Accounts of Customers

Chapter outlines1. Introduction and preliminary investigation2. Specimen signature card3. Married women4. Pardanashin women5. Minor account 6. Problems with individual account7. Death of customer8. Husband and wife joint account

introduction The opening the account is the

establishment of customer and bank relation. by opining an account at the bank a person become a 'customer''

Bank should obtain the proper information about his applicant.

Before opening an account for his customers who is not already known to the banker.

He should get proper inquires about his applicant

Introduction and preliminary investigation

Before a banker opens a new an account the bank should determine the integrity, respectability, occupation, and nature of business.

Introductory reference and introduction of applicant at the time of opining account.

The information is necessary because of following reasons

1 Avoid frauds 2 Safeguard against unintended

overdraft 3 Negligence 4 Inquiries about client

Avoid frauds If a bank does not make the necessary

inquires about the client, may enable dishonest persons to possess cheque-books for fraudulent purpose.

If any such person happened to be an undercharge bankrupt, the banker might be placed in a awkward position for not allowing to open account in a bank

Safeguard against unintended overdraft

Sometimes due to a mistake an account may be given an overdraft. For instance, the ledger-keeper misread the balance of an account honors a cheque for amount larger than balance. similarly credit entry belonging to a customer may be made by mistake in a another customer account. In such situation the express amount withdraw by the customer can only be realized if the customer is respectable person.

Negligence When a banker does not make necessary

investigation, he may deprived of the legal protection provided by banker.

Inquiries about client A banker has a business obligation to

response to inquiries from the banks. About the customer financial position.

Though the banker gives only general idea about the financial standing of his customer

2 Specimen signature when an account is open with a bank the

customer gives the bank a specimen of form of signature which would appear on all his cheques to express his authority for payment. This is generally on card, specially designed for the purpose. It also contain

Name, Account number Three or four signature.

If signature is other than English or Dari

If a customer signs in a language other than English or local language, than he have to fill the vernacular form, the vernacular form is obtained because the bank officer are not used to verify the signature other than English.

Illiterate person Banker must take obtain 4 passport size photo,

most recent one. one photo is paste on specimen card .one on account opening form, one photo on cheque book.

Instead of specimen signature card , both right hand and left hand thumb impression from male and female.

An illiterate person must operate his account personally because of signature.

An illiterate account holder advise not to issue cheques payable to other person, for cash or clearing

3 Married women Married women not disqualify a women

from becoming a customer of a bank. Because a married women is capable of holding and disposing any property, she is also capable of rendering herself liable in respect of any contract. If married women apply for loan, adequate securities belonging to her should be taken into consideration, because the bank will give the loan according her assets not her husband assets.

4 Pardanashin women A household women, whether observe purdah or

not known as Pardanashin woman. These ladies are competent to open a bank account in their own name. if such a lady is literate and can sign her name, there is no difficulty in opening an account; but in case of an illiterate woman, it is difficult due to the problem of verification of her thumb impressions and sometimes even to identify her. Therefore, the bankers generally avoid opening such an account and suggest the opening of a joint account with some literate person as an alternative.

5. Minor's Account A person is regarded as a minor until he has attained the

age of 18 years. If a competent court of law appoints a guardian of his person or property before eighteenth year, the majority extends to the age of 21 years.

Section 11 of the Contract Act, 1872, has declared a minor incompetent to enter into contract, therefore, any contract with a minor is avoid . However, in 1925 the Bombay High Court opined that if a competent person has made a contract for the benefit of a minor, it is a valid contract: and the minor can enforce it. The contract Act, 1872 lays down that if a loan is given for the necessities of the life of a minor, it can be recovered from his property, but he is not liable personally.

5. Minor's Account Bankers can allow the opening and

operation of an account by a minor also when he is physically grown up enough not to appear as minor and can sign is a form handwriting. But these are saving or fixed/ term deposed account only. Where no overdraft could be allowed.

He cannot be liable for any debts of the partnerships incurred before the he attains 18 years of age

Problems in personal account Death of the customer Lunacy of the customer Insolvency of the customer Stop-payment in a joint account

Death of the customer A banker cannot make payment on the

cheque after the notice of the customers death has been received by him. It is implied that can pay the cheque on a deceased customer account only.

The banker must confirm the notice received of his customer by him. Because the according sir John Paget

“ mere rumor would be sufficient for the bank to act upon for instance an announcement in a responsible newspaper”

Death of the customer After the confirmation of information of the death

of his customer, all the withdrawals from his account should be stopped and account should be termed as “Deceased Account” while credit into account should be allowed, cheque presented for the payment should be returned with the objection “ customer deceased”

A credit balance up to generally 100,000 consider small amount. Therefore, it can be paid legal heirs with the witness by two good customer. More than amount certificate of competent court of law is required, head office will approve

Lunacy of customer Contract Act 1872,

all person of unsound of mind are disqualified to open account in a bank. Therefore bank should not open account for unsound mind.may be during relation with bank he become sanity. As soon as banker comes to know that my customer mad, he will stop all debit operation on the account after confirming the information. The entire credit balance of the customer should be placed at the disposal of “manager in lunacy’ appointed by court under lunacy Act 1912

Lunacy of customer When a customer regains his soundness

of mind and his discharge from lunatic asylum, the bank should allow him to operate the account after he produce certificate of sanity from law. which will attested from two medical specialist of psychology.

Insolvency of customer According to Negotiable Act 1881

banker authorized according that act, determined the payment of the customers cheque with regard to his insolvency proceeding. When a customer adjudicated a bankrupt, whether on his own petition or on the creditors, his property vests into the official assignee all assets, and banker should refuse to honor the cheque.

Insolvency of customer The baker must handover to the assignee

all assets of the bank held him which he is not entitled to retain. If the bank does not do so he become guilty of contempt of court

Joint account of husband and wife

The instruction on operation of joint account is very helpful when joint account opened a husband and wife, because it indicate the intention of the deceased for the payment in the event of death of any of them.

It clearly stated that if joint account opened was opened with intention of making a provision to the wife in case untimely death of husband, the widow received the money

Bankrupt of joint account holder

When the bank comes to know of the bankruptcy of one or more of the joint account holders, the operation on the account should be immediately stopped. Withdraws will be responsibility of solvent customer.

Stop- payment in a joint account

Anyone joint account holder may stop payment of the cheque drawn by any others., but the removal of the stop-payment should be signed by all joint account holders. If the joint account holders wish to delegate their authority on the account to an outside party, all the joint parties should sign this authority.