GEETA INSTITUTE OF LAW

EXPLAIN THE MEANING OF NEGOTIABLE INSTRUMENTS,

ITS KINDS AND ESSENTIAL FEATURES

BANKING LAW INCLUDING NEGOTIABLE INSTRUMENT ACT

In the partial fulfillment of marking scheme of BA.LLB

Session (2022-2023)

Submitted By: Submitted To:

Mr. Akshat Aggarwal Mr. Chirag goel
BA.L.L.B (9th sem ) Assistant Professor
Roll No.:18503
 ACKNOWLEDGEMENT
This project comes out to be a great source of learning and experience. It has helped me gain
an insight into the practical aspect of what was taught in theory. And not only this, but it also
helped me to have an exposure to the work life in the Law world. Lot of efforts has been put
by various people to make this project a success. This has greatly enhanced my knowledge
about the Judiciary services which is still a virgin area, yet to be explored. I am deeply
grateful to Dr. DHARMENDAR PATIAL (Dean, GIL) and I would like to thank Mr Chirag
Goel (Assistant Professor) who guided me and who has given me an opportunity to show my
skills & all other faculty members, for giving me their valuable time, continuous support and
inputs at every step of this project. Finally, I would like to thank my institute GEETA
INSTITUTE OF LAW with special thanks to all staff members for their constant support and
valuable guidance, who helped me throughout this project at different stages of the project
and helped me completing this project within time.

1
 Index
INTRODUCTION 3
OBJECTIVES 3
NATURE AND DEVELOPMENT OF BANKING 4
NATIONALIZATION OF BANKS 6
VIEWS AGAINST NATIONALIZATION 8
BANKING FUNCTIONS 9
BANKING BUSINESSA 13
MISCELLANEOUS FUNCTIONS 15
TYPES OF ACCOUNT 15

2
INTRODUCTION
Without banking business, one cannot survive in today's commercial world. Money is
thelifeblood of all businesses; it is the source of all trade and commerce. You must save
yourmoney if you don't have an immediate need for it but don't want to lose it either. Banks
domore than just deal with money; they also create it. Today's money market is dominated
bycredit money, also known as cheques. Indian banking has come a long way since the days
ofthe English Agency Houses in Calcutta and Mumbai. To paraphrase O.W. Holmes, "Put
notyour trust in money, but your money in trust1." For the Indian people, Holmes'
statementsimply means that they can put their trust in Indian banks.

Banking in India is not a new concept; it has a 200-year history of both existence
anddevelopment. During this time, banking has changed dramatically in terms of
functions,administrations, and regulations2. This is due to mankind's overall development
over thecentury, as well as extremely rapid technological development in the last 30-35 years.
Asidefrom that, the overall pace of commercialization, combined with
technologicaladvancements, has increased customer expectations and needs in the banking
industry.

Any such changes in retrospect provide a wealth of interesting details to consider as well
asopportunities to improve the future. Looking back on the history of banking in India with
thisperspective reveals many interesting events. This banking, as and when different
regulationsare required, leads to even more interesting events, such as the emergence of a
variety ofregulations and the eventual creation of the current "Banking Regulation Act, l949."
Theregulation addressed a need for banking regulation that had existed for more than a
decadeand a half.

OBJECTIVES
The goal of this unit is to look at the overall state of banking in India. It is also necessary
tostudy the general characteristics of banking3. Nationalization of banking, the

1 https://blog.ipleaders.in/banking-law-india/
2https://www.studocu.com/in/document/aligarh-muslim-university/money-and-banking/nature-and-
development-of-banking-law

3https://www.studyadda.com/notes/banking/general-awareness/origin-and-development-of-banking-in-india/
origin-and-development-of-banking-in-india/11571

3
relationshipbetween banker and customer, banking business, banker's lien, types of
accounts, andspecial types of accounts are all concepts that need to be understood.

The accounts are being analysed in depth. Students will gain a comprehensive
understandingof banks and the banking industry by completing this unit. The entire
banking businesslandscape has changed as a result of bank nationalism.

