A) Define the term, banker" and "customer", What are the relationstip between bänker and customer?

(b) What are the risks that a banker runs în opening a current account without obtaining a suitable
introductory reference?

(C) What precautions should a banker take while opening curent accounts in the names of i)Secretary,
Jagannath University Students Union, ii) Arshia aged 12 years.

a)

- **Banker**: A banker refers to an individual or institution that is engaged in the business of banking,
which involves accepting deposits from the public, lending money, and providing various financial
services such as currency exchange, investment, and wealth management.

- **Customer**: A customer is an individual, business, or entity that maintains an account or has a

relationship with a bank or financial institution. Customers utilize banking services such as deposit
accounts, loans, credit cards, and investment products offered by the bank.

The relationship between a banker and a customer is primarily a contractual one based on trust, mutual
benefit, and legal obligations. The banker provides various financial services to the customer, including
safekeeping of funds, lending, and facilitating transactions. In return, the customer entrusts their funds
to the banker and relies on the bank's expertise and reliability in managing their financial affairs. The
relationship is governed by banking regulations, terms and conditions set forth in account agreements,
and legal principles.

b) Risks of opening a current account without obtaining a suitable introductory reference include:

- **Credit risk**: Without proper reference checks, the banker may not adequately assess the
creditworthiness of the customer, leading to potential defaults or non-payment of overdrafts.

- **Fraud risk**: Opening accounts without proper references increases the risk of fraudulent activities
such as identity theft, money laundering, or other financial crimes.

- **Operational risk**: Inadequate reference checks may result in the bank being exposed to
operational risks such as errors, omissions, or inadequate documentation, which could lead to financial
losses or reputational damage.

c) Precautions a banker should take while opening current accounts:

i) **Secretary, Jagannath University Students Union**:

 - Verify the authority of the secretary to open and operate the account on behalf of the union.

- Obtain necessary documentation, such as minutes of meetings or resolutions authorizing the opening
of the account.

- Conduct due diligence to ensure the legitimacy of the students' union and its operations.

ii) **Arshia aged 12 years**:

- Verify the legal capacity of Arshia to open and operate the account, considering the age of majority in
the jurisdiction.

- Require a guardian or parent to be a joint account holder or provide consent for the account opening.

- Ensure compliance with regulations regarding accounts for minors, including restrictions on
withdrawals and transactions.

In both cases, the banker should adhere to regulatory requirements, exercise due diligence, and
maintain appropriate documentation to mitigate risks associated with account opening.

**) A cheque for Tk.5000 has been crossed originally carries below the crossing the words "Crossing
Cancelled" and signed by the drawer is presented for cash payment by a bearer on the counter. What
would you do?

When a crossed cheque with the words "Crossing Cancelled" is presented for cash payment by a bearer
on the counter, it raises concerns about the validity and security of the cheque. Here's what should be
done:

1. **Verification**: The bank teller should first verify the authenticity of the cheque, the signature of
the drawer, and the crossing cancellation. This involves checking for any signs of alteration or tampering
on the cheque.

2. **Confirmation**: If there are doubts about the cheque's authenticity or if the crossing cancellation
appears suspicious, the teller should consult with a senior officer or the manager to review the situation.
3. **Policy Compliance**: The bank should adhere to its policies and procedures regarding the payment
of cheques. Typically, crossed cheques are not meant to be cashed over the counter; instead, they are
supposed to be deposited into the payee's bank account.

4. **Security Considerations**: Crossing cancellation raises concerns about the security of the cheque
and the potential risk of fraud. The bank should exercise caution to prevent unauthorized payments and
protect the interests of the account holder.

5. **Documentation**: The transaction should be properly documented, including details of the

cheque, the bearer's information, and any actions taken by the bank regarding the cheque's payment.

In this scenario, cash payment of the cheque should not be immediately processed without proper
verification and consideration of the crossed cheque's intended security features. The bank's priority
should be to ensure the integrity of the transaction and prevent any potential fraud or misuse of the
cheque.

a)As a branch manager; how will you deal with the following cases? Give reasons.

1. Your customer sends a crossed order cheque drawn by A in favor of your

bank, for crediting it to his account with you.

