by The account operating procedure is a set of standardized rules and methods that govern how a bank account is managed and transactions are conducted. It ensures that both the customer and the bank operate within legal, regulatory, and security frameworks. Proper account operation is essential to prevent errors, fraud, or disputes. It covers all activities related to deposits, withdrawals, transfers, and payments. By following these procedures, banks maintain operational efficiency, transparency, and accountability. For customers, adhering to account operating procedures ensures safe, smooth, and timely financial transactions, whether for personal, business, or institutional purposes.
Account Operating Procedure
- Modes of Operation
Bank accounts can be operated in different modes depending on the account type and number of account holders. A single account is operated by one person alone. A joint account may operate on “either or survivor” or “former or survivor” basis, giving flexibility to multiple holders. Minor accounts are operated by guardians until the minor attains legal age. Choosing the appropriate mode ensures clarity in authorization and minimizes conflicts. The mode of operation also determines who can sign cheques, make withdrawals, or authorize transactions, ensuring smooth functioning and legal compliance in all account activities.
- Authorized Signatories
Authorized signatories are individuals allowed to operate the account on behalf of the account holder. Banks record specimen signatures or digital authentication methods at the time of account opening. Only these signatories are permitted to perform transactions such as withdrawals, cheque payments, or fund transfers. Any transaction by an unauthorized person is invalid. For joint accounts, banks follow the operational instructions given at the time of opening. Updating signatories periodically is important to maintain security. This procedure protects both the bank and the customer against unauthorized access, misuse, or fraud, ensuring all transactions are properly authorized and legally valid.
- Deposit Procedures
Deposits can be made into bank accounts through cash, cheques, drafts, or electronic transfers. Banks follow strict verification methods to ensure authenticity, including validating cheques and confirming sender details for electronic transfers. Deposits increase account balance and may earn interest depending on the account type. Customers must fill out deposit slips correctly to avoid errors. Timely crediting of deposits ensures liquidity and supports smooth fund management. Adhering to deposit procedures also helps maintain proper records, reduces disputes, and ensures compliance with banking regulations, making the process safe and reliable for both the bank and account holder.
- Withdrawal Procedures
Withdrawals can be made via cheques, ATM/debit cards, net banking, mobile apps, or over-the-counter requests. Banks verify signatures, account balances, and transaction limits to prevent errors and fraud. Certain accounts may have withdrawal limits or require prior notice for large sums. Following withdrawal procedures ensures the account holder receives funds safely while maintaining accurate records. Violations, such as overdrawing without permission, can lead to penalties or account suspension. Proper withdrawal practices protect the customer and bank, ensuring secure, transparent, and timely access to funds, which is essential for day-to-day personal or business financial management.
- Cheque and Payment Handling
Cheques, standing instructions, and electronic payments are critical tools in account operation. Cheques must be properly filled with date, payee name, amount in words and figures, and signature. Banks verify all these details before clearing payments. Standing instructions allow automated, recurring payments, while electronic transfers enable instant, safe fund movement. Compliance with these procedures prevents bounced cheques, errors, or unauthorized transactions. Customers must maintain sufficient balances and provide correct instructions. Proper cheque and payment handling ensures security, efficiency, and transparency in banking operations, supporting both personal and business financial requirements.
- Digital and Electronic Banking Operations
Modern bank accounts allow operations through net banking, mobile apps, UPI, and debit/credit cards. Customers must follow authentication protocols such as passwords, PINs, OTPs, or biometric verification. Digital banking offers 24/7 access for transfers, payments, and account management. Banks monitor transactions to detect suspicious activity and prevent fraud. Customers are responsible for securing login credentials and reporting unauthorized transactions promptly. Digital procedures increase convenience, speed, and traceability while reducing dependence on cash. Following these procedures ensures safe, efficient, and error-free banking, allowing account holders to manage finances anytime and anywhere with confidence.
- Record Keeping and Compliance
Banks maintain detailed transaction records, reflected in periodic statements that the customer should review regularly. Proper record-keeping helps in budgeting, audits, tax filings, and legal compliance. Customers must comply with bank rules, including minimum balance requirements, withdrawal limits, and account operation instructions. Non-compliance may result in penalties or account suspension. Accurate record-keeping ensures transparency, accountability, and legal protection for both banks and customers. Adhering to operating procedures and regulatory norms reduces disputes, prevents fraud, and promotes disciplined financial management. Effective record management is therefore essential for the smooth functioning of all banking operations.
