1. THE UGANDA INSTITUTE
OF BANKING &
FINANCIAL SERVICES
UIBFS
ISO 9001:2008 CERTIFIED
Banker - Customer Relationships
Outline of Bank Services
Types of Accounts
Know Your Customer (KYC)
Savings and Fixed Deposit Accounts
Cheques, Money Transmission, and Other Payment Mechanisms
MODULE COVERAGE
1
Code of Banking Practice
Plastic Cards and Electronic Banking
2. THE UGANDA INSTITUTE
OF BANKING &
FINANCIAL SERVICES
UIBFS
ISO 9001:2008 CERTIFIED
Types of Bank accounts
Most banks offer current and savings accounts to individuals and other legal
entities depending on the requirements of the particular entities. Most
corporate customers and businesses will prefer to operate current
accounts while individuals may maintain savings accounts.
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• Individuals
• Sole proprietorship
• Limited liability companies
• Minors
• Illiterates
• Blind
• The Handicapped
• Partnerships
• Joint account
• Trustees
• Solicitors
• Liquidators
• Executors and
administrators
• Trustees
• Clubs and associations
3. THE UGANDA INSTITUTE
OF BANKING &
FINANCIAL SERVICES
UIBFS
ISO 9001:2008 CERTIFIED
Individual’s account
An individual of sound mind is free to open an account with the bank both
current and savings depending on his requirements. To avoid possibilities
of being involved in litigation arising out of accusations of negligence,
banks will require proof of identity and references before an account can
be opened
Sole proprietorship accounts – This is an individual who has registered a
business in different names or sometimes incorporating his names in the
title. An example may be ‘Johns & sons’ where John is the sole proprietor.
To open an account with the bank John should tender the business names
registration certificates and references like in any other instances.
Limited liability Company Accounts
Limited companies are separate legal entities from their members and may
be public or private. The common feature though is that they are both
limited by shares and are governed by memorandum and articles of
association which detail how the affairs of the company will be conducted.
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4. THE UGANDA INSTITUTE
OF BANKING &
FINANCIAL SERVICES
UIBFS
ISO 9001:2008 CERTIFIED
Special types of customers
Special customers are those who differ from normal or ordinary customers because of
some special features. Special customers are dealt with in special ways. The
following are some examples of special types of customers:
Minors –
• A minor means a person who is not yet eighteen years old, according to Uganda
laws, and as such cannot enter into a legally binding agreement. Banks therefore
must be extremely careful when opening accounts for minors as they may not sue
them in a court of law say if they are involved in fraud.
• In practice, therefore, banks will open only savings accounts for minors either in
their names or their guardians/trustees names or in their joint names. The account
will be operated by the guardian or trustee for the minor’s benefit.
• On attaining majority (when the minor reaches 18) the minor will operate the
account in his own right.
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5. THE UGANDA INSTITUTE
OF BANKING &
FINANCIAL SERVICES
UIBFS
ISO 9001:2008 CERTIFIED
Illiterate persons –
• Those who are unable to sign their names but use thumb impression are illiterates
for banking purposes. Illiteracy does not make a person incompetent to contract
and operate a bank account. However, banks rarely open current accounts for
illiterate persons. Should the bank, however, accept to open an account for an
illiterate, he will be required to come to the bank in person together with a
witness known to the bank.
• While opening an account banks obtain thumb impression as a substitute for a
signature. The thumb impression is obtained in the presence of a person known to
the bank and the depositor, witnessed by a customer of the bank. Photograph of
the account holder is obtained which is affixed on account opening documents.
Banks are required to explain the terms and conditions governing the account to
the illiterate.
• For withdrawing money, the illiterate must attend personally and affix his thumb
impression in the presence of an official of the bank, for the purpose of
identification. The introduction of electronic banking has made it much easier for
illiterates to withdraw from their accounts using plastic cards. Keeping
photographs electronically in bank data bases has made it much easier for
identification purposes.
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6. THE UGANDA INSTITUTE
OF BANKING &
FINANCIAL SERVICES
UIBFS
ISO 9001:2008 CERTIFIED
Blind Persons –
• A blind person can be a bank customer and is legally competent to
enter into a contract or to open and operate an account. For
opening an account, the person has to personally come to the bank
along with a witness known to him and the bank.
• Both the signature and thumb impression of the blind person are
obtained on the specimen signature card along with the signatures
of witnesses known to the bank. A rubber stamp indicating that the
account-holder is a blind customer is affixed on the account
opening documents. This enables bank officials to exercise caution
in the transactions with the blind customers.
• The Bank is required to explain the terms and conditions governing
the account to the blind person. In general the blind customers are
given special attention whenever they come to the bank.
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7. THE UGANDA INSTITUTE
OF BANKING &
FINANCIAL SERVICES
UIBFS
ISO 9001:2008 CERTIFIED
Handicapped (like a person who has lost
both hands) –
• A handicapped person is not barred
from being a bank customer and
opening an account.
• When opening or operating an account,
the bank obtains his/her toe impression
as a substitute of the signature on the
relevant forms in presence of bank
officials and a witness.
• As an alternative, the person is also
advised to give a suitable power of
attorney to a person of his/her
confidence.
