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Class 11 Finance Chapter 4 Different Types of Bank Accounts and Customers
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Different Types of Bank Accounts and Customers
Chapter : 4
| QUESTIONS |
(A) Very Short Answer Questions:
1. Write the meaning of bank customer.
Ans: The bank customer is such a person who transacts frequently with banks and where the customer can avail a number of facilities provided by the bank.
2. In which account overdraft is granted by a bank?
Ans: This facility is given on current accounts only.
3. Write the full form of the ATM.
Ans: The full form of the ATM is Automated Teller Machine.
4. Who is known as minor?
Ans: One who does not attain the age of 18 years is generally regarded as minor.
5. Can an illiterate person open a bank account?
Ans: Yes, an illiterate person can open a bank account.
6. What is the meaning of the term “Banking Ombudsman”?
Ans: A Banking Ombudsman is a senior official of the Reserve Bank of India (RBI) who handles complaints from bank customers. The Scheme is introduced with the object of enabling the resolution of complaints relating to certain services rendered by Banks and to facilitate the satisfaction or settlement of such complaints.
7. In which year the Banking Ombudsman scheme was introduced in India?
Ans: The Banking Ombudsman Scheme was introduced in India by the Reserve Bank of India on 14th June 1995 under Section 35- A of the Banking Regulation Act- 1949.
(B) Fill in the blanks:
1. The rate of interest on ____________ account is higher than that on other types of deposit accounts.
Ans: Fixed.
2. Generally no interest is paid to ____________ account.
Ans: Current.
3. Accepting the deposit and lending of money are ____________ functions of the bank.
Ans: Primary.
4. A minor ____________ a customer of a bank.
Ans: Can ne.
5. Every company ____________ be a customer of bank.
Ans: Must.
6. An illiterate person cannot open a ____________ in a bank.
Ans: Savings account.
(C) Short Answer Type Questions:
1. What are the different types of Bank accounts?
Ans: The different types of bank accounts are:
(i) Savings Bank Account: Savings bank accounts are meant for individuals to keep their savings for meeting their future monetary needs. The income source of every person in our society is not equal. Savings bank accounts are provided by the banks to encourage the people to save money especially among small and medium income groups for future needs.
(ii) Current Deposit Account: A current account is a running account and also known as demand deposit account maintained solely or jointly for carrying out large volume of transaction on a regular basis. Current accounts relate to liquid deposits and unlike savings account, it normally does not provide interests. Current accounts are primarily opened by businessmen. Such as proprietors, partnership firms, trust, association of persons, public and private companies etc.
(iii) Fixed Deposit Account: Fixed deposit account is regarded as time or term deposit account. A certain sum of money is deposited for a certain period of time chosen by the account holder himself at the time of opening the account. The bank pays a higher rate of interest in this type of account. The account holder cannot withdraw money before maturity of the period.
(iv) Recurring Deposit Account: Recurring deposit account is almost like a fixed deposit account. Here a certain amount of money is deposited at a regular interval for a fixed period of time. The purpose of these accounts is to encourage regular savings by the public, particularly by the fixed income group. Money in these accounts is generally deposited on monthly basis for a fixed period and is repaid to the depositors along with interest on maturity by means of account payee cheque or by crediting the amount to the savings or current deposit account.
2. What is a Current account?
Ans: A current account is a running account and also known as a demand deposit account maintained solely or jointly for carrying out large volumes of transactions on a regular basis. Current accounts relate to liquid deposits and unlike savings accounts, it normally does not provide interests. Current accounts are primarily opened by businessmen. Such as proprietors, partnership firms, trust, association of persons, public and private companies etc.
3. What do you mean by Recurring deposit account?
Ans: Recurring deposit account is almost like fixed deposit account. Here a certain amount of money is deposited at a regular interval for a fixed period of time. The purpose of these accounts is to encourage regular savings by the public, particularly by the fixed income group. Money in these accounts is generally deposited on monthly basis for a fixed period and is repaid to the depositors along with interest on maturity by means of account payee cheque or by crediting the amount to the savings or current deposit account.
4. What is a Joint Account?
Ans: When two or more persons open an account jointly in their names, it is called joint account. Generally, such accounts are opened for the sake of convenience of operation of account holders. For examples, husband and wife, and business partners may open a joint account, where any one of them can operate the account according to their convenience. The banker should get the specific instructions from the joint account holder regarding bill transactions, loans and advances etc. and it must be in writing and be signed by all of them.
