POLICY ON BANK DEPOSITS

Planning & Development Department

The South Indian Bank Ltd.

Head Office, Thrissur

(Reviewed on 17/10/2015 as per DBR/PLG/S-160/15-16)

CONFIDENTIAL

(Version- 12/15-16)
 1. Preamble

One of the important functions of the Bank is to accept deposits from the public for the
purpose of lending. In fact, depositors are the major stakeholders of the Banking System. The
depositors and their interests form the key area of the regulatory framework for banking in
India and this has been enshrined in the Banking Regulation Act, 1949. The Reserve Bank of
India is empowered to issue directives/advices on interest rates on deposits and other aspects
regarding conduct of deposit accounts from time to time. With liberalization in the financial
system and deregulation of interest rates, banks are now free to formulate deposit products
within the broad guidelines issued by RBI.
This policy document on deposits outlines the guiding principles in respect of formulation
of various deposit products offered by the Bank and terms and conditions governing the
conduct of the account. The document recognizes the right of depositors and aims at
dissemination of information with regard to various aspects of acceptance of deposits from
the members of the public, conduct and operations of various deposits accounts, payment
of interest on various deposit accounts, closure of deposit accounts, method of disposal of
deposits of deceased depositors, etc., for the benefit of customers. It is expected that this
document will impart greater transparency in dealing with the individual customers and create
awareness among customers of their rights. The ultimate objective is that the customer
will get services they are rightfully entitled to receive without demand. While adopting
this policy, the bank reiterates its commitments to individual customers outlined in the code
of Banks Commitment to Customers adopted by the bank. This document is a broad
framework under which the rights of common depositors are recognized. Detailed
operational instructions on various deposit schemes and related services will be issued from
time to time.

2. Types of deposit accounts

While various deposit products offered by the Bank are assigned different names, the
deposit products can be categorized broadly into the following types. Definition of
major deposits schemes are as under:-
o “Demand deposits” means a deposit received by the bank which is withdrawable on demand;
o “Savings deposits” means a form of demand deposit which is subject to restrictions as to the
number of withdrawals as also the amounts of withdrawals permitted by the Bank during any
 specified period;
o “Term Deposit” means a deposit received by the Bank for a fixed period withdrawable only
after the expiry of the fixed period and includes deposits such as Recurring / Double Benefit
Deposits / Short Deposits / Fixed Deposits / Monthly Income Certificate / Quarterly Income
Certificate etc.
o Notice Deposit means term deposit for specific period but withdrawable on giving at least
one complete banking day’s notice.
o “Current Account” means a form of demand deposit wherefrom withdrawals are allowed any
number of times depending upon the balance in the account or up to a particular agreed
amount and will also include other deposit accounts which are neither Savings Deposit nor
Term Deposit.

3. Opening & operation of deposit accounts

a) The Bank before opening any deposit account will carry out due diligence as
required under “Know Your Customer” (KYC) guidelines issued by RBI, Anti-Money
laundering rules and regulations and such other norms or procedures as per the
Customer Acceptance Policy adopted by the Bank. If the decision to open an account
of a prospective depositor requires clearance at a higher level, reasons for any
delay in opening of the account will be informed to him and the final decision of the
Bank will be conveyed at the earliest to him.

b) The bank is committed to providing basic banking services to disadvantaged sections

