The following procedure is followed in opening a current account or a saving bank account.
Application in the Prescribed Form:
The person desiring to open a current account or a saving 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 cost. Banks provide different application forms for opening a saving or current account. The application form contains the information regarding the name of applicant, his occupation, full address, and specimen signatures. The bank may also call for reference from the applicant.
Introduction of the Applicant:
By opening an account in the bank, the customer enters into a relationship with the banker. The bank undertakes to honor the cheque drawn by the customer as long as his account shows a credit balance. This involves risk. Though any person may apply for opening an account in his name but the bank reserves the right to do so on being satisfied about the identity of the customer. The banks usually insist on such person or business enterprise being introduced to the bank by an existing customer of the bank or a reputed businessman. The person introducing the account sings on the application form itself along with his full address. The bank may also call for references that would be consulted about the integrity, honesty, financial standing and respectability of the applicant. Introduction and references reduce the scope for fraud.
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 a card, for the purpose of bank’s record. These signature cards are preserved by the bank and are alphabetically filled for ready reference to verity the signatures whenever the need arises. The specimen signatures are compared with the signatures on the cheques of the customers. If the two signatures differ, the bank can refuse to honor the cheque.
If a company wants to open a current account with a bank, the following documents have also been admitted:
- A certified copy of the resolution of the Board of Directors for opening of the account.
- A copy of the Memorandum and Articles of Association of the Company.
- A copy of the Certificate of Incorporation and Certificate of Commencement of business.
- Specimen signatures of the persons authorized to operate the account.
In the same manner, if a society or club wants to open an account with a bank, it should admit a copy of the certificate of registration, a copy of the resolution of its managing committee for opening of the account, a copy of its bye-laws and specimen signatures of persons authorized to operate the account. In case of partnership, a copy of the partnership deed is also to be submitted while opening a current account.
To make the Initial Deposit:
After the above formalities are over, the applicant deposits the initial amount and the banker opens an account in the name of the applicant. Generally, the minimum amount to be deposited varies from bank to bank. At present many banks accept an initial deposit of Rs. 500/- for opening a new account.