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8. THE UGANDA INSTITUTE
OF BANKING &
FINANCIAL SERVICES
UIBFS
ISO 9001:2008 CERTIFIED
Joint account holders –
• This refers to two or more individuals holding one bank account.
Depending on the mandate given to the bank, any individual who is
a member of the joint account can withdraw from the account and
deposit to it.
• If two individuals open a joint account and one of them dies, the
other person is entitled to the remaining balance and is liable for
the debt of that account.
• In practice, if a joint account holder dies when the account is
overdrawn the account is stopped so as to preserve its right to
claim from the deceased’s estate.
• Similarly if a cheque signed by the deceased account holder is
presented it will be returned unpaid marked with ‘Drawer
deceased’ unless the survivor authorizes payment. The most
common joint account in banks is that of husband and wife.
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9. THE UGANDA INSTITUTE
OF BANKING &
FINANCIAL SERVICES
UIBFS
ISO 9001:2008 CERTIFIED
Partnership Accounts –
The bank will satisfy itself that the partnership firm legally exists and
normally ask for the partnership Deed and a letter signed by all the
partners providing following information:
• The name and address of all partners
• The nature of the firm’s business
• The names and mandate of the partners authorized to operate the
account in the name of the firm and the manner in which it will be
operated
• The mandate form completed by partners will require them to
accept joint and several liability, meaning that should they be
indebted to the bank the liability extends them collectively and
individually. Death of one partner dissolves the partnership and the
account will normally be stopped if the bank is notified.
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10. THE UGANDA INSTITUTE
OF BANKING &
FINANCIAL SERVICES
UIBFS
ISO 9001:2008 CERTIFIED
Trustees –
• A trustee is a person who deals with property for the benefit of
other persons of whom he may be one himself. Banks have to take
care with trustee accounts so that they do not knowingly or
unknowingly become party to breaches of trust and be liable for
damages to bonafide beneficiaries.
• To open an account of a trust, the bank obtains copy of
constitution of the trust; Trust Deed; the necessary resolution
passed by the trustees for opening the account with the bank;
certified copy of the resolution signed by all the trustees in regard
to the conduct of the account.
• Most common trustee accounts are for estates of deceased persons
where close relatives and older children of the deceased may be
appointed trustees until children become adults
•
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11. THE UGANDA INSTITUTE
OF BANKING &
FINANCIAL SERVICES
UIBFS
ISO 9001:2008 CERTIFIED
Liquidators –
A liquidator is a person appointed by the court to wind up the affairs of a company.
His business is to realize (sell) the company’s assets and apply funds thus collected
in repayment of debts and distribute the balance among shareholders.
• He has power to borrow money on the security of the company’s assets and to
draw, endorse or accept instruments on behalf of the company. While exercising
such powers, the liquidator is free of personal liability.
• The bank should obtain a copy of the court order before opening an account for
the liquidator. The court order normally details how the affairs of the company will
be conducted by the liquidator.
Societies, clubs, associations and other non trading institutions–A club or a society
gets becomes a legal entity only when it is incorporated under Company’s Act, or
under Cooperative Societies Act. While opening accounts, the bank must obtain a
copy of the bye laws; a copy of resolution by the managing committee regarding
opening and conduct of the account; original certificates of registration; a list of
the managing committee members; copies of resolutions electing them as
committee members duly certified.
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12. THE UGANDA INSTITUTE
OF BANKING &
FINANCIAL SERVICES
UIBFS
ISO 9001:2008 CERTIFIED
Executors and Administrators - Executors and administrators are persons
appointed by a person through a Will to manage the affairs of his estate
after his death.
• The person appointing an executor in his will is known as testator. There
can be more than one executors or administrators. If the person has not
appointed any one to manage the affairs of his estate after his death,
court appoints an administrator for the purpose.
• In Uganda, it is the Office of the Administrator General. Banks generally do
not permit an executor to deal with the moneys or securities of the
deceased until he produces the probate –letters of administration from
the Administrator General.
• To open an account for Executors and Administrators, the bank obtains
account opening forms duly signed by all the executors or administrators
and obtains clear instructions as to the manner in which the account will
be operated. Bank also obtains copy of probate or letters of administration
in original for scrutiny.
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Notas do Editor
The main difference between a current account and a savings account is the availability of cheques and cheque-books on current account plus the flexibility of transacting any time during banks opening hours. These facilities and flexibility are not normally extended to savings account holders. Most savings accounts with Commercial banks operate more like current accounts these days except that cheque books are not issued. The banks operate the following accounts for both individuals and other legal entities:
When a sole proprietor dies and the bank is notified, it should stop the account and not allow any further payments from the account. Any credit balance on the account or items held in safe custody can only be released to the estate’s executors or administrators.
In practice, Banks allow the next of kin of a blind customer to operate his account as a guardian or a representative of the blind person. Both the blind person and the guardian are expected to appear together in the bank premises whenever they are carrying out any transactions
The bank ascertains the identity of executors or administrators to its satisfaction. An executor or administrator has no right to delegate his authority to an outside party, not being co-executor or administrator. Any one of the executors or administrators can countermand the actions of the others. Cheques drawn or payable to the executor or administrator's account are not collected for credit of their personal accounts without inquiry.