5. State the uses of ATM Cards.
Ans: The bank provides a four digit secret number to the holders which is known as Personal Identification Number (PIN). In case, the PIN is leaked, the deposits may be led to forgery. So, the ATM card holder should take precaution in utilisation of the card. If the account holder lost the ATM card, he should inform the bank immediately.
(i) The ATM card holder can withdraw money as specified by the bank during 24 hours.
(ii) The account holder can deposit as well as withdraw money by using this card anywhere and anytime.
6. What is a Pay-in-Slip book?
Ans: The bank provides the pay-in-slip book to the account holders to deposit cash, cheques, bills and bank drafts etc. into his account. There are two parts of the printed slips in the book with perforated counterfoils. The account holder has to fill-up both sides of the pay-in-slip by himself or through another agent at the time of deposit.
7. What is the Banking Ombudsman Scheme?
Ans: The Banking Ombudsman Scheme was introduced in India by the Reserve Bank of India on 14th June 1995 under Section 35- A of the Banking Regulation Act- 1949. The Scheme is introduced with the object of enabling of resolution of complaints relating to certain services rendered by Banks and to facilitate the satisfaction or settlement of such complaints. The Reserve Bank of India directs that all Commercial Banks, Regional Rural Banks, and Scheduled Primary Co-operative Banks shall comply with the Banking Ombudsman Scheme.
8. What is a Pass Book?
Ans: A pass book is important small book that is issued by the banker to the customer after an account is opened. Pass Book, contains the complete address of a customer, address of the bank branch and customer’s account number, mobile no, Pan no. Pass-Book is provided to the customer with a view to record every transaction between a customer and the bank smoothly. After every transaction, the bank records every entry in the bank’s ledger against customer’s account.
(D) Long Answer Questions (Type-1):
1. Distinguish between Savings Bank Account and Current Deposit Account.
Ans: The differences between savings bank account and current deposit account are mentioned below:
(i) In case of objective: The preliminary objective of savings bank account is to make a habit of savings. On the other hand, the preliminary objective of current deposit is to provide facilities to deposit and withdraw money as and when required
(ii) In case of Nature: Generally, all classes of people can open the savings bank account whereas the current deposit accounts are opened by businessman, firm, company etc.
(iii) In case of Interest: Generally, the bank pays a certain interest to the savings bank account holders. But, no interest is paid generally to the current deposit account.
(iv) In case of Overdraft: The bank does not provide any kind of overdraft facility against the savings bank account. But, the bank provides overdraft facility to the current account holders.
(v) In case of withdrawal: There are some restrictions on withdrawal from savings bank account. The banker may fix the maximum number of withdrawals during a certain period of time. But there is no limitation on withdrawals from current deposit account. Money can be withdrawn as desired by the account holder.
(vi) In case of Incidental charges: The bank does not impose any incidental charges on savings bank account. But, the incidental charges are levied to the current deposit account holder.
2. Distinguish between a Savings Bank Account and Fixed Deposit Account.
Ans: The differences between savings bank account and fixed deposit account are as follows:
(i) In case of objective: The preliminary objective of a savings bank account is to make a habit of savings and to get economic relief in future. In the matter of fixed deposit account, the preliminary objective is to invest funds for a long period to earn high rate of interest for some specific purpose like education of children etc.
(ii) In case of period of deposit: There is no fixed period of time of deposits in savings bank account. Whereas in fixed deposit account the depositors invest funds for a fixed period of time.
(iii) In case of Nature of deposit: The depositors can make several transactions in a year during banking hours in his savings bank account. But the depositor can deposit for one time only in his fixed deposit account.
(iv) In case of rate of interest: The rate of interest is very low in a savings bank account. But the rate of interest is higher in a fixed deposit account.
(v) In case of withdrawal: There are some restrictions on withdrawal from savings bank account. The banker may fix the maximum number of withdrawals in a financial year. But in the matter of fixed deposit account, the depositor can withdraw the principal along with interests after maturity.
(vi) In case of Pass-Book: The bank issues a pass-book to the savings bank account holder. On the other hand, no pass-book is provided to the fixed deposit account holder. But the bank issues a fixed deposit receipt in this regard.
(vii) In case of Cheque Book: Cheque book facilities are provided to savings bank account holder who undertakes to maintain a certain minimum balance in the account. But, cheque book facility is not provided to the fixed deposit account holder. No transaction is operated by means of cheque.
(viii) In case of collection of cheques and payment: The banks collect only those cheques which are in the name of the savings bank account holders. But the banks do not collect any cheques in fixed deposit account.
