From : E-Group, STC, Salt Lake, Kolkata Dear Member, Kindly double click on the enclosed attachment to read it. With regards, Anup Sen, Moderator E-Group, STC, Salt Lake, Kolkata email : stcsaltlake@xxxxxxxx We are receiving emails from our members advising that they are not receiving emails from us. In this regard we like to inform our members that there may be two reasons for non receipt of the emails as under: 1. If mails are returned from your mail box (due to hard bounce) as there is no space in the mail box, our system automatically delete your email from the list. To avoid these, please ensure to download regularly the mails sent by us and keep enough space in the mail-box. 2. Some of the e-mail servers (e.g. yahoo.com, sify.com, rediff.com or hotmail.com etc) may treat our mails as "SPAM" and delete the mails. Some of them put these mails in the "Bulk Folder". If such is the case, please take up the matter with your respective e-mail service provider to sort out the problem. However, if you do not receive our mails please contact us. We shall be glad to receive your feedbacks through emails regarding the mails being sent to you through this e-group. This message is intended only for the use of the Addressee and may contain information that is PRIVILEGED and CONFIDENTIAL. If you are not the intended recipient, dissemination of this communication is prohibited. If you have received this communication in error, please erase all copies of the message and its attachments and kindly arrange to notify stcsaltlake@xxxxxxxx immediately.Title: State Bank of India, Staff Training Centre, Salt Lake, Kolkata. : : stcsaltlake@xxxxxxxx : :
Q.1. Shri K.C. Sharma maintains a
Savings Bank Account with your branch; the average balance therein is Rs.
35,000/-. He is well-connected personality and can effectively influence good
business to your branch. He has Term Deposits worth Rs. 2,44,000/- and Special
Term Deposits worth Rs. 1,75,000/- with
your branch and also aggregate deposits of Rs 6,50,000 at other branches of
your bank. He comes up with a request to convert the STDRs into TDRs and
payment of monthly interest on all the TDRs. Will you accommodate his request?
If yes, will you observe some precautions? A1) While the usual request letter for
conversion of STDRs into TDRs and for payment of monthly interest on the
aggregate of TDRs will be obtained, the following additional precautions will
have to be taken: (i) While closing the STDRs and opening
TDRs, tax deductible at source will be deducted and deposited into the
government account, under the provisions contained in section 194 A of the
Income Tax Act. (ii) While calculating monthly interest
payable on the aggregate TDRs, only the net interest after deduction of tax at
source will be paid to the depositor. Q2) Shri K.C. Sharma maintains a
Savings Bank Account with your branch; the average balance therein is Rs.
35,000/-. He is well-connected personality and can effectively influence good
business to your branch. He has Term Deposits worth Rs. 2,44,000/- and Special
Term Deposits worth Rs. 1,75,000/- with
your branch and also aggregate deposits of Rs 6,50,000 at other branches of
your bank. He comes up with a request to convert the STDRs into TDRs and
payment of monthly interest on all the TDRs. Will you accommodate his request?
If yes, will you observe some precautions? A2) While the usual request letter for conversion
of STDRs into TDRs and for payment of monthly interest on the aggregate of TDRs
will be obtained, the following additional precautions will have to be taken: (i) While closing the STDRs and opening
TDRs, tax deductible at source will be deducted and deposited into the
government account, under the provisions contained in section 194 A of the
Income Tax Act. (ii) While calculating monthly interest
payable on the aggregate TDRs, only the net interest after deduction of tax at
source will be paid to the depositor. Q3) A young boy of 14 years of age
approaches you with a request to open a Savings Bank a/c in his personal name
and he gives you a cheque issued in his favour by his father as an initial
deposit for opening the account. The cheque is issued by the father on his
account with your branch. A3: A minor who is 14 years of age can
open a Saving Bank account in his own name. Hence his request to open Savings
account in his own name can be acceded to. However, banks generally insist for
cash for opening accounts. As the Negotiable Instruments Act does not preclude
a minor from being a payee of a cheque, he may asked to take cash on his
fathers cheque and pay the initial deposit for his new Savings account.
However, if the cheque is crossed, it would be preferable to return the cheque
to him and ask him to bring cash for the initial deposit. Q4) A cheque issued by Mr. Amit is
presented to you on 24/3/2003 and paid. The cheque is dated 11/3/2003. On
25-3-2003, Mrs. Amit comes to the Branch and gives a letter stating that Mr.
