BANKING LAW AND PRACTICE

Module 1
BANKER AND CUSTOMER
 PART-A
BANKER AND CUSTOMER RELATIONSHIP
 CONTENT
● Introduction
● Meaning of Banker & Customer
● General and Special Relationship between Banker & Customer
● Rights & Obligations of Banker and Customer
 Definition of Bank

According section-5(B) of Banking Regulation Act banking has

been defined as “Accepting for the purpose of lending and investment
of deposits of money from the public, repayable on demand order or
otherwise and with drawable by cheque, draft order or otherwise”.
 Definition of Banker

A person who is doing the banking business is called a banker. But it is not easy to define
the term ‘Banker’ because a banker performs multifarious functions.

First: a banker must be a man of wisdom, he deals with others money but, with his own
mental faculties.

Second: a banker is not only acting as a depositor, agent but also as a financial
advice.

The bill of exchange Act of 1882 defines the banker “Banker includes a body of persons
whether incorporated or not who carry on the business of banking”.

According to section-3 of the Negotiable instruments act state that “The term banker
includes a person or a corporation or a company acting as a banker”.
 Customer

According to Dr. Hart, “a customer is one who has an account with a banker
or for whom a banker habitually undertakes to act as such.”

A person who has a bank account in his name and for whom the banker
undertakes to provide the facilities as a banker, is considered to be a
customer.
Features of Banking
(i) Dealing in money: The banks accept deposits from the public and advance,
the same as loans to the needy people. The deposits may be of different types
- current, fixed, savings, etc. accounts. The deposits are accepted on various
terms and conditions.

(ii) Deposits must be withdrawable: The deposits (other than fixed deposits)
made by the public can be withdrawable by cheques, draft or otherwise, i.e.,
the bank issue and pay cheques. The deposits are usually withdrawable on
demand
iii) Dealing with credit: The banks are the institutions that can create
credit i.e., creation of additional money for lending. Thus, “creation of
credit” is the unique feature of banking.

(iv) Commercial in nature: Since all the banking functions are carried
on with the aim of making profit, it is regarded as a commercial
institution.

(v) Nature of agent: Besides the basic function of accepting deposits

and lending money as loans, bank possesses the character of an agent
because of its various agency services.
Relationship Between Banker and Customer
The relationship between a banker and his customer depends upon
the nature of service provided by a banker. Accepting deposits and
lending and/or investing are the core banking businesses of a bank. In
addition to its primary functions, it deals with various customers by
providing other services like safe custody services, safe deposit
lockers, and assisting the clients by collecting their cheques and other
instruments as an agent and trustees for them.

So, based on the above a banker customer relationship can be

classified as under:
The RELATIONSHIP between BANKER AND CUSTOMER is
classified as followed
 The General Relationship Between Banker And Customer

The services provided by a banker to its customer come under a general relationship
between banker and customer. The general relationships between banker and customer
are:
 General Relationship between Banker and Customer
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 General Relationship between Banker and Customer
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09 Indemnity Holder And Indemnifier

10 Hypothecator And Hypothecatee

Debtor/Creditor and Creditor/Debtor
The opening of a bank account in the bank of a banker by a person who has the capacity to contract is the
basis of the debtor and creditor relationship between banker and customer. By filling out the form for
opening a bank account bind the banker and customer in the written contract. The customer when
deposits his money into his bank account, becomes a creditor because he is giving his money to the bank
indirectly. The money deposited by the customer in the bank account becomes the bank’s property. The
bank can use your money as it likes. By using your money, the bank becomes a debtor because he will take
that money into his account to make further transactions with other bank customers. The bank is not liable
to inform the customer about the utilization of his money.

This relationship gets opposite at the time when a bank customer takes a loan from the bank, the bank
becomes the creditor and the customer becomes a debtor. It means the debtor and creditor relationship
works both ways depending on the condition of the transfer of money. The bank usually takes the money
of customers to use it to provide loans for other bank customers and it is the most important activity of a
bank.
 Relationship As Trustee And Beneficiary
The bank performs the relationship as a trustee with his customer when the bank customer
deposits his property or other assets. In this case, the bank holds the property of other
documents of bank customers in exchange for the loan provided by the bank. The person
who is depositing the property or other documents is known as the beneficiary. It can be
done in two conditions:

● When a person deposits his important document in the bank locker.

