Question

Describe the procedure to be followed to open a bank account.

Describe the procedure to be followed to open a savings account in a bank.

Answer 1

1. Application in the Prescribed Form: The person or organisation wanting to open a bank account has to apply to the bank concerned in the prescribed form. The application forms are printed and are available in the bank free of charge. Banks provide different application forms for opening different types of accounts. The application form contains information concerning the name of the applicant, his occupation, full address, and specimen signatures. The bank may also ask the applicant to furnish references.
2. Introduction of the Applicant: Opening of an account creates a business relationship between the applicant and the bank. The bank undertakes to honour the cheques drawn by the customer so long as there is a credit balance in his account. This involves risk, and therefore, the bank wants to be satisfied with the identity of the applicant. A bank insists that the applicant be introduced by an existing account holder of the bank or a reputed businessman. The person introducing the applicant signs the application form itself and writes his full address. The bank may also consult references about the financial standing and honesty of the applicant. The purpose of the introduction and references is to reduce the scope for fraud.
3. Specimen Signatures: Once the bank is satisfied with the introduction and references, it proceeds with the opening of the account. The applicant is asked to give two or three specimen signatures on a prescribed card. These signature cards of account holders are alphabetically filed by the bank for ready reference. Whenever the need arises, the signatures of an account holder are verified by comparing the recorded signature and the signatures on cheques. In case the two signatures differ, the bank can refuse to honour the cheque.
   If a partnership firm wants to open a bank account, a copy of the partnership deed is also to be submitted for opening the account. In case of a joint stock company, the following documents have to be submitted:
   
   1. A certified copy of the resolution of the Board of Directors for opening of the current account.
   2. A copy of the Memorandum of Association of the company.
   3. A copy of the Articles of Association of the company.
   4. A copy of the Certificate of Incorporation.
   5. A copy of the Certificate of Commencement of Business, in case of a public company.
   6. Specimen signatures of the persons authorised to operate the account.
      If a cooperative society or club wants to open a bank account, it should submit copies of the certificate of registration, resolution of the managing committee, bylaws, and specimen signatures of persons authorised to operate the account.
4. Photographs: A number of bank frauds took place despite introduction and references. There were instances where 'account payee' dividend warrants and refund orders sent by companies were encashed by opening fictitious accounts. In order to check for such fraud, banks now require photographs of applicants. These photographs are affixed on signature cards. The identity of the customer who transacts business with the bank can be easily established with the help of photographs.
5. Initial Deposit: When the foregoing formalities are completed, the applicant deposits the initial amount. The bank opens an account in the name of the applicant. The minimum amount to be deposited differs from savings account to current account and from one bank to another.