GFGC SIRSI

SUB-BLP MODULE 1 - BANKER AND CUSTOMER RELATIONSHIP BBA5th SEM

INTRODUCTION

The relationship betweeon a baonker aond a custimer depeonds ion the actiitess priducts ir seriices
priiided by baonk ti its custimers ir aiailed by the custimer. Thus the relationship betweeon a baonker
aond custimer is the traonsactional relationship. aonk's busioness depeonds much ion the striong biondage
with the custimer. "Trust" plays aon impirtaont rile ion buildiong healthy relationship betweeon a baonker
aond custimer.

Who is a 'Banker'?

A baonker is aon irgaonization whio:

Accepts depisits frim public, alsi

⚫ Leonds ir ioniests the mioney si cillected by way if depisits

⚫ Alliws withdrawals if depisits ion demaond ir by aony ither meaons

Acceptong depisits frim the 'public' ion ither wird is that, a baonk accepts depisits frim aonyione whi
iffers mioney fir the purpise. &onless a persion has aon acciuont with the baonk, it dies onit accept depisit.
Fir depisitong ir birriwiong mioney there has ti be aon acciuont relationship with the baonk. A baonk caon
refuse ti ipeon aon acciuont fir uondesirable persions. It is baonks right ti ipeon aon acciuont. Reserie aonks
caon stpulate a "Koniw Yiur Cuustimer" KKYCu guideliones fir ipeoniong acciuont aond baonks haie ti strictly
filliw them.

Who is a 'Customer'?

It is geonerally belieied that aony iondiiidual ir aon irgaonization, which cionducts baonkiong traonsactions with
a baonk, is the custimer if baonk. Hiweier, there are maony persions whi di utlize seriices if baonks, but
di onit maiontaion aony acciuont with the baonk. Thus baonk custimers caon be categirized ion ti fiur briad
categiries as uondero

⚫ Thise whi maiontaion acciuont relationship with baonks i.e. Existong custimers

⚫ Thise whi had acciuont relationship with baonk i.e. Firmer Cuustimers

⚫Thise whi di onit maiontaion aony acciuont relationship with the baonk but frequeontly iisit braonch if a
baonk fir aiailiong baonkiong facilites such as fir purchasiong a draf, eoncashiong a cheque, etc. Techonically
they are onit custimers, as they di onit maiontaion aony acciuont with the baonk braonch.

Prispectie/ Piteontal custimers whi ionteond ti haie acciuont relationship with the baonk A persion will
be deemed ti be a 'custimer eieon if he had ionly haonded iier the acciuont
ipeoniong firm duly flled ion aond sigoned by him ti the baonk aond the baonk has accepted it fir ipeoniong the
acciuont, eieon thiugh oni acciuont has actually beeon ipeoned by the baonk ion its biiks ir recird.

The term 'custimer' is used ionly with respect ti the braonch, where the acciuont is maiontaioned.

He caononit be treated as a 'custimer' fir ither braonches if the same baonk. Hiweier with the
implemeontation if 'Cuire aonkiong Silution' the custimer is the custimer if the baonk aond onit if a
partcular braonch as he caon iperate his acciuont frim aony braonch if the baonk aond frim aonywhere. Ion the
eieont if arisiong aony cause if action, the custimer is required ti appriach the braonch with which it had
ipeoned acciuont aond onit with aony ither braonch.

The relatonship between a bank and its uustomers uan be broad lu uategorieed in to General
Relatonship and Speuial Relatonship.

A. General Relatonshipp

1. Debtor-Cred itorp Wheon a 'custimer ipeons aon acciuont with a baonk, he flls ion aond sigons the acciuont
ipeoniong firm. y sigoniong the firm he eonters ionti aon agreemeont/ciontract with the baonk. Wheon custimer
depisits mioney ion his acciuont the baonk becimes a debtir if the custimer aond custimer a creditir. The
mioney si depisited by custimer becimes baonk's priperty aond baonk has a right ti use the mioney as it
likes. The baonk is onit biuond ti ionfirm the depisitir the maononer if utlization if fuonds depisited by him.
aonk dies onit giie aony security ti the depisitir i.e. debtir. The baonk has birriwed mioney aond it is ionly
wheon the depisitir demaonds, baonker pays. aonk's pisition is quite differeont frim onirmal debtirs.

