Clients of a Banker

8/6/2019 Clients of a Banker

1/21

Clients of a bankerClients of a banker

1.Minor1.MinorClients of a bankerClients of a banker

MinorsMinors MarriedMarried womanwoman PardanashinPardanashin womanwomanDrunkardDrunkardLunaticLunatic


2/21

1.Minors1.Minors

A minor is aA minor is a person who does not have the legal rightsperson who does not have the legal rightsof an adult. A minor is usually defined as someone whoof an adult. A minor is usually defined as someone whohas not yet reached the age of majority.has not yet reached the age of majority.

In most states, a person reaches majority and acquiresIn most states, a person reaches majority and acquiresall of the rights and responsibilities of an adult when heall of the rights and responsibilities of an adult when heor she turns 18. Until a minor reaches the legal age ofor she turns 18. Until a minor reaches the legal age ofadulthood, he or she may not be responsible for his/heradulthood, he or she may not be responsible for his/herown actions (including the capacity to enter into aown actions (including the capacity to enter into acontract which is enforceable by the other party), forcontract which is enforceable by the other party), for

damages for negligence or intentional wrongs without adamages for negligence or intentional wrongs without aparent being liable, nor for punishment as an adult for aparent being liable, nor for punishment as an adult for acrime.crime.


3/21

A contract, otherwise valid, entered into by a minor,A contract, otherwise valid, entered into by a minor,

cannot be disaffirmed because of the minor's minoritycannot be disaffirmed because of the minor's minorityif the contract is to pay the reasonable value ofif the contract is to pay the reasonable value ofnecessaries. The meaning of the term "necessaries"necessaries. The meaning of the term "necessaries"depends on the facts of the individual case. Itdepends on the facts of the individual case. Itdepends on many things, including the particulardepends on many things, including the particular

circumstances of the minor, the actual need, and thecircumstances of the minor, the actual need, and theuse to which the purchased article is to be put.use to which the purchased article is to be put.

However, the commonHowever, the common--law classification oflaw classification ofnecessaries as including food, lodging, clothing,necessaries as including food, lodging, clothing,medicine, medical attention, and education ismedicine, medical attention, and education is

generally recognized to the extent such items aregenerally recognized to the extent such items aresuited to the minor's social position and situation insuited to the minor's social position and situation inlife, even though such items are not absolutelylife, even though such items are not absolutelyneeded.needed.


4/21

As agentAs agent

A minor can act as an agent for anotherA minor can act as an agent for anotherperson who is competent to contractperson who is competent to contract

provided his principal has duly authorisedprovided his principal has duly authorisedto do so.to do so.

For example a minor son can make aFor example a minor son can make acontract on the behalf of his father if hiscontract on the behalf of his father if his

father has duly authorised him to do so.father has duly authorised him to do so.


5/21

2. Lunatic2. Lunatic

According to section 12 of Indian contractAccording to section 12 of Indian contractact 1872 a person is said to be of soundact 1872 a person is said to be of sound

mind for the purpose of making contractmind for the purpose of making contract,if at the time when he makes it he is,if at the time when he makes it he iscapable of understanding nature andcapable of understanding nature andeffect of same and of forming a rationaleffect of same and of forming a rational

judgment as to its effects on interest.judgment as to its effects on interest.


6/21

PrecautionsPrecautions

As soon as the banker comes to knowAs soon as the banker comes to knowinsanity of the customer ,he shouldinsanity of the customer ,he should

avoid opening an account of personavoid opening an account of personwho is of unsound mind.who is of unsound mind.

If the customer is confined to a lunaticIf the customer is confined to a lunaticasylum or is judicially declared lunaticasylum or is judicially declared lunatic

by competent court under lunacy act,by competent court under lunacy act,bank is safe in stopping it.bank is safe in stopping it.


7/21

3. Drunkard3. Drunkard

Generally drunkenness is not considered toGenerally drunkenness is not considered toaffect a persons power to contract ,yetaffect a persons power to contract ,yet

with a view to prevent people to take naywith a view to prevent people to take naydue advantage of a drunken person, he isdue advantage of a drunken person, he isallowed to evade liability of a person whoallowed to evade liability of a person whoimproperly induces him to sign animproperly induces him to sign an

instrument, provided that the court isinstrument, provided that the court issatisfied that the person was so drunk assatisfied that the person was so drunk asto unable to know what he was doing.to unable to know what he was doing.


8/21

4. Married woman4. Married woman

A Hindu married woman can enter into a contract andA Hindu married woman can enter into a contract andcan bind her estate .can bind her estate .

A Mohammedan married woman is not disqualified toA Mohammedan married woman is not disqualified toenter into a contract by the reason ofd her marriage.enter into a contract by the reason ofd her marriage.

