opening and operation of accounts-sb

8/13/2019 Opening and Operation of Accounts-SB

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Opening and Operation of Different types of

Accounts: CD, SB, FDR, SNTD, Recurring,

NFCD, RFCD, Convertible & Non-Convertibleand other Deposit A/Cs.

Presented by-

Sk. Nazibul IslamFaculty Member, BIBM


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Bank Deposits

Mostly the banks business is funded through

deposits from retail and corporate customers as

well as call money from local banks. Othersources of banks fund are paid-up capital, reserve

& undistributed profit, Borrowings.

The management of each bank is aware of the

situation and it has already started diversifyingsources of funds to reduce the dependency on

funds from other banks.


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Deposits:Current liabilities of a bank in

the form of Current A/Cs , Savings A/Cs,

Fixed Deposit A/Cs, Money at call, Shortnotice time deposits, Recurring Deposits,

NFCD, RFCD etc.


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Types of Deposit

1. Demand Deposit:

a) Cur rent Deposit

b) A small portion of Saving Deposit

An amount deposited with a bank which may bewithdrawn on demand, i.e. without having togive any notice.

Demand Deposits like deposits in currentaccount and savings account are repayable ondemand, subject to the terms and conditions ofthe deposits.


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2. Time/Term Deposit

a) Fixed Deposits

b) Short term deposits

c) Recurring Deposits

d) Large portion of Saving Deposits

e) NFCDf) RFCD etc.


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Time deposits like Fixed deposits or recurringdeposits are repayable after an agreed period.

The deposits which are held by bank and financialinstitutions for a fixed period plus a certainpercentage of savings deposit which arewithdrawable by notice only.

The period of the deposit and rate of interestapplicable to the deposit are matters to be agreedbetween the depositor and the bank under theterms of the deposit.


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Current Deposit Account

A Current account is generally opened by business

people for their convenience.Big customers as

Individual business man, Group of persons, JointStock Companies, Public authorities , Non-trading

Companies, Trustees, Banks, Corporations etc.

generally open this account.

Money can be deposited and withdrawn at any

time without restriction. Money can be withdrawn

only by means of cheques.


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In fact, unlimited cheque facilities are its specialfeatures. Usually, a banker does not allow anyinterest on this deposit account. Even then

people come forward to deposit money oncurrent account because of two important

privileges, which they can enjoy in a currentaccount, namely-

1. Overdraft facility in some cases and

2. Other facilities like collection of cheques,transfer of money and general utility services.


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For this reason account holders do not mind abanker charging some commission for servicesrendered and incidental charges for maintainingthe account.

The bank charges interest on overdraft on a day today basis.

Current account holders are to keep a minimumbalance in the account failing which they will haveto pay bank incidental charges at the time of halfand annual closing of accounts.


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Usually the bank sends a statement of account to

the customers every month.

As these deposits are repayable on demand, thebanker required to keep a large cash reserve. This

may be one of the reasons why a banker does not

pay any interest on current deposit accounts.


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Savings Deposit Account

This deposit is intended primarily for small scale savers.

The main objective of this deposit account is to encourage

savings habit among people.

The number of withdrawals is generally restricted. Rules in

this regard may vary from bank to bank.

Heavy withdrawals are permitted only against prior notice.

Generally withdrawal without notice is allowed twice in aweek upto 25% of the balance in the account subject to

maximum of Tk.10,000/-.


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Withdrawal beyond the maximum limit willrequire 7 days prior notice. Failure to which nointerest is allowed for the month in which

withdrawals occurs. A minimum balance is required to be maintained

all times.

Cheques, dividend warrants etc. allowed for

collection. Interest generally allowed on this deposit account

subject to fulfillment of the terms and conditions.Interest is payable on collected funds also.


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Interest is allowed at the rate specified by the bank

on minimum monthly balances and on monthly

product basis. Cheque book is issued to the account holder.

Appointment of nominee is compulsory.

Interest is credited to the account every six months

(Generally in June and December).


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Fixed deposits

The term Fixed Deposit means deposits repayable afterthe expiry of a certain period, which ordinarily varies from3 months to 1 year and above. They are also known as timeliabilities or term deposits.

The fixing of the period enables the banker

-to invest money

-employ it in his business without having to keep

a reserve.

