opening & operation of accounts ibp

Opening & Operation of Accounts

DEFINITION OF AN ACCOUNT

• A record of transactions related to a particular head (Asset, liability, revenue, expenses)

• A bank account is a record of transactions of a particular person, firm, company, club/society, or a Government Institution/Organization.

ACCOUNT HOLDER

• A person, firm, company, club/society, or a government institution maintaining accounts with bank for deposits and withdrawals as per agreed terms and conditions.

OPENING OF AN ACCOUNT

Opening of an account is establishment of banker customer relationship

CONTRACTUAL RELATIONSHIP

ELIGIBILITY FOR OPENING OF ACCOUNT

MUST NOT BE • Minor• Person of un-sound mind• Debarred from entering into any contact

under any law• Bankcrupt• Enemy• Proclaimed offender

IMPORTANCE OF OFFER AND ACCEPTANCE

Depositor offers money and the bank offers to accept his deposits.

The depositor in acceptance of this offer deposits his money.

Account opening form

Account opening form is the document that carries

1. Type and Nature of Account to be opened2. The details of a customer,3. Next of Kin4. Operating Instructions5. Detail of Other Accounts maintained with the bank

and/or other banks6. Acknowledgement and undertaking7. Signatures / thumb impression of the account

holder

KNOW YOUR CUSTOMER

INTRODUCTION

• State bank’s prudential regulations bound us and stresses upon obtaining all possible information about account opening individual.

KNOW YOUR CUSTOMER

Categories of Prudential Regulation

The prudential regulation covers four categories:

1. R, for risk management.

2. G, for corporate governance.

3. M for KYC & Anti money laundering.

4. O for Operations.

Any one can have latest version of prudential regulation through SBP web site.

KNOW YOUR CUSTOMER

PRUDENTIAL REGULATIONS

CATEGORY 3:

KYC & ANTI MONEY LAUNDERING

Prudential Regulation M-1 Know Your Customer

– Establish specific procedures for checking client’s financial status, source of earnings, and monitor transaction patterns, remitters and beneficiaries, to enable pinpointing of any abnormal transactions

– Train staff members to effectively implement the Bank’s policy and procedures.

– Set up an effective Internal Audit system for counter-checking compliance with Bank policy and procedures

Prudential Regulation M-2 Anti Money Laundering

– Prevention of Criminal Use of Banking Channels for the purpose of Money Laundering and other Unlawful Trade

– Identify ownership of all accounts, including those using custodial facilities, and implement effective procedures, to determine identity of new clients before starting relationships

– Ensure that business, including cross-border transactions, is in compliance with high ethical standards, and local and international banking laws

Prudential Regulation M-3 Record Retention

– All necessary records on transactions to be maintained for a minimum period of five years in a systematic manner with exactness of period of preservation.

– The records must be sufficient to permit reconstruction of individual transactions to provide, to SBP or law enforcement agencies for investigation or as an evidence in legal proceedings.

– Identification data of customers, account files and business correspondence should be retained for a period of five years after the end of relationship with the customer.

– Records relating to the suspicious transactions reported by the bank to be retained, till the time the State Bank of Pakistan permits the bank to destroy such record.

Prudential Regulation M-4 Correspondent Banking

• Obtain sufficient information about correspondent banks to understand the nature of their business considering the following factors:

Know your customer policy (KYC) Information about the correspondent bank's management and

ownership Major business activities Their location Money laundering prevention and detection measures Purpose of the account The identity of any third party that will use the correspondent

banking services (i.e. in case of payable through accounts) Condition of the bank regulation in and supervision in the

correspondent's country.

Prudential Regulation M-4 Correspondent Banking (contd.)

– Relationships with only those banks which have effective customer acceptance and KYC policies and are effectively supervised by the relevant authorities.

– Relationships with shell banks if any to be discontinued.

– Proper identification and ongoing due diligence of third parties using correspondent bank’s account (payable-through-accounts) should be ensured.

– Approval should be sought from a senior management position before establishing new correspondent relationships

Prudential Regulation M-5 Suspicious Transactions

– Special attention to be paid to all complex, unusually large transactions, and all unusual patterns of transactions, which have no apparent economic or visible lawful purpose.

