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Banking Law- 20th Sept 2011.Doc Revised 3.

Banking Law- 20th Sept 2011.Doc Revised 3.


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Published by: jemengich on Jan 24, 2012
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A customer’s account with the banker may be closed in the following circumstances:

i.The customer may inform the banker in writing of his intention to close the account.


The banker cannot ask for his reasons of such closure. It should immediately ask the

customer to return the unused cheques and close the account.

ii.The banker may itself ask the customer to close the account when then banker finds

that the account has not been operated for a long time. A notice to that effect can be

given to the customer.

iii.A banker can also close the account if it finds the customer not being desirable, e.g.

customer is found guilty of having forged cheques or flouting rules of operating the

account. In that case the banker may by notice in writing, informs the customer of

its intention to close the account. However, the banker should follow the following


a.The banker should give a reasonable time notice to the customer for making

alternative arrangements

b.In case the customer does not come forward to close the account in spite of

getting the notice for closure of such account from the banker, the banker

should give a second notice to him stating clearly that in case he himself

does not close his account by a specified date, the banker itself will close

that account.

c.In case the customer fails to close the account by the specified date, the

banker should by a draft send to him the money lying in his account.

iv.In the following cases, the banker should suspend all payments from the customer’s

account till the matters are finally settled:

a.When the banker receives notice of the customer’s death or insanity.

b.When the customer becomes insolvent or in case of a company, goes in to


c.When the banker receives a garnishee order

d.When the banker receives a notice from the customer regarding assignments

of the balance standing to the credit of his account by him to a third party.

The banker in such a case is bound to pay money to the third party.

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