Banking Operations and Procedures
Banking Operations and Procedures tests day-to-day account handling: KYC, cheque rules, clearing, electronic funds transfer, cash management and loan documentation.
Core rules and concepts
- Account opening requires KYC: identity and address proof, photograph, PAN or Form 60 where applicable, and risk-based periodic updation. Joint accounts and nominations must be recorded correctly.
- A cheque is valid for three months from its date. Crossing restricts payment to a bank account; endorsement transfers rights; a stale or post-dated cheque is not payable.
- NEFT has no prescribed minimum or maximum; RTGS has a minimum of Rs 2 lakh and no maximum; IMPS and UPI are immediate retail systems with bank-set limits.
- Stop-payment instructions must be recorded before payment. Clearing follows the CTS image-based process; a dishonoured cheque attracts statutory consequences under the Negotiable Instruments Act, 1881.
- Cash operations require dual control, denomination counting, and reconciliation of physical cash with the ledger.
Worked example
Opening balance Rs 30,000. Deposit Rs 50,000, cheque debit Rs 12,500, ATM withdrawal Rs 5,000, interest credit Rs 300. Closing balance = 30,000 + 50,000 - 12,500 - 5,000 + 300 = Rs 62,800. Reasoning: credits increase the customer liability to the bank; debits reduce it. Interest is a credit.
Traps that cost marks
Do not say RTGS has no minimum; it is Rs 2 lakh. Do not treat a three-month-old cheque as valid. Do not confuse NEFT with RTGS settlement timing. Do not ignore nomination or KYC updation. Do not record a stop-payment instruction after the cheque has already been paid.