Q.1 Define a Banker.

Ans: According to the Indian Central Banking Enquiry Committee, “A banker company as one
which carries on as its principal business the acceptance of money deposits on current account or
otherwise subject to withdrawal by cheque, draft or order”.

Q.2 Define a Customer.

Ans: Generally a person who held an account with the bank is treated as a customer. To be called
a customer, a person should satisfy the following conditions:

(i) person should have a bank account in his own name,

(ii) the dealing between banker and the customer should be related to banking business.

A human being, joint stock company, society or a separate legal entity may be a customer of a
banker.

According to Sir John Paget, “To constitute a customer there should be some recognizable
course or habit of dealing in the nature of regular banking business.

Q.3 Mention the different types of banks accounts and explain each of them
briefly.
Ans: the different types of bank accounts are mentioned and explained as follows:

(i) Fixed Deposit Account: Fixed deposit account is also known as Time Deposit
Account. Under this account, money is deposited for a fixed periods and is not
supposed to be withdrawn before the expiry of the pre-decided period. The fixed
deposit account is opened from 15 days to 5 years. The rate of interest is paid on this
account relatively higher than any other types of accounts.

It is the most suitable form of accepting deposits for a commercial bank. The
depositors deposit their funds in such account with a view to earn maximum interest.
Bank may allow the customer a deposit before the expiry of the due date or may grant
a loan against the fixed deposit. If a customer takes a loan against the deposit, he has
to pay interest at a higher rate than allowed on his deposit. If the customer withdraws
the money before the due date, he forgoes a part of interest accrued on such deposit.

(ii) Saving Bank deposit Account: This account is meant for the benefit of middle class
and low class group people. It can be opened by any person with a minimum
specified deposit. The important feature of this account is that deposits can be made
for any number of times in a week. But withdrawals can be made only once or twice
 a week. The interest rate payable on such deposits is very low as compared to fixed
deposit accounts by the banks.
Interest is allowed on the minimum balance standing to the credit of an account
during the period from the tenth day of the month to the last day of every month. A
Pass Book is issued to this account holder. The depositor is normally required to
present his pass book together with a withdrawal from when he wants to withdraw
money. Banks have started to allow cheque facility also to saving bank depositors
who maintain a minimum balance in the account.

(iii) Current Account: Current account is also known as ‘Open Account’. In current
account, money can be deposited and withdrawn at any time during working hours
without giving any notice to the bank. Banks provide overdraft facility to the current
account holder.
The object of current account is to provide facilities to businessmen for depositing
and drawing money whereby they are relived of the task of handling cash themselves
and the risk inherent therein.
This account can be freely operated by the customer. Customers can withdraw money
from his account by cheque at any time during the working hours of the bank on any
working day. There is neither any restrictions on the number of withdrawals and no
interest is paid in this account.

(iv) Recurring Account: A predetermined amount is deposited into account every month
in a recurring deposit account. The rate of interest is normally equal to the rate of
interest payable on a term deposit account of the same period.

Q.3 Write the procedure of opening a Current Account or a Saving Bank

Account.
Ans: The following procedure is followed in opening a current account or a saving deposit
account:

(i) Application Form: Banks provide different application form for opening a savings or
current account. Banks provide printed application forms which are made available
in the bank free of cost which contain the various information relating to the
applicant, his occupation, full address, and specimen signatures.

(ii) Introduction: The banks may also ask for references and introduction who would be
consulted about the integrity, honesty, financial standing and responsibility of an
applicant. The bank insists on such person or business or enterprise being introduced
to a bank by existing customer of the bank or a reputed businessman.
(iii) Specimen Signatures: When the bank is satisfied with the introductory references it
proceeds with the opening of the account. The applicant is asked to give his two or
three specimen signatures on a prescribed form, generally card, for the part of bank’s
record. The specimen signatures are compared with on the cheques of the customer. If
the two signatures differ, the bank can refuse to honour the cheque.

(iv) Photographs: Banks require four copies of photographs of the account holders.
These photographs are required for all types of account opening. The identity of the
customer is very clearly established with the help of photographs.

(v) Initial Deposit: After the above formalities are fulfilled, the applicant deposits the
initial amount and the banker opens an account in the name of the applicant. The
minimum amount to be deposited initially differs from bank to bank.