Amit died on 7-3-2003 and demands restoration of the amount of the cheque. A4: When Mr. Amit died on 07-03-2003,
the Bank should have been informed immediately of his death in writing. Here it
is immaterial whether the cheque had a date prior to the death of Amit or not.
A drawer can always issue a post-dated cheque if his intention is that the
cheque should be paid only on or after a particular date. When the banker paid
the cheque on 24-3-2003, he had no knowledge that Mr. Amit had died. Hence he
gets a valid discharge as long as he has made payment in due course. The
request of Mr. Amit cannot therefore be acceded to. Q5) A pensioner having a Savings Bank
a/c for payment of pension request you to add the name of his wife and convert
the same in a joint account. He also wishes to give a mandate in favour of his
son. A5: As per Government of India Pension
Rules, pension is paid only to an individual who has retired from Government
Service and is entitled to receive pension under the CCS (Pension) Rules.
Therefore, opening joint accounts for the purpose of crediting pension is not
permitted. The pensioner may be advised to open a separate joint account with
his wife and may transfer funds from his pension account to the joint account
as and when required. For the same reason, the pensioner alone is allowed to
operate his pension account and he cannot be permitted to give a mandate in
favour of his son. Q6) A Fixed Deposit Receipt was issued
for 180 days @ 9% p.a. The rate of interest was subsequently reduced to 7% for
180 days and 8% for one year. On 160th day the depositor requests you to extend
the tenure of the existing deposit to one year from the date of issue to get the advantage of the higher rate which
was prevailing on that date. A6: When a Fixed Deposit Receipt is
issued by the Bank, it is a mutual contract between the Bank and the customer
for a fixed period of time and on certain agreed terms. In the instant case,
the customer has contracted to keep a deposit for 180 days @ 9% p.a. when the
customer comes on the 160th day the Bank can tell him that as per RBI
directives, the existing deposit cannot be extended. However, if he wants, the
deposit can be issued for one year from the 160th day at the prevailing rate of
interest i.e. 8%. For the 159 days, the deposit has run, the Bank can pay the
applicable rate of interest for 159 days and treat the deposit as repaid.
However, since the deposit is being renewed for a longer period, the penalty
clause for interest can be waived and actual applicable interest for 159 days
can be paid. Q7) Mr. Anup is maintaining an account
with your branch. An amount of Rs. 50,000/- was credited to his account of by
mistake. Mr. Anup took advantage of the situation and utilised this money after
withdrawing. Your branch detected the mistake after a lapse of three months.
Your branch has claimed interest on the said amount for three months from Mr.
Anup. Is the account holder (Mr. Anup) bound to pay interest to the bank as
claimed? A7: Mr. Anup has to repay to the bank
the amount of Rs. 25,000/- credited to his account by mistake, in terms of
Section 72 of Indian Contract Act. The beneficiary, Mr. Anup, will become a
constructive trustee of bank?s money. In terms of Section 4 (2) (b) of Interest
Act 1987 and Section 34 (1) of Civil Procedure Code, interest has to be paid by
Mr. Anup, more so because he knew of the wrong credit and utilised the amount. Q8) An entrepreneur / applicant engaged
in manufacturing of batteries has approached your branch for cash credit
facility. The unit has projected sales of Rs. 9 lacs in the current financial
year. The sales projection appears reasonable. The applicant wants a limit of
Rs. 1.80 lacs. Discuss the method of assessment for working capital that will your
branch would adopt to assess his credit requirements. A8) To assess the credit requirements of
the applicant, we shall first adopt the under noted two methods: (i)
(Total expenses x Operating Cycle in No. of days ) / 30 (ii)
(a) Projected Annual
Turnover, (b) Total working capital
required [25% of (a)] & (c) Working
capital limit [80% of (b)] We shall arrive at the two assessed
limits and sanction the one, which is higher, in terms of Nayak Committee
recommendations. Q9) An applicant approaches your branch
and submits an application for credit facilities in SSI segment. He supplies
the necessary financial data. The applicant claims that he has to give 3
months? credit on sales, and requests that this fact should be taken into
account while assessing his credit requirements. Please discuss how you will
satisfy yourself about the applicant?s claim. A9) Before entertaining the claim of the
applicant, we shall have to scrutinise his financial statements. We shall see
the past record of sundry debtors and the average period these sundry debtors
represented. Further, an age-wise break-up of sundry debtors will be called for
and scrutinized to ascertain whether these are all current credits extended and
do not represent old and irrecoverable past dues. We shall also enquire whether
it is a normal practice to allow 3 months credit in this line of activity. Q10) An old and now incapacitated
