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Proposed administrative procedure - CURR.06
Universal   Banking   System

Purpose : To encourage citizens to pay/accept payments by checks/DDs


    Contents
  1. Universal Bank
  2. Advantages of Universal Banking
  3. Draft to create procedure CURR.05

Universal Bank

The proposed banking system is as follows
  1. The procedure CURR.01, "RLPP/Jury over RBI/SBI staff" is a pre-requiste for this proposed procedure CURR.06.

  2. The State Bank of India MUST have at least one "basic" branch in per population of 20,000. The basic branch will provide ONLY, what I have termed as "Basic Bank Account" which will have checking/DD, cash deposit/withdrawal and fund transfer services ONLY.

  3. Every citizen, who can sign his name, will be entitled to open one acccount at any of the SBI branch with NO minimum balance requirement, no monthly charge, free 500 checks per year and free 100 DDs a year with amount below Rs 1000. The account will NOT bear any interest except for senior citizens.

  4. If and when finger print technology becomes available, the banks will also allow illiterate to open acconts with use of thumb print as means.

  5. A basic account can have one and ONLY one owner, and cannot be joint.

  6. A citizen may open additional accounts in SBI branch for which there may be balance requirement, monthly charges and other fees. Non-individual entities like trusts, companies, HUFs, associations etc may also open accounts, and these accounts may have charges/fees etc

  7. The account number will be the income-tax ID itself. If a person has more than one account, his account number will be tax id followed by dot (".") followed by 3 digit serial number. eg say tax-ID is 676-898-89821. Then if the person has ONLY one account, the number will be tax-id itself i.e. 676-898-89821. But if person has more than account, the account number will be "676-898-89821.001" , "676-898-89821.002" etc.

  8. Same way, the account number of accounts of trusts, firms etc will be income tax ID itself, or based on income tax IDs.

  9. Thus when a person shifts his basic account from one SBI branch to another, the account number will NOT change.

  10. The SBI branch at the time of issuing checkbook, will print the account number and check-issue date on the checks. The checks will be valid ONLY for 6 months after they were issued i.e. date when the check was written should be within 6 months after checkbook was issued. And check will be valid ONLY for 3 months after written

  11. Say a person with tax-id and account number X has his account at branch A, writes a check. But before the check reaches branch-A, say he shifts his account to branch-B. Then A will return the check, along with note that account has shifted to branch B. If the check-holder sends the check to branch-B, it will be honored.

  12. When A writes a check to B, the B's bank will send a memo to A's bank which will confirm the payment to B, and A's bank will write account number i.e. tax-ID of B in A's statement. This will reduce A's difficulty in maintaining books.

  13. The account of children below 18 will be need signatures of BOTH parents.

  14. The senior citizen will get interest at the rate decided the PM, and approved by the Parliament. All other Basic Accounts will NOT bear any interest.


    The bank may charge upto 0.1% of total amounts deposited below Rs 10,00,000 in a year fees.

  15. The additional funds needed to run Basic Accounts will be given to SBI directors by the Finance Minister using income/wealth tax as decided by the Parliament.


Advantages of Universal Banking

  1. This will encourage more and more citizens to pay/accept by checks. This will improve book keeping, and reduce book keeping burden.

  2. This will also improve collection of income tax.

  3. This will reduce the burden to carry cash etc and will reduce theft etc

  4. This will encourage more and more persons for savings.


Draft of the act to create procedure CURR.06

To enact CURR.06, the citizens would need to pass an Act in the Parliament. The draft of the Act is given here.

     It will be wiser for citizens to first enact procedure LM.03, and then use LM.03 to pass this act. To know about procedure LM.03, please click here.


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