These deposit are occupied against acknowledgementreceipt which is popularly known as FDR.

Longer the period, the higher the rate of interest.


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Recurring Deposits

Deposit pension Scheme/Monthly Savings

Scheme/Contributory Savings Scheme etc. are

opened by the fixed income/salaried people intendto save money with a bank monthly so that they

can get back their savings and interest/profit

thereon after a few years.

One can take benefit at a time on maturity or cantake monthly pension amount.


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Depositors save and deposit regularly every montha fixed installment so that they are assured of thesizeable amount at a later period. This enable thedepositors to meet contingent expenses.

In such accounts, only deposits can be made andno withdrawal is allowed until the expiry period as

per terms of contract.

A recurring deposit holder can get a loan on thesecurity of a recurring deposit up to a certain

percentage.


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These accounts are transferable from one branch

to another of the same bank as required.

A recurring deposit holder is given the passbook/statement for verification.

The rate of interest is almost similar to the rate

offered on fixed deposit but it is compounded.

Monthly benefit deposit scheme/Monthly income

scheme, Education savings scheme, Hajj deposit

scheme etc. are other special recurring deposit

scheme.


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Short Term Deposit

Generally, these accounts are opened who wants liquidity

and some return simultaneously on their deposits.

Withdrawable by short notice.

No interest is payable if withdrawal is made without prior

notice.

Interest is payable on daily product basis.

Interest is lower. Suitable for corporations.

Cheque books issued (at present).


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Interest is payable-

- at the time of withdrawal of entire amount

- at the time of annual and half-yearly closing

- at the time of closing the account

- at the time of transferring the account.


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Foreign currency accounts

As per existing guidelines of Bangladesh bankthe ADs may open following types of foreigncurrency accounts:

1. Private Foreign Currency Accounts.

2. Non-Resident Foreign Currency Deposit(NFCD) Accounts.

3. Resident Foreign Currency Deposit (RFCD)Accounts.


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Private foreign currency accounts:

Private foreign currency accounts may be openedin the names of-

i) Bangladesh Nationals residing abroad.

ii) Foreign nationals residing abroad or in

Bangladesh.

iii) Foreign firms registered abroad and operating

in Bangladesh or abroad.

iv) Foreign missions and their expatriate

employees.


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v) Bangladeshi nationals working with the

foreign / international organizations

operating in Bangladesh provided their

salary is paid in foreign currency.

vi) Diplomatic Bonded Warehouse (Duty

free shops) licensed by the CustomAuthorities.


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Credits to such foreign currency accounts may bemade against inward remittance of foreign

exchange in any form or transfer from anotherforeign currency account or non-resident Takaaccounts of banks abroad.

Payments may be made freely abroad from these

foreign currency accounts to the extent of balanceslying therein.

Local disbursements may also be made freely inTaka from such foreign currency accounts.


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Opening of FC Account by Bangladeshi

nationals residing abroad (wage earners): Account can be opened without initial deposit.

Remains operative even if operation not made for a

particular time.

Both the account holder and the nominee can operate theaccount.

Wage earners can remit fund from abroad.

First transaction normally takes place when remittance

deposited. Wage earners may also deposit currency notes, travelers

cheques, drafts brought into Bangladesh.

Entire remittance from abroad is free from income tax.


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Documents required:

Account opening form duly filled in and signed. Photographs of the account holder. Photocopy of the employment contract.

Photocopy of passport of the account holder (first 7pages) and visa.

Photographs of the nominee duly attested by the accountholder.

Letter of authority (for nominee).

Specimen signature card, which is used both for theaccount holder and the nominee.

Any other pertinent information / documents if requiredsuch as transaction profile.


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Non-Resident Foreign Currency Deposit (NFCD)

Account:

All non-resident Bangladesh nationals and persons

of Bangladesh origin including those having dual

nationality and ordinarily residing abroad, maymaintain interest bearing time deposit accounts

namely Non- Resident Foreign Currency Deposit

(NFCD) Account with the authorized dealers.


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NFCD Account may be opened by Bangladesh

nationals serving with Embassies/High

Commissions of Bangladesh in foreign countriesand the officer/staff of the government/semi-

government / autonomous / nationalized banks

posted abroad or deputed with international and

regional agencies like IMF, World Bank, ADBetc. during their assignment abroad may open such

accounts.