2. D presents for encashment on an uncrossed cheque payable to him or bearer and refuses to endorse
the cheque. Will it make any difference il the amount is small?

3.A bill dated: 29 January 2018 payable the 29th February, 2018 after one month remains unpaid on

4.Ariana Hossain sends for the credit of her account with you a chequ drawn in favor of Aroshi and
endorsed by her as Ariana.

(b) Arshia drew a cheque for Tk.5000 in favor of Jabin on 1 January, 2018 anıt on the same day. The
cheque was presented for payment on 15 meantime, the bank had failed in May, 2018. Discuss the le
against Arshia and the bank for recovering the amount.

a) Dealing with the following cases:

1. **Crossed Order Cheque drawn by A in favor of the bank's customer**: In this scenario, as a branch
manager, I would follow the standard procedures for accepting and processing crossed cheques. The
crossed order cheque signifies that it is not payable over the counter but should be credited to the
payee's account with the bank. Therefore, I would credit the amount to the customer's account after
verifying the authenticity of the cheque and ensuring that all necessary endorsements and details are in
order.

2. **D presents an uncrossed cheque payable to him or bearer and refuses to endorse it**: Regardless
of the amount, if D presents an uncrossed cheque payable to him or bearer and refuses to endorse it,
the bank should not proceed with encashment. Endorsement is crucial for establishing the right to
receive payment from the cheque. Without proper endorsement, the bank cannot validate the
legitimacy of the transaction. The refusal to endorse raises concerns about the authenticity and
ownership of the cheque. Therefore, the bank should decline the encashment and advise D to provide
the necessary endorsement for the cheque to be processed.

3. **Unpaid bill dated: 29 January 2018, payable 29th February 2018 after one month remains
unpaid**: This scenario indicates a discrepancy in the payment terms of the bill. February does not have
a 29th day, which renders the payment due date invalid. The bill is essentially payable on the 28th of
February. If the bill remains unpaid beyond the due date, appropriate follow-up procedures should be
initiated by the bank, such as contacting the debtor for payment or pursuing legal remedies as per the
terms of the bill and applicable regulations.

4. **Ariana Hossain sends a cheque drawn in favor of Aroshi, endorsed by her for credit to her account
with the bank**: The bank should process the cheque for credit to Ariana Hossain's account after
verifying the authenticity of the endorsement and ensuring compliance with banking regulations.
Endorsements serve as authorization for the transfer of funds and should be examined to prevent
unauthorized transactions.

b) Regarding Arshia's case:

- Arshia, as the drawer of the cheque, is legally obligated to ensure that sufficient funds are available in
her account to honor the cheque when presented for payment. Since the bank failed in May 2018, the
responsibility to honor the cheque shifts to the bank's liquidator or relevant authority overseeing the
bank's dissolution.

- Arshia may still be held liable for the amount of the cheque, and Jabin, as the payee, may have
recourse against Arshia to recover the funds promised by the cheque.
- The bank's failure does not absolve Arshia of her obligation as the drawer of the cheque. However, the
process of recovering the amount may involve legal proceedings against the bank's liquidator or relevant
authorities responsible for handling claims against the failed bank. Jabin may need to seek legal advice
and pursue appropriate actions to recover the amount owed to him by Arshia and potentially from the
bank's assets, subject to applicable laws and regulations regarding bank failures and creditor claims.

A) Bangladesh Bank is not only a controller of credit but also a promoter of credit." Discuss

(b) Differentiate between Statutory Liquidity Ratio and Cash Reserve Ratio.

C) Describe briefly the relationship belweon commercial bank and Bangladesh Bank.

a) Bangladesh Bank, as the central bank of Bangladesh, plays a multifaceted role in the country's
financial system. It acts not only as a controller of credit but also as a promoter of credit. Let's discuss
each aspect:

1. Controller of Credit:

Bangladesh Bank regulates the credit supply in the economy through various monetary policy tools. It
sets the benchmark interest rates, such as the repo rate or the discount rate, which influence the cost of
borrowing for commercial banks and ultimately affect the overall credit availability in the economy.

