Banking Basics

Question 1

Describe the Banker- customer relationship as a Debtor-Creditor

Answer 1

The customer is the creditor, and the bank is the debtor. The customer (creditor) deposits funds with the bank (the debtor). The bank can use the funds as it pleases without the customer’s knowledge, however they are liable to payback when the customer requests for repayments (just not in the same denominations).

Question 2

Describe the banker customer relationship as a principal and agent

Answer 2

The bank acts as an agent for the customer by performing transactions on behalf of the customer. This happens when the paying/honoring the customers cheques that are presented through the clearing system. Collecting proceeds of a check, effecting transfers, purchasing and selling shares for customers, fund management and collecting proceeds for service providers

Question 3

Describe the banker-customer relationship as a mortgagee-mortgagor

Answer 3

The customer is the mortgagor, and the bank is the mortgagee. This arises when the
customer has borrowed from the bank and mortgages an asset, usually an immoveable property, such as land and buildings, as security.

Question 4

Describe the banker-customer relationship as a bailee and bailor

Answer 4

The customer is the bailee and the bank is the bailor. This occurs when the customer deposits items for safe custody with the bank. The bank is entitled to charge the bailee for this service.

Question 5

What are some duties of the banker?

Answer 5

1. To receive customer’s cash , cheques and other instruments ( eg electronic transfers) for the credit of the customer’s account
2. To repay the customer’s funds upon
   presentation of the customer’s written
   authority, or other agreed mechanisms.eg
   digital services.
3. Confidentiality in customer’s dealings.
   4.To advise the customer of any known
   forgeries to his signature, and exercise care
   and diligence in handling the account.
4. This Duty to ensure e-banking services are
   convenient, private, secure and available.
5. Advise customers on appropriate fees for
   services rendered and their conditions.
6. To issue statements to the customer
7. To give reasonable notice before termination of an account. (3 months
   for a company and 1 month for individuals deemed to be reasonable)

Question 6

What are some duties of the customer to the bank?

Answer 6

1. To pay a reasonable charge for the use of the bank’s facilities.
2. To seek out the bank when he/she needs to be repaid, either through physical or electronic means.
3. To seek payment up to the amount in the account or up to an agreed overdraft limit.
   4.To advise the bank of known forgeries to his/her signature, or suspicion of fraudulent attempts on electronic banking facility.
4. Duty of care when drawing cheques or performing digital transactions so as not to facilitate fraudulent alterations. In e-banking, customers must protect their passwords, pin codes, etc, to avoid impersonation and fraud.

Question 7

What are the 4 circumstances or conditions where banks are not required to guard privacy?

Answer 7

a) Disclosure under compulsion of law (When the bank is ordered to produce a customers account in court) or by BOG, EOCO, FIC, etc.
b) Disclosure where there is duty to the public
(Persons involved in fraud, narcotics and financing terrorism)
c) Disclosure in the interest of the bank (issuing a writ against a customer in the event of default on a loan)
d) With customers’ express or implied consent (e.g to customers’ Auditors, Principals, Partners or Agents)

Question 8

What are some things that bankers that can lead to a breach in confidentiality?

Answer 8

Misdirected email and attachments
1. Leaving confidential documents lying about, or in the printer or waste baskets: Breach of bank’s clear desk policy.
2. Loud discussions of sensitive transactions, within the listening range of other customers. (forex or large cash withdrawals)
3. Delivering information to third parties without checking for the consent of customers
4. Discussing customers balances/transactions in front of third parties.
5. Discussion of customers’ affairs in public places. (Church member discussing her bank’s loan arrangement with the Chairman of
Fund Raising Program)
6. Linking cards to wrong accounts
7. Divulging deceased accounts to third parties without proper documented authority (Probate of the Will, letters
of Administration)
8. Leaving demand notices with third
parties in the absence of customers

Question 9

In what cases can the banker-customer relationship be terminated?

Answer 9

1. When either party requests for the contract to be terminated.
2. Death of customer
3. Insanity/lunacy of customer
4. Bankruptcy of the customer

Question 10

How many months notice should the bank give a company account before it decides to terminate?