of the society. Banking services will be offered to them through Basic Savings
Bank Deposit Accounts and accounts will be opened with relaxed customer
acceptance norms as per regulatory guidelines. As part of its Financial Inclusion
Plan, bank also engages Business Correspondents to extend basic banking services to
the identified villages / locations.
c) The account opening forms and other material would be provided to the
prospective depositor by the Bank. The same will contain details of information to be
furnished and documents to be produced for verification and or for record, it is
expected of the Bank official opening the account, to explain the procedural formalities
and provide necessary clarifications sought by the prospective depositor when he
approaches for opening a deposit account.
d) The regulatory guidelines require banks to categorize customers based on risk
perception and prepare profiles of customers for the purpose of transaction monitoring.
Inability or unwillingness of a prospective customer to provide necessary
information/details could result in the bank not opening an account.
e) Inability of an existing customer to furnish details required by the bank to fulfill
statutory obligations could also result in closure of the account after due notice(s) is
provided to the customer.
f) For deposit products like Savings Bank Account and Current Deposit account, the
Bank will normally stipulate certain minimum balances to be maintained as part of
terms and conditions governing operation of such accounts. Failure to maintain
minimum balance in the account will attract levy of charges as specified by the Bank
from time to time. For Savings Bank Account the Bank may also place restrictions on
number of transactions, cash withdrawals, etc., for given period. Similarly, the Bank
may specify charges for issue of cheque books, additional statements of accounts,
duplicate pass book, folio charges, etc. All such details, regarding terms and
conditions for operation of the accounts and schedule of charges for various services
provided will be communicated to the prospective depositor while opening the account.
g) Savings Bank Accounts can be opened for eligible person/persons and certain
organizations/agencies (as advised by Reserve Bank of India (RBI) from time to time).
h) Current Accounts can be opened by individuals/partnership firms/Private and
Public Limited Companies/HUFs/specified Associates/Societies/Trusts, Departments
of Authority created by Government (Central or State) Limited Liability Partnership, etc.
i) Term Deposits Accounts can be opened by individuals/partnership firms/Private
and Public Limited Companies/HUFs/Specified Associates/Societies/Trusts,
Departments of Authority created by Government (Central or State) Limited Liability
Partnership, etc.
j) The due diligence process, while opening a deposit account will involve satisfying
about the identity of the person, verification of address, satisfying about his
occupation and source of income. Obtaining introduction of the prospective
depositor from a person acceptable to the Bank and obtaining recent photograph of the
person/s opening/operating the account are part of due diligence process.
k) In addition to the due diligence requirements, under KYC norms the Bank is required
 by law to obtain Permanent Account Number (PAN) or alternatively declaration in
Form No.60 or 61 as specified under the Income Tax Act / Rules.
l) Deposit accounts can be opened by an individual in his own name (status: known
as account in single name) or by more than one individual in their own names
(status: known as Joint Account). Savings Bank Account can also be opened by a
minor jointly with natural guardian or with mother as the guardian (Status: known as
Minor’s Account). Minors above the age of 10 will also be allowed to open and
operate savings bank account independently, subject to restrictions on transactions.
Cheque books will not be provided in such accounts and no overdrafts will be granted
to these minors. Bank offers Students’ A/c with ATM card facility for those students
who have completed the age of 10 years.
m) Operation of Joint Account – The Joint Account opened by more than one individual
can be operated by single individual or by more than one individual jointly. The
mandate for operating the account can be modified with the consent of all account
holders. The Savings Bank Account opened by minor jointly with natural guardian /
guardian can be operated by such guardian only.

n) The joint account holders can give any of the following mandates for the disposal
of balance in the above accounts:
a. Either or Survivor: If the account is held by two individuals say, A&B, the
final balance (on maturity) along with interest, if applicable, will be paid to
anyone of them when both are alive and to survivor on death of anyone of
the account holders.
b. Anyone or Survivor/s: If the account is held by more than two individuals say,
A, B and C the final balance(on maturity) along with interest, if applicable,
will be paid to any one of them when all are alive and to any one of the
survivor/s on death of anyone or any two account holders. The above mandate
will be applicable to or become operational only on or after the date of
maturity of term deposits. This mandate can be modified by the consent of all the
account holders.
o) At the request of the depositor, the Bank will register mandate/power of attorney
given by him authorizing another person to operate the account on his behalf.
p) The term deposit account holders at the time of placing their deposits can give
 instructions with regard to closure of deposit account or renewal of deposit for
further period on the date of maturity. In case of absence of any instructions deposits
will be treated as an auto renewal deposit and should be renewed for a similar period.
q) Nomination facility is available on all deposit accounts opened by the individuals.
Nomination is also available to a sole proprietary concern account. Nomination can be
made in favour of one individual only. Nomination so made can be cancelled or changed
by the account holder/s any time. The thumb impression of the accountholder affixed on
the nomination form is to be attested by two witnesses. Nomination can be modified by
the consent of account holder/s. Nomination can be made in favour of a minor also.
r) Bank recommends that all depositors avail nomination facility. The nominee, in the
event of death of the depositor/s, would receive the balance outstanding in the
account as a trustee of legal heirs. The depositor will be informed of the advantages of
the nomination facility while opening a deposit account.
s) A statement of account will be provided by the Bank to Savings Bank as well as
Current Deposit Account holders periodically as per terms and conditions of
opening of the account. Alternatively, the Bank may issue a Pass Book to these account
holders.
t) The deposit accounts may be transferred to any other branch of the Bank at the request
of the depositor.