● The person took the loan and deposited his property document as security.

This relationship is based on trust. The document deposited in the bank is a secured
document and the bank never share these document with any other person. Also, the
ownership of the property will remain with the person, not the bank. In the situation of bank
liquidation, the property secured in the bank by the beneficiary is not subject to distribution
to the general creditors of the bank.
 Relationship As Principal And Agent
The bankers provide agent services to their customers. The agent is defined under section 182 of the
Indian Contract Act as the agent is the person who is employed by a person by giving him the power of
attorney to work or deal on his behalf.

In the banking industry, the relationship between a banker and a customer can be considered as a
principal-agent relationship. In this type of relationship, the customer (the principal) entrusts the bank
or the banker (the agent) with their money and other financial assets, and the bank or the banker acts
on the customer’s behalf to manage and invest those assets. The customer, as the principal, is the
party who has the ultimate control over their assets and makes the final decisions on how they should
be managed. The bank or the banker, as the agent, is the party who is responsible for executing the
customer’s instructions and managing their assets in accordance with the customer’s wishes.

The bank or the banker has a fiduciary duty to act in the best interests of the customer and to use
reasonable care, skill, and diligence in managing the customer’s assets. This means that the bank or
the banker must always act in the customer’s best interests, even if it is not in the best interests of the
bank or the banker.
Relationship as Lesser and Lessee
Section 105 of ‘Transfer & Property Act’ deals with lease, lesser, lessee. In case of safe
deposit locker accounts, the banker and customer relationship of lesser/lessee is
applicable. Banks lease the safe deposit lockers (bank’s immovable property) to the
clients on hire basis. Banks allow their locker account holders the right to enjoy (make
use of ) the property for a specific period against payment of rent.

In a lease agreement, the lessee (customer) is granted the use of an asset (such as a
piece of property or equipment) by the lesser (the bank), usually in exchange for rent or
a periodic payment. Similarly, when a customer opens an account with a bank, they are
essentially leasing the use of the bank’s assets, such as its capital and liquidity, in order
to access financial services such as borrowing, depositing, and investing.
Relationship As Pledger And Pledgee
the relationship between a banker and a customer can be viewed as a pledge and a
pledger when collateral is involved. The pledgee (bank) holds the right to take
possession of and sell pledged assets in the event of default while the pledger
(customer) has the right to continue to use and enjoy the pledged assets until a default
occurs.

The relationship between a banker and a customer can also be understood as a pledgee
and a pledger. In this context, a pledge is a legal agreement in which a borrower (the
pledger) gives the lender (the pledgee) the right to take possession of and sell the
specific property (the collateral) if the borrower defaults on the loan. This type of
arrangement is commonly used in secured lending, where the borrower is required to
provide collateral in order to secure the loan.
Relationship As Bailor And Bailee
Section 148 of Indian Contract Act,1872, defines bailment, bailor, and bailee.
A bailment is the delivery of goods by one person to another for some purpose upon a contract.
As per the contract, the goods should when the purpose is accomplished, be returned or disposed
off as per the directions of the person delivering the goods.
The person delivering the goods is called the bailer and the person to whom the goods are
delivered is called the bailee.
Banks secure their loans and advances by obtaining tangible securities. In certain cases banks hold
the physical possession of secured goods (pledge) – cash credit against inventories; valuables – gold
jewels (gold loans); bonds and shares (loans against shares and financial instruments) In such loans
and advances, the collateral securities are held by banks and the relationship between banks and
customers are that of bailee (bank) and bailer.(borrowing customer).

The relationship of bailor and bailee between banker and customer arises when the customer gives
his security document of any other goods to the bank for a specific period of time for security. The
customer is a bailor and the bank becomes bailee.
Relationship As Mortgagor And Mortgagee
Section 58(a) of the Transfer of Property Act, of 1882 defines the mortgage as “A
mortgage is the transfer of an interest in specific immovable property for the purpose of
securing the payment of money advanced by way of loan, etc.”

