General Lien does NOT apply when goods/securities are entrusted for a specific purpose (like safe custody or selling shares). In such cases, the banker acts as a Bailee/Trustee, and the specific purpose overrides the general right of lien.

Upon the death of the Karta, the bank must stop operations to determine the new Karta (usually the next eldest coparcener). While recent laws allow daughters to be coparceners and potentially Karta, the succession must be formally established before operations resume to avoid legal disputes.

For partnership firms, the threshold for identifying the beneficial owner is ownership of/entitlement to more than 15% of capital or profits of the partnership, or who exercises control through other means.

A Power of Attorney is an agency relationship. It is terminated automatically upon the death, insanity, or insolvency of either the Principal or the Agent. Therefore, in all three cases, the PoA ceases to be valid.

For Set-off, debts must be mutual: between the same parties, held in the same right and capacity. A bank cannot set off a customer's personal credit balance against a debit balance in their trust account or a joint account (unless all joint holders are liable).

The Act specifies the Father as the primary natural guardian. The Mother becomes the natural guardian only after the Father. (Note: This applies to boys and unmarried girls; for illegitimate children, the Mother is the primary guardian).

A minor can be appointed as a nominee. However, if the depositor dies while the nominee is still a minor, the payment is made to a person appointed by the depositor to receive the amount on behalf of the minor. Nomination is valid only for individuals, not Trusts/HUFs.

If a savings or current account witnesses no customer-induced transactions (credit or debit) for a continuous period of 2 years (24 months) , it is classified as inoperative/dormant to prevent fraud.

Based on the principle of natural justice and legal precedents (like Prosperity Ltd vs Lloyds Bank), a bank must provide reasonable notice to the customer before closing an account to allow them time to clear cheques and make alternate arrangements.

In safe custody, the goods are entrusted to the bank for a specific purpose (safety) to be returned later. The customer is the Bailor (owner), and the bank is the Bailee (custodian). This differs from a Locker where the bank is a Lessor.

Normally, the death of a partner dissolves the firm. However, regarding old transactions (cheques issued before death), the bank can pay them to avoid dishonor, provided the account has funds and the surviving partners don't object. The estate of the deceased partner remains liable for acts done before death.

According to RBI KYC norms: High Risk - Every 2 years; Medium Risk - Every 8 years; Low Risk - Every 10 years.

SDD is allowed for low-risk customers like SHGs to promote financial inclusion. For SHG savings accounts, CDD of all members is not required; CDD of office bearers suffices.

Normally, a bank collecting a cheque is an Agent. However, if the money is collected and held specifically *in trust* for a specific purpose (like investment) and not just credited to the general account, the relationship shifts to Trustee-Beneficiary.

Upon the death of one joint holder in an E or S account, the title to the deposit passes to the survivor. Being the sole owner now, the survivor has the right to cancel old nominations and make a fresh nomination.

PEPs are individuals who are or have been entrusted with prominent public functions (e.g., Heads of State, politicians). Due to potential involvement in bribery and corruption, they are classified as High Risk customers requiring Enhanced Due Diligence (EDD).

The Memorandum of Association (MoA) defines the company's relationship with the outside world and sets the limits (scope) of its operations. Any act outside the MoA is "Ultra Vires" (void). AoA defines internal rules.

Banks must report all cash transactions of the value of more than ?10 Lakh or its equivalent in foreign currency (integrally connected series of transactions in a month) to FIU-IND by the 15th of the succeeding month.

Order Nisi is a preliminary order asking the bank to freeze the funds and explain why they shouldn't be paid. Only after the Order is made "Absolute" does the bank pay the court.

A Garnishee Order suspends the operation of the account (freezes it) but does not terminate the relationship. The account can become active again if the order is revoked or satisfied. Death, closure, or insanity typically end the active contract.

An illiterate person CAN open a single account. While joint operation is allowed, it is not mandatory that they must open a joint account. The other safeguards (witness, photo, no cheque book) are standard.

Salaried employees, government departments, and small amounts balances are generally Low Risk. HNIs, Jewelers, and Non-face-to-face customers are usually Medium or High Risk due to higher money laundering potential.

In an F or S account, only the first named person (Former) can operate the account as long as they are alive. The Survivor gets rights only after the death of the Former.

The insanity of the Principal (customer) automatically terminates the agency/mandate. The agent's authority ceases immediately. Therefore, the bank must stop operations and dishonor the cheque to protect the principal's funds.

While CTRs are filed monthly (by 15th), STRs must be filed within 7 working days of the bank's Principal Officer determining that a transaction is suspicious.

