Special customers

  • Minor or infant
  • A married women
  • Drunkard
  • A partnership firm
  • A joint stock company
  • Non-trading companies
  • Private companies
  • Non-trading associations
  • Executors, administrators and trustees
  • Joint account

we will study about 4 of these special customers

Minor

  •  A person who hasn’t attained the age of 18 is a minor.

Privileges:

  • Any contract entered by a minor is void
  • Cannot be compelled to pay the loan even if he has falsely represented himself as an adult
  • An adult who gives bill of exchange during his infancy, cannot be sued
  • Even guarantee given in respect of a minor’s debt is not valid
  • A minor who borrows money cannot be compelled to repay unless it is for the necessaries of his life
  • He/she can get back the securities proposed for securing a loan even without repaying the loan
  • A minor can recover even a third party’s securities pledged without repaying the debt
  • A minor can never be appointed as a trustee
  • A minor can act an agent of an adult who has given the necessary authority to him
  • A minor can enjoy the benefit of the firms but is not liable for the debts of the partnership firm.
  • A minor cannot be appointed as an executor but cannot start his work until he attains the age of a major
  • A minor can endorse or draw a cheque

Banker’s duty

  • Banker can allow a minor to open a savings account
  • A joint A/C or account in the name of the guardian can be opened
  • A banker can grant a loan to a minor only if it is for the necessaries for his life or against a joint promissory note with an adult or against an indemnity bond given by an adult

A married woman

  • Can open and operate an account without the consent of her husband
  • Can own properties in her own name
  • banker cannot attach property for non-payment of the money
  • can make her husband liable for overdraft enjoyed by her if she borrows money for the necessaries of life or for the necessaries of the household or if she acts as the agent of her husband
  • husband can escape this liability if he proves that he has already provided her the necessaries
  • she cannot be imprisoned for non-payment of money and she cannot be made insolvent, unless, she carries on some trade or business

Banker’s duty

  • Can very well open an account in the name of a married woman
  • If she applies for O.D., then banker should see to it that she owns spate property in her own name. and should also see that her husband is made liable for repayment of the loan
  • Obtaining of thumb impression of an illiterate woman on the opening of account.

Partnership

  • A banker would open the bank account only when written application is given by the partnership firm
  • Banker should go through the partnership deed and carefully study it and enquire the details about the organization, description of the business, details of the partners. He should see that the firm is registered or not
  • Mandate should be duly signed by the partners and the banker should see to it.
  • The mandate should contain certain information
  1. The name of the person who is authorized to operate the account
  2. The extent of authority given to such persons
  3. Personal account and a firm’s account
  4. Creation of mortgage
  5. Retirement of the partner
  6. Death of the partner
  7. The insolvency/insanity of a partner

Joint stock company

An artificial person created by law. It has a separate existence different from that of the members who constitute it.

  • Before opening the account the banker should find out whether the company has legal existence
  • Banker should obtain the latest copy of the memorandum of association and articles of association
  • Banker should get a copy of the prospectus of the company
  • If the company is a new one then banker should note the names of the first directors are mentioned on the documents
  • If company happens to be an existing one, then banker should demand a copy of the balance sheet and profit and loss statement.
  • The first step in opening of a bank account is taken by the directors by passing a resolution authorizing the secretary to supply the required documents.
  • Banker must get a copy of the resolution and should properly scrutinize it
  • Signs of the chairman and the directors must be checked
  • Banker makes the secretary fill an application and the secretary hands it over with the resolution
    • A mandate is required to be made by the company which should contain following information
    1. The names of the persons who is authorized to operate the account
    2. Nature and the extent of the powers of the authorized person
    3. It contains a provision that it will be in force until it is replaced by another resolution
    4. It provides that whenever there is change in board of directors or post of the secretary, the banker would be informed
  • A prudent banker will look into the borrowing powers of the company
  • The borrowing power can be exercised by the directors and the banker should know about those powers before lending money
  • If the money borrowed for company’s purpose is misappropriated for different purpose, unauthorized by the MOA, and if the bank is unaware about it, the bank is not liable for it. But should immediately stop the operation once it gets the knowledge of the same
  • A list of charges is to be registered within 30 days of signing those charges and a banker should pay attention to this.
  • Non-registration of the same would create security problem to the bank only
  • If banker has the personal accounts of the directors side by side to the company’s account then he must handle the personal accounts of the directors very carefully
  • He should keep the accounts separate
  • Certified copies of the annual accounts and reports of the previous year must be demanded by the banker in case the company is an old one
  • The banker should be very careful during the winding of the company because at that time the powers of the directors and creditors cease and the liquidator only has the power to operate the account
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