Notes Reserve Bank of India has directed the banks not to pay any interest on margin
money held in current accounts.

3.6 Term Deposits

Term deposits refer to such deposits which are placed with the bank for a definite time period,
although the customers are free to withdraw their deposit as per their requirements.
Banks may accept term deposits for a minimum period of 7 days (one year in case of NRE
deposits) and maximum for a period of 10 years. Banks may accept deposit for periods exceeding
10 years in the event of any orders from the competent court of law.
Banks may accept term deposits for a minimum period of 7 days (one year in case of NRE
deposits) and maximum for a period of 10 years. Banks may accept deposit for periods exceeding
10 years in the event of any orders from the competent court of law.

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