Clayton's Rule states that in a running account, the first debit is discharged by the first credit (FIFO - First In, First Out), unless there is a contrary intention. This is vital for determining liability in overdrafts when guarantees are revoked.

Since an unregistered body has no separate legal existence, it cannot be sued in its own name. If the account goes into debit/overdraft, recovering money becomes legally complex as the bank has to sue individual members.

Entries in a passbook are strong evidence (prima facie) against the bank, but they are not conclusive. A bank can prove an entry was made by mistake (e.g., wrong credit) and reverse it, provided the customer hasn't altered their position based on that entry.

The 6 OVDs are: Passport, Driving License, Voter ID, MGNREGA Card, Aadhaar, and NPR Letter. PAN Card is mandatory for financial transactions but is technically not listed as an OVD for *address proof* in the core list, and Ration Card is definitely not an OVD anymore.

The bank has the right to combine accounts and set off dues BEFORE complying with the Garnishee order, provided the bank's debt was due and recoverable at the time the order was served.

While an HDC gets a better title than the transferor (curing defects like fraud or lack of consideration), Forgery is a nullity . A forged signature does not convey any title, and even an HDC cannot acquire a valid title on a forged instrument.

Section 87 of NI Act: Converting a Bearer cheque to Order is allowed and restricts the negotiability safely, so it is not considered a material alteration that voids the cheque. However, converting Order to Bearer is material and needs signature.

Section 85(1) protects the paying banker for order cheques if the endorsement purports to be regular (even if forged), provided the payment is made in Due Course (good faith and without negligence).

"Sans Recourse" means "without recourse". By adding this, the endorser denies liability to any subsequent holder if the instrument is dishonored.

The revised guidelines (2021) state that in case of incidents like fire, theft, burglary, or building collapse attributable to the bank's deficiency, the liability shall be 100 times the prevailing annual rent of the locker.

The authority to *draw* funds is joint, but the authority to *revoke* the mandate (stop payment) is individual. Any single joint holder can stop payment to protect the funds.

NEFT transactions are settled in batches (DNS), whereas RTGS transactions are settled individually and continuously (Real-Time Gross). Now both operate 24x7.

Limitations of Small Accounts: Total credits in a FY = ?1 Lakh; Balance at any point = ?50,000; Withdrawals in a month = ?10,000. No foreign remittances allowed.

CMS products focus on efficient inflow and outflow of funds (Collection and Payment services) to minimize idle cash and improve working capital management.

Protection to Collecting Banker (Section 131) applies only for crossed cheques collected for a customer in good faith and without negligence .

A Mandate is usually specific to a bank account and given on the bank's standard form. A PoA is a general legal document drafted on stamp paper that can cover various acts, including property and legal representation, beyond just banking.

An Executor derives authority from the Will (confirmed by Probate). An Administrator is appointed by the court (Letter of Administration) if there is no will. These documents validate their legal standing.

A Garnishee Order can only attach funds that solely belong to the judgment debtor. A joint account (A & B) cannot be attached for A's individual debt because the debt is not due to A alone. However, the reverse is true (A's account can be attached for a joint debt of A & B).

"Not Negotiable" does NOT restrict transferability. It restricts the property of "Negotiability" (the ability to give better title). Even a bona fide holder for value cannot get a good title if the transferor had a defective title (e.g., stolen cheque).

The Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) manages the CKYCR to reduce the burden of producing KYC documents every time a customer opens a new relationship with a financial entity.

RBI advises banks to settle claims simply on indemnity for small amounts. Legal representation (Succession Certificate) should be insisted upon only in cases of large amounts or disputes to avoid harassment of heirs.

If the debtor doesn't intimate, the creditor has the discretion to appropriate the payment to any lawful debt actually due, even if it is barred by the law of limitation.

Current accounts offer fluidity and unlimited transactions (cheques, transfers) which incurs high operational costs for banks. Hence, no interest is paid (though RBI deregulated this, most banks still don't pay to maintain margins).

Once issued, a DD is a direct commitment of the bank to pay. The purchaser is not the drawer; the bank is. Therefore, the purchaser cannot simply stop payment like a personal cheque unless there is a court order or loss of instrument.

As per RBI guidelines on limiting customer liability, if the fraud/negligence/deficiency is on the part of the bank, the customer has Zero Liability , regardless of when they report it.

Changing the amount (sum payable) alters the character and liability of the instrument significantly. Without the drawer's authentication, this is a material alteration under Section 87, rendering the cheque void.

For foreign students, pending verification of local address, the account is operated with a condition that withdrawal should not exceed ?50,000 per month and total credits should not exceed ?1 Lakh in the financial year.