customer of your branch wants to withdraw a sum of Rs. 5,000/- from his SB
account. He is unable to come to the branch. He wants that a person known to
him may be permitted by the bank to withdraw the amount. How will you help him? A-10) If thumb impression of the
incapacitated person can be obtained, then his impression would be identified
by two independent witnesses known to the bank, one of them should be a
responsible bank officer. If even thumb impression can not be obtained, then a
mark can be obtained on the Cheque / withdrawal form, which should be witnessed
as stated above. The person who will actually withdraw money on behalf of the
incapacitated customer will also have to be identified by two independent
witnesses. This person (drawing the money) should also furnish his signature to
the bank. Q11) Shri P Ray walks into your branch;
he is in a hurry. He wants to open a SB Account. However, your branch refuses
to open the account as Shri Ray expresses his inability to produce PAN or GIR
number. Your branch is insisting on PAN or GIR number. Shri Ray disagrees with
the branch. He says that he has no PAN or GIR number to submit and insists that
the bank open the account. Discuss the issue. A-11) It is not mandatory that a person
should have PAN or GIR number for opening a bank account. Persons not having
PAN or GIR Number can fill form no. 60 or 61 as applicable and have their
accounts opened. Accordingly, Shir Panduranga Rao will be advised to fill in
Form No. 60 or 61 as applicable and will be allowed to open the account. Stand
taken by the branch in refusing to open his account for want of PAN or GIR
number is not correct. Q12) Shri Banamali Dutta is an
influential and wealthy person in your area of operation. Your branch has been
trying to persuade this gentleman to open his account(s) with your branch.
Finally, he agrees to deposit Rs. 2,00,000/- in Term Deposit. He tenders his cheque drawn on another local
bank for Rs. 2,00,000/-. He says he has no PAN or GIR number. He also says that
it is upto the branch to either accept the deposit or not. Please discuss how
you will deal with the customer. A-12) In respect of time deposits
exceeding Rs. 50,000/-, where the deposits are made through cheques / drafts/
transfer from customer?s own account, there is no requirement regarding
submission of Form No. 60/61. However, if the customer tenders cash, then we
shall have to obtain Form No. 60 or 61 as applicable, if the customer does not
have PAN or GIR number. In the present case, as the potential customer is
tendering cheque for deposit, we shall not insist on PAN or GIR number, nor Form No. 60/ 61. The deposit account will be
opened on realisation of the Cheque in clearing. He also stands introduced with
the other bank / branch as he has account there. Q13) Mr. Biswas the purchaser of a
Demand Draft for Rs. 50,000/- informs that the payee has not received the draft
as it is lost in postal transit. He requests you to issue a duplicate draft. A13: As the draft was already sent by
post to the payee, as per law, the payee has got the possession over the draft.
However, Mr. Biswas should be asked to give an application duly signed
along-with a letter of consent from the payee for the issue of a duplicate
draft. He should also be asked to produce the counterfoil, if possible. His
signature should be verified against the original draft application form. A
telex / telegram should be sent to the drawee branch stating the loss of the
draft and asking them to exercise caution. The drawee branch should also be
requested to confirm that the draft is still out standing in their books. After
receiving such confirmation, Mr. B. may be asked to give a stamped indemnity
signed by him and two sureties whose worth is 10 times the draft amount.
Thereafter duplicate draft may be issued and this fact also advised to the
drawee branch. Q14) Bijay & Co. having account no
2345/97 remitted Rs. 1, 50,000/- to their account. But the bank remitted the
amount in Ajay & Co account no 2346/97. A cheque drawn by Ajay & Co.
for Rs. 1,30,000/- favouring XYZ & Co. was presented in clearing and duly
honoured by the bank. A cheque for Rs. 1,50,000/- representing earnest money
deposit drawn by Bijay & Co. favouring a Government Corporation was
presented in clearing; it was duly returned by the bank with remark
?Insufficient Funds?. When contacted, Ajay & Co. informed that they did not
want the bank to honour the cheque for Rs. 1,30,000/-, Therefore they had not
kept sufficient balance in the account. As a B.M. What will you do? A14: The Bank has been negligent in
providing a wrong credit. Unfortunately, the amount has been withdrawn by Ajay
and co. Its contention that the cheque was not to be paid is untenable. It is
established law that when a cheque is issued, it is intended to be paid and
there is adequate balance in the account. It would also be in order for the
bank to pay the cheque by creating an overdraft, at its discretion. Hence, it
is liable to repay the overdraft. The Bank?s action in return of the
cheque issued by Bijay & Co would have damaged the credit of the firm. We
will have to provide immediate credit to the account, with the approval of C.A.
