Banking Operations and Procedures
Banking Operations and Procedures
This domain tests the routine paperwork and settlement rules that keep a bank account and payment system working: account opening, KYC, cheques, funds transfer and loan documentation. Questions often ask which form, endorsement or clearing rule applies.
Core rules and concepts
- KYC identifies the customer and verifies address; banks carry out customer due diligence at onboarding and periodic updation.
- A cheque is valid for three months from its date; a stale cheque, post-dated cheque or one with a material alteration not authenticated is returned.
- CTS cheque clearing uses a scanned cheque image and MICR data; the paying bank verifies the signature and funds.
- NEFT settles in batches, RTGS is for high-value real-time settlement with a minimum of ₹2 lakh, and IMPS is an immediate retail transfer.
- A nomination names a person to receive proceeds; a lien blocks funds until a claim is settled.
Worked example
A cheque dated 15 May is presented on 20 August. Three months from 15 May ends on 14 August under normal bank practice, so on 20 August it is stale and should be returned unpaid. The reasoning is to compare the presentation date with the cheque’s validity window, not with the account balance. If the same cheque were post-dated to 25 August, it would be returned as post-dated until that date.
Traps that cost marks
- Treating RTGS as having no minimum.
- Confusing NEFT batch settlement with IMPS immediate settlement.
- Ignoring the difference between a bearer cheque and an order cheque.
- Saying a nominee is automatically the legal heir; nomination is not inheritance.