4. Interest payment

a) The bank's own interest rates on domestic savings bank deposits and term deposits is
fixed from time to time with the prior approval of the bank's Board of Directors / Asset
Liability Management Committee (ALCO).
b) In terms of Reserve Bank of India directives, interest shall be calculated at quarterly
intervals on term deposits and paid at the rate decided by the Bank depending upon the
period of deposits. In case of monthly deposit scheme, the interest shall be calculated
for the quarter and paid monthly at discounted value. The interest on term deposits is
calculated by the Bank in accordance with the formulae and conventions advised by
Indian Banks’ Association.
c) The rate of interest on deposits will be prominently displayed in the branch
premises. Changes, if any, with regard to the deposit schemes and other related
services shall also be communicated upfront and shall be prominently displayed.
 d) The Bank has statutory obligation to deduct tax at source if the total interest
paid/payable on all term deposits and recurring deposits held by a person exceeds
the amount specified under the Income Tax Act. The Bank will issue a tax deduction
certificate (TDS certificate) for the amount of tax deducted. The depositor, if entitled to
exemption from TDS / lower rate of TDS can submit declaration in the prescribed
format at the beginning of every financial year along with the Permanent Account
Number (PAN) issued by the Income Tax Department.
e) Payment of Interest on Term Deposit Maturing on Sunday / Holiday / Non-business
Working Day. In case of reinvestment deposits and recurring deposits, banks should pay
interest for the intervening Sunday / holiday / non-business working day on the maturity
value. However, in the case of ordinary term deposits, the interest for the intervening
Sunday / holiday / non-business working day should be paid on the original principal
amount.

5. Minors’ accounts:

a) The minor can open Savings Bank Account and the same can be operated by the
natural guardian or by minor himself / herself, if he/she is above the age of 10 years.
The account can also be opened jointly.
b) On attaining majority, the erstwhile minor should confirm the balance in his/her
account and if the account is operated by the natural guardian / guardians, fresh
specimen signature of erstwhile minor duly verified by the natural guardian to be
obtained and kept on record for all operational purpose.

6. Account of illiterate person:

The Bank may at its discretion open deposit accounts other than Current accounts of
illiterate person. The account of such person may be opened provided he/she calls on the Bank
personally along with a witness who is known to both the depositor and the Bank.
Normally, no cheque book facility is provided for such Savings Bank Account. At the time
of withdrawal/ repayment of deposit amount and/or interest, the account holder should affix
his/her thumb impression or mark in the presence of the authorized officer who should
verify the identity of the person. The Bank will explain the need for proper care and safe
keeping of the pass book etc. given to the account holder. The Bank official shall explain
the terms and conditions governing the account to the illiterate person.
 7. Addition or deletion of the name/s of joint account holders:

The bank may at the request of all the joint account holders allow addition or deletion of name/s
of joint account holder/s if the circumstances so warrant or allow an individual depositor to add
the name of another person as a joint account holder. Individuals resident in India have been
permitted to include non-resident close relative(s) (relatives as defined in Section 6 of the
Companies Act, 1956) as a joint holder(s) in their resident bank accounts on 'former or survivor'
basis. However, such non- resident Indian close relatives shall not be eligible to operate the
account during the life time of the resident account holder.