NATURE AND DEVELOPMENT OF BANKING

Presidency Banks were established in each of the three Presidency Towns, namely,
Calcutta,Bombay, and Madras, beginning in 1809 with the Bank of Bengal, 1840 with the
Bank ofBombay, and 1849 with the Bank of Madras, in – 1867. The Government was
approached bythe Bank of Bengal4 with a proposal to merge these three banks. The idea was
rejected by thegovernment for two reasons. For starters, it claimed that a single institution
formed in this way would be far too powerful. Second, it was thought that the necessary
personnel formanaging such a large institution across the country might not be
available. Thegovernment, on the other hand, proposed the merger in 1899. The Chambers
of Commerceand all three presidency banks were against it this time. All of the banks agreed
to merge in1919, and the presidency banks were merged in 1921. The new institution was
given thename Imperial Bank of India, which is now known as the State Bank of India.

The recommendation of the Hilton Young Commission, which was established in

August1925 to examine and report on the Indian exchange and currency system, to establish
aseparate central bank for regulatory functions, including the issuance of currency notes,came
in 19265. The plan was to take the central bank function away from Imperial Bank
whilekeeping the commercial banking function. RBI, on the other hand, was founded in
1935.

The Indian Companies (Amendment) Act 1936, which included a separate

chapter onprovisions relating to banking companies, was passed on January 15, 1937, and
was the firstattempt at banking in India. The Indian Companies Act 1913 governed banks in
all importantmatters prior to its enactment. It was commonly used by both banking and non-

4 https://jupiter.money/blog/finance/evolution-of-banking-in-india/

5 https://rbidocs.rbi.org.in/rdocs/Publications/PDFs/BANKI15122014.pdf

4
bankingbusinesses. The Companies Act only had a few provisions that differentiated between
banksand other businesses. Sec. 4 made it illegal to form a partnership.

Sec. 136 prohibits a partnership with more than ten partners from carrying on a
bankingbusiness unless it is registered as a corporation. Sec. 138 empowers the government
toappoint inspectors to investigate the affairs of a banking company on the application
ofmembers holding not less than 1/5 of the shares as opposed to 1/10 of the shares in
othercompanies, and Sec. 145 regarding some provisions relating to audit of banking
companieswith branches outside India.

On March 16, 1949, the Banking Companies Act became law. With effect from March
1966,the name of the Banking Companies Act, 1949 was changed to The Banking Regulation
Act,1949 by amendment Act 23 of 1956.

Initially, the Act did not apply to cooperative banks, but in 1965, it was amended to
includethem. Indeed, it is difficult to comprehend why the cooperative sector was left out of
theAct, which was intended to regulate banking in India. Cooperative banking
was wellestablished in India by the time the Act was passed.

There have been several amendments to the Banking Regulation Act, 1949, as required
bychanging needs of time and changing banking practises, but the Act has largely proven to
beof great assistance to both the Reserve Bank of India and banks, primarily
as anadministrative law in the hands of the RBI6. The Banking Regulation Act, 1949 has
stood thetest of time when measured by the challenges it receives in courts of
law and theinterpretations the judiciary has to add and contribute for the particular
enactment. Theexception to this is the addition of Sec. 21-A w.e.f. 15th February 1984 by the
AmendmentAct 1984.

The Reserve Bank of India was nationalised in 1948, and the Banking Regulation Act of
1949was passed shortly after. 14 major commercial banks were nationalised as a result in
1969and 1980, respectively. The Punjab National Bank was merged with the New Bank of

6https://www.lexology.com/library/detail.aspx?g=a1976e5b-288e-4dce-be91-
ecd57fc575c9#:~:text=The%20Indian%20banking%20sector%20is,to%20regulate%20the%20banking
%20sector.

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India, anationalised bank, in 1993. As a result, the total number of nationalised commercial
banks iscurrently around 19.

The Reserve Bank of India is currently the most powerful bank in the Indian banking
system.The Indian banking industry can be divided into two categories: commercial
banks andcooperative banks. The scheduled commercial banks are those listed in the Reserve
Bank ofIndia Act, 1934's Second Schedule, while the others are non-scheduled commercial
banks

The State Bank of India took over from the Imperial Bank of India on July 1, 1955, when
theState Bank of India Act was passed. R.B.I7. owns 60 percent of S.B.lshare .'s capital. In
Octoberof 1996, I was the first bank of Indian origin to launch a highly successful Global
DepositoryReceipt.

The stage is set for a self-governing banking environment governed solely by market
forces.The dividing line between banks and financial institutions is becoming increasingly
thin.Bank capital project funding norms have been relaxed, and financial
institutions areexperimenting with short-term working capital advances. The day when
the two sectorsconverge will usher in 'universal' banking in India is not far off.