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NFCD Accounts can also be opened with funds

transferred from existing foreign currency

accounts maintained by the wage earners with theauthorized dealers in Bangladesh.

NFCD Accounts are in the nature of term deposits

maturing after one month, three months, six

months and one year.


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These accounts may be maintained in US Dollar, PoundSterling, Deutsche Mark, Japanese Yen and Euro withminimum amount of USD 1000 or Pound Sterling 500 or

equivalent. Accounts may be opened against remittances ofother convertible currencies after conversion of those intoabove currencies.

Application in prescribed form may be sent by the eligibleBangladesh nationals along with a set of specimen

signatures of the opener duly verified by Bangladeshmission abroad or authorized dealers foreigncorrespondent.


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- These accounts may be maintained as long as the

account holders desire. Eligible persons are also

allowed to open such accounts within six monthsof their return to Bangladesh.

- The account holder can freely repatriate the

balance and the interest accrued thereon, in

foreign exchange to the country of his residence oranywhere in the world.


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The ADs in Bangladesh may at their option sell

foreign exchange deposits (in US dollars only) to

the Bangladesh Bank without any lower limit atthe Bangladesh banks buying rate and repurchase

the principal and interest at the Bangladesh bank

selling rate prevailing on the day of repurchase.

The ADs may also invest abroad the amountsdeposited with them and pay interest to the

depositors out of earnings from such investments.


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Resident Foreign Currency Accounts:

Persons ordinarily resident in Bangladesh may

open and maintain Resident Foreign Currency

Deposit (RFCD) Accounts with foreign exchangebrought in at the time of their return from travel

abroad.

These accounts may be opened by any amount of

foreign exchange brought in with declaration tocustoms authorities in form FMJ and up to USD

5000 brought in without any declaration.


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RFCD Accounts may be opened in US Dollar, PoundSterling, Deutsche Mark and Japanese Yen and may bemaintained as long as the account holder desires.

While depositing foreign exchange for credit to suchaccount the depositor shall furnish written declaration,mentioning the date of return from abroad and the amountof foreign exchange brought in, that the foreign exchange(i) is not a receipt against export of goods or services from

Bangladesh, (ii) is not a commission due from abroadarising from business deal in Bangladesh.


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The ADs will credit the foreign exchange

presented by the depositor to the RFCD account

only after examining the passport of the depositorand the FMJ form (if the amount exceed the

equivalent of USD 5000) and after being satisfied

about the correctness of the declaration.


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Interest in foreign exchange shall be payable on

balances on such accounts if the deposits are for a

term of not less than one month and the balance isnot less than SD 1000 or pound Sterling 500 or

equivalent. The rate of interest shall be one-

quarter percent less than the rate at which interest

is paid on balances of banks in their foreigncurrency clearing accounts maintained with the

Bangladesh Bank.


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Convertible and Non-Convertible Taka Accounts

ADs may open convertible Taka accounts in the

names of foreign organizations/nationals viz.,

diplomatic missions, UN organizations, non-profitinternational bodies, foreign contractors and

consultants engaged for specific projects under the

Govt. semi Govt. agencies and the expatriate

employees of such missions / organizations whoare resident in Bangladesh.


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These accounts may be credited with foreign

currency brought in or remitted from abroad or

transferred from a foreign currency account oranother convertible Taka account.

For transfer from another convertible Taka

account, the taka amount from the transferors

account would be converted into foreign currencyfor transfer and credit to the recipient account by

conversion into Taka.


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No money emanating from a business originating

in Bangladesh and otherwise repatriable to

Bangladesh can be credited to these accounts. A convertible Taka account may be debited for

payments in foreign currency abroad, for local

expenses, for transfers to foreign currency

accounts or other convertible Taka accounts or forcredits to a non-convertible Taka account.


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Foreign organizations/their expatriate personnel maymaintain non-convertible Taka accounts with Ads without

prior BB approval.

These accounts may be credited with funds fromconvertible Taka accounts, with remittances from abroad,and with Taka received from authorized sources includinginterests from STD accounts.

These accounts may freely be debited for local expenses.

No remittance abroad or transfer to an foreign currencyaccount/Convertible Taka account may be made by debitto a non-convertible Taka account.


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Thank You