By adjusting these rates, Bangladesh Bank can control the money supply and credit expansion in the
economy. During periods of high inflation or overheating, it may increase interest rates to reduce
borrowing and spending, thereby controlling credit growth. Conversely, during economic downturns or
recessions, it may lower interest rates to stimulate borrowing and investment.

2. Promoter of Credit:

Bangladesh Bank also plays a proactive role in promoting credit to support economic growth and
development objectives. It implements policies and initiatives aimed at facilitating credit access for
various sectors, particularly those deemed crucial for economic development, such as agriculture, small
and medium enterprises (SMEs), and export-oriented industries.

Bangladesh Bank may introduce special credit schemes, provide refinancing facilities, or offer
incentives to encourage commercial banks to extend credit to priority sectors. By doing so, it helps
channel funds to areas that contribute to sustainable economic growth, job creation, and poverty
alleviation.

In essence, Bangladesh Bank's dual role as both a controller and promoter of credit reflects its broader
mandate to ensure monetary stability while fostering inclusive and sustainable economic growth.

b) Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR) are two important regulatory tools used
by central banks like Bangladesh Bank to control the liquidity and lending capacity of commercial banks.
Here's how they differ:

1. Statutory Liquidity Ratio (SLR):

- SLR is the percentage of a bank's Net Demand and Time Liabilities (NDTL) that it must maintain in the
form of liquid assets such as cash, gold, or government-approved securities.

- SLR is determined by the central bank and serves as a prudential measure to ensure that banks
maintain a certain level of liquidity to meet depositor withdrawals and other obligations.

- SLR helps stabilize the banking system by reducing the risk of bank runs and ensuring that banks have
sufficient liquid assets to cover short-term liabilities.

2. Cash Reserve Ratio (CRR):

- CRR is the percentage of a bank's NDTL that it must keep with the central bank in the form of cash
reserves.

- CRR is a tool used by the central bank to control the amount of money that banks can lend.

- By adjusting the CRR, the central bank can influence the liquidity levels in the banking system. A
higher CRR means banks have less money to lend, thus reducing the money supply in the economy.
Conversely, a lower CRR increases the lendable funds of banks, leading to higher liquidity in the system.

In summary, while both SLR and CRR are regulatory measures aimed at ensuring the stability and
liquidity of banks, they operate differently and serve distinct purposes within the framework of
monetary policy.
c) The relationship between commercial banks and Bangladesh Bank is one of regulation, supervision,
and coordination within the financial system of Bangladesh. Here's a brief overview:

1. Regulatory Oversight:

Bangladesh Bank acts as the regulatory authority overseeing the operations of commercial banks. It
formulates and enforces regulations and guidelines pertaining to various aspects of banking operations,
including capital adequacy, risk management, corporate governance, and customer protection.

2. Supervision and Monitoring:

Bangladesh Bank monitors the activities of commercial banks to ensure compliance with regulatory
requirements and to safeguard the stability and integrity of the banking system. It conducts regular
inspections, audits, and assessments of commercial banks to assess their financial health, risk exposure,
and adherence to prudential norms.

3. Lender of Last Resort:

Bangladesh Bank serves as the lender of last resort for commercial banks facing liquidity crises or
financial distress. In times of need, commercial banks can borrow funds from Bangladesh Bank against
eligible collateral to meet short-term liquidity shortages and maintain solvency.

4. Monetary Policy Transmission:

Bangladesh Bank implements monetary policy measures to regulate the money supply, interest rates,
and credit conditions in the economy. Commercial banks play a critical role in transmitting these
monetary policy signals to the broader financial system and the real economy through their lending,
deposit, and investment activities.

In essence, the relationship between commercial banks and Bangladesh Bank is characterized by
regulatory oversight, supervision, and mutual dependence within the framework of the country's
financial system. Collaboration and coordination between these entities are essential to ensure the
stability, efficiency, and resilience of the banking sector and the overall economy.

1. A solicitor, has two current accounts at your branch: the first in his name, and the second also in his
name with the addition of the words" Clients account" as required under the Courts rules. He has drawn
a cheque on the Clients accounts in favor of a third party. Before the cheque is presented for the
payment, the Bank is served with a garnishee order in respect of a decree against A. How will yoy act.