The Indian economy is on track to overtake China as the world's fourth largest, and
Indianbanks are already spreading their wings to conquer the vast global market

NATIONALIZATION OF BANKS
After the nationalisation of the Imperial Bank of India in 1955, there was a debate
aboutnationalising commercial banks. On July 19, 1969, fourteen large banks were
nationalised,accounting for 84 percent of all scheduled banks' deposits. In addition, on April
15, 1980, sixmore banks with deposits of Rs. 200 crores or more were nationalised. With the
rise in thenumber of public sector banks, the debate over bank nationalisation has become
even moreimportant8. Private sector banks with a small aggregate paid-up capital currently

7 https://blog.ipleaders.in/banking-law-india/
8https://www.studocu.com/in/document/aligarh-muslim-university/money-and-banking/nature-and-
development-of-banking-law/19439881

6
control alarge amount of public deposits, promoting power and wealth concentration as well
as thegrowth of monopolies. In its report, the Mahalanobis Committee says:

According to a report submitted in February 1964, 1% of the country's households own

over75% of privately held stocks, and even within this small minority, there is a high degree
ofconcentration. In its December 1965 report, the Monopolies Enquiry Commission noted
thatmanagement control was more concentrated than ownership control, and that liberal
loansby banks and other financial intermediaries aided this trend toward concentration. It
isargued that nationalising banks will help to alleviate this social ill to some extent.

Industrialists dominate commercial banks in the private sector, who use the entire volume
ofpublic deposits for their own purposes9. General share capital accounted for about 2% of
thefunds available to them. Because they control only a small portion of the share capital,
largecorporations usually do not limit their financial and speculative operations. Instead,
banksprovide them with additional credit. In fact, because many bank directors are
personalfriends, businessmen use the vast resources of commercial banks for pure speculation
as well as hoarding of essential commodities. The Vivian Bose commission's findings
revealedbanks' antisocial and anti-national activities in relation to Mundra deals, as well as
violationsof exchange control regulations and numerous other fraudulent activities.
Nationalization isexpected to put an end to these wrongdoings10.

Commercial bank nationalisation will allow our banking system to open new branches inrural
and semi-urban areas, accelerating the rate of savings mobilisation in these areas.

Nationalization of banks will provide depositors with 100 percent protection, obviating
theneed for any expenditure on the part of the Deposit Insurance Corporation.

Nationalization will help to mitigate the problem of unaccounted money and hidden
incomeand wealth. It will also bring in additional revenue and resources to help us
meet ourdefence and development needs.

9 https://thelawreviews.co.uk/title/the-banking-regulation-review/india
10https://www.gklawcollege.com/wp-content/themes/gklaw-theme/downloads/library/studymaterials/1banking-
law.pdf

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Finally, when the role of exchange banks is considered, the case for nationalisation
becomeseven stronger. Without investing, foreign exchange banks currently have deposits of
overRs.30 crores.

In India, they have their own capital. These banks pose a serious threat to India's joint-
stockbanks. Furthermore, profits earned by them are remitted abroad, which has a clear
impacton our balance of payments. Nationalization will undoubtedly assist us in eliminating
foreignexchange banks.

VIEWS AGAINST NATIONALIZATION

Nationalization will put an end to the efficient, personalised service that we currently
receivefrom private sector banks, especially foreign exchange banks. After nationalisation,
red tape,excessive delay, a lack of initiative, and a hasty decision on the part of management
willobstruct the banking system's smooth operation11.

The demands for nationalisation of all commercial banks are unrelated to the State Bank
ofIndia's efficient operation for more than a decade. The State Bank of India appears to
beoperating efficiently because it is up against stiff competition from well-organized and
well-managed private sector banks. Depositors will have no choice but to move to other
banks iftheir needs are not met now that all banks have been nationalised. Naturally,
bankingfacilities and services will deteriorate in such circumstances.

The argument that private sector banks ignore agriculture and small industries in rural
andsemi-urban areas does not hold water because commercial banks must adhere to
certaincanons regarding their business' liquidity. In fact, commercial banks cannot be
expected tokeep their funds in unprofitable and risky investments for an extended
period of time.Ventures. It is important that the government finance these activities, which in
our caseshould be done through the Reserve Bank of India, the State Bank of
India, and thecooperative network.

The issue of providing depositors with 100 percent security through nationalisation shouldnot
arise in our case because the Indian Deposit Insurance Corporation is
performingadmirably and has provided significant psychological relief to Indian depositors.
11 https://en.wikipedia.org/wiki/Banking_Regulation_Act,_1949

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When it comes to allegations of bank fraud in the private sector, it's worth noting that
thepackage deal is a mixed bag12.