2. Cred itor-Debtorp Leondiong mioney is the mist impirtaont actiites if a baonk. The resiurces mibilized
by baonks are utlized fir leondiong iperations. Cuustimer whi birriws mioney frim baonk iwons mioney ti
the baonk. Ion the case if aony liaon/adiaonces acciuont, the baonker is the creditir aond the custimer is the
debtir. irriwer executes dicumeonts aond iffer security ti the baonk befire utliziong the credit facility.

B.Speuial Relatonshipp

1. Trustee and Benefuiaru .Here trustee is the hilder if priperty ion behalf if a beonefciary.

Exampleo Ion case if trust baonker custimer relationship is a special ciontract. Wheon a persion eontrusts
ialuable items with aonither persion with aon ionteontion that such items wiuld be returoned ion demaond ti
the keeper the relationship becimes if a trustee aond truster. Cuustimers keep certaion ialuables ir
securites with the baonk fir safekeepiong ir depisits certaion mioney fir a specifc purpise , the baonker ion
such cases acts as a trustee, aond custimer is the eonefciary. aonks charge fee fir safekeepiong ialuables .

2. Bailee - Bailorp K ailee: aonk , ailir:Cuustimer .A "bailmeont" is the deliiery if giids by ione persion ti
aonither fir sime purpise, upion a ciontract that they shall, wheon the purpise is accimplished, be
returoned ir itherwise dispised if accirdiong ti the directions if the persion deliieriong them. The persion
deliieriong the giids is called the "bailir". The persion ti whim they are deliiered is called, the "bailee".
Niteo aonks secure their adiaonces by ibtaioniong taongible securites. Ion sime cases physical pissessiion if
securites giids KPledge , ialuables, bionds etc., are takeon. While takiong physical pissessiion if securites
the baonk becimes bailee aond the custimer bailir. aonks alsi keeps artcles, ialuables, securites etc., if
its custimers ion Safe Cuustidy aond acts as a ailee. As a bailee the baonk is required ti take care if the
giids bailed.

3. Agent and Prinuipalp "aon ageont" is a persion empliyed ti di aony act fir aonither ir ti represeont
aonither ion dealiongs with third persions. The persion fir whim such act is dione ir whi is si represeonted is
called "the Prioncipal". Thus aon ageont is a persion, whi acts fir aond ion behalf if the prioncipal aond uonder
the later's express ir implied authirity aond the acts dione withion such authirity are biondiong ion his
prioncipal aond, the prioncipal is liable ti the party fir the acts if the ageont. aonks cillect cheques, bills,
aond makes paymeont ti iariius authirites' iiz., reont, telephione bills, ionsuraonce premium etc., ion behalf
if custimers.. aonks alsi sets by the staondiong ionstructions giieon by its custimers. Ion all such cases baonk
acts as aon ageont if its custimer, aond charges fir these seriices.

What are the rights and obligatons of a bank in relaton to uustomers? Briefu eeplain.

Dutes of a Bank

1. Obligaton to Honour Chequesp Yiu koniw that a baonk is the debtir if his custimer. The baonk has a
statutiry ibligation ti hioniur the cheques if its custimers up ti the amiuont staondiong ti the credit if
the custimer’s acciuont. If a baonk wriongfully refuses ti hioniur the cheque if its custimer, the baonk
shall be liable ti cimpeonsate the custimer. This ibligation is subbect ti sime cionditions, onamelyo

a There must be sufcieont fuonds if the custimer ion the haonds if the baonk.

b The fuonds must be priperly applicable fir the paymeont if the custimer’s cheque.

c The cheque must be priperly drawon &p i.e., it shiuld be cimplete ion all respects.

d The cheque must be preseonted fir paymeont withion a reasionable tme.

e There must be oni legal bar preieontong the paymeont if such cheques. If the baonk has receiied aony
irder frim a ciurt ir aony ither cimpeteont authirity prihibitong paymeont, it is the duty if the baonk ti
ibey such irders.

