The first and foremost step in opening an account for a new customer is to obtain a letter of introduction.  A letter obtained by a banker from a prospective customer is known as ‘letter of introduction’.  The letter serves as a letter of guarantee of the applicant.  The purpose of obtaining this type of a letter is to enable the banker to ascertain the genuineness of the applicant.

Obtaining a proper letter of introduction is beneficial for the banker to know more about the new customer in the following manner:

1. Protecting against issuing cheque books to unscrupulous persons.
2. Facilitating the claiming of overdraft inadvertently granted by the banker.
3. Protecting against undischarged insolvent.
4. Helping to provide correct financial information about the customer.
5. Obtaining statutory protection.