If properly implemented, an approach in which monetary measures are integrated with

fiscaldevices and physical controls can achieve a lot in this direction. Furthermore, a
completeoverhaul of the Reserve Bank of India's inspection staff will aid in the elimination of
some ofthese irregularities.

Because it entails paying compensation to shareholders, nationalisation cannot generate

alarge amount of revenue for the government. Furthermore, even after nationalisation,
asufficient profit margin should be set aside for the reserve fund's strengthening.

It will be incorrect to view the nationalisation of commercial banks in isolation in our case.
Itshould be an important component of a comprehensive socialisation programme
thatrequires some groundwork. Instead of taking proper measures to ensure effective
groundpreparation, the government decided to try out a scheme for social control of
commercialbanks as a stopgap measure before nationalising the larger commercial banks

BANKING FUNCTIONS
A banker provides a variety of services to his customers in addition to his primary
functions.Their relationship is primarily that of a creditor and a debtor. If a customer entrusts
a bankerwith agency or trust work, the banker also acts as the customer's agent or trustee. In
suchcases, the banker serves as a debtor, an agent, and a trustee all at the same time, but only
inrelation to the business at hand13.

When a bank account is opened, the banker assumes the role of a debtor. Because themoney
handed over to the banker becomes a debt due from him to the customer, he is not
adepository or trustee of the customer's money. A depository accepts something
forsafekeeping on the condition that it will not be opened or replaced by another
commodityof similar value. A banker will not accept money from depositors on such terms.
In legalterms, the money deposited by the customer with the banker is lent by the customer to

12 https://blog.ipleaders.in/banking-law-india/
13https://uk.practicallaw.thomsonreuters.com/w-007-9424?transitionType=Default&contextData=(sc.Default)

9
thebanker, who uses it according to his discretion. The creditor has the right
to demand payment.

to demand that the banker return his money, and the banker is obligated to repay the
debtwhen he is required to do so. It is not required, however, that the repayment be made in
thesame currency notes and coins. Of course, the payment must be made in the country's
legaltender currency.

So long as his account has a credit balance, a depositor remains a creditor of his
banker.However, he does not receive any charge over his debtor/assets banker's and remains
an unsecured creditor of the banker. The element of risk to the depositor has been
minimisedsince the introduction of deposit insurance in India in 1962, as the Deposit
Insurance andCredit Guarantee Corporation agrees to insure deposits up to a certain amount.

When a customer's account is redrawn, the banker's relationship with the customer
isreversed. The banker becomes the creditor of the customer who has taken out a loan
fromthe banker and remains so until the loan is repaid. Because a banker's loans and
advancesare usually secured by the borrower's tangible assets, the banker
becomes a securedcreditor of his customer.

Though the relationship between a banker and his customer is primarily that of a debtor
andcreditor, it is distinct from other types of debtor-creditor relationships.

In the case of ordinary commercial debt, the creditor must demand payment, and
thedebtor must pay the amount on the specified date or sooner, or whenever the creditor
sorequests, as per the terms of the contract14. However, in the case of a bank deposit,
thedebtor-banker is not required to repay the amount on his own initiative. It is critical that
thedepositor (creditor) make a proper demand for the deposit's payment. This distinction
arisesfrom the fact that a banker is not a typical debtor; he accepts deposits with the
addedobligation of honouring his customers' checks. If he returns the deposited amount on
hisown initiative by closing the account, some of the depositor's checks may be
dishonoured,and his reputation may suffer as a result. Furthermore, the deposits

14https://www.richmondfed.org/-/media/richmondfedorg/publications/research/econ_focus/2018/q1/pdf/
economic_history.pdf

10
are repayable ondemand or otherwise, according to the statutory definition of banking. The
holder of the deposit.

Apart from his desire to cant an income, he makes the deposit for his own
convenience(except current account). The creditor's demand is thus required for the deposit
money tobe refunded. As a result, a customer's deposit with his bank differs significantly
from aregular debt.

The creditor's demand must be made in the proper location and at the appropriate
time.Although a commercial bank with multiple branches is considered one entity, the
depositorestablishes a relationship with only the branch where an account is opened in his
name. Hisdemand for the deposit's repayment must be made at the same branch of the bank
inquestion, or the banker will not be obligated to honour his commitment. The customer,
onthe other hand, may make a special arrangement with the banker for the repayment of
thedeposited funds at a different branch. In the case of bank draughts, traveler's checks,
andother similar items, the branch receiving the money agrees to re-pay it at a specified
branchor at any branch of the bank15.