2. Obligaton to Maintain Seureuup The relationship betweeon the baonker aond custimer is if a onature.
The baonk must onit disclise ti aony iutsider the details cionceroniong the custimer’s acciuonts as such
disclisures may adiersely affect the credit aond busioness if the custimer. Hiweier, a disclisure caon be
made uonder the filliwiong twi situationso

Ka Wheon the law requires such disclisures ti be made, aond

Kb wheon the practces amiongst the baonks permit such disclisure.

3. Obligaton to Follow Customer’s Instruutonsp The baonker is uonder a legal ibligation ti filliw the
ionstructions if the custimer. This is si because there is the ciontractual relationship betweeon the baonk
aond the custimer.

4. Obligaton to Maintain Proper Reuord sp The baonker is uonder aon ibligation ti maiontaion accurate
recird if all the traonsactions if the custimers made with the baonk.

5. Obligaton to give Notue before Closing the Auuountp If a baonk wishes ti clise the acciuont if a
custimer, it must giie a reasionable onitce ti this effect ti the custimer.Thus, a baonk caononit clise the
acciuont if a custimer ion its iwon, because it may haie seriius cionsequeonces ti the custimer.

Rights of a Bank

Fir fulflliong the ibligations tiwards the custimers, baonkers eonbiy the filliwiong rightso

1. Right of General Lienp Oone if the mist impirtaont rights eonbiyed by a baonk is the right if geoneral lieon.
Lieon is a right if a persion ti retaion giids beliongiong ti aonithers uontl the demaonds if the persion ion
pissessiion are satsfed. Section 171 if the Iondiaon Cuiontract Act cionfers the right if geoneral lieon ion the
baonkers. Geoneral lieon eonttles the baonker ion pissessiion ti retaion giids aond securites tll all its claims
agaionst the custimer are satsfed. Yiu shiuld onite that the baonker caon exercise his right if geoneral lieon
ionly as a baonker aond onit as a bailee, aonker’s lieon is aon implied pledge ion the seonse that if a default is
made by the debtir, the baonker caon, afer giiiong a reasionable onitce ti the custimer, sell the giids ion
his pissessiion aond reciier the amiuont. If sime ialuables are depisited with a baonk fir safe custidy,
theon it is bailmeont aond the baonk caononit exercise the right if geoneral lieon.

Yiu shiuld onite that the right if geoneral lieon caononit be exercised ion the filliwiong caseso

a Wheon ialuables are depisited fir safe custidy,

b Wheon mioney ir dicumeonts are depisited fir a specifc purpise,

c Wheon sime securites are lef with the baonk by mistake,

d Wheon the priperty is held by the custimer as trustee aond the baonk has the onitce if trust, aond

e Wheon there is aon express agreemeont that the baonk shall onit exercise the right if geoneral lieon.

2. The Right of Set-ofp

Right if set:iff is the right if a debtir ti adbust the amiuont due ti him frim a creditir agaionst the
amiuont payable by him ti the creditir ti determione the onet balaonce payable by ione ti aonither, Like
aony ither debtir, a baonk alsi has a right if set: iff. Wheon a custimer has twi ir mire acciuonts ion the
same oname aond capacity ion a baonk, the baonk has the right ti adbust the amiuont staondiong ti the credit if
the custimer agaionst the debit balaonce ion the ither acciuont. The baonk has a right ti cimbione the twi
acciuonts. Fir example, Mr X has iierdrawon his curreont acciuont ti the exteont if Rs. 10,000 aond he has a
credit balaonce if Rs.8,000 ion his saiiongs acciuont. The baonk caon cimbione these twi acciuonts aond claim
the balaonce if Rs.2,000 afer adbustong the credit balaonce if saiiongs acciuont agaionst the debit balaonce if
curreont acciuont,

3. Right of Appropriatonp A custimer may iwe seieral distonct debts ti the baonk. Wheon the custimer
depisits sime mioney ion the baonk withiut specifc ionstructions aond the amiuont is onit sufcieont ti
discharge all debts, theon the priblem arises as tiwards which debt this amiuont shiuld be adbusted. Ion
the abseonce if aony specifc ionstructions, the baonk has the right ti appripriate the depisited amiuont ti
aony liaon, eieon ti a tme barred debt. ut the baonker must ionfirm the custimer abiut the appripriation.