In this scenario, a garnishee order has been served to the bank regarding a decree against the solicitor,
A, who holds two current accounts at the branch: one in his name and the other designated as the
"Clients account" as required under the Courts rules.

A garnishee order is a legal directive that requires a third party, such as a bank, to freeze funds held in
an account belonging to the debtor (in this case, the solicitor, A) up to the amount specified in the order.
The purpose is to satisfy a debt owed by the debtor to a creditor.

Here's how the bank would typically act in response to the garnishee order:

1. **Review the Order**: The bank will carefully review the garnishee order to ensure that it is valid,
properly issued by the court, and legally enforceable.

2. **Freeze Funds**: Upon receipt of a valid garnishee order, the bank will freeze the funds in the
relevant account(s) up to the amount specified in the order. This means that the bank will prevent any
withdrawals or transactions from the account(s) affected by the order.

3. **Notification**: The bank will notify the account holder (the solicitor, A) about the garnishee order
and the freezing of funds in the account(s) subject to the order.

4. **Execution of the Order**: The bank will comply with the garnishee order by withholding the
specified amount from the designated account(s) and transferring it to the creditor or the court as
directed by the order.

5. **Consideration of Client Accounts**: In the case of accounts designated as "Clients account," which
typically hold funds belonging to clients of the solicitor for specific legal purposes, the bank will ensure
that any funds belonging to the clients are not affected by the garnishee order. The bank may need to
verify the ownership of funds held in the "Clients account" and ensure that they are properly segregated
from the solicitor's personal funds.
6. **Legal Compliance**: The bank will ensure full compliance with the garnishee order and any
applicable laws and regulations governing such orders and banking operations.

In summary, upon receiving a garnishee order against the solicitor, A, the bank will freeze the relevant
account(s) and comply with the order to satisfy the debt owed by A to the creditor, while also ensuring
the protection of funds belonging to clients held in the "Clients account."

A)Briefly discuss the main functions of a commercial bank.Distinguish between scheduled bank and non-
scheduled bank with examples.

B) Depict the relationship between bankers and customers. As a banker, do you think that is it important
to maintain such relationship?

A)

**Main Functions of a Commercial Bank:**

1. **Accepting Deposits:** Commercial banks accept various types of deposits from individuals,
businesses, and other entities. These deposits include savings accounts, current accounts, fixed deposits,
and recurring deposits.

2. **Providing Loans and Advances:** Commercial banks extend credit facilities to borrowers in the
form of loans, overdrafts, cash credits, and other advances. They cater to the credit needs of individuals,
businesses, and industries, contributing to economic growth and development.

3. **Credit Creation:** Commercial banks have the ability to create credit through the process of
fractional reserve banking. They can lend out a portion of the deposits they receive, thereby expanding
the money supply in the economy.

4. **Payment Services:** Banks facilitate domestic and international payment transactions for their
customers through various channels such as checks, electronic funds transfers (EFT), debit cards, credit
cards, and online banking platforms.
5. **Providing Ancillary Services:** In addition to core banking services, commercial banks offer a range
of ancillary services such as locker facilities, investment advisory, insurance products, foreign exchange
services, and wealth management services.

**Scheduled Bank vs. Non-Scheduled Bank:**

**Scheduled Bank:**

- Scheduled banks are those financial institutions that are listed in the Second Schedule of the Reserve
Bank of India (RBI) Act, 1934, in the case of India, or the relevant central bank's list for other countries.

- These banks are eligible for various facilities from the central bank, including borrowing funds from the
central bank, opening branches in different parts of the country without seeking permission from the
regulatory authority, and participating in clearinghouse facilities.

- Example: State Bank of India, HDFC Bank, ICICI Bank, etc.

**Non-Scheduled Bank:**

- Non-scheduled banks are those banks that are not included in the Second Schedule of the Reserve
Bank of India (RBI) Act, 1934, or the equivalent schedule of other central banks.

- These banks do not enjoy the privileges and facilities available to scheduled banks, such as access to
central bank funding or automatic clearinghouse participation.

- Example: Local cooperative banks, some regional rural banks, and certain specialized banks that do not
meet the criteria for scheduling.