It is necessary to make a proper demand. Deposits can be withdrawn by check, draught,order,

or other means, according to the statutory definition of banking. It means that ademand for a
refund of deposited funds must be made using a check or an order, as iscustomary among
bankers. To put it another way, the demand should not be made verbally,via a telephonic
message, or in any other way.

In most cases, a banker is a debtor to his customer for the deposits made by the latter, but
insome cases, he also acts as a trustee. A trustee is a person who holds money or assets
andperforms certain functions on behalf of another person known as the
beneficiary. If acustomer deposits securities or other valuables with a bank for sale
custody, the banker actsas a trustee for the customer. The valuables deposited with the banker
remain the propertyof the customer. As a result, the banker's legal position as a trustee differs
from that of acustomer's debtor. In the first case, the money or documents he holds are not

15 https://blog.ipleaders.in/banking-law-india/

11
considered hispersonal property and are not available for distribution among his general
creditors in theevent of liquidation.

A banker's status as a trustee or a debtor is determined by the facts of each case. He acts asa
debtor if he does something in the ordinary course of his business without the
customer'spermission (or creditor). When money, bills, or other items are deposited with the
bank for aspecific purpose, the banker's position is determined by determining whether the
amountwas debited or credited to the customer's account. For example, in the case of cheques
sentto another banker for collection, the banker serves as trustee until the cheque is
realisedand credited to his customer's account, after which he becomes the debtor for the
sameamount. If the collecting bank fails before receiving payment of the cheque from the
payingbank, the money realised after the bank's failure will belong to the customer and will
not beavailable for distribution among the bank's general creditors.

If, on the other hand, a customer instructs his bank to purchase certain securities from
hisdeposit with the latter, but the bank fails to do so, the bank will remain a debtor of
hiscustomer (rather than a trustee) for the amount not withdrawn from or debited from
hisaccount to carry out his specific instruction16.

A banker acts as a customer's agent and performs a variety of agency functions for thebenefit
of his clients. For example, lie buys and sells securities on behalf of his customer,collects
checks on his behalf, and pays his customers' various dues, such as
insurancepremiums, among other things. The scope of such agency functions has
expandedsignificantly, and banks now provide a diverse range of agency services. Some
banks, forexample, have established a Tax Service to handle their customers' tax issues.

BANKING BUSINESSA
Sank is typically thought of as a trustworthy institution where money can be deposited.The
concept is a little sloppy. Banks do accept valuables for safekeeping and promise toreturn
them, but this is merely a side function. Typically, jewellery, deeds, securities, andother
similar items are given.

16https://www.gklawcollege.com/wp-content/themes/gklaw-theme/downloads/library/studymaterials/1banking-
law.pdf

12
Safe custody deposits are made to the bank. However, the services provided by a bank as
adepository or trustee are just a few of the many services that a modern commercial
bankprovides, some of which are of a more important nature. The following main headings
canbe used to categorise the functions of a commercial bank in very broad terms:

This is perhaps the most important function of almost all modern banks, as deposits areused
to lay the groundwork for a variety of other activities. The amount of money a bank can
borrow in the form of deposits, which can be in the form of fixed, savings, or
currentdeposits, determines how much it can help the business community. All of this
contributesto the expansion of its resources17. The money received on fixed deposits can be
used withoutrisk of withdrawal before the due date, and a bank can use a large portion of the
moneyreceived on savings deposits because the demands of customers with such deposits
aregenerally comparatively small, due to restrictions on the amount that can be Withdrawn
andthe number of withdrawals that can be made within a week: By opening current accounts,
abank not only provides funds to its customers, but also deposit currency that is
moreconvenient and cost-effective than other forms of currency. A bank provides
safekeeping forpeople's money by accepting deposits. The money, on the other hand, is not
kept in a safe. Itis replaced by a debt owed to a banker, who usually pays interest as long as
the money iskept as a deposit with him. The principle, plus interest, is returned once the
claim is made inaccordance with the contract's terms.

This function, which was once thought to be the most lucrative part of a banker's job, is
nowgenerally performed by central banking institutions in most of the world's leading
countries.Its importance to banks has dwindled in some of the world's most important
countries,where the cheque currency has largely replaced banknotes. For example, bank notes
arebecoming increasingly insignificant in England and the United States of America,
despitetheir continued popularity in certain European countries such as France
and Germany.Germany is making serious efforts to popularise the use of cheques as a form
of payment18.

