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GENERAL BANKING RATIONALES 4

1. Branch Manager should examine all Trust Accounts & Deeds periodically. R. Trust Accounts are fiduciary in nature and it must be ensured that their provisions are not overlooked because any violation is there it lands the Bank in trouble for refund of monies to the beneficiaries. 2. Private Limited Companies can start business on getting Certificate of Incorporation itself. R. Such Companies do not invite Public subscription to their Capital and statutory requirements in this regard are not necessary for them to follow. They need not wait for the certificate to commence business issued by the Registrar of joint stock companies. 3. SB Accounts are not to be opened for Firms/Companies. R. SB accounts are purely meant for individuals with a view to encourage and inculcate savings habit in them but not for business purposes. SB Accounts cannot be opened for profit oriented commercial organisations as per Income Tax Act. 4. SB Withdrawals not accompanied by Pass Books should not be paid. R. Withdrawal Form is not a cheque and is only designed to suit the convenience of Depositors of non-cheque operated accounts and to obviate chances of frauds by forgery by unscrupulous persons. 5. Standing Instructions can now be accepted on non-cheque operated Savings Bank Accounts also. R. This is a part of ancillary service to the Depositors without any distinction and to maintain our competitive efforts with that of other Banks. Now all savings bank accounts are introduced accounts. Bank gets protection under Section 131 of N.I.Act, 1881. 6. TDRs maturing on Holidays are paid on the succeeding working day but not on the preceding working day. R. Bank holidays are declared as per Sec.25 of NI Act with specific reference to payment of Negotiable Instruments which are paid on the previous working day. TDRs are not NIs but are receipts of monies deposited. Their payments can not be made before maturity date as per Contract lest they should become premature payments. Page 1 of 7

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R. Income Tax Act provides for the same. Its violation by the Banker is an offence punishable under IT Act. The person responsible for the lapse will be penalized. 8. Delayed payments of RD instalments are penalized. R. To ensure against investment of the RD instalments in some other accounts on which interest earned is more than the penalties payable by him on delayed instalments. 9. Interest should not be paid on margin monies held in Current Accounts. R. Such interest payment is prohibited by RBI. 10. Branch Manager should scrutinize Staff accounts at Quarterly intervals. R. To ensure that the inflows of monies, spending and life style of Staff Members is of usual nature commensurate with the known sources of income and they are properly conducted. 11. The prospective Current Account Depositors have to sign an undertaking while opening a Bank Account. R. This is to obviate possibility of lodging of Cheques in the Current Account of another Bank other than the Bank granting credit limits as the outstandings in the lending Bank become unsecured. 12. Current Account Formality Register should be maintained. R. To ensure that no single formality while opening the account is overlooked and to serve as a reminder to complete the formalities remaining to be attended to. 13. Of late, Savings Bank Accounts have assumed greater importance. R. This is on account of (i) low cost of deposits, (ii) greater stability of a large chunk of such deposits, and, (iii) greater availability of interest spread when such deposits are lent. 14. NOMINATION REGISTERED should be recorded on the face of the passbooks/term deposits regarding availment of nomination facility. R. To facilitate the heirs of the depositors to know that nomination facility has been availed by the deceased depositors. Page 2 of 7

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15. Bank has introduced Multi Option Deposits Scheme(MODS) R. To provide convenience, flexibility and liquidity to depositors and to meet the competition from foreign and new private banks. 16. Gold Deposit Scheme has been introduced R. To mobilize domestic gold and recycle it for economic purposes. To reduce Countrys reliance on import of gold and to help the depositors in earning income on gold by way of interest. 17. Additional column for recording recovery of handling charges is incorporated in cheque referred and return register and cheque book issued register R. With a view to plug income leakage and to record recovery of charges that should be available for verification 18. Succession Certificate not to be insisted upon irrespective of the amount involved for settlement of claims of deceased constituents. R. RBI directive on payment of balance in accounts of the deceased customers to legal heirs without insisting on succession certificate. 19. IVPs against which loans are granted must be held in joint custody. R. Indira Vikas Patra is a bearer certificate. Any person can fraudulently encash the certificates to the detriment of banks interest. Hence they should be held in joint custody. 20. Telephone number of the branch with STD code should be incorporated below the name and code number of the branch while issuing drafts etc. R. In order to help other branches, banks, customers, to seek clarification, if any, form the issuing branch. It is for this convenience of both customers and Bank and helps in mitigating complaints. 21. Accounts can be closed if bouncing of cheques is continuous. R. Irregularly conducted accounts are a source of danger to the Bank and must not be allowed to continue as such forced closure of such accounts is permitted. 22. More Automated Teller Machines have to be installed with aggressive marketing and educating the customers of its usage. R. The ATMs provide to the customers, global standards, self service channels without waiting in long queues, facilitating convenience banking any Page 3 of 7

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time and any where with consistency of service. These require to be popularized to face the competitive environment and to have leisure time to attract new business with happy and contended customers in a totally secured environment. It is a Technological Initiative to provide 24 x 7 day service to customers. 23. Chequebooks are issued in the order in which they are received and stocks of chequebooks are not allowed to accumulate. R. To exercise proper control over the stock and Cheque forms retain their protective quality for about 5 years. 24. The safe deposit receipt issued by other branch for the packet containing branch duplicate keys should be retained with the Branch Manager. R. In order to facilitate the branch to get the duplicate keys by producing the receipt in the custody of B.M in case of original keys are lost. 25. The note slip on the currency note packets should contain the signature as well as the name of the cashier who prepared/recounted the note packet. R. The responsibility of the counting/recounting employee continues till the packet is finally disposed of. For easy deciphering of the name of the cashier to fix responsibility in case of shortages and forged/mutilated notes 26. Gold ornaments or articles in Safe Deposit should not be delivered against Succession Certificate. R. Succession Certificate is applicable in the case of only debts and securities. Gold loans do not fall under the category.(However it is applicable in states of UP & MP) 27. Constituents should be asked to transfer securities in the name of the Bank even if those are lodged for safe custody. R. To enable us to collect the interest on securities at periodical intervals when due and on due date the principal has to be got recovered or renewed. 28. Bank is liable for any damage caused to articles in Safe Deposit due to its negligence. R. Section 151 of Indian Contract Act makes the bailee (Bank) liable for any damage caused by negligence. As Bank has to take care of the goods bailed, as their own goods. 29. Anti-termite treatment in locker rooms should be carried out regularly. Page 4 of 7