When the banker provides the credit facility to his customer against the security of
immovable property, the customer becomes a mortgagor and the bank is a mortgagee.
Relationship As Hypothecator And Hypothecatee
The relationship between banker and customer converts into Hypothecator and
Hypothecatee when the bank customer hypothecates some movable or
immovable property or any other assets into the bank to take the loan from the
bank. In this case, the bank customer is a hypothecator and the banker is
Hypothecatee.
Relationship As Indemnity Holder And Indemnifier
There are various types of indemnity given under the Indian Contract Act. Indemnity is
one of the types of contract in which one person promises to save another party by
paying his loss that occurred due to the person who is making the contract or by the act
of any other person.

In the relationship between banker and customer, the banker acts as an indemnity
holder if any wrong transaction is done while making the payment by the customer.

For example, if you make an online transaction with another person but the transaction
fails and your money is deducted. The bank will repay the loss that occurred due to fault
occurred in the transaction
 Relationship As Advisor And Client
The relationship between banker and customer can be as advisor and client in a case when
the customer invests in securities. The bank gives advice to its customer for investing. For
example, if you are planning to take any kind of loan, but are not sure which loan you should
take. Here, the bank can advise you officially or unofficially to make the right decision. In that
case, the banker will be your advisor and you will be his client.
 The Special Relationship Between Banker And Customer

The duties and instruction to the banker come under a special Relationship between
Banker and Customer.
 Special Relationship between Banker and Customer

MaintainRecords
Maintain Records Maintain
Maintain Confidentiality
Confidentiality ObligationTo
Obligation ToHonour
HonourCheques
Cheques

It is the duty of the banker to A banker is responsible for the safety The bank is responsible for accepting
maintain every record of the of the documents, records or any the Cheque of the customer that is
transaction, loan and investment other property which is deposited by equivalent to the amount present in
done by the bank customer. These the bank customer in the bank. The the account. There are some
records must be clear, genuine and information must remain confidential. necessary conditions which must be
authorized. The bank customer has However, there are some conditions fulfilled by the Cheque. Lack of these
the right to check his transaction when the banker can disclose these conditions can lead to the dishonour
details whenever he needs them. In a confidential documents saved in the of cheques. Some important
case where the transaction details are bank account. conditions are: Proper format of the
needed, the bank has the duty to Cheque. Correctly signed by the
provide the true details to its person. Properly presented in the
customer with the stamp and bank. There must be an available
signature of the authorized person. balance in the bank account.
Any mistake in the records can bring
the bank into trouble.
https://gyansanchay.csjmu.ac.in/wp-content/upl
oads/2023/09/Rights-and-duties-of-Bankers-a
nd-Customers.pdf
REFERENCES
● https://www.icsi.edu/media/webmodules/publications/9.1%20Banking%2
0Law%20-Professional.pdf

● https://gyansanchay.csjmu.ac.in/wp-content/uploads/2023/09/Rights-and-
duties-of-Bankers-and-Customers.pdf

● https://legalstudymaterial.com/relationship-between-banker-and-custom
er/

● https://www.iedunote.com/banker-rights-and-obligations

● https://bankingdigests.com/blog/banker-customer-relationship/
 PART-B
CUSTOMER AND ACCOUNT HOLDERS
 CONTENT
● Types of Customer and Account Holders-
Procedure and Practice in opening

● Operating the accounts of different types of Customers-

Minor, Joint account holder, Partnership Firms, Joint Stock Companies,
Clubs, Non-Resident Account (NRI & NRE Accounts)
 Types of Customers and Account Holders

https://indiafreenotes.com/types-of-customers-and-account-holders/
https://examlimit.com/types-of-account-holders-customer-in-bank-notes-pdf.html
 Minors Account
According to Section 3 of Indian Majority Act, a person attains majority at the age of 18,
except in cases where a guardian is appointed by a Court where the age of majority is 21.