– Suspicious transactions after proper investigation to be reported to SBP within three days with the following particulars:

• Title, type and number of the accounts.• Amounts involved.• Detail of the transactions.• Reasons for suspicion.• Nature of the underlying criminal activity, the bank / DFI suspects, has

generated the proceeds under suspicion.

– The employees should not disclose the fact to the customer that a suspicious transaction or related information is being reported for investigation.

– Foreign branches should also adhere to these regulations.

Suspicious transactions:Examples-1

• Large cash deposits

• Deposit of cash and then transfer elsewhere

• Frequent exchange of smaller notes for larger

• Depositing funds at different branches of same bank and transferring funds to main account

• Depositing and withdrawing the same amount

Importance of Introduction

Banker’s Considerations

• Before a banker opens a new account he should ascertain whether a person desirous of opening the account is a desirable customer.

• The bankers should determine the prospective customer’s

1. Integrity2. Respectability3. Occupation4. Nature of business.

Selection of Customer

PRELIMINARY INVESTIGATION

REASONS

Reasons of Investigation

1. Avoid Frauds

2. Safeguard against unintended overdrafts

3. Negligence

4. Inquiries about Clients

Avoid fraud:• If a banker does not make the necessary

inquiries he may enable dishonest persons to possess cheque books for fraudulent use.

• If any such person happens to be an un-discharged bankrupt, the banker might be placed in an awkward position for having allowed such a person to open and operate a bank account.

Safeguard against unintended overdrafts:

• Some time due to a mistake an account may be overdrawn. For instance, the ledger keeper misreading the balance of an account, honors a Cheque for an amount exceeding the balance.

• Similarly a credit entry belonging to a customer may be made by mistake in another customer’s account. In such situations, the excess amount withdrawn by the customer can only be realized if the customer is a desirable / acceptable person.

Negligence

When a banker does not make the necessary investigation, he may be deprived of the statutory protection provided to a collecting banker under section 131 of the Negotiable Instrument Act 1881. This is because in such a case the banker will be deemed to have acted negligently.

Section 131 of Negotiable Instrument Act 1881

• Where a banker in good faith and without negligence receives payment for a customer of a Cheque crossed generally or specially to himself, and the customer has no title or a defective title thereto, the banker shall not incur any liability to the true owner of the Cheque by reason only of having received such payments.

Inquiries about clients:

A banker has a business obligation to respond

to inquiries from other banks etc. about his

customer’s financial position.

Though the banker only gives a general idea about

the financial standing of his customer he should

nevertheless have the necessary information

available with them.

Generic Deposit Products

1. Chequing Accounts

• Current Accounts• PLS Savings Accounts

2. Non-chequing Accounts

• Term Deposit Certificates• Other Special Accounts

Types of Accounts


Current Account

•No profit / interest•Cheque book•No restrictions on # of transaction•No zakat•Ledger fees payable

Savings Account

•Profit / interest•Cheque book•Restrictions apply on # of transactions•Zakat payable•No ledger fees

Chequing Accounts


•Fixed Term Deposits

•Profit / interest•No cheque book•Restrictions apply on transactions•Zakat payable•No ledger fees

Non-Chequing Accounts

Deposit Banking Customers

•Individual Accounts

•Joint Accounts

•Proprietorship Accounts

•Partnership Accounts

•Private Limited Companies Accounts

•Public Limited Companies Accounts

•Trust Accounts

•Liquidators Accounts•Societies, Associations and Club etc•Local Bodies Accounts etc.•Autonomous & Semi Autonomous Institutions•Local/District Zakat /Usher Committees•Accounts of Government Departments

Types of Customers

Deposit Banking Operations

• A multipurpose Account opening form is used for

– Basic Banking Account

– Current Accounts

– PLS Saving Accounts

– PLS SNTDR

– PLS TDR

– Call Deposits

– FC Saving Accounts

– FC Current Accounts, FC Term

Accounts Opening Form


• Entry in Account Opened and Closed Register– Date– Particulars– Account Number– Number of running account– Initials of Authorized officer.

– Data fed to computer.