Unless there is a specific survivorship mandate (like Either or Survivor), a simple "Jointly" operated account implies joint ownership. Upon death, the contract ends, and the balance is payable jointly to the Survivor (B) and the Legal Heirs of A.

The guardianship terminates automatically when the minor attains majority. The bank must stop the guardian's operations and take fresh instructions and specimen signatures from the erstwhile minor.

In CTS, the Presenting/Collecting Bank captures the image of the cheque and sends the electronic data to the Paying Bank. The physical movement of the cheque is stopped (truncated) at the Collecting Bank's end.

Assignment involves the transfer of rights, title, and interest in the policy from the policyholder (assignor) to the bank (assignee). It is the correct mode for creating security on insurance policies.

Technically, "Lien" is the right to retain goods. An FDR represents money (a debt owed by the bank). You cannot have a lien on your own debt. The correct legal concept for adjusting FD against a loan is "Set-off". However, loosely in banking, it is often called lien.

In a locker with a survivorship clause ("Either or Survivor"), the bank is validly discharged by allowing the survivor to access and remove contents. The bank need not insist on the presence of legal heirs unless there is a court order restraining it.

Under the Companies Act, a Public Limited Company needs a Certificate of Commencement of Business in addition to the Certificate of Incorporation to start operations and borrow money. Private companies only need Incorporation cert.

A general mandate to operate an account does not imply the authority to borrow money or overdraw the account, which creates a debt liability for the principal. This power must be explicitly stated.

Section 85(2) provides that where a cheque is originally expressed to be payable to bearer, the banker is discharged by payment in due course to the bearer of the instrument, notwithstanding any endorsement whether in full or in blank appearing thereon. This means the banker need not verify the regularity of endorsements on a bearer cheque because the title passes by delivery, and endorsements are legally superfluous for negotiation.

In a significant shift for consumer protection, the revised RBI guidelines mandate that the Bank shall bear the cost of stamp paper and other expenses related to the execution of the locker agreement for both new and existing locker hirers. This ensures standardization and removes the financial burden of documentation from the customer.

The Maker-Checker principle acts as a critical internal control mechanism. It mandates that for any transaction (especially financial or sensitive data changes), there must be at least two individuals involved: one to initiate/create (Maker) and another to verify/authorize (Checker/Authorizer). This segregation of duties minimizes the risk of internal fraud, unauthorized transactions, and human error.

While the Resolution of the Managing Committee specifies who will operate the account *currently*, the Bye-laws are the fundamental governing rules that define the *constitution* of the society, the powers of the committee, election rules, and the procedure for appointing signatories. The bank must verify that the resolution passed is consistent with the powers conferred by the Bye-laws.

As per RBI guidelines, if 5 or more counterfeit notes are detected in a single transaction, the Nodal Bank Officer must file an FIR (First Information Report) with the local police station immediately. For less than 5 notes, a consolidated report is sent to the police at the end of the month. In all cases, notes must be impounded and stamped "COUNTERFEIT BANKNOTE"; they must never be returned to the depositor.

The RBI mandates that banks must resolve failed ATM transactions (wrong debits) within 5 calendar days (T+5) from the date of transaction. Beyond this period, the bank is liable to pay a compensation of ?100 per day of delay to the account holder, without waiting for a formal complaint/claim from the customer.

Clayton's Rule (First-In-First-Out for appropriation) implies that subsequent credits into a running account discharge the earliest debits. If a guarantee is revoked or a partner dies (terminating liability), the bank must break the account (stop operations) immediately. If they continue the account, new credits will pay off the old "guaranteed" debt, while new debits will create a new "unsecured" debt, leaving the bank exposed.

To protect customers, RBI mandates that a duplicate DD must be issued within 14 days. If there is a delay beyond this period, the bank must pay interest at the rate applicable for Fixed Deposits of corresponding maturity to the purchaser, to compensate for the loss of use of funds.

Trustees have only those powers granted by the Trust Deed. If they borrow for an unauthorized purpose, the act is Ultra Vires (beyond powers). The Trust estate cannot be bound by such acts. The bank can only look to the trustees personally for recovery, making it a high-risk situation.

The Ombudsman scheme aims to resolve "Deficiency in Service." It specifically excludes complaints arising from the commercial judgment/decisions of the bank, such as whether to grant a loan or the interest rate charged (unless not as per RBI guidelines), to avoid interfering in business autonomy.

Section 131 protects a banker collecting crossed cheques. Section 131A explicitly applies this chapter to Demand Drafts drawn by one branch of a bank upon another, ensuring that collecting bankers get the same protection for DDs as they do for cheques.

