Ancillary Services

Topics: Bank, Deposit account, Foreign exchange market Pages: 34 (12746 words) Published: September 1, 2012
Ancillary Services by Retail Banks
This background note is intended to provide essential understanding about various ancillary services offered by retail banks to their customers such as; A. Extension of Safe Deposit Locker / Safe Custody Article Facility and Access to Safe Deposit Lockers / Return of Safe Custody Articles by banks B. Remittance facilities for Non-Resident Indians / Persons of Indian Origin / Foreign Nationals C. Interest Rates on Rupee Deposits held in Domestic, Ordinary Non-Resident (NRO) and NonResident (External) (NRE) Accounts D. Forex Facilities for Residents (Individuals) E. Electronic Money The required information is largely sourced from the public domain of Reserve Bank of India

Background Note on

……………………………………………………………………………………………………………………….. 1. Allotment of Lockers 1.1 Linking of Allotment of Lockers to placement of Fixed Deposits The Committee on Procedures and Performance Audit of Public Services (CPPAPS) observed that linking the lockers facility with placement of fixed or any other deposit beyond what is specifically permitted is a restrictive practice and should be prohibited forthwith. We concur with the Committee's observations and advise banks to refrain from such restrictive practices. 1.2 Fixed Deposit as Security for Lockers Banks may face situations where the locker-hirer neither operates the locker nor pays rent. To ensure prompt payment of locker rent, banks may at the time of allotment, obtain a Fixed Deposit, which would cover 3 years rent and the charges for breaking open the locker in case of an eventuality. However, banks should not insist on such Fixed Deposit from the existing locker-hirers. 1.3 Wait List of Lockers Branches should maintain a wait list for the purpose of allotment of lockers and ensure transparency in allotment of lockers. All applications received for allotment of locker should be acknowledged and given a wait list number. 1.4 Banks are also advised to give a copy of the agreement regarding operation of the locker to the locker-hirer at the time of allotment of the locker. 2. Security aspects relating to Safe Deposit Lockers 2.1 Operations of Safe Deposit Vaults/Lockers Background Note on Ancillary Services by Retail Banks – Compiled by Dr. Vighneswara Swamy, Associate Professor, Department of Finance, IBS-Hyderabad

Extension of Safe Deposit Locker / Safe Custody Article Facility and Access to Safe Deposit Lockers / Return of Safe Custody Articles by banks


Banks should exercise due care and necessary precaution for the protection of the lockers provided to the customer. Banks should review the systems in force for operation of safe deposit vaults / locker at their branches on an on-going basis and take necessary steps. The security procedures should be well documented and the concerned staff should be properly trained in the procedure. The internal auditors should ensure that the procedures are strictly adhered to. 2.2 Customer due diligence for allotment of lockers / Measures relating to lockers which have remained unoperated In a recent incident, explosives and weapons were found in a locker in a bank branch. This emphasises that banks should be aware of the risks involved in renting safe deposit lockers. In this connection, banks should take following measures: (i) Banks should carry out customer due diligence for both new and existing customers at least to the levels prescribed for customers classified as medium risk. If the customer is classified in a higher risk category, customer due diligence as per KYC norms applicable to such higher risk category should be carried out. (ii) Where the lockers have remained unoperated for more than three years for medium risk category or one year for a higher risk category, banks should immediately contact the locker hirer and advise him to either operate the locker or surrender it. This exercise should be carried out even if the locker hirer is paying the rent regularly....
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