• Account opening officer will certify that “Account opened after compliance with Bank’s Anti Money Laundering, Anti-Terrorist Financing and Know-Your-Customer policy.

• Approval of the Manager/Manager Operations on AOF

• Data entry Operator will certify that “Account opened and particulars entered in computer.

• Specimen Signature express the authority of the account holder for the payment of the cheque drawn on his banker.

• Specimen Signature Card is specially designed card to record the specimen signature of the customers for reference.

Specimen Signature Card


• Contains in addition of SS particulars as– Account Number, Title, Operational Instructions

• Should be signed at two different places (lines)

• In Case of illiterate person;

– Pasting recent photograph.


• Importance

• Admitting Signatures (Stamping/Signing on left side)

• Comparison with AOF

• Changing Specimen signatures

• SS Cards, kept in Card Box must be;– Up to date

– In serial order

– Balanced with the running number of account

– Separated (Regular, Dormant & Inoperative)



• Can be opened in the name of;– Individuals (single/joint)

– Proprietary Firms

– Private Limited Companies

– Public Limited Companies

– Trusts

– Clubs, Associations

– Societies

– Institutions etc.

Current Accounts


• Features• Profit and Loss Sharing Saving Accounts.• PLS rates declared by bank, half yearly• Minimum Monthly balance condition to earn profit• Profit payable on minimum balance during the month• Can be opened by

– Individual (Single/Joint)

– Charitable Institutions

– Zakat/Usher Committee

– Local Bodies, Autonomous Corporation, Firms, Companies, Associations, Institutions etc. can open for Provident and other Benevolent nature funds.

PLS Saving Bank Accounts


• Sole discretion of bank for credits / debits of the profit / loss earned / incurred on PLS savings account on the basis of its net operational results.

• Profits calculated / credited by computer (centers)

• Calculation of products;– Monthly bases– Minimum balance of an account during the month.

• Accruals

• Service charges

PLS Saving Bank Accounts

SIGNATURES OTHER THAN IN URDU OR ENGLISH

• Vernacular form is required

ACCOUNT OF AN ILLETERATE PERSON

• Illiteracy does not disqualify a person from opening of account, however extra precautions to be taken

• 3 passport-size photographs are required• Instead of SS right and left hand thumb

impressions are taken on SS Card and AOF

• An illiterate person must come personally to operate the account.

ACCOUNT OF PARDANASHEIN WOMEN

• A household woman, observing parda or not is known as pardanashin woman.

• In case of an illiterate woman observing parda, which makes it difficult for banker to identify her, banker must advise her to open a joint account.

MINORS’ ACCOUNTS

WHO IS A MINOR ?

• A person who has not attained the age of 18 years is a minor. If the guardian's appointed by a court of law, this age is further extended by three years.

CAN A MINOR OPEN AN ACCOUNT ?

• According to Section 11 of Contract Act a minor is incompetent to enter into a valid contract.

• Usually bankers do not open account in minor’s name.

• The minor’s account is opened either in the parent or guardian’s name with the following special operational instructions.

Operational Instructions:

The guardian will operate the account Even if minor

attains the age of majority

Why Minor Account ?

• Normally and preferably the bankers would not have minor’s account but in order to attract deposits to broaden banking service and to inculcate the habit of saving the minor is allowed to open saving bank account along with parent/guardian.

RISK IN HAVING MINOR’S ACCOUNT:

• As, a minor is incompetent to enter into a contract the banker should always keep in its mind that no overdraft is allowed in that account.

CONVERSION OF MINOR’S ACCOUNT:

• The minor account, which has not been opened under the orders of the court, can’t be converted into an independent regular account without the consent of the guardian.

• The account can be converted into regular account of a major in case the person concerned produces the order of competent authority.

DEATH OF GUARDIAN:

• New guardian will be appointed by the court of law. Preferably the old account is closed and the new guardian is asked to open a fresh account.

TITLE OF MINOR ACCOUNT

• An account in the name of a minor shall not be opened unless title of account is in following form.

Muhammad Zeshan. (Minor)

Muhammad Ashraf. (Guardian)

Precautions -Opening of Minor Account

• The guardian shall only sign the account opening form.