8. Customer information:

The customer information collected from the customers shall not be used for cross selling
of services or products by the Bank, their subsidiaries and affiliates. If the Bank proposes to
use such information, it should be strictly with the consent of the account holder.

9. Secrecy of customer’s accounts:

The Bank shall not disclose details/particulars of the customer’s account to a third person
or party without the expressed or implied consent from the customer. However, there are
some exceptions, viz. disclosure of information under compulsion of law, where there is a
duty to public to disclose and where interest of the Bank requires disclosure.

10. Premature withdrawal of term deposit:

The Bank on request from the depositor, at its discretion may allow withdrawal of deposit
before completion of the period of the deposit agreed upon at the time of placing the deposit.
However, interest on the deposit for the period it has remained with the bank will be paid,
at the rate applicable to the period for which the deposit remained with the bank after
applying the penal rates if any, and not at the contracted rate. Further, the effective rate will be
the net of applicable rate for the period of deposit remained with the bank (less the penal rate)
or the net of original contracted rate (less the penal rate) whichever is less. The Bank shall
make depositors aware of the applicable penal rate along with the deposit rate upfront, while
accepting the deposit. The interest rates including the applicable penal rates shall be fixed by
the ALCO of the Bank from time to time.

11. Premature renewal of term deposit:

In case the depositor desires to renew the deposit by seeking premature closure of an
existing deposit account, the bank will permit the renewal at the applicable rate on the date of
renewal. While prematurely closing a deposit for the purpose of renewal, interest on the
deposit for the period it has remained with the bank will be paid at the rate applicable to the
period for which the deposit remained with the bank, after applying the penal rates if any,
and not at the contracted rate. Further, the effective rate will be the net of applicable rate for
the period of deposit remained with the bank (less the penal rate) or the net of original
contracted rate (less the penal rate) whichever is less. The Bank shall make depositors aware
of the applicable penal rate along with the deposit rate upfront, while accepting the deposit.
The interest rates including the applicable penal rates shall be fixed by the ALCO of the Bank
from time to time.

12. Renewal of overdue term deposits:

i) When a term deposit is renewed on maturity, interest rate on renewed deposit for the
period specified by the depositor as applicable on the date of maturity would be applied. If
request for renewal is received after the date of maturity, such overdue deposits will be
renewed with effect from the date of maturity at interest rate applicable as on the due date,
provided such request is received within 14 days from the date of maturity. In respect of
overdue deposits renewed after 14 days from the date of maturity, interest for the overdue
period will be paid at the rates decided by the Bank from time to time.
ii) Interest payable on overdue term deposits: If the deposit matures on/ after August 22, 2008
and proceeds are unpaid, the amount left unclaimed with the bank will attract Savings
Bank rate of interest. No interest will be paid for deposits lying unpaid with the bank prior
to this period. Bi-dating of deposits is not allowed where the overdue period exceeds 14 days.

13. Advances against deposits:

The Bank may consider request of the depositor/s for loan/overdraft facility against term
deposits duly discharged by the depositor/s on execution of necessary security documents.
The Bank may also consider loan against deposit standing in the name of minor, however, a
suitable declaration stating that loan is for the benefit of the minor, is to be furnished by the
depositor – applicant.

14. Settlement of dues in deceased deposit account:

If the depositor has registered nomination with the Bank; the balance outstanding in the
account of the deceased depositor will be transferred to the account of / paid to the nominee
after the Bank satisfies about the identity of the nominee, etc.
o The above procedure will be followed even in respect of a joint account where
nomination is registered with the Bank.
o In a joint deposit account, when one of the joint account holders dies, the Bank
is required to make payment jointly to the legal heirs of the deceased person
and the surviving depositor(s). However, if the joint account holders had given
mandate for disposal of the balance in the account in the forms such as “either or
survivor, former / latter or survivor, anyone of survivors or survivor”, etc., the
payment will be made as per the mandate to avoid delays in production of legal papers
by the heirs of the deceased.
o In the absence of nomination and when there are no disputes among the claimants,
the Bank will pay the amount outstanding in the account of deceased person
against joint application and indemnity by all legal heirs or the person mandated by
the legal heirs to receive the payment on their behalf without insisting on legal
documents up to the limit approved by the bank’s board. This is to ensure that the
common depositors are not put hardship on account of delays in completing legal
formalities.