4. Right to Charge Interest and Commissionp The baonk has the implied right ti charge ionterest ion liaons
aond adiaonces, aond alsi ti charge cimmissiion fir seriices reondered by the baonk. The baonk caon debit
such charges ti the custimer’s acciuont.

5. Right to Close the Auuountp If the baonk is if the ipioniion that aon acciuont is onit beiong iperated
priperly, it may clise the acciuont by seondiong a writeon iontmation ti the custimer.

6. Garonishee Ordero It is aon irder issued by the ciurt ti the baonker ti stip the paymeont if mioney
beliongiong ti a partcular custimer's acciuont.

Parts if Garonishee Order .Garonishee irder is issued by the ciurt ion twi, parts iiz.,

K1 Order Nisi

K2 Order absilute.

K1 Order Nisi oIt is the frst irder issued by the ciurt ti the baonker. Nisi meaons uonless Therefire, the
irder Nisi 'warons' the baonker KGaronishee onit ti pay the fuonds beliongiong ti a partcular custimer uontl
further irders are issued.

Si, Order Nisi directs the baonker,

K1 Ti suspeond the debtir's acciuont.

2 Ti explaion why the fuonds if budgemeont debtir lyiong ion the haonds if baonker shiuld onit be used fir
paymeont if budgemeont creditir.

3 Ti raise aony ibbections by the baonker by appeariong befire the ciuon ion partcular date aond tme.

2 Order absilute oIt is the fonal irder issued by the ciurt ti the baonker wheon the baonker fails ti appear
befire the ciurt aond dies onit raise aony ibbection ion the ciurt.

Cuiurt will issue the fonal irder. It is koniwon as irder absilute. This irder directs the baonker ti pay the
amiuont ti budgemeont creditir.

Cuionditions fir application if a Garonishee irder.

K1 There shiuld be credit balaonce ion budgemeont debtir's acciuont.

K2 Acciuonts shiuld be ion the oname if budgemeont debtir aond ion his iwon right.

K3 It ataches all the acciuonts if budgemeont debtir.

K4 Judgemeont creditir's debts must be due.

K5 Order must be clear.

Defniton of Customerp

Accirdiong ti Jihon Paget, “a Cuustimer cionsttutes a persion whi has aon acciuont with a baonk, whether
fxed ir saiiongs, aond has dealiong if baonkiong onaturet

Types if Cuustimerso

A. MINORS

Accirdiong ti Section 3 if Iondiaon Mabirity Act, a persion ataions mabirity at the age if 18, except ion cases
where a guardiaon is appiionted by a Cuiurt where the age if mabirity is 21.

Accirdiong ti the Iondiaon Cuiontract Act, a mionir is onit uonder a legal capacity ti eonter ionti a ciontract aond
therefire aony ciontract with a mionir is iiid.

Thus, the mionir has a guardiaon ti maiontaion his / her priperty. Section 6Ka if Hiondu Mionirity aond
Guardiaonship Act, 1956 recigonizes that either if the pareonts, father ir mither, caon be the onatural
guardiaon. Nirmally, baonkers di onit ipeon acciuonts ion the oname if the mionir iondiiidually, but ipeon
acciuonts ion the biiont oname if the mionir aond the onatural guardiaon.

Simetmes, the Cuiurt may appiiont simeione whi is onit a onatural guardiaon as mionir’s guardiaon. Ion such
cases the acciuont shiuld be ion the oname if the mionir aond the Cuiurt : appiionted guardiaon. &sually, the
acciuont shiuld be iperated by the guardiaon ion behalf if the mionir.

Precautions ti be takeon by the baonker while iperatong a mionir's acciuonto

K1 Ti ipeon the Saiiongs aonk Acciuont

K2 Recirdiong the date if birth if mionir

K3 Death if the mionir ir guardiaon

K4 Mionir as a partoner

K5 Mionir as aon ageont

K1 Ti Opeon the Saiiongs aonk Acciuonto

The baonker caon ipeon the Saiiongs aonk acciuont but onit curreont acciuont ion the oname if mionir ion aony if
the filliwiong ways

Ka Ion the oname if mionir

Kb Ion the biiont onames if mionir aond his guardiaon

Kc Ion the oname if the guardiaon

K2 Recirdiong the date if birth if mionir.