According to the Indian Contract Act, a minor is not under a legal capacity to enter into a
contract and therefore any contract with a minor is void. Thus, the minor has a guardian to
maintain his / her property.

Section 6(a) of Hindu Minority and Guardianship Act, 1956 recognizes that either of the
parents, father or mother, can be the natural guardian. Normally, bankers do not open
accounts in the name of the minor individually, but open accounts in the joint name of the
minor and the natural guardian. Sometimes, the Court may appoint someone who is not a
natural guardian as minor’s guardian. In such cases the account should be in the name of
the minor and the Court - appointed guardian. Usually, the account should be operated by
the guardian on behalf of the minor.
Guardian
Section 4 (b) of the Hindu Minority and Guardianship Act, 1956
defines "Guardian" (major) means a person having the care of the person of a minor or
of his property or of both his person and property and includes –

(i) a natural guardian,

(ii) a guardian appointed by the will of the minor’s father or mother,
(iii) a guardian appointed or declared by a court, and
(iv) a person empowered to act as such by or under any enactment relating to
any court of wards.
Testamentary Guardian: Testamentary Guardian is a guardian who is appointed
by way of will. It is done to ensure that the child will have a guardian even after the
death of the natural guardian who may require supervision over themselves or
their estate. A testamentary guardian cannot act as a guardian if the natural
guardians are alive.
Guardian appointed by court: The court may appoint a guardian if the father
or Mother of a minor person is unfit to be guardian of the minor

The first two types of guardians are governed by the provisions of the Hindu Minority and
Guardianship Act, 1956, whereas a guardian is appointed by a court under the Guardians
and Wards Act, 1890.
https://www.srdlawnotes.com/2017/11/guardian-meaning-definition-and-kinds.html
Procedure to Open a Bank Account For Minors
Opening the bank account offline:

Parents have to visit the branch of the bank along with their children. They will have to carry the KYC
documents along, after selecting the preferred type of savings bank account, a form has to be filled and a
passport-size picture of the primary account holder and the parents along with the KYC
documents will have to be submitted. Once the documents are checked by the bank, which only takes a
few minutes these days, your account can be activated.

Opening a bank account online:

Parents will have to go to the official website of the bank or a partner website and enter their mobile
number preferably the one registered with the Aadhar. An Aadhar-linked number will help the bank to
pull their basic details beforehand, making the process quick. Where parents can select a slot for the next
working day covenant to them in most cases.

After registering the number an agent from the company will get on a call with the parents for the KYC checks
at that point in time they must have their PAN card or Aadhar card handy. The caller will get on a video
call after taking their permission and take a picture of the parent and the primary account holder with a clear
background from their end. This will finish the KYC process and the bank will start an account in your name. All
required details of this account will be sent to the account holder in an email and a kit will be sent by post within
seven working days carrying your checkbook and other details.
The account opening form should contain details,
● Name of the Minor
● Age of the Minor
● Date of birth of the Minor
● Date of attaining majority
● Name of the Guardian
● Signature of the Guardian
When the minor attains the age of majority, he/she alone can operate the
account and the guardian should not be allowed to operate the account
https://www.forbes.com/advisor/in/banking/how-to-open-a-minor-bank-account/

https://www.hdfcbank.com/personal/resources/learning-centre/save/how-to-open-a-bank-account-for-a
-minor
DEATH OF THE MINOR GUARDIAN

In the event of death of a minor the money will be payable to the guardian. In case the guardian dies
before the minor attains majority and the account is a joint account or to be operated by the guardian only,
the money should be paid by the bank to the minor or attaining majority or to some person appointed by
the court as his guardian.