A contract by a married woman can bind her husbandA contract by a married woman can bind her husbandonly if it is for the purpose of necessity.only if it is for the purpose of necessity.

A married woman can open a current account with theA married woman can open a current account with thebanker in her own name, which would form a part of herbanker in her own name, which would form a part of her

own separate estate.own separate estate. She can thus draw bills, in connection with her estateShe can thus draw bills, in connection with her estate

and arrange for all obligations including overdraft withand arrange for all obligations including overdraft withher banker.her banker.


9/21

A Pardanashin woman experiences a completeA Pardanashin woman experiences a completesecularism in accordance with customs in her ownsecularism in accordance with customs in her owncommunity.community.

It does not deal with customs in her own community .It does not deal with customs in her own community .

As she remains completely isolated, a presumption inAs she remains completely isolated, a presumption inlaw exist that any contract entered into by her might belaw exist that any contract entered into by her might besubject to undue influence.subject to undue influence.

A contract may not have been entered through her freeA contract may not have been entered through her freewill and with full understanding of what contract actuallywill and with full understanding of what contract actually

mean.mean. Bank should take due precaution in opening account ofBank should take due precaution in opening account of

Pardanashin woman.Pardanashin woman.

5. Pardanashin woman5. Pardanashin woman


10/21

6. Illiterate person6. Illiterate person

Illiterate person cannot sign their names andIlliterate person cannot sign their names andhence banker takes their thumb impressions ashence banker takes their thumb impressions asthe substitute for signature and also a copy ofthe substitute for signature and also a copy of

their recent photograph.their recent photograph. The application form and photograph should beThe application form and photograph should be

attested by approved witness for withdrawingattested by approved witness for withdrawingmoney.money.

He must attend personally and fix his thumbHe must attend personally and fix his thumbimpression in the presence of an official of bankimpression in the presence of an official of bankfor the purpose of identification.for the purpose of identification.


11/21

7. Joint account7. Joint account

death insolvency insanitydeath insolvency insanity


12/21

8. Joint Hindu family8. Joint Hindu family

A joint Hindu family or Hindu undividedA joint Hindu family or Hindu undivided

family (HUF) or a Joint Family is an familyfamily (HUF) or a Joint Family is an family

arrangement prevalent among Hindu of Indiaarrangement prevalent among Hindu of India

,consisting of many generations living under,consisting of many generations living under

the same roof.the same roof.

All the male members are blood relatives andAll the male members are blood relatives and

all the women are either mothers, wives,all the women are either mothers, wives,

unmarried daughters, or widowed relatives.unmarried daughters, or widowed relatives.


13/21

Kartha is the senior most male member of theKartha is the senior most male member of thefamilyfamily

Only the Kartha has the right to manage theOnly the Kartha has the right to manage theproperty and business of the HUF.property and business of the HUF.

Kartha can enter into contract on behalf of theKartha can enter into contract on behalf of theHUF and bind all the members to the extent ofHUF and bind all the members to the extent oftheir share in the property/businesstheir share in the property/business

If the coparceners so desire, all the coparcenersIf the coparceners so desire, all the coparcenersand Karta may authorize any one or more adultand Karta may authorize any one or more adultcoparceners to manage the business. Such acoparceners to manage the business. Such aperson (s) is/are known as Manager (s)person (s) is/are known as Manager (s)


14/21

Position of a Banker inPosition of a Banker inextending credit facilitiesextending credit facilities

A banker dealing with Hindu undivided families will haveA banker dealing with Hindu undivided families will haveto be cautious while extending credit facilities to HUFto be cautious while extending credit facilities to HUFbecause certain laws and customers relating tobecause certain laws and customers relating to

succession and transfer of rights among Hindus, putsuccession and transfer of rights among Hindus, putserious obstacles in the way of the Bankers providingserious obstacles in the way of the Bankers providingfinancial accommodation on the security of what isfinancial accommodation on the security of what isordinarily considered to be normal and reliable bankordinarily considered to be normal and reliable banksecurity.security.

In order to charge a joint family estate, its is necessaryIn order to charge a joint family estate, its is necessary

that all the members of the family should join thethat all the members of the family should join theexecution of the deed, or should give their consent, orexecution of the deed, or should give their consent, orthat the deed should be made by the head of the familythat the deed should be made by the head of the familyin his capacity as karta or manager.in his capacity as karta or manager.


15/21

The powers of the karta are, however, limited and charge createdThe powers of the karta are, however, limited and charge createdby him is binding on the family property, only if the loan for whichby him is binding on the family property, only if the loan for which

the charge is created, is taken for a purpose necessary or beneficialthe charge is created, is taken for a purpose necessary or beneficialto the family, or is in discharge of a lawful debt due from the family.to the family, or is in discharge of a lawful debt due from the family.This is also called as vyavaharika debt. ["Vyavahar" meansThis is also called as vyavaharika debt. ["Vyavahar" meansconduct].conduct].