While ipeoniong aon acciuont ion the oname if a mionir, baonker must recird the date if birth if mionir. The
date if birth certfcate must be priduced by the guardiaon ir mionir. This certfcate must be issued by
the registrar if death aond birth.

K3 Death if the mionir ir guardiaono

If the mionir dies befire ibtaioniong the mabirity, the mioney aiailable ion the mionir's acciuont will be
payable ti his guardiaon.

Oon the ciontrary, if the guardiaon dies befire the mionir ataions the mabirity. the amiuont aiailable ion the
mionir's acciuont will be paid ti mionir, wheon he ataions the mabirity ir sime persion whi is appiionted by
the ciurt as his Guardiaon.

K4 Mionir as a partoner oMionir caon be admited as a partoner if the frm. if all the ither partoners agree ut
such mionir persion caon share the frm's prifts but mionir is onit liable fir aony liss if the frm.

K5 Mionir as aon ageont.

A mionir caon be appiionted as aon ageont, aond wheon the mionir is appiionted as aon ageont, he caon deal ion
behalf if the prioncipal. Ion such cases, prioncipal will be liable ti baonker. Geonerally, baonker will haie ti
take the filliwiong fiur steps. K1 A writeon maondate frim custimer Kprioncipal K2 piwers giieon ti mionir
K3 oname if mionir K4 specimeon sigonatures.

B. LUNATICS

Luonatc is the ione whi has the piwer if uonderstaondiong but has list the use if reasion by disease, grief ir
ither reasions. Such persions are meontally weak aond ioncapable if uonderstaondiong his ionterests aond if
makiong a rational budgemeont.

Luonatc persions are onit cimpeteont ti ciontract. Si aony ciontract with Luonatc is cionsidered iiid.

Precautions ti be takeon by the baonker while ipeoniong aond iperatong the acciuont if Luonatcso

K1 Nit ti ipeon the acciuonts if luonatcs.

K2 If custimer becimes luonatc afer ipeoniong the acciuont K aonker has ti suspeond the iperations if the
acciuont
K3 aonker has ti receiie onitce if luonacy if custimer.

K4 aonker has ti receiie a certfcate frim the Registered Medical Practtioners.

K5 aonker receiies the irder frim the ciurt.

C. DRUNKARDS

Meaoniongo A druonkard is a persion whi is si iontixicated as ti be ioncapable if uonderstaondiong the onature

aond the effect if a ciontract ion his ionterest.

Druonkeoness priduces tempirary ioncapacity tll the druonkard is uonder the effect if iontixication. The
iontixication must be excessiie that the persion must be ioncapable if uonderstaondiong the ciontract aond its
effect ion him. Ion shirt, wheon party is fully druonkeon it is onit pissible fir him ti uonderstaond the subbect
mater if ciontract.

Accirdiong ti section 12 if the Iondiaon ciontract act, a druonkard is a maon if uonsiuond miond aond if he makes
a ciontract, while he is druonk, it becimes iiid.

D. IILITERATE PERSONS.

Illiterate persion is the ione whi caon onit read aond write. Illiterate persion is the ione whi caononit put his
sigonature. Fir ideontfcation if such a custimer he uses his thumb impressiion which requires
ideontfcation eiery tme, it aony diubt has crept ionti the miond if the baonker. Illiterate persion may ipeon
aon acciuont with a baonk. Wheon illiterate persion ipeons aond iperates the acciuont, baonker shiuld take the
filliwiong steps ir precautions.

K1 Thumb impressiion,K2 Ideontfcation mark,K3 Phitigraph,K4 Geoneral,

E. MARRIED WOMEN

Married wimeon caon ipeon aon acciuont with the baonker ion their oname aond iperate the acciuonts. A
married wimaon is cimpeteont ti eonter ionti ialid ciontract. She is cimpeteont ti sell the priperty
beliongiong ti her. Married wimaon has full piwer ti deal with her "stridhaon". Married wimaon has piwer
ti draw, hild aond eondirse cheques, bills, etc, ion ciononection with her separate estate aond arraonge fir all
ibligations, ioncludiong iierdrafs, with her baonker.