15. Interest payable on term deposit in deceased account:

i) In the event of death of the depositor before the date of maturity of deposit and amount of
the deposit is claimed after the date of maturity, the Bank shall pay interest at the contracted
rate till the date of maturity. From the date of maturity to the date of payment, the Bank shall
pay simple interest at the applicable rate obtaining on the date of maturity, for the period
for which the deposit remained with the Bank beyond the date of maturity; as per the
Bank’s policy in this regard.
ii) However, in the case of death of the depositor after the date of maturity of the deposit,
the bank shall pay interest at Savings deposit rate obtaining on the date of maturity from the
date of maturity till the date of payment.

16. Interest Rates on Term Deposits:

With effect from October 22, 1997, RBI has given the freedom to commercial banks to fix their
own interest rates on domestic term deposits of various maturities with the prior approval of their
respective Board of Directors / Asset Liability Management Committee (ALCO). Bank is,
however, not allowed to discriminate in the matter of interest paid on deposits, between one
deposit and another, accepted on the same date and for the same maturity, whether such deposits
are accepted at the same office or at different offices of the bank. Interest rates paid by the bank
should be as per the schedule and should not be subject to negotiation between the depositor and
the bank.

Bank is allowed to offer differential rate of interest on domestic term deposits on the basis of the
following:
a) Tenor of Deposits
Bank is allowed to offer differential rates of interest on term deposits on the basis of tenor.
b) Size of Deposits
Bank is allowed to offer differential rates of interest on the basis of quantum for single term
deposits of 1 crore and above.

c) Availability of early withdrawal option

With effect from April 16, 2015 bank has been allowed the discretion to offer differential interest
rates based on whether the term deposits are with or without-premature-withdrawal-facility,
subject to the following guidelines:

i. All term deposits of individuals (held singly or jointly) of 15 lakh and below should,
necessarily, have premature withdrawal facility.
ii. For all term deposits other than (i) above, bank can offer deposits without the option of
premature withdrawal as well. However, it will be ensured that at the customer interface
point the customers are, in fact, given the option to choose between term deposits either with
or without premature withdrawal facility.
iii. Bank shall disclose in advance the schedule of interest rates payable on deposits i.e. all
deposits mobilized by banks should be strictly in conformity with the published schedule.

17. Insurance cover for deposits:

All bank deposits are covered under the insurance scheme offered by Deposit Insurance and
Credit Guarantee Corporation of India (DICGC) subject to certain limits and conditions.
The details of the insurance cover in force, will be made available to the depositor.

18. Stop payment facility:

The Bank will accept stop payment instruction from the depositors in respect of cheques
issued by them. Charges, as specified, will be recovered.

19. Dormant Accounts:

A Savings Account as well as Current Account should be treated as inoperative /

dormant account, if there are no customer induced transactions in the account for a period of
two years. Such accounts will be transferred to a separate dormant / inoperative account
status in the interest of the depositor as well as the Bank. The depositor will be informed of
charges, if any, which the bank will levy on dormant/ inoperative accounts. The depositor can
request the Bank to activate the account for operating it. There will not be any charge for
activation of inoperative account.

20. Redressal of complaints and grievances:

Depositors having any complaint / grievance with regard to services rendered by the Bank
has a right to approach authority (ies) designated by the Bank for handling customer
complaint / grievances. The details of the internal set up for redressal of complaints /
grievances will be displayed in the branch premises. The branch officials shall provide all
required information regarding procedure for lodging the complaint. In case the depositor
does not get response from the Bank within a period of one month after the bank received the
complaint, or the bank rejects the complaint, or if the complainant is not satisfied with the
reply given by the bank; he has a right to approach Banking Ombudsman appointed by the
Reserve Bank of India.