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.

Thanking you