In the event of a suit being filed by a banker, who has granted aIn the event of a suit being filed by a banker, who has granted aloan on the security of the joint family estate, the burden of proofloan on the security of the joint family estate, the burden of proofthat, before he granted the loan, the banker had satisfied himselfthat, before he granted the loan, the banker had satisfied himselfthat the loan was taken for purposes beneficial to the family, lies onthat the loan was taken for purposes beneficial to the family, lies onthe banker.the banker.

To avoid this and several other difficulties, some banks require aTo avoid this and several other difficulties, some banks require aHindu customer desiring to open an account, to furnish a statementHindu customer desiring to open an account, to furnish a statementto the effect that the money deposited in a fixed deposit, current orto the effect that the money deposited in a fixed deposit, current orsavings bank account is the personal or selfsavings bank account is the personal or self--acquired property ofacquired property of

himself or himself and not that of a joint Hindu family.himself or himself and not that of a joint Hindu family. The manager of a trading Hindu family may be such a person as theThe manager of a trading Hindu family may be such a person as the

family appoints or who holds out as its accredited representative.family appoints or who holds out as its accredited representative.He need not be the Karta, for there can be more than one Manager,He need not be the Karta, for there can be more than one Manager,particularly if the business is carried on at different placesparticularly if the business is carried on at different places


16/21

9. Executor and Administrator9. Executor and Administrator

On death of the customer , the banker mustOn death of the customer , the banker muststop payment from his account.stop payment from his account.

An account in name of Executor andAn account in name of Executor and

Administrator and balance in the account ofAdministrator and balance in the account ofdiseased is transferred to such account.diseased is transferred to such account.

Prevent Executor and Administrator fromPrevent Executor and Administrator frommisappropriation of funds of diseasedmisappropriation of funds of diseased

It should not permit transfer of funds fromIt should not permit transfer of funds fromestate account to personal account of executorestate account to personal account of executorto repay o/d taken by Executor .to repay o/d taken by Executor .


17/21

Bank cannot exercise his right of setoffBank cannot exercise his right of setoffagainst credit balance in Executorsagainst credit balance in Executorspersonal account in respect of debitpersonal account in respect of debit

balance in account of deceased.balance in account of deceased. Bank should thoroughly examine will toBank should thoroughly examine will to

ascertain borrowing powers of executors.ascertain borrowing powers of executors.


18/21

10. Customers attorney10. Customers attorney

Following precautions must be observed:Following precautions must be observed: The power of attorney should be duly stampedThe power of attorney should be duly stamped

and registered. Bank must retain with itsand registered. Bank must retain with itsattested copy for its own record.attested copy for its own record.

Bank should ensure that in case the power ofBank should ensure that in case the power ofattorney Is granted for a specific period, suchattorney Is granted for a specific period, suchperiod has not expiredperiod has not expired

Bank should note what powers have beenBank should note what powers have been

entrusted by principal to attorney.entrusted by principal to attorney. The person presenting power of attorney mustThe person presenting power of attorney must

be properly identified and his address should bebe properly identified and his address should beproperly noted.properly noted.


19/21

11. Partnership firm11. Partnership firm

Indian Partnership Act 1932 definesIndian Partnership Act 1932 defines

Partnership as the relation betweenPartnership as the relation betweenpersons who have agreed to share profitspersons who have agreed to share profitsof business carried on by all or any one ofof business carried on by all or any one ofthem acting for all.them acting for all.

Following precautions must be observed:Following precautions must be observed:

Number of partnersNumber of partnersTitle of firms accountTitle of firms account

Partnership letterPartnership letter


20/21

12. Joint stock companies12. Joint stock companies

A Joint stock company is an artificial person withA Joint stock company is an artificial person withperpetual succession brought into existenceperpetual succession brought into existenceunder the provisions of companys act ,1956.under the provisions of companys act ,1956.

A certified copy of resolution ofBOD should beA certified copy of resolution ofBOD should beobtained by banker for its own record .obtained by banker for its own record .

Banker of a Joint stock company having personalBanker of a Joint stock company having personalaccount of directors of company must beaccount of directors of company must behandled with care.handled with care.


21/21

13. Club, society and charitable13. Club, society and charitableinstitutioninstitution

Following precautions must be observed:Following precautions must be observed:

Society must be Incorporated.Society must be Incorporated.

Rules and by laws of society.Rules and by laws of society. Resolution of managing committee.Resolution of managing committee.

Death or resignationDeath or resignation

Care to be exercised in operation ofCare to be exercised in operation ofpersonal account.personal account.

Clients of a Banker

Documents

Transcript of Clients of a Banker