RBI guidelines mandate that if the beneficiary account cannot be credited for any reason, the destination bank must return the transaction to the originating bank within 2 hours of the completion of the batch in which the transaction was processed (B+2).

To ensure timely service to the bereaved family, banks are mandated to settle claims in deceased accounts within 15 days of receiving the claim application complete in all respects. This applies to accounts with nomination/survivorship clauses as well as those without.

The Right of Set-off applies only to financial debts (money owed by bank vs money owed to bank). The contents of a locker are physical goods entrusted for safe custody (Lease/Bailment relationship), not a sum of money owed by the bank to the customer. Therefore, Set-off is legally impossible; the bank cannot just open the locker and take the contents.

RBI Guidelines are strict: No account can be opened without proper KYC ("No KYC, No Account"). Furthermore, refusal to provide standard information or non-cooperation is a red flag for potential money laundering, warranting the bank to consider filing an STR with FIU-IND.

The definition of Payment in Due Course (Sec 10) has three pillars: 1. Payment according to apparent tenor. 2. Payment in good faith. 3. Payment without negligence to any person in possession thereof. If the bank is negligent (e.g., ignores a visible alteration), it is not Payment in Due Course and protection is lost.

Unlike a court Garnishee Order (which usually attaches only present balances), Income Tax Attachment Orders (under Sec 226(3) of IT Act) are generally "continuing" in nature. They bind the bank to remit any funds held *at that time* OR *subsequently held* for the assessee until the tax demand is met or the order is revoked.

The Resident Foreign Currency (RFC) account is specifically designed for returning NRIs to park their foreign currency earnings (pension, savings abroad) without converting them to Rupees, protecting them from exchange rate risk. NRE/FCNR accounts must be closed/converted upon return.

To support vulnerable groups, RBI mandates banks to provide basic banking services at the doorstep for senior citizens over 70 and differently-abled persons. This includes pick-up of cash/instruments, delivery of cash, KYC documents pickup, and delivery of DDs/cheque books.

A "Full" or "Special" endorsement specifies the person to whom or to whose order the money is to be paid (e.g., "Pay to B or Order" signed A). This converts a bearer instrument back into an order instrument, adding security.

Post the Hindu Succession (Amendment) Act, 2005, daughters have the same rights as sons and are considered Co-parceners by birth in their own right. Wives and daughters-in-law are members but not co-parceners (they cannot demand partition).

Under Article 22 of the Limitation Act, 1963, the period is 3 years. Crucially, time starts running NOT from the deposit date, but from the date the customer makes a demand for payment and the bank refuses it. Until a demand is made, the limitation does not expire.

RBI guidelines strictly specify that the V-CIP must be operated by officials of the Regulated Entity (Bank) only. Business Correspondents (BCs) or Direct Selling Agents (DSAs) are NOT authorized to conduct the video interaction to ensure data security and accountability.

This is incorrect. RBI has mandated that banking facilities including ATM/Debit Cards and Net Banking should be offered to visually impaired persons without discrimination. Banks must ensure ATMs are accessible (talking ATMs). Denying a card is a violation.

As per RBI directive (effective April 1, 2012), the validity period of Cheques, Drafts, Pay Orders, and Banker's Cheques is reduced from 6 months to 3 months from the date of the instrument.

Bailment involves the delivery of goods from one person to another for a specific purpose. In Safe Custody, the customer delivers the goods to the bank. In a Locker, there is no delivery of goods (the customer retains control), so it is Lease, not Bailment. FD is a debt.

Since December 2019, NEFT operates on a 24x7x365 basis with half-hourly batches. There are 48 half-hourly batches every day. (Note: RTGS is real-time, NEFT is batch-wise).

The Comprehensive Compensation Policy aims to cover various deficiencies in service, including delays in cheque collection, ATM failures, unauthorized debits, and payment of interest for delays in returns, ensuring customer rights are protected.

Section 51A of UAPA empowers the Central Government to freeze, seize or attach funds and other financial assets or economic resources held by, on behalf of, or at the direction of any individual or entity listed as a terrorist.

A Special PoA is restricted to the specific act mentioned (e.g., selling a specific property or operating a specific account). It contrasts with a General PoA, which gives broader powers. The bank must verify the specific limits.

A Small Account (opened without full KYC) can be extended for another 12 months if the customer provides proof that they have applied for any of the OVDs (like Voter ID, NREGA card, etc.) during the first 12 months.

Clayton's Rule applies specifically to running accounts (like Cash Credit, Overdraft) where debits and credits are continuous. In a Term Loan, the account is not a running account; payments are appropriated towards interest first and then principal, not based on FIFO of debits.