MINOR AS A PARTNER

A minor can be admitted to the benefit of partnership with the consent of all the partners but he will not be
liable for the losses or debts of the firm. Within six months after majority he should repudiate the liability
as partner otherwise he will be liable as a partner.

https://www.lawyersclubindia.com/articles/special-types-of-customers-under-the-banking-act-a-analytical
-study-3318.asp
 Joint Account
A joint account is a special account type where two or more persons open a
savings account jointly in a bank per their needs. Joint account savings
function like an ordinary account but have two or more people operating it.
Its prime advantage is the ease of operation for a single person without
needing other joined members to go to the bank. In addition, as two or more
people operate the account, the need for a nominee in the account is absent.
Procedure to Open Joint bank Account
https://groww.in/banking/joint-account
Formalities Of Opening A Joint Account
Opening a shared account is similar to registering for a single savings account; both
require the submission of the following:

● Identity & address proofs

● Social security numbers
● Passport-size photos
● Signature specimens
● Filling up the account opening form under the shared account
● Selecting the account’s mode of operation while filling up the account opening form

All the individuals involved in the shared account opening process must submit these
documents.
Either (Or) Survivor

This is the most common form of joint account. Only two individuals can operate the
account i.e., primary account holder and secondary account holder. Both can access the
account and transfer the funds. The final balance and interest (if any) will be paid to the
survivor on death of anyone of the account holders. The survivor can opt to continue the
account. If the nominee is a different person then the balance money is paid to him/her after
the death of the survivor.

Example : Mother and daughter can open a joint-account. On death of anyone of them, the
surviving person can continue the account or get the account balance transferred to her
name.

Anyone (Or) Survivor

This is similar to “either or survivor” option. The only difference is, more than two individuals
can operate the account.

If you want your father, mother and spouse to be able to access and operate your bank
account then this is the best option. In case of death of anyone of the account holders, the
remaining survivors can continue to operate the account.
Former (Or) Survivor

In this type of joint account, only the first account holder (primary) can access and operate the
account till the time he/she is alive. The second account holder (second applicant) can operate
the account only on death of the primary holder (first applicant). The survivor can also get the
balance transferred to his/her name (if required).

Latter (Or) Survivor

This is similar to “former/survivor” option. The main difference is, only the second account holder
can access and operate the account till the time he/she is alive. The primary/first account holder
can operate the account only on death of the secondary account holder.Example : Husband and
wife are the joint-account holders. Wife is a second account holder . Then in this case, only wife
can operate the account. Only after she is no more, can the husband have access to operate the
account.
Jointly

In this type of account, all the transactions need to be signed and mandated by all the
account holders. If any of the account holder dies then the account can not be further
operated. The balance proceeds shall be payable to survivor.

Jointly or Survivor

This is similar to “jointly” option. The only difference being, the survivor can continue to
operate the account. Alternatively, the proceeds of the account can be transferred to
his/her name.

Along with the above options there is another type which is “Minor Account.” If the
primary account holder is less than 18 years of age then there should be an adult
guardian, as a joint account holder.
Joint Tenants With Rights Of Survivorship (JTWROS)
Under this type, when one of the account holders dies, the assets of the shared
account go to the other survivor, exclusive of probate, as per the existing rule of law.
Tenants In Common (TIC)
Under this category of the shared account, each joint holder can have a different
beneficiary for their share of the asset. As a result, the assets of the deceased
account holders pass to the beneficiary instead of the second account holder.
Moreover, the split of the assets may not get done in equal halves; instead, it gets
distributed as per the mandate given by each account holder.
Joint Tenants
Under this operation, one gets to split the assets in the shared account into two
halves for each account holder.
 Prerequisites for Opening a Partnership Bank Account
PAN Card of Partnership Firm: Ensure that your partnership firm has a PAN (Permanent Account
Number) card, as this is a mandatory requirement.

Partnership Deed: The partnership deed is a legal document that outlines the terms and conditions
of your partnership. It serves as evidence of your business structure and should be prepared
beforehand.

Identity Proof and Address Proof of Partners: Each partner will need to provide their identity and
address proofs, such as an Aadhar card, passport, or driver’s license.

Address Proof of Partnership Firm: Provide documents verifying the business address, such as rent
agreements or utility bills.

Registration Certificate (if applicable): If your partnership firm is registered, ensure you have the
registration certificate on hand.

Utility Bills: Latest utility bills like electricity, water, or telephone bills for the business premises for
the last three months are usually required as proof of the business’s address.