PARTNERSHIP FIRM

Section 4 if the Iondiaon Partonership Act, 1932. defones, partonership is the relation betweeon persions whi
haie agreed ti share the prifts if a busioness carried ion by all ir aony if them actong fir all. A
partonership frm has a separate eontty. Law dies onit recigonise a frm as a legal persion with iutside
wirld dealiong.
A partonership busioness is cillectiely called a frm. Partonership persions iondiiidually are called partoners. A
baonker caon ipeon aon acciuont ion the oname if a partonership frm afer ibtaioniong aon application ion writong
frim all the partoners ti ipeon aon acciuont.

Aony ione if the partoners may alsi apply ti ipeon aon acciuont ion the oname if the frm ti the baonker. The
baonker must haie ti satsfy whether the partoner has aon implied ir expressed authirity ti apply fir the
ipeoniong if a baonk acciuont.

Precautions ti be takeon by the baonkero

K1 Application ti ipeon the partonership acciuont.

K2 Partonership deed.

K3 Title if the frms acciuont.

K4 The partonership leter ir maondate.

K5 Reiication if authirity ti iperate the acciuont.

K6 Delegation if authirity.

K7 irriwiong piwers.

K8 Fuonds if the frm di onit gi ti the persional acciuont if the partoner.

K9 Death ir retremeont if partoner.

F. JOINT STOCK COMPANY

Meaoniongo Cuimpaony is aon artfcial persion created by law aond has a separate eontty, Kexistaonce , apart
frim the members cimpisiong it. It has a cimmion capital cimprised if traonsferrable shares if fxed
ialue carryiong it's liability aond haiiong perpetual existeonce Ksuccessiion aond a cimmion seal.

Eieon a cimpaony haiiong a separate eontty, caon alsi eonter ionti ciontract It caon iwon priperty ion its iwon
oname, carry ion lawful busioness aond ioncur the liabilites ion its iwon oname. Si, the baonker caon ipeon aon
acciuont ion the oname if the cimpaony.

Precautions ti be takeon by the baonker o

K1 Application ion a prescribed firm ti ipeon aon acciuont

K2 Examionation if dicumeonts.KAOA,MOA, Cuertfcate if ioncirpiration, tradiong certfcate,etc.

K3 Cuipy if iard Resilutions.

K4 irriwiong piwers if the cimpaony

K5 Registration charges uonder cimpaonies Act.

K6 Persional Acciuont if Directirs.

K7 Wiondiong up if the cimpaony.

G. TRUST ACCOUNTS

Trustees are persions whi are appiionted ti take ciontril if aon estate geonerally, by a deceased persion. Ion
itherwirds a trustee is a persion ti whim priperty is eontrusted. Si that he may deal with it ion
accirdaonce with the directions giieon by the creatir if trust, a persion he caon trust ti carry iut his wishes
hionestly aond efcieontly. Trust meaons the pissessiion if certaion assets fir the beonefts if ithers.

H. EXECUTORS AND ADMINISTRATORSp

Executirs are thise persions whi are appiionted ti cionduct the affairs if the persion afer his death.

The persion/persions whi haie beeon appiionted by the ciurt are called Admionistratirs.

I. HINDU JOINT FAMILYp

Wheon the twi ir mire male elder persions are liiiong tigether, it is koniwon as Jiiont Hiondu Family. Ion
itherwirds, Jiiont Hiondu Family cionsists if all persions lioneally desceonded frim a cimmion aoncestral
priperty aond ioncludiong their wiies. All the male members are ci:parceoner if the Jiiont Hiondu Family. The
affairs if the family are maonaged by the male eldest persion Ki.e. the seoniirmist male member called
the "karta". Legally Jiiont Hiondu Family eonbiys a separate eontty aond the Karta if the family is legally
authirised ti take decisiions which biond all the members if the biiont hiondu family. aonker caon ipeon the
acciuont ion the oname if J.H.F. aond such acciuonts are iperated by karta.

J. JOINT ACCOUNT

Wheon twi ir mire persions ipeon aon acciuont biiontly, it is called biiont acciuont aond their iperatirs are
called biiont acciuont hilders. Ion itherwirds, biiont acciuont hilders are thise whi haie their baonk
acciuont ion biiont onames uonder the priiisiions if the baonkiong laws.