• The age of the minor shall not be recorded either in account opening form or in the ledger.

• Under no circumstances overdrafts shall be allowed in the account of minor.


• Joint accounts can be opened with mutual agreement of two or more parties who can be relatives, friends or business associates. They can take shape of:– Any one to sign– Either or survivor– Any two or more to sign– All to sign jointlyAll have to sign the AOF and any change in instructions

• SS Card to be signed only by authorized signatories

• Illiterate, Blind, Handicapped people and Purdanashin illiterate ladies are advised to open joint account if other alternatives do not suit them.

Joint Accounts


• A banker should not open such account without written request of all the persons.

• Types of Operational Instructions.

– Any one to Sign

– Either or Survivor

– Any two (or more) jointly or survivor(s)

• Any joint account holder can request for stop payment.

• Get survivorship mandate in case of Joint A/Cs

Joint Accounts

STOP-PAYMENT in Joint Account

• Stop-payment can be marked by any one of joint account holder

• Removal of Stop-Payment is to be signed by all jointly

• Mandate is to be signed by all account holders and is automatically revoked by– Death, bankruptcy or insanity of either or any

of the account holders

Dormant Accounts

Operation & Activation

Dormant Accounts

• Current/savings accounts that remain inoperative for 1 year be classified as dormant by the system at every month end

• Half-yearly profit shall be paid as usual on dormant accounts through the system

• Account statements shall be printed as per frequency

Custodians of dormant accounts

• AOF & SS Cards Pertaining to Dormant accounts should be kept in the joint custody/Dual Control

Dormant Account – Activation

• Only custodians can authorize change in account status

• Only on account holder being present, the status of account can be changed

• Change of address/signatures can also be requested at the time of activation

Dormant Account – Activation - Procedure

• Customer upon his visit to branch is referred to the custodians

• Custodians to establish identity, Obtain CNIC and advise about account status and enquire about its activation

• Upon satisfactory enquiry, custodians to authorize activation of account

• Computerized branches will change the status themselves under supervision of both or either of the custodians

Accounts of Special Customers

Accounts of Partnership Concerns

What is Partnership?

• Section 4 of partnership Act 1932 defines partnership:

• Partnership is relation between the persons who have agreed to share the profits of the business carried by all or any of them acting for all.

Essentials of Partnership


• The persons concerned must carry on business.

• There must be an agreement.

• The agreement must be to share profits of business.

• The business must be carried on by all or any of them acting for all.


• Partner acts as agent of all the partners and therefore liable to all of them.


• A partner carrying out business of firm binds all his Copartners and the firm by doing any act necessary for doing business (Section 18 & 19)

• As per section 19 of Act every partner in the firm has an implied power to bind his partners by drawing, endorsing of cheques, and accepting B/E

Opening of a Partnership Account

• Who can introduce partnership account?• Letter of Partnership• Registration of Firm• Signature on A.O.F. in personal capacity.• Signature on declaration IV in personal

capacity.• Signature on S.S. Card in official capacity.

MODE OF SIGNATURES

• The signatures on A.O.F. should be in individual capacity by all partners.

• The signatures on Declaration IV should be in individual capacity by all partners.

• The signatures on SS Card should be in Official capacity of the person authorize to operate the account.

OPERATIONAL INSTRUCTIONS

• The partners should sign a mandate authorizing any or all of their members to make withdrawals and stipulating how many signatures shall be necessary etc.

Documentation – Partnership Accounts

• Attested copies of CNIC of all partners.• Attested copy of Partnership Deed duly

signed by all partners.• Attested copy of registration certificate.• In case of Non registered firms this fact

should be clearly mentioned on AOF.• Authority letter, in original, signed by all

partners, in favor of a person authorized to operate the account.

ADMISSION OF NEW PARTNER

• The operation in the A/c should not be stopped at the time of admission of new partner.

• A fresh mandate OR partnership letter duly signed by all the partners should be obtained.

• In case of debit balance if the new partner does not accept the liability the operation should be stopped immediately.