Only the Karta (Manager) has the implied authority to operate the account and bind the family/firm. Other coparceners can operate only if the Karta grants them a specific mandate/power of attorney.

Section 125 of the NI Act permits a holder to convert a general crossing into a special crossing. This enhances security and is not considered a material alteration that voids the instrument.

The bank has the discretion to break open the locker after following due procedure (giving notice, allowing reasonable time). The contents must be inventoried in the presence of independent witnesses and kept in safe custody.

Since the money was entrusted for a specific purpose, the bank holds it as a Trustee. In liquidation, trust money does not form part of the bank's general assets, so the customer has a preferential claim over general creditors.

Banks must ensure they do not have any accounts in the names of individuals/entities appearing in the lists of terrorists approved by the UN Security Council (e.g., Al-Qaida Sanctions List), as circulated by the RBI.

A partner acts as an agent for the firm. An agent cannot delegate his authority to another (sub-agent) unless expressly authorized. Therefore, a PoA for operating the firm's account requires the joint consent/signature of all partners.

Under Section 31 of the NI Act, a banker is liable to compensate the drawer for any loss or damage caused by wrongful dishonor. This includes damages for injury to the customer's credit and reputation in the market.

Under Section 184 of the Contract Act, a minor can be an agent between the principal and third parties. The minor is not personally liable, but their acts bind the Principal. Banks usually discourage this due to risk.

An "Account Payee" crossing directs the collecting banker to credit the proceeds ONLY to the account of the payee named. If the banker collects it for someone else (an endorsee), they lose statutory protection under Section 131 because it is considered negligence.

The 6 core OVDs are Passport, Driving License, Voter ID, NREGA Card, Aadhaar, NPR Letter. Utility bills are "Simplified Measures" or Deemed OVDs allowed primarily for address proof for low-risk customers when OVD doesn't have the current address.

An SI creates an agency relationship where the bank agrees to pay "subject to availability of funds." If funds are insufficient, the bank is not obligated to pay or create an overdraft, and thus is not liable for the lapsed policy.

Upon the appointment of a Liquidator, the directors become functus officio (lose their office/powers). The bank must stop the operation of the account by directors and allow operations only by the Liquidator.

In a Simple Mortgage (Section 58(b) of Transfer of Property Act), the mortgagor binds himself personally to pay the debt but does NOT deliver possession of the property to the mortgagee.

Payment in Due Course must be "in accordance with the apparent tenor". A post-dated cheque becomes payable only on or after the date on its face. Paying it earlier violates the tenor and is negligent, stripping the bank of statutory protection.

The Goiporia Committee (1990) was a landmark committee that recommended time norms for various banking transactions and measures to improve customer service in banks.

Where neither party appropriates, the law applies the payment to discharge debts in chronological order (oldest first), irrespective of whether they are time-barred or not.

PMLA rules mandate that identification records (KYC) must be preserved for 5 years from the date of cessation of the relationship with the client.

A resident PoA holder in an NRE account can operate it for local payments in India. However, they are generally NOT allowed to repatriate funds abroad, except in very specific cases like remitting to the account holder himself.

An endorsement in blank (just the signature) converts an Order instrument into a Bearer instrument, meaning it can now be transferred by mere delivery.

Banks typically do NOT allow lockers to be hired by minors (even with guardians) because a minor cannot be bound by the locker contract (lease agreement). Locker facility is for adults who can contract.

Every deposit (credit) by the borrower or debit (withdrawal) acts as an acknowledgment of the continuing relationship, resetting the limitation clock. Thus, it is 3 years from the last operation.

While the Core Banking System handles day-to-day transactions (OLTP), the Data Warehouse stores historical data from various sources to facilitate analysis, MIS reporting, and strategic decision-making (OLAP).

Public Trusts are required to be registered under the Public Trusts Act in many states. The Certificate of Registration issued by the Charity Commissioner is a key KYC document confirming the legal existence of the Public Trust.

A banker is bound to know the drawer's signature (their customer) but cannot possibly know the signatures of all payees and endorsees in the world. Hence, statutory protection is given if the endorsement appears regular.

Under Section 130 of the Transfer of Property Act, the transfer of an actionable claim can only be effected by the execution of an instrument in writing signed by the transferor (Assignment).

Banks must file the CTR for transactions occurring in a calendar month by the 15th day of the following month.

Executing SIs involves administrative effort and liability. Banks are permitted to levy reasonable service charges for setting up and executing SIs, provided these are transparently communicated.

Unlike an Executor (whose authority starts from death), an Administrator is appointed by the Court. Therefore, their legal authority commences strictly from the date the Letter of Administration is granted.