B)

**Relationship between Bankers and Customers:**

The relationship between bankers and customers is based on trust, confidentiality, and mutual benefit.
Key aspects of this relationship include:
1. **Financial Intermediation:** Bankers act as intermediaries between depositors and borrowers,
facilitating the flow of funds in the economy.

2. **Customer Service:** Bankers provide various services to meet the financial needs of their
customers, including deposit accounts, loans, investment advice, and payment services.

3. **Confidentiality:** Bankers are bound by confidentiality agreements and legal obligations to protect
the privacy and financial information of their customers.

4. **Risk Management:** Bankers assess the creditworthiness and risk profile of their customers to
mitigate potential risks associated with lending and investment activities.

5. **Compliance and Regulation:** Bankers adhere to regulatory requirements and ethical standards to
ensure fair and transparent dealings with customers.

As a banker, maintaining a strong relationship with customers is crucial for several reasons:

- **Customer Retention:** Building trust and providing excellent customer service can help retain
existing customers and attract new ones.

- **Risk Management:** A good relationship with customers allows bankers to better understand their
needs, assess risks, and make informed lending decisions.

- **Business Growth:** Satisfied customers are more likely to use additional banking products and
services, leading to increased revenue and profitability.

- **Reputation Management:** Positive relationships with customers contribute to the bank's

reputation and brand image in the market.

In conclusion, maintaining a positive and mutually beneficial relationship with customers is essential for
bankers to ensure customer satisfaction, mitigate risks, and foster long-term business success.
A)Discuss the significance to the paying banker of Account Payee Only" and "Not Negotiable" crossing
on a cheque. If a cheque is converted from "bearer" "to order" and from "order to bearer" does it
amount to material alteration? Does it require authentication?

B)Who can cross a cheque? Discuss the concept "Obliterating of Crossing".

A)

**Significance of "Account Payee Only" and "Not Negotiable" Crossing on a Cheque:**

1. **"Account Payee Only" Crossing:** When a cheque is crossed with "Account Payee Only," it signifies
that the funds mentioned in the cheque should only be deposited directly into the payee's bank
account. It prevents the cheque from being cashed over the counter. The significance to the paying
banker lies in ensuring that the funds are directly credited to the intended recipient's account,
enhancing security and minimizing the risk of fraud or misappropriation during the payment process.

2. **"Not Negotiable" Crossing:** This crossing indicates that the cheque is not transferable to a third
party. It doesn't affect the negotiability of the cheque, but it makes the transferee subject to the same
title defenses as the transferor. From the paying banker's perspective, it serves as a cautionary measure
against unauthorized transfers and helps mitigate the risk associated with cheque negotiation.

**Material Alteration of Cheques:**

- Converting a cheque from "bearer" to "order" or vice versa does amount to material alteration. Any
alteration to the material aspects of a cheque, such as the payee's name or the mode of payment,
requires authentication to prevent fraud and ensure the integrity of the cheque. Such alterations should
be authenticated by the drawer's signature or initials to validate the changes made.

- Material alterations without proper authentication can render the cheque invalid or raise suspicion of
fraudulent activity. Therefore, it's essential to adhere to authentication procedures when altering
cheque details to maintain the cheque's legal validity and integrity.
B)

**Who Can Cross a Cheque:**

- The drawer of a cheque typically performs the crossing. However, a holder of a cheque can also cross
it, provided they are authorized to do so by the drawer. The crossing can be done by drawing two
parallel lines across the face of the cheque and can be accompanied by specific instructions, such as
"Account Payee Only" or "Not Negotiable."

**Concept of Obliterating of Crossing:**

- Obliterating the crossing of a cheque involves canceling or removing the crossed lines on the face of
the cheque. This action transforms the cheque from being crossed to being uncrossed or open. Once
obliterated, the cheque becomes payable to the bearer, and its negotiability increases.

- Obliterating a crossing can only be done by the drawer or an authorized signatory. However, it's
important to note that such alterations should be made cautiously and with proper authorization to
avoid raising suspicion of fraud or misuse.

In summary, crossing a cheque adds an additional layer of security and instruction regarding the
payment process. Obliterating crossing is a significant alteration that should be performed carefully and
with proper authorization to maintain the integrity and validity of the cheque.