• {Section 13 of partnership Act provides that an incoming partner does not become liable to the creditors of the firm before he becomes partner}

ADMISSION OF NEW PARTNER

RETIREMENT OF PARTNER• If the provision have been made in the contracts,

the partnership can be carried out even after the retirement of a partner.

• As a general rule, the retirement of a partner changes the constitution of the partnership and the remaining partners can not carry out the business.

• A retired partner is liable for the debits incurred already

BANKRUPTCY OF A PARTNER

• A partnership (Section 34) is dissolved as soon as a partner is adjudicated insolvent or bankrupt.

IF THERE IS NO AGREEMENT• The solvent partners are empowered to carry on

business for the purpose of winding it UP• They will be accountable official assignee for

insolvent’s share in the firm.

Death of Partner• Where the deceased was operating the

account singly.• The balance shall be paid to the heirs of

deceased/surviving partners as per court order or agreement arrived at between surviving partners and heirs of deceased.

• Execution of Indemnity bond in the later case.

DEATH OF A PARTNER

• As the death of a partner can dissolve the partnership and the authority of any one partner or agent is revoked, it would be advisable that the cheques signed by a deceased partner before his death should not be honored without the confirmation of surviving partners. It is also the case with insolvent partners.

DEATH OF A PARTNER

• Cheque payable to firm should not be accepted for the credit of private account of a partner without inquiry being made from other partners.

• Failure to do so will deprive the banker of the protection of Sec.131 of the Negotiable Instrument Act on ground of negligence.

COUNTERMAND OF PAYMENT

• Any partner has an implied power to stop payment of a cheque drawn on the firm’s account

• Banker is bound to comply with the instructions of partners.

• Any one or more partners may cancel the authority given to operate the account.

• In this case the banker should not honor cheques drawn by such an authority.

Precautions- Partnership Accounts

• Who are the partners and under what title they transact business ?

• Opening of account by one partner. • Not to insist on partnership deed.• Manager( Non Partner) not to operate account

without proper authority. • Specimen signature of the manager to be attested

by the partners.• The account should be opened in the firm’s name.

Accounts of Public and Private Limited Companies

Joint Stock Company - Definition

• Companies Ordinance 1984 defines Joint Stock Company as

• “An artificial person” created by law with a common seal and perpetual (continuous) succession.

Types of Limited Companies

• Private Limited Companies

• Public Limited Companies

PRIVATE LIMITED COMPANY

• A private limited company is a company where the right to transfer the shares of its members is restricted

• Public subscription in the shares of the company is prohibited under its articles.

• The maximum number of its members is 50 and minimum is one.

PUBLIC LIMITED COMPANY

• A public limited company commonly known as a joint stock company

• Means an association of a number of individuals formed for the same common purpose.

• Its capital is divided into shares which are freely transferable by the shareholders and are quoted in the stock exchange market.

• The minimum number to form such a company is seven”.

DIFFERENCE BETWEENPRIVATE & PUBLIC LTD. COMPANY

• Relatives or persons having close relations form it.

• Minimum number of members is one

• Maximum number of members are 50.

• Publication of prospectus is not required.

• Subscription is restricted to members only.

• It may be formed by any body from general public.

• Minimum number of members is 7• Maximum number of members

are un-limited.• Publication of prospectus is legal Obligation.• Subscription is open to public.

PRIVATE LTD. COMPANIES PUBLIC LTD.COMPANIES


• It can start business as soon as it is formed.

• There is no need to obtain certificate of Commencement of business.

• There is no obligation to get the accounts audited by Chartered Accountants.

• Registration gives legal entity • Cannot start business unless

certificate of commencement of business is obtained.

• Accounts of the company are to be audited by Chartered Accountants.

• Transfer of shares is restricted among the members.

• Election of Directors is not necessary.

• Statutory meeting is not necessary

• Shares are freely transferable.

• Election of Directors is must.

• Statutory meeting must be called within one year time or not more six months time after registration.


Opening of Limited Company Accounts- Documentation

1. Resolution of the Board of Directors to open and operate the account.

2. Memorandum of association.3. Articles of association.4. Certificate of incorporation.5. Certificate of commencement of business (not

required in case of private limited Co.)6. Last balance sheet. (if Co. is old)7. List of directors with addresses.8. CNIC of all signatories.