This function is not only critical, but it is also the primary source of profit for the majority
ofbanks. The transaction is known as a discount or a loan when a bank agrees to discount a

17 https://www.tndalu.ac.in/econtent/3_Banking_Law.pdf
18 https://rbidocs.rbi.org.in/rdocs/Publications/PDFs/BANKI15122014.pdf

13
billor gives funds in exchange for a promissory note. In either case, the bank agrees to
putfunds at the borrower's disposal in exchange for a promise of future payment. This
allowsindividuals and corporations who lack sufficient capital to carry on large-scale
business to doso with the help of funds borrowed from a bank, allowing them to use their
capital moreprofitably than they could otherwise. As a result, the bank is able
to assist not onlymerchants, but also others who, in turn, can use funds not only for their
own benefit, butalso for the benefit of the community19.

Modern banks are generally able to send money from one location or country to another
viadraughts drawn on their branches or agents. They can also enable merchants and others
toreceive money from their debtors in other cities or countries by purchasing bills of
exchange.These facilities have aided not only domestic trade between countries, but also
internationaltrade. It will be obvious that without the exchange facilities provided by banks,
the greatstrides made by trade and commerce, which have been responsible for a large part of
theindustrial development of various parts of the world, would have been impossible.

MISCELLANEOUS FUNCTIONS

In addition to the aforementioned main function, modern banks provide a

variety ofservices, including: 1) the issuance of various types of credits, such as letters
of credit,travellers' cheques, credit cards, and circular notes; 2) underwriting of capital issues;
3) theacceptance of bills of exchange, in which the banker lends his name to his customers in
exchange for a commission; 4) the safe custody of valuables; 5) acting as executors
andtrustees for customers; and 6) preparing financial statements

TYPES OF ACCOUNT
In the case of a current account, also known as demand deposits, the banker is obligated
topay all cheques drawn against him as long as his customer's account balance is
sufficient.The customer, on the other hand, deposits funds into the current account in the
form ofcash, checks, draughts, postal orders, money orders, and so on. This is done by filling
outpayment slips that the banker provides either loose or in book form. The customer or
hisagent who pays the money in must sign these paying-in slips. When the slips are in
bookform, there are counterfoils that the bank cashier rubber-stamps or initials after
19 https://www.toppr.com/guides/civics/understanding-laws/understanding-laws-of-india/

14
receivingthe money. The legal effect of this stamping is merely an acknowledgement that the
slip wascorrect and that the effects would be credited to the customer once cleared. If the
amount isgreater than the Stamp Act's limit, it is not a receipt that requires a revenue stamp.

While current accounts are primarily for business purposes, savings bank accounts are
forindividuals who wish to save and build up account balances. While interest is not
permittedon current accounts, it is permitted on S.B. Accounts, which are
governed by the.RBIdirective20. The RBI made a distinction between savings accounts with
and without chequefacilities for the first time. Savings deposit accounts without the ability to
write checks couldearn 5% interest, while those with the ability to write checks could earn
only 3%. With effectfrom June 1, 1977, these new rates were implemented. However, with
effect from March 1,1978, the RBI abolished the distinction between the two types of
Savings Accounts, and nowinterest on deposits in S.B. Accounts will be paid at 412 percent
per annum, regardless ofwhether the cheque facility is extended or not. Interest will be
calculated on the minimumbalance at the credit of the accounts during the period from the
10th to the last day of eachcalendar month. If the deposits are not repaid, no interest will be
paid. Under the S.B.Accounts, a minimum of 50 paisa per half year is not earned. Interest
will be paid only onceevery six months, usually in May and November of each calendar year.

Certain types of accounts, which differ from individual or proprietary accounts,

necessitateextra caution and attention not only when they are opened, but also afterward. For
specifictypes of accounts, there are well–known precautions to be taken. A special account
could bea deposit or a borrowing account, but a banker must understand certain principles
thatgovern special types of accounts in any case. The accounts listed below may be
consideredspecial types of accounts:

I ) Minors' Account
ii) Lunatics' Account
iii) Drunk People
iv) Insolvents
v) Joint Accountants
vii) Married Woman
vi) Joint Account between Husband and Wife
20 https://rbidocs.rbi.org.in/rdocs/Publications/PDFs/BANKI15122014.pdf

15
viii) Hindu Family Partnership

16