(ix) In case of fixed deposit receipt: The bank does not issue fixed deposit receipt to the savings bank account holder. The bank issues a pass-book to record the transactions to the account holders. But the bank issues a fixed deposit receipt comprising in the details in a fixed deposit account.
3. Mention the main features of Savings Bank Account.
Ans: The main features of Savings Bank Accounts are as follows:
(i) A Savings Bank Account may be opened by-
(a) An individual in his own name.
(b) Two or more persons in their joint names.
(c) A minor in his/her own name after attainment of certain ages between 10-14 years through their guardians.
(d) A club or association of person not engaged in business.
(e) A charitable and religious institutions.
(f) A trustee.
(g) An educational institution not related to profitable business.
(ii) The savings bank accounts are not allowed to open in the name of any trading or business concern whether sole trading, company, firm or any association.
(iii) A savings bank account can be opened by depositing a certain amount of money. There is no limitation of deposit everyday and number of deposits.
(iv) There are restrictions on the number and amount of withdrawals from savings bank account. The banks may restrict the number of withdrawals up to 150 times in a year. But rule of restrictions are modified from time to time. The bank should issue a prior notice to the account holder to withdraw money beyond a specific maximum amount.
(v) The rate of interest payable on savings bank account is lower than that of the fixed deposit and recurring deposit account.
(vi) The interest on savings bank account is calculated by the banks on daily basis. The RBI guidelines provided for adoption of the daily average method for calculating interest on savings bank account w.e.f. 1st April, 2010.
(vii) The pass books are provided to all savings bank account holders. Moreover, the depositors may be provided with a cheque book also.
(viii) The savings bank account holders may withdraw money from their accounts with the help of the withdrawal form or cheque or ATM.
4. Mention the essential features of Current deposit account.
Ans: The features of Current Deposit Account are given below:
(i) The current deposit account can be opened by an individual, businessman, firm, company etc. But a minor is not allowed to open such type of account.
(ii) The account holders are allowed to deposit and withdraw money as and when required. There is no restriction on it.
(iii) Generally, no interest is allowed on the credit balance in a current account, because the bank has to maintain a more liquid fund against this account.
(iv) The bank provides pass-book, cheque book and ATM facilities to all current account holders.
(v) The current account holders can avail of overdraft facilities. The customer intimates to the bank for this purpose.
(vi) The bank collects third party cheques and cheques with endorsement on behalf of current account holders.
(vii) In a current account, the banker does not provide cash credit directly rather loans and advances are granted to the account holders.
(viii) Penalty or incidental charges are levied, if minimum balance is not maintained in the current account.
(ix) In the current account, the bank accepts bills of exchange, bank draft, cheque, etc. on behalf of customers besides deposits.
(E) Long Answer Questions (Type-2):
1. Discuss the process of operation of Savings Bank Account and Current Deposit Account.
Ans: Procedures of Opening of Savings Bank Account and Current Deposit Account:
(i) Application on the prescribed form: The person or institution desiring to open an account makes a request on the prescribed form of the bank concerned. The bank provides application form to individuals, firms and companies. The applicant has to fill-up the relevant form and provides the requisite information to the bankers.
The applicant has to provide the following particulars clearly in the application form:
(a) Name of the applicant.
(b) Date of birth of the applicant.
(c) Nationality of the applicant.
(d) Type of account to be opened.
(e) Occupation of the applicant.
(f) Full address of the applicant.
(g) Declaration form to obey rules relating to maintaining the accounts imposed by the bank from time to time.
(ii) Photograph: The applicant has to enclose at least two (2) copies of the latest passport size photographs. The photographs are pasted on the application form and on the specimen signature card.
(iii) Identification and address proof: The applicant will have to produce a valid proof of his identity and residential address. As an identity, the applicant can submit passport, pan card, voter card, identity card of Government employee, driving licence, electricity bill etc. Along with the application form to the concerned bank.
(iv) Introductory References: The bank pays attention to the applicant about his character, economic condition, integrity and responsibility to open an account for him. The applicant is required to be introduced to the banker by a referee. The applicant may be introduced to the banker by an existing customer of the bank or by any respectable person of the society or by a person known to the banker.
(v) Permanent Account Number: The applicant has to cite Permanent Account Number (PAN) issued by the Income Tax Authority. In case, the application has no such number, he has to fill-up a prescribed form which is sent to the Income Tax Department by the bank. Permanent Account Number is compulsory to open a deposit account.