Resolution of the Board of Directors

• It is an authorization from the board of directors in favor of persons authorized to open a account

• The resolution must consist of following points1. Name of the Bank2. Name of the person authorized to operate

upon the account with their specified authority3. An undertaking to keep the bank informed

about revocation of authority or any changes in board of Directors.

Memorandum of Association

• It is the charter of a company giving scope and objectives for which a company is formed

• It given names of company • Place of its registered office• Amount of share capital• Distribution into number of shares.

It governs a company with regards to its dealing with the outside world

Articles of Association

• It contains the rules and regulations for the internal management of the company regarding:

1. Powers of the directors 2. Election3. Retirement4. Meetings 5. Passing of resolution 6. Declaration of dividend

Certificate of Incorporation

• The registrar of the joint stock company issue this certificate and it is conclusive evidence that all the requirements of the law regarding formation and registration of the company have been duly complied with

Certificate of Commencement of Business

• This certificate is issued when the registrar of the joint stock company is satisfied with regard to the subscription of shares by the public

• Before issuance of this certificate a company cannot enter into a valid contract

GENERAL INSTRUCTIONS/PRECAUTIONS

• In case of accounts of limited companies, the signatures will be in official capacity on “AOF” and “specimen signatures Card”.

• Saving bank account holder can not introduce a current account of limited company unless the SB A/c. holder is really a very good customer or is personally known to the manager.


• If an officer of other branch of the same bank introduces account verify the signature of officer from specimen signature book and then send the account opening form to that branch with special messenger for physical verification.

• Clear instruction with regard to operation should be obtained.


• No Cheque book is issued or withdrawals allowed unless a certified copy of the certificate of commencement of business is produced in case of Public Limited Company.

• If a company fails to produce such certificate the deposit accepted by the bank, shall be refunded in one sum to the Directors of the company on obtaining a joint receipt from all of them subject to the prior approval of the Head Office.


• No advance shall be allowed to a company unless authorized by the memorandum and articles of association to secure advance against securities offered by it.

• The person (s) signing the charge documents in respect thereof shall be entitled to so by virtue of the powers vested in him/them by memorandum and articles of the company.


• In case of opening an account of newly floated Public Limited Company, approval from Head Office should be obtained

NON PROFIT NON TRADING ORGANIZATION

ACCOUNTS OF CLUBS/SOCIETIES

What is a Club/Society

• Body formed for the promotion of culture, education, religion , and charitable purposes.

• Includes Schools, Colleges, Mosques, Clubs and societies.

• Registered under Societies Registration Act 1866.

• Registration not compulsory.

Characteristics of Club/Societies.

Unregistered Organizations.• No Legal Entity• Cannot enter into a valid Contract.• Office Bearers have no implied borrowing

powers.• Not personally liable for any overdraft.• Affairs of societies are administered by

executive committee.

Opening of Account

Club/Societies

Account Opening-ProcedureDocuments• Account opening form duly completed• Specimen signature card duly completed in

duplicate.• Declaration form III should be signed by the

authorized office bearer • Resolution of Governing body authorizing the

opening of account with UBL.

Account Opening-Procedure

Documents• Names of authorized persons and their Specific

authority to operate account• Copy of bye-laws-Certified Copy • Attested copy of registration certificate if any.• Undertaking by the authorized persons to keep

bank informed about any change.• List of members of executive/managing/working

committee

ACCOUNTS OF CLUBS AND SOCIETIES

Precautions • All withdrawals only according to the instructions

contained in bye laws or resolution.• No overdraft to be allowed without head office

approval • Funds belonging to societies not to be

transferred to personal account of office bearers

ACCOUNTS OF CLUBS AND SOCIETIES

• No Cheque drawn in favor of the club/society will be collected for credit the private account of office bearers.

