 Trust Account

A savings account established under a trust agreement whereby a trustee administers the funds for the
benefit of one or more beneficiaries.
An account in which a bank or trust company (acting as an authorized custodian) holds funds for specific
purposes such as to pay property taxes and/or insurance premiums associated with a mortgaged
property.

 Executor Account
Executor  is the individual who has the responsibility of seeing the terms of the will enacted and that
everyone who is meant to have money or property through the estate receives it in a timely manner.  He
or she will be responsible for paying any remaining taxes or obligations, as well as, sorting through the
various property and personal requests of the deceased.

The executor of the estate must work within a very rigorous set of obligations, among those is creating
an executor account from which the funds may be distributed and pulling together the payments owed
to the estate and the various funds and savings he or she may have accumulated.

An executor’s account is a special banking account that enables the estate’s executor or executors to
gather the finances and payments that are owed to the estate of the deceased person in one account
from which distributions can be made.  It may be used for the purposes of paying for funeral
arrangements, creditors, or beneficiaries.

 Dishonour of negotiable instrument:

Dishonour of negotiable instrument means loss of honour or respect for the instrument in question on
the part of the maker, drawee, or acceptor, as the case may be, which eventually results in non-
realization of payment due on the instrument.

Dishonor by non-acceptance:
Any type of negotiable instruments, i.e., bill of exchange, promissory note, or cheque may be
dishonoured by non-payment by the drawee/acceptor thereof. But a bill may also be dishonoured by
non-acceptance because bill of exchange is the only negotiable instrument which requires its
presentment for acceptance and non-acceptance thereof, can amount to dishonour.
Dishonour of negotiable instrument by Non-payment:
A promissory note, bill of exchange, or cheque is said to be dishonoured by non-payment when the
maker of the note, acceptor of the bill, or drawee of the cheque commit default in payment upon being
duly required to pay the same. Also the holder of a bill or pro-note may treat it as dishonoured, without
placing for payment when presentment for payment is excused expressly by the maker of the pro-note,
or acceptor of the bill and the note or bill when overdue remains unpaid.
  Characteristics of good security

1.Easy to Value: The market value of the security should be easy to determine in the market.
The value of house provided as security should be easily determined; further the value of the
security should be stable over the period and not fluctuate.
2. Easy to Realize: The security should also be marketable or easily to sale. The lending
institution should be able to dispose of the security without incurring additional cost. The
security should also be easy to liquidate, concert to cash in little time without loss of value.
3. Easy to Take: A good security should enable the lending institution to acquire an interest or
charge over it without delay and additional costs. There should be no legal encumbrances,
disputes on the security. The title deed or ownership of the security should be in favor of the
borrower and there should be no outstanding dispute over it. Other components of easy to take
should be ease to own legal or take physically.

 Rights and liabilities of Guarantor

There are certain rights accorded to you as a guarantor before and after signing the contract of
guarantee
 The right to obtain a copy of the letter of guarantee or contract of guarantee and any
other documents in relation to the loan transaction.
 The right to seek advice from your lawyer before signing the contract of guarantee.
(Nevertheless, you will have to pay the legal fees yourself).
 The right to the information on the outstanding balance of the account of the borrower
with the financial institution subject to the borrower's consent.
 The right to call upon the borrower to pay off the loan to release you from all your
liabilities under the guarantee. This right can be exercised at anytime and even before
the financial institution has called upon the borrower to pay the debt. However, this
right may be subject to the terms and conditions of the loan, which may vary from
customer to customer.
 The right to be indemnified by the borrower for any payment made to the financial
institution. This means that you can sue the borrower for the amount that you have paid
to the financial institution
Below are some points to explain the liabilities of a guarantor:
 The extent of the liability of a guarantor will be as specified in the guarantee document.
 A guarantor may be held liable for the liabilities of the borrower in accordance with the
terms of the guarantee document.
 A guarantor can only be rendered liable under a guarantee if the borrower is in default
of any payment to the financial institution and the financial institution makes a demand
on the guarantor.
  Pledge Vs Hypothecation

Possession of property Remains with the Remains with the debtor (H)
creditor (P)

Rights of lender in To sale out the goods in To take to possession of the

exceptional his possession to adjust asset first, then it out to
circumstances the debt.(p) recover the debt. (H)

 Marchent Banking
Merchant banking is a combination of banking and consultancy services. It provides consultancy to its
clients for financial, marketing, managerial and legal matters. It helps a business person to start a
business. It helps to raise (collect) money. It helps to expand and modernize the business. It helps in
restructuring of a business. It helps sick business units. It also helps companies to register, buy and sell
stocks at the stock exchange.