(vi) Specimen Signature: The applicant is required to put his two or more specimen signature. The bank preserves such specimen signature for future reference. Now-a-days the specimen signature and photos are scanned and stored in the computer. Whenever a cheque is issued by the customer and presented to the banker then the bank compares the signature and photos and arranges to make payment of the cheque to avoid the risk of forgery.
(vii) Mode of operation of the account: The applicant can operate his account himself. In case of joint accounts, mode of operation of the account has to be specified to the banker. The mode of operation in joint account of, say, two individuals, can be any of the following:
(a) Jointly by both the account holders.
(b) former account holder or survivor.
(c) latter or survivor.
(d) Either or survivor In case the applicant desires to operate his account with the help of a third person, then the account holder is required to give a mandate in this regard to the banker. The banker will obtain the specimen signature of the concerned third person or agent to operate the account in that regard.
(viii) Nomination: The applicant is required to fill up the nomination form with the name/names of the nominee/nominees to receive the amount of the deposits in an event of an unexpected death of that account holder.
(ix) Opening the Account: The bankers agree with the applicant to open an account in his name after the observance of these formalities. The applicant is then required to deposit a certain amount through pay-in-slip in his new account. The amount of initial deposit varies from account to account and bank to bank.
2. What is Recurring deposit account? What are the essential features of recurring deposit accounts?
Ans: Recurring deposit account is almost like fixed deposit account. Here a certain amount of money is deposited at a regular interval for a fixed period of time. The purpose of these accounts is to encourage regular savings by the public, particularly by the fixed income group. Money in these accounts is generally deposited on monthly basis for a fixed period and is repaid to the depositors along with interest on maturity by means of account payee cheque or by crediting the amount to the savings or current deposit account. The bank pays almost same rate of interest as that of fixed deposit and high rate of interest than other deposit accounts. The bank provides a Pass-book to such account holder. The depositor can deposit the amount of money through pay in-slip in this respect. The notable matter is that in case the depositors desires to close the account before maturity, then the bank pays less interest than the agreed rate of interest.
The main features of Recurring deposit account are stated as follows:
(i) This account may be opened by-
(a) A person in his own name.
(b) Two or more persons in their names jointly.
(c) A minor jointly with his/her guardian.
(d) A minor in his/her own name provided he/she has attained certain minimum age between (10-14) years through guardian.
(ii) The depositors will have to deposit a fixed sum of money at regular intervals chosen by him monthly, quarterly and half-yearly.
(iii) If the account holder fails to deposit money in a specific period, then the bank levies a charge at a predetermined rate.
(iv) The rate of interest in this type of account is almost equal to the rate of interest of fixed deposit account.
(v) The bank provides a pass-book to the account holder to record every deposit.
(vi) The account holder can avail the loan facility up to 75% on his total deposits.
(vii) The account holder can transfer his recurring deposit from one branch to another branch of the same bank without paying any charges.
(viii) The account holder can withdraw the principal amount along with interest after maturity.
3. Discuss the Procedures of opening an account in the name of a minor.
Ans: The following are the Procedures of opening an account in the name of a minor:
(i) Nature of accounts: The banker may open a savings bank account in the name of a minor. It will not be advisable to open a current account in the name of the minor, because in case of an overdraft in current account, the minor does not have any personal liability.
The savings bank account may be opened as follows:
(a) In the name of the minor himself/herself.
(b) In the joint names of the minor and his/her guardian.
(c) In the name of the guardian to be operated by the guardian.
The bank can also open fixed deposit account and recurring deposit account in the name of a minor through their father/mother/ guardian.
(ii) Date of birth of the minor: The banker should record the date of birth of the minor as disclosed by his/her guardian at the time of opening the account in the application form.
(iii) Death of the guardian: In case the death of the guardian before the minor attains majority and the account is a joint account or to be operated by the guardian only, the deposit money should be paid by the bank to the minor on attaining majority or to some person appointed by the court as his/her guardian.
(iv) Death of the minor: In the unfortunate death of a minor the money will be payable to his or her guardian.
(v) Minor as a Partner: Generally, a minor can not be a partner in a firm but the minor may be admitted to the benefits of partnership in case all the partners of the firm agree in this respect. In such cases, the minor can not be held liable for the debts of the firm during his/her minority. A minor’s liability is limited to the extent of his share in profits and property of the funds.