The BM has to call on the firm, explain the mistake and persuade the firm to
arrange for presentation of the cheque. We have to offer our deep regret for
the mistake and assure good and faultless service in future. Q15) A cheque for Rs. 12,000/- in the
account of Mr. Basu dated 8.10.2003 was paid by the bank on 14.10.2003. His
wife Mrs Basu came to the bank later stating that Mr. Basu died on 10.10.2003
and hence the bank has to refund the amount to her. A15: No doubt, the mandate of the
customer comes to an end immediately on the death of the customer. But this
rule is applicable from the date of notice of death to the bank and not from
the date of death of the customer. The bank has obviously paid the cheque in
the normal course of business on 14.10.2003. Hence, the claim of Mrs. Basu for
the refund of the cheque amount is not valid. Q16) M/s Patel & Co., a partnership
firm was granted cash credit facility by your branch. The firm has not paid
back the outstanding amount for a long time despite demands raised. Your branch
has now decided to file a court case against the firm. The advance is secured
by mortgage of prime immovable property. It was created eight years back.
Discuss the type of case the bank should file, the limitation period applicable
in this case and the date from which the limitation period will start. A16: For enforcement and recovery of
payment of money secured by a mortgage on immovable property, we shall file
mortgage suit against the borrower. In cases of mortgage, the limitation period
is 12 years. However, the period of limitation would commence from the date on
which the money sued for became due. In the instant case, even though 8 years
have passed since creation of mortgage, the material point is the date when the
money became due for payment to the bank. The counting of 12 years will start
from that date. Q17) At the request of a Savings Bank
account holder, your bank agreed to keep Rs. 1 lac in trust for
government. This balance was seized by
the government authorities. However, your bank paid this trust money of Rs. 1
lac to the account holder inadvertently. No immediate action was taken against
the bank by the government authorities, as they did not notice this violation.
Fifteen years lapsed by the time the government authorities took notice of the
fact and threatened to initiate legal action against your bank. Can the govt.
authorities still sue the bank? A17) There is no question of any
limitation period in this case, as the period of limitation is indefinite
(Section 10 of the Limitation Act, 1963) against a trustee for breach of trust,
and the limitation period commences from the date when the breach is noticed.
In the instant case, the government authorities can sue the bank for recovery
of money. Q18) Shri Subodh Roy is your borrower.
The bank filed a suit in a court of law for the recovery of dues. The borrowers
admitted in the court that he had deposited the title deeds in the bank with
the intention of creating equitable mortgage in favour of the bank to security
advance. The bank, however, did not create equitable mortgage as per due
process / procedure. Will the bank still have any recourse against the
immovable property (as security) in question? A18: The bank can still have recourse
against the immovable property, since the borrower gave evidence that the
intention of the deposit of title deeds was to create an equitable mortgage.
Section 100 of Transfer of Property Act, 1882, defines the term ?charge?, which
says that where immovable property of one person is, by act of parties or
operation of law, made security for the payment of money to another and the
transaction does not amount to a mortgage, the latter person is said to have a
charge on the property. The bank can exercise, enforce and take advantage of
this clause. Q19) Shri Dinesh Paul is a guarantor
for Shri Pratap Paul. Shri Pratap Paul
had borrowed Rs. 2 lacs from your branch. The present outstanding is Rs.
1,85,000/-. Shri Dinesh Paul gave a notice to the Bank saying he is no more a
guarantor for Shir Pratap Paul. What are the options open to the bank as
against the borrower and the guarantor? A19: Section 130 of the Indian contract
Act provides that a continuing guarantee may at any time be revoked by the
surety, as to the future transactions, by notice to the creditor. In the
present case, the guarantor is still liable to the bank for the loan
outstanding as on the date of notice. He is, however, not liable for any future
transactions in the account. The bank has the option of obtaining another
guarantor of sufficient worth, or demand the money due from the guarantor
immediately on receipt of notice and stop operations in the account. Q20) Shri Sajjan Singh enjoys a cash
credit hypothecation limit of Rs. 3 lacs from your branch. Shri Madan Lal
furnished guarantee for the cash credit limit granted to Shri Sajjan Singh. The
borrower applied for conversion of the existing cash credit hypothecation limit
of Rs. 3 lacs into a clean cash credit limit. The bank agreed to the proposal
and the limit was accordingly converted. After some time, when the borrower
failed to pay the bank?s dues despite repeated requests, the bank decided to file a suit against the
borrower and the guarantor. The guarantor pleaded that he is not obliged to pay
the bank?s dues. However, the bank
filed a suit against the borrower and the guarantor. The guarantor pleaded in
the court that he is not obliged to pay to the bank on account of default by
the borrower because the bank changed the facility from secured limit to clean limit.