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R. In order to keep the locker room clean and treated against insecticides, dampness, white ants, moth etc and to avoid claims for damages, losses etc. This is also to get protection under Section 151 of Contract Act and to protect the image of the bank. 30. Packets/boxes tendered for Safe Deposit are not sealed with the Banks seal. R. To avoid possibility of contesting by the depositor that the bank has tampered with the contents of the packet/box and resealed it. This is done also as a precautionary measure from future litigations. 31. Sealed packets said to contain duplicate keys and held in Safe Deposit must be handed over only to the authorised persons to withdraw. R. To obviate the possibilities of mishandling of the keys by unscrupulous and unauthorized persons with a view to defraud the bank. 32. A Safe Deposit Locker cannot be hired either singly or jointly in the name of a Minor. R. Safe Deposit Lockers are hired on Stamped Agreement causing contractual relationship between Bank and Hirer and Minors have no contractual capacity in Law i.e. minor can not enter into any contract, as per Section 11 of Indian Contract Act. 33. Power of Attorney Holder should not be allowed to surrender the Locker Key to the Bank. R. Power of Attorney Holder is only authorised to operate on the Locker for convenience of hirer and the original agreement is between the Bank and the Locker Hirer. Termination of the contract is in the hands of the original hirer only. 34. Before and after the search of the SDLs the search parties of I.T.Office are to be searched thoroughly. R. To obviate the possibility of allegations of evidence brought in or planted by them or that any valuable things are clandestinely taken away. 35. Requests for extension of due dates of usance bills are not generally granted by the drawee branch/bank. R. Drawee branch is an agent for collection of the bill. He has to receive instructions from the principal, the lodger of the bill. Further, extension of due dates unilaterally by the drawee releases all other prior endorsers from their liability in terms of Section 135 of Indian Contract Act. Page 5 of 7

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36. Cheques/ Bills returned unpaid should be entered party wise in a section of the Demand- Liability Register. R. To have effective control over such negotiations and to detect kite flying and other mal practices. 37. Documentary Bills are preferred to Clean Bills. R. The Bank holds the documents of title to goods in the capacity of an endorsee and hence considered safer. Failure to repay the loan, the Bank can acquire the goods and appropriate the sale proceeds for the loan liquidation. 38. When Documentary Bills negotiated/purchased accompanied by RRs are received for realization, the Collecting Bank issues a notice to the Railway Authorities. R. Bank acquires valuable interest in the goods covered by the RRs and to prevent the railways delivering the goods under indemnity. To notify the dealing public about banks interest in the property and the danger to lift them without banks consent and dues paid for 39. Clean Bills are to be paid within three days. R. Clean Bills are demand bills and do not evidence commercial transactions i.e. movement of goods and these should be paid within three days 40. The Bills and accompanying documents of title to goods may not be left blank endorsed while sending for collection. R. To avoid possibility of taking delivery of goods by any unauthorized person and any consequential loss to the bank. 41. We must insist for a full set of Bill of Lading. R. To avoid the risk of delivery of the consignment on production of any one copy of the set as all the copies are negotiable. 42. An account of the Demand Bills purchased from each party will be kept in Demand Liability Register. R. To enable us to regulate the drawings within the sanctioned limits and to arrive at liability borrower wise. 43. While returning the Bills to the remitting bank or the drawer, re-endorsement in their favour should be made following with the words without recourse to SBI. R. To avoid any liability as an endorser of the Bill. Page 6 of 7

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44. We normally do not collect Bills for non-constituents. R. To avoid liability to the true owner if it proves to be a conversion. We loose protection under section 131 of N. I. Act, 1881 if they are not our constituents. 45. Bank insists that an acceptance should be in the form of Accepted and Payable at SBI...... Branch. R. To make the drawee to pay at the branch and obviate the necessity of presenting the bill for payment at the Customers premises. If the place of payment is not stated, the Bank has to make a demand on the drawee at his place of business which will result in delay. It is an established practice. 46. A bill of exchange is deemed to be due on the preceding business day when its actual date of maturity falls on a public holiday. R. As per provisions of N.I.Act, 1881 they represent credit afforded. If they are payable after the due date, contractual terms get altered which may not stand legally valid. 47. Bill of exchange when dishonored is required to be noted and protested. R. To get legal evidence of the fact of dishonor. To make or sue other parties liable on the bill and to protect our interest as endorsee of the bill. 48. We show bills sent for collection as contra item on both the sides of the Balance Sheet i.e., both as a liability as well as an asset. R. To have record and control over these transactions. They are shown as liability to those on whose account the bills have been sent for collection and as an asset on account of those the bills are to be collected. 49. In the case of the purchase of documentary bills with attached Railway Receipts, the collecting branch notifies the concerned railway authorities. R. To protect the interests of the Bank by preventing unauthorized delivery of the goods by railways. To avoid sale of goods by railway authorities if the goods are not taken delivery for unduly long period when the bills are not paid at the Bank.

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