(vi) Minor as an agent: A minor acts as an agent. But the banker should collect written authority from the principal regarding the powers. The principal should be a major one. Otherwise the contracts would be invalid with third parties.
4. Discuss the Procedures of opening an account in the name of an Illiterate person.
Ans: The following are the Procedures of opening an account in the name of an Illiterate person:
(i) Thumb impression: In the application form, the banker should obtain left hand thumb impression of the depositor in the specimen signature sheet in the presence of an authorised bank officials.
(ii) Identification mark: At the time of opening an account of an illiterate person the banker should also obtain physical identification mark and note it down in the account opening form and the specimen signatures sheet. This identification mark to be certified as true mark by any responsible officer of the bank.
(iii) Photograph: The bank should obtain three copies of recent passport size photographs of the depositor. One copy of photograph will be affixed in the account opening form and the other in the specimen signature sheet and the third in the pass-book.
(iv) Operation of the account: An illiterate person can deposit money with the help of any other person. For withdrawing money he has to attend personally with the pass-book to the bank. He has to affix his thumb impression in presence of a bank official on the withdrawal form. If the person is unable to attend personally in the bank for withdrawal of cash, he can send a messenger with an authorization letter which should contain the signature of two witnesses authorising by his left hand thumb impression. Usually, cheque book facility is not provided to such person.
5. Discuss the Procedures of opening an account in the name of a joint account.
Ans: The banker while opening joint account should take the following precautions/Procedures:
(i) The application form duly completed in all respects mentioning details of joint account holders and must be signed by all persons intending to open a joint account.
(ii) The banker must get specific instructions in writing signed by all the joint account holders regarding the operation of the account.
(iii) Any joint account holder has right to stop payment of a cheque issued on a joint account. The banker has to obey such order.
(iv) The full name of the account holder should be given in all the documents furnished to the banker even in case the account is to be operated upon by any one or a few of the joint account holders.
(v) The banker must ascertain whether the persons operating the joint account are also authorised to make transaction, overdraw, loans and advances and Bills transactions etc.
(vi) The banker must be given clear instructions regarding the withdrawal of securities in the joint account and the power conferred upon the person operating the joint account to pledge the securities.
(vii) In the case of death of one or more joint account holders, the balance in the account will vest with the survivor or survivors. On the death of all the joint account holders any balance in the account is payable to the legal representative of the joint account holder who dies last.
6. Discuss the Procedures of opening an account in the name of a partnership Firms.
Ans: A banker while opening an account in the name of a partnership firm should take the following precautions/ Procedures:
(i) Titles of the firm’s account: The banker should always open an account in the name of the firm and not in the name or names of the individual partner or partners.
(ii) Application of opening of an account: The banker should open an account in the name of the firm on receiving application from one or more partners. Signatures and specimen signatures of all the partners should be taken on the account opening form.
(iii) Copy of partnership deed: A copy of the “Partnership Deed” is a must for the banker and should thoroughly examine of its various clauses.
(iv) The partnership letter or mandate: The banker should take a letter signed by all the partners mentioning the following particulars:
(a) The names and address of all the partners.
(b) The nature of the business undertaken by the firm.
(c) The name or names of the partner or partners authorised to operate the account in the name of the firm, including the authority to draw, endorse and accept cheques and bills and mortgage and sell property belonging to the firm.
(v) Revocation of authority to operate the account: Any partner may serve notice in writing to the banker to revoke the authority given to any other partner regarding operation of the firm’s account. Similarly, any partner can stop payment of cheque issued by any other partner on the firm’s account. The banker will be bound to obey such instructions.
(vi) Delegation of authority to operate the account: The partner who is authorised to operate the firm’s account can not delegate his authority to any other partner without due consent in writing of all other partners.
(vii) Personal account and firm’s account: A partner may have his personal account in the same bank branch. In such a situation the banker should act with utmost care in respect of transactions relating to partnership business. All funds and cheques which are in the name of the firm must be invariably credited to the firm’s account and not to the personal account of the partners.
(viii) Admission of a new partner: A new partner can be admitted into the firm only with the consent of all the existing partners. Unless otherwise agreed upon with the admission of a new partner, the partnership firm is reconstituted and a new agreement is entered into to carry on the business of the firm. So, the banker should obtain a new mandate signed by all the partners including the new partner.
(ix) Liability of the partners in respect of firm’s debt: The liability of the partners of a partnership firm is unlimited. Every partner is liable to pay the obligations and debts of the firm to an unlimited extent. The liability is unlimited which means that the partner’s private assets can be disposed of for the purpose of paying the debts of the firm. Therefore, the banker should get the documents signed by all the partners as well as individual capacities.