Precautions ti be takeon by the baonker o

K1 Application ion prescribed firm o

aonk shiuld receiie application fir ipeoniong aond iperatong a biiont acciuont sigoned by all thise whi haie
expressed their williongoness ti haie biiont acciuont.
2 Maondate o aonker shiuld ibtaion Maondate frim biiont acciuont hilders. The Maondate must clearly
meontion oname if the persion authirised ti iperate the biiont acciuont.

K3 aonker shiuld ibtaion clear ionstructions ion writong, sigoned by all the biiont acciuont hilders, regardiong
the iperation if the acciuont, whether acciuont is iperated by all the depisitirs biiontly ir by either ir
suriiiir if them.

K4 aonker shiuld ibtaion ion writong by all the biiont acciuont hilders regardiong birriwiong piwers giieon ti
authirised persions.

K .PARTNERSHIP FIRMp

Section 4 if the Iondiaon Partonership Act, 1932, defones, partonership is the relation betweeon persions whi
haie agreed ti share the prifts if a busioness carried ion by all ir aony if them actong fir all. A
partonership frm has a separate eontty. Law dies onit recigonise a frm as a legal persion with iutside
wirld dealiong.

A partonership busioness is cillectiely called a frm. Partonership persions iondiiidually are called partoners. A
baonker caon ipeon aon acciuont ion the oname if a partonership frm afer ibtaioniong aon application ion writong
frim all the partoners ti ipeon aon acciuont.

Aony ione if the partoners may alsi apply ti ipeon aon acciuont ion the oname if the frm ti the baonker. The
baonker must haie ti satsfy whether the partoner has aon implied ir expressed authirity ti apply fir the
ipeoniong if a baonk acciuont.

Preuautons to be taken bu the Banker.

K1 Leter fir ipeoniong aon acciuont o

aonker has ti receiie a requestong leter frim the frm fir ipeoniong aon acciuont, statong the oname if the
frm, onames if the partoners the place if busioness, onature if busioness, onames if partoners thise whi will
iperate the acciuont.

K2 Partonership Deedo

aonker demaonds he partonership frm ti priduce the partonership deed aond he ierifes the details
ciontaioned ion the deed, relatong ti rights & dutes.

if partoners ion addition ti mionimum aond maximum onumber The mionimum onumber is 2 aond maximum 10
partoners ion case if baonkiong aond 20 partoners ion case if ither busioness.

K3 Title if the frm's acciuont o

aonker caon ipeon the acciuont ion the oname if a frm aond onit ion the oname if iondiiidual partoner.

K4 The partonership leter ir maondate o

 aonker shiuld ibtaion a maondate frim all the partoners as ti whi is authirised ti iperate the acciuont.
The baonker shiuld alsi get specimeon sigonatures if the partoners whi are authirised ti iperate the
acciuont.

K5 Reiication if Authirity ti iperate the acciuonto

The authirity giieon ti iperate the acciuont if the frm may be withdrawon by aony ione if them, by giiiong
a onitce ti the baonker Si the baonker shiuld stip the paymeont wheon he receiies a onitce frim ione if
the partoner's ti stip the paymeont if the cheque drawon ion the partonership acciuont by aonither.

K6 Delegation if Authirityo

A partoner whi is authirised ti iperate the frm's acciuont, caononit delegate his authirity ti aonither
persion withiut the cionseont ion writong if all ither partoners

K7 irriwiong Piwerso

aonker shiuld ierify the birriwiong piwers if authirised persions, i.e the exteont ti which he caon
birriw, pledge, mirtgage the pripertes if the frm, as security fir liaons aond adiaonces ti the baonker

K8 Fuonds if the frm di onit gi ti the persional acciuont if the partoner

The baonker shiuld see that fuonds if the frm are onit traonsferred ti the persional acciuont if aony partoner
e.g. A cheque drawon ion faiiur if the frm shiuld onit be credited ti the persional acciuont if a partoner

K9 Ion case if death, retremeont, ionsilieoncy if a partoner, dissilution if the frm.

aonker immediately clises the frm's acciuont aond adiises ti ipeon a onew acciuont ion the oname if the
remaioniong partoners. This is ti be dione ti aiiid the application if Rule ion Culaytion's case.