Banking Operations and Compliance
Banking Operations and Compliance tests the account-level controls that keep a retail bank safe and lawful: KYC/AML, payment and clearing operations, nominations, lockers and grievance redressal. The exam favours scenario questions where a procedural step decides the answer.
KYC and AML controls
- Complete customer due diligence before opening an account; identify the beneficial owner and verify address, PAN and risk category.
- A politically exposed person is not automatically refused: apply enhanced due diligence, establish source of funds and obtain senior-management approval.
- Screen against sanctions lists; monitor transactions; file a suspicious transaction report with FIU-IND promptly. Do not tell the customer.
- Retain KYC and transaction records for five years after the relationship ends or the transaction is completed.
Operating rules
- Cheque truncation uses CTS; positive pay adds cheque-detail verification for high-value cheques.
- Nomination is optional but should be recorded; for safe deposit lockers, use the bank’s locker agreement and nomination.
- Grievance redressal starts with the bank’s internal ombudsman; unresolved complaints can go to the RBI Ombudsman under RB-IOS 2021.
Worked example
A new customer is a PEP and wants a savings account. The correct answer is not “reject” and not “open with normal CDD”. The bank should complete identification, treat the customer as high risk, obtain source-of-wealth evidence and senior-management approval, then apply ongoing enhanced monitoring. Rejection needs a separate policy reason.
Traps
An STR is not an FIR; record retention is not “forever”; lockers are not a bank custody service for contents; and a customer’s oral assurance does not replace CDD.