Authorisation Letter: Prepare an authorisation letter designating one of the partners as the
authorized signatory for the partnership bank account
 The Procedure for Opening a Partnership Bank Account
Select a Bank: Choose a bank that suits your business needs and offers convenient branch
locations.
Visit the Bank: Schedule a visit to the chosen bank branch and inquire about their specific
requirements for partnership account opening.
Complete Application: Fill out the account opening application form provided by the bank. Make
sure to provide accurate and up-to-date information.
Document Submission: Submit all the required documents mentioned in the prerequisites section
to the bank. Ensure that all partners sign the application and partnership deed.
Verification: The bank will verify the documents and may conduct background checks on the
partners. This process can take a few days to a couple of weeks.
Initial Deposit: Make the initial deposit as per the bank’s guidelines. This amount may vary from
bank to bank.
Receive Account Details: Once the bank approves your application, you will receive your
partnership bank account details, including the account number and relevant documents.
Activate and Manage the Account: Visit the bank to activate the account, set up online banking
services, and familiarise yourself with account management tools.
 Documents required to open a current account
In order to open the current account for a partnership firm, the following are the documents that are required to be submitted along
with application for opening the account:

1. A certified copy of the partnership deed

2. The PAN card that is in the name of the partnership firm
3. AADHar card of all the partners of the firm
4. Address proof of the place of business
5. ID proof of the partners of the firm
6. If there partnership is registered, then you are going to need a partnership registration certificate
7. A certified copy of any license that the partnership firm possesses. They can be:
○ Mandi License
○ Labour license
○ Trademark registration certificate
○ Liquor License
○ Registration certificate by customs department
○ Weights and measures registration certificate
8. An NOC from the police department
9. GST registration certificate
10. SSI Registration or MSME registration certificate(if any)
11. Startup Recognition Certificate (if any)
12. EPF details of the partners of the firm
13. SEBI registration certificate
14. Income tax returns that were filed by the partners
15. Copy of electricity and the phone bill.
1. PAN in name of Firm
2. Partnership Deeds
3. Registration Certificate or one government issued certificate confirming the name, address &
activity of the firm
● Certificate/licence issued by the municipal authorities under Shop and Establishment Act
● CST/VAT/ GST certificate
● Certificate/registration document issued by Sales Tax/Service Tax/Professional Tax authorities
● IEC (Importer Exporter Code) issued to the proprietary concern by the office of DGFT/
Licence/certificate of practice issued in the name of the proprietary concern by any professional body
incorporated under a statute
● Complete Income Tax Return (not just the acknowledgement) in the name of the sole proprietor where
the firm's income is reflected, duly authenticated/acknowledged by the Income Tax authorities
● TAN Allotment Letter issued by NSDL in the name of the firm
● Certificate/ License of Registration under any specific Statute/Act of the government
● Utility bills such as electricity, water, and landline telephone bills
4. Partnership Declaration in bank format (to be signed by all the partners)
5. Proof of Identity & Address of Partners:
● Passport
● Driving License
● Voter ID card
● Aadhaar card
● PAN card
● Letter issued by the National Population Register
Current Account Opening Documents – Public/Private Limited Company
Here’s the checklist of documents required to open a current account for joint stock companies (public or private limited):

Memorandum of Association (MoA)

Articles of Association (AOA)
An updated list of directors of the Public/Private limited company
Board Resolution (BR)
Shareholding pattern/ list & ID proofs of all the beneficial owners owning more than 25% of the firm
Address proof: anyone out of Aadhar card, voter ID card, rent agreement, electricity bill, telephone bill, water bill, passport,
driving license
Identity proof: anyone out of PAN card, passport, voter ID card, driving license, aadhaar card
Business registration proof or incorporation certificate
PAN of the entity
Latest passport size photo
Account opening cheque from an existing bank account

https://old.amu.ac.in/emp/studym/100004752.pdf
Documents Required to Open a Club, Society, or Association Bank Account
i. Authorization Letter to Open Bank Account
ii. Valid Identification of the Signatories
iii. Bank Verification Number (BVN) of Signatories
iv. Proof of Address
v. Passport Photo(s) of Signatories
vi. Two (2) References
vii. Constitution of the Association, Club, or Society
viii. Minutes of the Meeting
Authorization Letter to Open Bank Account
The foremost document needed by a bank to open a bank account for a club, society, or association is an authorization letter from
a presiding officer of the society/club/association to create the bank account.