Functions of Merchant Banking Organization

1. Portfolio Management: Raising funds for clients: Merchant banking organisation assist the
clients in raising funds from the domestic and international market, by issuing securities like
shares, debentures, etc., which can be deployed for starting a new project or business or
expansion activities.
2. Promotional Activities: One of the most important activities of merchant banking is the
promotion of business enterprise, during its initial stage, right from conceiving the idea to
obtaining government approval. There is some organisation, which even provide financial and
technical assistance to the business enterprise.
3. Loan Syndication: Loan Syndication means service provided by the merchant bankers, in
raising credit from banks and financial institutions, to finance the project cost or working capital
of the client’s project, also termed as project finance service.
4. Leasing Services: Merchant Banking organisations renders leasing services to their customers.
There are some banks which maintain venture capital funds to help entrepreneurs.
  IMF
The International Monetary Fund (IMF) is an international organization that aims to promote
global economic growth and financial stability, encourage international trade, and reduce
poverty.
he International Monetary Fund (IMF) is based in Washington, D.C. and currently consists of
189 member countries, each of which has representation on the IMF's executive board in
proportion to its financial importance, so that the most powerful countries in the global economy
have the most voting power.
MF Activities
The IMF's primary methods for achieving these goals are monitoring, capacity building, and
lending.
Surveillance
The IMF collects massive amounts of data on national economies, international trade, and the
global economy in aggregate, as well as providing regularly updated economic forecasts at the
national and international level.
Capacity Building
The IMF provides technical assistance, training and policy advice to member countries through
its capacity building programs. These programs include training in data collection and analysis,
which feed into the IMF's project of monitoring national and global economies.
Lending
The IMF makes loans to countries that are experiencing economic distress in order to prevent or
mitigate financial crises. Members contribute the funds for this lending to a pool based on a
quota system. IMF funds are often conditional on recipients making reforms to increase their
growth potential and financial stability. Structural adjustment programs, as these conditional
loans are known, have attracted criticism for exacerbating poverty and reproducing the structures
of colonialism.

 LIBOR

LIBOR is a benchmark rate that represents the interest rate at which banks offer to lend funds to
one another in the international interbank market for short-term loans. LIBOR is an average
value of the interest-rate which is calculated from estimates submitted by the leading global
banks on a daily basis. It stands for London Interbank Offered Rate and serves as the first step
to calculating interest rates on various loans throughout the world. LIBOR serves as a globally
accepted key benchmark interest rate that indicates how much does it costs to the banks to
borrow from each other.

 Notary Public

A notary public (or notary or public notary) of the common law is a public officer constituted by

law to serve the public in non-contentious matters usually concerned with estates, deeds, powers-
of-attorney, and foreign and international business. A notary's main functions are to
administer oaths and affirmations, take affidavits and statutory declarations, witness and
authenticate the execution of certain classes of documents, take acknowledgments of deeds and
other conveyances, protest notes and bills of exchange, provide notice of foreign drafts, prepare
marine or ship's protests in cases of damage, provide exemplifications and notarial copies, and
perform certain other official acts depending on the jurisdiction. Any such act is known as
a notarization. The term notary public only refers to common-law notaries and should not be
confused with civil-law notaries.

 Green Banking

Green Banking refers to practices and guidelines that make banks sustainable in economic,
environment, and social dimensions. It aims to make banking processes and the use of IT and
physical infrastructure as efficient and effective as possible, with zero or minimal impact on the
environment.

There are two guidelines for greening banking:

1. Making day-to-day business operations, banking products and services greener by following
simple practices and making them environmentally friendly.

2. Making IT infrastructure (including data center) and physical infrastructure (including

buildings) greener and taking initiatives so that a bank could itself generate electricity for its own
consumption.

 Bridge Financing

Bridge financing, often in the form of a bridge loan, is an interim financing option used by
companies and other entities to set their short-term position until a long-term financing option
can be arranged. Bridge financing normally comes from an investment bank or venture capital
firm in the form of a loan or equity investment. This type of financing is most normally used to
fulfill a company's short-term working capital needs. 

Question: Who can open a bank account? (page 194)

Question: How to close bank account? / How to terminate banker-customer relationship? (page
201)

Question: The balance of a joint account in the name of X, Y and Z is paid to Y and Z on the
death of X. State the legal position of the banker.

Answer: In case of death of one or more joint account holders the balance in the account will
vest with the survivor or survivors. on the death of all joint account holders, any balance in
the account is payable to the legal representative of the joint account holders.

according to this, the banker can make the payment to Y and Z. There is no legal problem for the
banker.