Answer 10

3 months

Question 11

How many months notice should the bank give a personal account before it decides to terminate the account?

Answer 11

1 month

Question 12

How can a customer close it’s account with a bank?

Answer 12

1. To carry out the account closure process, an account holder needs to visit the branch personally.
2. Customer completes an account closure form, stating reasons for the request.
3. Bank must collect unused cheque book, savings withdrawal booklet, debit card and any other bank property.

Question 13

What could cause an account to be undesirable for the bank to close them?

Answer 13

1. Illegal transfer of funds through the accounts
2. Money laundering and terrorist financing suspicions
3. Dormant account, resulting in overdrawn balances accrued from bank charges.
4. Constant issue of dud cheques, and disregard to warning letters and reminders.
5. Upon the Directives from Bank of Ghana.
6. Zero Balance.
7. Suspected Identity Theft.

Question 14

What are the general principles for an account closure?

Answer 14

1. The request for closure has to be in writing
2. Retrieve all bank stationery (Cheque books, ATM cards etc.)
   3.Delete account details from system
   4.The duty of secrecy survives even after account closure
3. Retrieve and file away customer mandate file

Question 15

What is the current bills of exchange act?

Answer 15

The Bills of exchange Act, 1961, Act 55

Question 16

What is a bill of exchange?

Answer 16

The bill of exchange is an unconditional order given by the drawer to the drawee, for payment of a certain amount to the payee, stated on the bill of exchange, or to thedrawer themselves

Question 17

Who are the parties to a cheque?

Answer 17

1. The Drawer : The person (your customer), who signs, or draws, the cheque. It is he who orders you (his banker) to pay out his money away (to another party or to himself).
   b) The Drawee : The person to whom the order is addressed, i.e. the banker.
   c) The Payee : The payee, or beneficiary, after he has written his name upon the back of (an order) cheque (and who assumes certain responsibilities and rights)

Question 18

What are the types of cheques?

Answer 18

a. “Order” Cheques – when a cheque is made payable to a specific person or entity (referred to as the “payee”), that person or entity must sign the back of the cheque (known as an “endorsement”) in order to transfer ownership or authorize the cheque to be cashed or deposited be endorsed by the person to whom it is made payable.

b) “Bearer” Cheques – a cheque made payable to “bearer” or “cash” can be transferred or cashed by anyone who holds it, without needing the payee’s endorsement. However, in order for the cheque to be valid for transfer, the drawer (the person who wrote the cheque) must endorse it.

c. Open cheque/ uncrossed cheque- they can be presented for payment at the counter

d. Crossed cheque

Question 19

What is a crossed cheque?

Answer 19

A crossed cheque is where a cheque bears across its face an addition of:
a. The words “and company” or any abbreviation there of between two
parallel transverse lines, either with or without the words “not
negotiable”: or
b. Two parallel transverse lines simply either with or without the words
“not negotiable

Question 20

Why is a cheque crossed?

Answer 20

A cheque is crossed to prevent the payee or holder of the cheque from cashing it over the counter of the paying (drawee) banker. This
means that a crossed cheque must be paid into an account, thus ensuring the cheque passes through the hands of a banker who has to handle with care and according to law. If a crossing on a cheque has been “Opened”, the cheque should only be cashed for the drawer himself or his known agent, or the person endorsed to.

Question 21

What are some warning signs of an illegal cheque?

Answer 21

1. MICR ink that looks shiny or that feels raised. Magnetic ink is dull and legitimate printing produces characters that are flat on the paper.
2. A cheque on which the name and address of the drawee bank is typed, rather than printed, or that includes spelling errors. Eg (GCB Berekum was cloned as GCB Brekum)
3. A cheque that has no perforated edge.
4. A cheque on which information shows indications of having been altered, eradicated, or erased.
5. A signature that is irregular-looking or shaky or shows gaps in odd spots. (Note, signatures become less flowing with age)
6. A cheque printed on poor quality paper that feels slippery.
7. Cheque colours that smear when rubbed with a moist finger. (This suggests they were prepared on a colour copier).
8. Cheques payable to a corporate body that are presented for cashing by an individual
9. Cheques that have amounts in numbers and in words that do not
   match