If the association/club/society is formed within the premises of a proper corporate entity, the authorization letter must come from
the presiding officer of the corporate entity. For instance, an association formed within a church must get an authorization letter
from the presiding officer of the church agreeing to the creation of the bank account.

For clubs and societies that are stand-alone, the authorization letter must be endorsed by the overall president of the club/society.

This helps the bank/financial institution to confirm that the leadership of the society/club is in agreement to open the bank account.

The authorization letter must contain the following:

● The appointed signatories of the bank account

● The signing powers of the appointed signatories
● The signing mandate/arrangement of the signatories
 ● Valid Identification of the Signatories

All the appointed signatories of the club, association, or society must present their
government-issued valid ID cards and recent utility bills to the bank. In Nigeria, a government-issued
valid can either be a:

● Voters’ Card
● International Passport
● Driver’s License
● National Identification Number (NIN)

Bank Verification Number (BVN) of Signatories

BVN is a unique 11-digit number used by banks/financial institutions in identifying people. All the
appointed signatories MUST present their BVNs to the bank for an account to be created. This is a
serious requirement to open a bank account.
Proof of Address
This is very important to open a club or association bank account in Nigeria. A proof of address/utility bill is a receipt or invoice
issued by a biller, showing the address of the user of the utility. The meeting point or verifiable secretariat of the association or
club must be clearly stated in the utility bill being presented. The utility bill must be recent i.e, 1-3 months old.

Here are the types of utility bills in Nigeria:

● Telephone bill
● Tenancy agreement/rent receipt
● Electricity bill
● Water bill
● Land use charge (for Lagos only)
● Waste bill

Passport Photo(s) of Signatories

The proposed signatories of the association, society, or club to be opened must present their recent passport photos. The
passport photo, preferably, should:

● Be clear
● No eyeglasses/sunshades
● No head-ties
● Lighting must be balanced, avoid glare
● Avoid laughing/frowning
● Show the signatory’s ears, neck, opened eyes, and face
Two (2) References
This is also very important in opening a club, association, or society bank account. The reference forms, to be provided by
the bank, must be duly filled and signed both by the signatories of the proposed bank account, and the referee.

Here are some rules about reference forms:

● The referee account can be from any Nigerian commercial bank

● The referee’s bank account must be your account type or one that requires even more documentation to open. In
this case, only an LLC, a Business Name (BN), a PLC, or another association/club can stand as a referee. Current
account-holding individuals cannot stand as references for associations or clubs.
● A related party e.g., family member, self in another bank, etc. cannot stand as a reference
● A duly signed reference can only be valid for 6 months before the presentation

Constitution of the Association, Club, or Society

A constitution contains all the rules, guidelines, and regulations guiding the conduct of the members of the said body.

This document is extremely important in the account opening process, as the bank will go through the provided
constitution to confirm if the activities of the association/club conform with the existing laws of the country.
Minutes of the Meeting
The association/club secretary must present a copy of the minutes of the meeting where the entire association
agreed to create the said bank account. This is to confirm that the bank is not acting on the request of just a
section of the club or association.

The minute should be signed by the association/club secretary and another officer
 Who is Non-Resident Indian (NRI)?
In simple words, a Non-Resident Indian (NRI) is a person residing in a foreign country with the status of an Indian
citizen. NRIs are also referred to as Overseas Indians because they reside overseas. The Foreign Exchange
Management Act 1999 (FEMA) and the Indian Tax Act have outlined specific guidelines defining NRI meaning for legislative
and tax purposes.

