This document discusses various types of special customers that bankers may deal with and the precautions that should be taken when opening accounts for them. It describes minors as those under 18 who require a guardian until age 21. Partnership firms require documentation of all partners and their authorization. Joint accounts require agreements on operating procedures. Companies need documentation like certificates of incorporation. Precautions are also outlined for married women, executors, illiterate customers, trustees, and joint Hindu families. In all cases, bankers should verify identity and authorization according to legal standards for the customer type.
This document discusses various types of special customers that bankers may deal with and the precautions that should be taken when opening accounts for them. It describes minors as those under 18 who require a guardian until age 21. Partnership firms require documentation of all partners and their authorization. Joint accounts require agreements on operating procedures. Companies need documentation like certificates of incorporation. Precautions are also outlined for married women, executors, illiterate customers, trustees, and joint Hindu families. In all cases, bankers should verify identity and authorization according to legal standards for the customer type.
This document discusses various types of special customers that bankers may deal with and the precautions that should be taken when opening accounts for them. It describes minors as those under 18 who require a guardian until age 21. Partnership firms require documentation of all partners and their authorization. Joint accounts require agreements on operating procedures. Companies need documentation like certificates of incorporation. Precautions are also outlined for married women, executors, illiterate customers, trustees, and joint Hindu families. In all cases, bankers should verify identity and authorization according to legal standards for the customer type.
This document discusses various types of special customers that bankers may deal with and the precautions that should be taken when opening accounts for them. It describes minors as those under 18 who require a guardian until age 21. Partnership firms require documentation of all partners and their authorization. Joint accounts require agreements on operating procedures. Companies need documentation like certificates of incorporation. Precautions are also outlined for married women, executors, illiterate customers, trustees, and joint Hindu families. In all cases, bankers should verify identity and authorization according to legal standards for the customer type.
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Special Type of Customers
DR TEENA SHIVNANI
Introduction A banker can enter into valid banking contractual
relationship with the customers of normal capacity.
It is subject to the condition that the customer is a
genuine person and is willing to enter into necessary
business relationship with the banker. In addition to normal customers there are also
special customers who also have dealings with the
bankers.
Minors According to section 3 of the Indian Majority Act,
1875, Minor is a person who has not completed the
age of 18 years. If a guardian is appointed by the court to look after
minor person or his property. He will attain majority
only at the completion of 21 years of age. A contract by or with a minor is no contract at all.
Contd. Precautions to be followed by the banker while opening an
account in the name of a minor:
1. It is advisable to open Account in the name of his guardian. 2. A cheque issued by a minor against his credit balance is valid. 3. A cheque endorsed by the minor is also valid. 4. A cheque issued by a minor as an agent of a person is valid. 5. In the case of partnership, a minor may be admitted for the benefits of partnership. 6. A minor may be appointed as an agent on behalf of his principal.
Partnership Firm A partnership is the relation between persons who have agreed to share the profits of the business carried on by all or any one of them acting for all. Steps taken by a Banker while opening an account in the name of a partnership firm: Letter of Introduction: The prospective customer(firm) must be introduced to the banker by a person who is already known to it. Number of Partners: The Banker should, before opening the account see that the total number of partners should be as per the partnership act.
Contd. Application: A banker should not open the account
in the name of partnership unless one or more of the
partners apply for the same. Letter: Banker should get a letter signed by all the partners stating the nature of the firms business, the names& addresses of all partners and the names of those authorized to operate the account. Cheque Validity: Cheques drawn in the firms name signed by one partner is quite valid and can be honored unless instructions to the contrary are given to banker.
Contd. Private Account: A cheque drawn on private account
can be credited to firms account. But Cheques
payable to the firm should not be credited to partners private account without enquiry from other partners. Retiring Partner: A retiring partner would continue to be liable for advances or loans or overdraft given to the firm. Money Transfer: A banker can transfer money from the private account of a partner to that of a firm. If the partner so desires.
Joint Stock Company
A company has a separate legal existence as distinct
from that of the shareholders.
Current account may be opened in the name of the company. The company has the power to open bank accounts and operate upon them. Precautions to be taken at the time of opening account in the name of a company : 1. Certificate Of Incorporation: The Banker should examine the certificate of incorporation before opening the account in the name of Company.
Certificate of Incorporation
Contd. First Directors: In the case of a new company the banker
should see whether the names of first directors are
included in the Memorandum. This would help the banker to know whether the company is a legal entity or not. Certificate of Commencement: The banker must check
the certificate of commencement of business.
Resolution: The Banker must also ask for the copy of
resolution passed by the directors appointing him as the
banker company.
Married Woman A married woman can enter into a contract in her own name. She can have an account opened in the bank. She also has the power to draw Cheques and give a valid
discharge. A married woman cannot make her husband responsible for
debts incurred by her.
Executors & Administrators
Executor is a person who is named in a will to
administer the estate of the deceased after his death.
Administrator is a person appointed by the court to
administer the property of the ceased owner, where
the owner dies in state i.e. without leaving a will. The banks must take following precautions : 1. Examining the Letter of Probate 2. Personal liability of Executors and Administrators for loans.
Illiterate Persons They are the persons who cannot read/write. The banker can always open an account in the name of
an illiterate person. Following precautions are needed to be taken by the banker: 1. It is necessary for the banker to obtain thumb impression of such a person as he/she cannot sign. 2. The banker should obtain photograph of the illiterate person. 3. The Banker should also obtain the brief details of physical identification marks of such a person.
Trustees A trustee is a person on whom confidence is reposed by another person. The person who stands to derive benefits is Beneficiary. A banker has to observe following precautions: A banker should first go through the Trust Deed. The banker should ascertain the fact as to who would sign the Cheques amongst various trustees. The banker should also ascertain the details of death/ retirement of any trustee. It is essential that banks do not allow the misuse of funds.
Joint Accounts They are the accounts, opened and operated in joint names of more than one person. The banker needs to observe the following guidelines while opening and operating accounts in joint names: 1. Before opening an account the banker has to obtain a duly signed account opening form. Signed by all the persons who are interested in operating the account. 2. The mode of conduct of the account must be finalized with the consent of all the members of joint account. 3. On the death of the joint account holder the credit balance in the account would go to the legal recipient of the joint account holder.
Joint Hindu Family
The banker has to be thorough with the provisions of the
Hindu law that govern bank dealings.
The eldest member of the family called Karta runs the business. The Karta has an implied authority to borrow/pledge the property of the family in the beneficial interest of the family. While granting the loan to the JHF it is advisable for the banker to obtain signatures of all the male members of the JHF. The Karta of the JHF has all the powers to transact business with the banker. All the members of the JHF are liable for all the acts of the Karta.