• Fresh resolution required on transfer or death of an office bearer operating the account

Trust Accounts

Banker’s Considerations

Definition of Trust

• Section 3 of Trust act 1882 Defines

A trust is an obligation annexed to the ownership of property out of a confidence reposed in and accepted by the owner of declared and accepted by him for the benefit of another and the owner

Ingredients of Trust

• A person who declares the confidence is called author of Trust

• A person who accepts the confidence is called Trustee

• A person who benefits from the confidence is called Beneficiary

Ingredients of Trust

• The subject matter of Trust is called Trust Property or Trust Money

• The instrument by which a trust is declared is called Trust Deed

Four Constituents of Trust

1. An intention on the part of author

2. The purpose of Trust

3. The beneficiary

4. The trust Property

Who may create/Constitute trust

• Persons having contractual capacity

• The subject matter of trust must be estate or property transferable to trustee

Who may be beneficiary

• Every person who gets the benefit from trust property may be trustee

Acceptance of Trust

• A trust is accepted by any words or acts of the trustee indicating with reasonable certainty of such acceptance

• No one is bound to accept a trust

Disclaimer of Trust

• Instead accepting a trust the intended trustee may with in reasonable period disclaim

• Such disclaimer shall prevent the trust property from vesting in him

Acts of Trustee

• Receives money and invest it • otherwise uses it according to the terms of

trust • No account in detail for every thing he has

done with it.• A trustee is a person in whose are the control

of an estate ( Generally of deceased person under a will.)

Opening/Handling of Trust Accounts

• Accounts be opened with head office approval • Registration of Trust deed• Withdrawals under joint signature • Delegation of authority not permissible • No overdraft to be allowed

Opening/Handling of Trust Accounts

• Trust funds • Funds belonging to trust not to be collected in

personal accounts • Operations to be stopped if a trustee dies• Recording in system

Trust Accounts - Documentation

• Attested copy of certificate of registration.• Attested copies of CNIC of all trustees• Certified copies of Instrument of Trust

Appointment of New Trustee

• Disclaimer on the part of trustee• Death of Trustee• Shifting of residence on the part of trustee• Insolvency of Trustee• Desire on the part of Trustee to be

discharged• Becomes incapable to act in the trust

Death or Retirement of Trustee

• Operations to be stopped forthwith.• Surviving Trustees not allowed to operate on the

account.

Borrowing by the Trustee

• Generally no implied power to borrow for the trust

• Trust deed can give express power to borrow or pledge trust property.

Borrowing by the Trustee

• Ensure borrowing is for the purpose mentioned in Trust deed.

• Accepts only those securities mentioned in the trust deed.

• Trustees Jointly and severely responsible to bank

Insolvency of Trustee

• Insolvency doesn't terminate trustee from trust automatically.

• Sound reason for court to terminate trustee.• Cheque issued by terminated trustee be

returned unpaid

ACCOUNTS OF EXECUTORS AND

ADMINISTRATORS

ACCOUNTS OF EXECUTORS AND ADMINISTRATORS

• Executor is a person nominated by deceased during his life to execute the will after his death.

• In the event of Executor’s death or inability to perform, administrator is appointed by the court to execute the will of deceased.

• No such account can be opened without prior approval from Head Office


The account shall be opened in the following form:

Mohammad Jamil & Mohammad AminExecutors of the Estate of

Mohammad Kamil, deceased.

Mohammad Jamil & Mohammad AminAdministrators to the Estate of

the deceased Mohammad Kamil.


• The account Opening Form shall be signed by all the Executors to whom probate has been granted, or by al the Administrators, if more than one.

• The probate or Letter of Administration shall be duly registered at the Branch.


• Clear instructions under the signatures of all the Executors and/or Administrators shall be obtained to determine as to which of the Executors or Administrators shall operate on the account.


• In the event of revocation of such instructions by any of the Executors or Administrators, further operations in the account shall be allowed only under the joint signatures of all the Executors and Administrators.


• No power of attorney or authority letter given by the Executors or Administrators to third parties to operate on the account, shall be accepted by the Bank.

• No transfer of funds from the account of Estate to the personal accounts of the Executors or Administrators shall be allowed.


• The Executors/Administrators shall not be allowed to raise any borrowing from the Bank in their personal names against securities belonging to the Estate Account, nor shall they transfer any funds from the accounts of the Estate to their personal loan or overdraft accounts.