Under FEMA, the NRI definition hints at someone who resides outside India as an Indian citizen or as a Person of Indian
Origin (PIO). The law defines an NRI as a person who:

● Stays in India for less than 182 days during the preceding financial year, or
● Has moved out of India or staying abroad for employment purposes, or
● Has gone out of India or is staying abroad for business-related activities or vocational purposes, or
● Has moved out of India or is staying abroad for any other objective hinting towards their intention of staying outside India
for an unspecified period.

For navy officers or traders who work in international waters, the tenure of stay depends on the territory. For instance, if the
person spends more than 183 days in foreign territorial waters, they are considered an NRI.

However, if they reside for a major part of the financial year in Indian territorial waters, they are considered Indian citizens.
Students of Indian origin studying in universities outside India acquire the status of a Non-Resident Indian and have to abide
by the legal regulations accordingly.
Non-Residential External
Non-Residential External or NRE Account can be opened and maintained by NRIs with earnings originating from the respective

individual’s country of residence but shall be held in Indian rupee denominations.

For better understanding, let’s consider the following instance – Ms. Avantika is employed in Paris, France, but her mother, who is a

dependent individual, stays in Mumbai. She remits 2000 euros every month in her NRE Account for her mother, which is deposited in

the account in Indian currency. Therefore, considering the prevailing exchange rate in that month was 1 EUR = 80 INR, her remittance

of 2000 Euro would be held as Rs. 1,60,000 in her NRE Account.

Non-Residential Ordinary Account
An NRO or Non-Residential Ordinary Account can be opened with income earned from within India and shall be held in that deposit

account in INR denominations. The source of income can either be rent, dividends, etc.

For instance, Mr. Rahul, who is an NRI residing in Newark, USA has an apartment in Mumbai which he has leased to Mr. Arman. To

receive rent earnings from such a lease, Rahul has to open an NRO account where Arman shall deposit the stipulated rent amount

periodically.

As deposits in an NRO account are made in rupee denominations, there is no step of currency conversion involved.
Foreign Currency Non-Residential Account
FCNR or Foreign Currency Non-Residential Account facilitates deposits made by Non-Residential Indians (NRIs) or Persons of Indian Origin (POI). NRIs or

POI can make these deposits in the currency of their country of residence and shall be held in that account in any one of the foreign currencies prescribed by

RBI.

The currencies in which deposits can be held in an FCNR (B) Account are – US Dollars (USD), Canadian Dollar (CAD), Australian Dollar (AUD), Euro (EUR),

Great Britain Pound Sterling (GBP), Singapore Dollar (SGD), Hong Kong Dollar (HKD), Japanese Yen (JPY) and Swiss Franc (CHF).

Hence, for instance, if an individual has earnings in any of these currencies, their deposits in an FCNR (B) Account shall not be subject to conversion. On the

other hand, if an individual earns in any other currency, deposits made in it shall be converted to any one of the prescribed currencies mentioned above.
NRI accounts can opened either on

1) Face to Face Basis

You may visit any nearest HDFC Bank branch in India and open NRE/ NRO Account. Click here to locate an HDFC Bank near you.
If account is being opened under FACE-TO-FACE basis, then you will have to carry all the original KYC documents while visiting the
branch.
2) Non-Face to Face Basis-
Click Here to fill in the HDFC bank NRE/NRO Account opening application form and our bank representatives will call you to assist
further on our account opening process.
If you are already an existing account holder with HDFC Bank and if you wish to open account under NON FACE TO FACE basis
then you need to mandatorily self-attest on all supporting KYC documents.
If you do not hold any bank relationship with HDFC Bank and if you wish to open account under NON FACE TO FACE basis then
supporting KYC documents need to be self attested by the and further need to be attested by any one of the designated authorities.
Click Here for the list of designated authorities.
References
● https://indiafreenotes.com/types-of-customers-and-account-holders/

● https://www.bdu.ac.in/cde/SLM/B.Com.%20Bank%20Management/Banking%20Theory%20Law
%20&%20Practice/lession%205%20types%20of%20customer.pdf

● https://www.studocu.com/in/document/bengaluru-central-university/bcom/customer-and-acco
unt-holder-notes/68442233

● https://groww.in/p/nri-account