(x) In case of retirement, death or Insolvency of a partner: On receiving a notice of retirement, death or insolvency of a partner, the banker should operate the firm’s account according to “Partnership Deed”.
7. Discuss the Procedures of opening an account in the name of a company.
Ans: The banker should take the following precautions /Procedures at the time of opening an account in the name of a company–
(i) Examination of documents: As the company is an artificial person, its constitution, powers and objectives, rules and regulations are contained in the following documents. The banker should thoroughly and carefully examine these documents to determine legal existence of the company.
(a) Certificate of incorporation: It is most important document in the formation of a company. This certificate is issued by the Registrar of Companies. This certificate provides conclusive evidence of registration that the company is a duly incorporated body.
(b) Certificate of commencement of business: This certificate is also issued by the Registrar of Companies. This document provides clearance to public companies to commence their business activities and is an evidence for the banker that the company is legally entitled to start business operation.
(c) Memorandum of Association: A memorandum of association represents the Charter or constitution of the company. It defines the objects and lays down the fundamental conditions upon which the company is to be formed. It contains in detail regarding the name of the company, objectives, liability and capital etc.
(d) Articles of Association: The articles of association contain rules and regulation or bye-laws for governing the internal affairs of the company. It contains in detail all matters which are concerned with the conduct of day-to-day business of the company.
(e) Copies of annual accounts: The banker should carefully study the internal financial condition of the company. The banker should insist upon the company to supply the copies of annual accounts of the preceding few years.
(ii) Copy of the Board of Directors resolution: The banker must insist upon the company to submit a copy of the Board’s resolution appointing bank as the banker of the company. The resolution should be signed by the chairman and secretary of the meeting.
The resolution should also specify about the following matters:
(a) The names of the persons who are authorized to operate the bank account on behalf of the company can borrow.
(b) The names of the persons who are authorized to execute documents title deeds with the bank on behalf of the company.
(c) Authorizing the advance and stating all details of such advance e.g. the limit of advance, its security, rate of interest etc.
(iii) Borrowing Powers of the Company: All trading companies enjoy implied borrowing powers for the purpose of carrying of their business. So far as non-trading companies are concerned, they can not borrow unless it is expressly stated in their memorandum and articles that they are authorised to do so. The power to borrow is generally exercised by the director’s with the authority of the Articles. Where the memorandum of a company has stated the limit of a company’s right to borrow money, any borrowing beyond such limit is beyond the authority of the company.
(iv) Registration of Charges: Whenever companies fall short of capital and to increase the capital, the simplest way for the company is to borrow money from banks keeping its assets as collateral security. In this event charge is created for securing loans by way of pledging or mortgage on the assets of the company. The main purpose of registration of charge is to give notice to the Registrar of Companies and also to the person who advance money to the company about the encumbrance created on the assets of the company.
(v) Companies Account and Personal Account: The company’s account and the personal account of the person authorised to operate account should be maintained separately. The banker should not allow transferring of funds from the company’s account to the personal account of the person who is authorised to operate the account on behalf of the company.
8. Explain Banking Ombudsman Scheme in India.
Ans: The Scheme is introduced with the object of enabling of resolution of complaints relating to certain services rendered by Banks and to facilitate the satisfaction or settlement of such complaints. The Reserve Bank of India directs that all Commercial Banks, Regional Rural Banks, and Scheduled Primary Co-operative Banks shall comply with the Banking Ombudsman Scheme. The services of the Banking Ombudsman are now very important.
The Reserve Bank may appoint one or more persons to be known as Banking Ombudsman to carry out the functions entrusted to him by or under the scheme. The Banking Ombudsman shall hold office during the pleasure of the Governor, Reserve Bank of India. As on date (Twenty Two) 22 Banking Ombudsman have been appointed with their offices located mostly in the state capital.
The Banking Ombudsman will be a person of high standing in the legal, banking, financial services and public administration or management sectors.
The Banking Ombudsman will be appointed for a period not exceeding three years and be eligible for extension for further period not exceeding two years subject to an overall age limit of 65 years.
Powers and Duties of Banking Ombudsman: General The Banking Ombudsman’s powers and duties will be:
(a) To receive complaints relating to the provision of banking services.
(b) To consider such complaints and facilitate their satisfaction, or settlement by agreement, by making a Recommendation, or Award in accordance with this scheme.