In the light of this argument of the guarantor, discuss the position of the
guarantor. A20: In terms of Section 133 of the
Indian Contract Act, any variance made without the surety?s consent, in the
terms of the contract between the principal debtor and the creditor, discharges
the surety as to transactions subsequent to the variation. As such, in the
event of the guarantor being unaware of the status of the cash credit limit
from a hypothecation limit to a clean limit, the guarantor stands discharged
from the date of such conversion of the credit facility. However, he is still
liable for the outstanding in the a/c prior to the date of such conversion. Q21) Shri Charanjit Singh is a customer
of your branch. He lost a valuable packet at your branch which contained five
precious stones. An employee of your branch found the packet in the banking
hall. He handed it over to the Branch Manager. The branch kept the packet in
custody with due care, pending receipt of genuine claim. The branch also spent
some money on finding out the true owner. After one year, Shri Charanjit Singh
claimed the packet as its real owner. However, the Branch Manager refused to
hand over the packet to Shri Charanjit Singh unless he was ready to pay and
actually paid to the bank the Safe Custody Charges and the expenses incurred in
tracing the owner. Is the stand taken by the Branch Manager in order? Discuss. A21: The finder of lost goods is treated
as the bailee of the goods and is, therefore, charged with the responsibility
of a bailee, besides the responsibility of making reasonable efforts in finding
the true owner. In the instant case, the bank kept the packet carefully as a
bailee and made reasonable efforts to find out the true owner. However, the
finder of the lost goods also enjoys certain rights which are: (i) right to
retain the goods (Section 168 of Indian Contract Act) until he receives the
compensation for money spent in preserving the goods and / or amount spent in
finding the true owner, and (ii) right to sell (Section 169), when the owner
refuses, upon demand, to pay the lawful charges of the finder. Q22) An illiterate person visits your
branch for opening a SB account with chequebook facility. He offers to deposit
Rs. 2,00,000/- in the new account. His determined bid is to make you agree to
open the account or he would walk away without opening the account. How will
you tackle him? A22: In case the illiterate person
insists on having a cheque book, we shall advise him (i) To open the account as a joint
account with a person who is a literate person. All formalities connected with
opening an account in joint names will have to be completed. (ii) Alternatively, the illiterate
person will be advise to grant registered power of attorney in favour of third
person of his confidence / trust (preferably near relative / legal heir). Q23) Shri K.C. Sharma maintains a
Savings Bank Account with your branch; the average balance therein is Rs.
35,000/-. He is well-connected personality and can effectively influence good
business to your branch. He has Term Deposits worth Rs. 2,44,000/- and Special
Term Deposits worth Rs. 1,75,000/- with
your branch and also aggregate deposits of Rs 6,50,000 at other branches of
your bank. He comes up with a request to convert the STDRs into TDRs and
payment of monthly interest on all the TDRs. Will you accommodate his request?
If yes, will you observe some precautions? A23: While the usual request letter for
conversion of STDRs into TDRs and for payment of monthly interest on the
aggregate of TDRs will be obtained, the following additional precautions will
have to be taken: (i) While closing the STDRs and opening
TDRs, tax deductible at source will be deducted and deposited into the
government account, under the provisions contained in section 194 A of the
Income Tax Act. (ii) While calculating monthly interest
payable on the aggregate TDRs, only the net interest after deduction of tax at
source will be paid to the depositor. Q24) An influential person has been
maintaining Saving Bank account with your branch. He has been availing of
temporary overdraft facility every now and then; the amount was different on
different occasions. He comes up with yet another request for a temporary
overdraft of Rs. 1,500 in his account. How will you handle the request? A24: In view of the fact that the
customer had already availed of the overdraft facility earlier in the SB
account, it will be made clear to him that (i) The overdraft facility can not be granted for more than 3
occasions in a calendar year, (ii) The
overdraft facility cannot be claimed as a matter of right, (iii) The present
request for Rs. 1500/- can not be granted, as the maximum permissible overdraft
amount in SB accounts is only Rs. 1,000/- and (iv) If the customer is important
from banking business point of view, his request for overdraft to the extent of
Rs. 1,500/- can be entertained and telephonic approval from the controlling
authority obtained. |