Major Types of Accounts Individuals, Joint & Minor Sole proprietorship Partnership concern Joint Stock Companies Others (Agents, Executors,

Administrators, Clubs, Societies etc.

Individual’s Account Accounts of literate ladies and

gents. Accounts of illiterate ladies and

gents. Accounts of Parda observing ladies. Joint Accounts Minor’s Account

Problems In Individual’s Account In case of Death, Two situations

Died without will Died after leaving a will

In case of died without will an administrator will be appointed by the court while in case of died with will and executor will be appointed by the competent court.

Problems In Individual’s Account Insanity of an Individual customer

Balance shall be placed at the option of the manager in lunacy, appointed by the court, through lunacy order, under the Lunacy Act, 1912.

Servicing of a Garnishee Order Insolvency of an individual customer

Insolvency is civil death Provincial Insolvency Act, 1921

Joint Account More than one person Relationship is neither of trustees nor of

partners. Definite instructions required regarding:

Operations Payment of balance in case of death

Any joint account holder may lodge stop payment instructions.

Removal of these instructions require consent of all the members.

Joint Account Member can delegate authority to

operate to a third party. Any such authority will deemed to be

cancelled in case of death of the that member of account.

In case any of the members of joint account becomes insolvent, or insane, operation on the account should be stopped.

If any member dies, operations of the account should be immediately stopped.

Minor’s Account According to S-3 of the Majority Act,

1875: “A person who has not attained the age

of 18 years is said to be a minor. However, where the guardian is appointed by the court of law, majority extends to 21 years”.

Legally a minor cannot open a bank account since opening of a bank account is the result of a contractual relationship which minor does not possess.

Minor’s Account Operation In the Account

Minor can neither give stop payment instructions nor can claim the balance during his/her minority

Operation of the account, nevertheless, shall rest with the guardian.

Minor’s Account Operation In the Account

In case of death or insanity of a minor, balance is to be paid to the person authorized by the court of law.

In case of death, insanity or bankruptcy of the guardian, balance in the account is to be paid according to the instructions of the court of law.

Sole Proprietor’s Account It is a kind of business which is

controlled and owned by a single person.

Proprietor himself is required to operate the account

Proprietor can give authority to a third party for the operation of account.

Sole Proprietor’s Account Authority to operate is automatically

revoked in the following circumstances: Death of the proprietor Insolvency / bankruptcy of the proprietor Insanity of the proprietor If a Garnishee Order has been served on

the firm’s account.

Sole Proprietor’s Account In case of death of authorized

person, all cheques are to be counter signed by the proprietor.

In case of death of the proprietor, operation of the account should be stopped immediately.

Partnership Accounts Partnership is the relation between

persons who have agreed to share profits of the business, to be carried out by all or any one of them acting for all.

Eligibility, Number of Partners, signing capacity and partnership deed.

Operational authority can be delegated to third party.

Partnership Accounts Incoming of a new partner Retirement of a partner Death of a partner Insolvency of a partner Insanity of a partner Bankruptcy of the firm

Joint Stock Companies Private Limited Companies Public Limited Companies

Operations in the account: Death, retirement or dismissal of the

directors does not effect operation on the account.

Joint Stock Companies The cheque signed by the directors

before their death, should be honored since they are considered valid instruments.

Winding up of the company in any manner terminates its career. Thereafter, no cheque is to be honored and operation of the account to be stopped immediately.