Special Types of Customer – Opening of

Account and Operation thereof, Such as

Minor, Illiterate Person, Pardanashin Lady,
Executor / Administrator

1
 Introduction

Opening of an Account binds the Banker and

Customer into a contractual relationship.

Account opening form is not mere an

application it’s an agreement between Banker
and Customer, that establishes a lawful
relationship.
2
 Contractual Relationship

Every commercial transactions starts from an

agreement between Two or more Persons.

According to the Contract Act, 1872, an Agreement

enforceable by Law is Contract.

All agreements are contract if they are made by free

consent of parties those are competent to contract
for a lawful consideration.
3
 Person Competent to contract

Every person is competent to contract -----

• If he is of the age of major.

• If he is of sound mind
• If he is not disqualified from contracting
by any law.

4
 Free consent of the parties
Consent is not free if it is caused by -----
• Coercion.
• Undue influence
• Fraud
• Mis –representation
• Mistake.
• So every person who is competent to contract can
open an account with a Bank. But the capacity of
certain classes of person to make valid agreement
is subject to certain legal restrictions as the case
with Minor, Illiterate Person, Pardanashin
Lady, Executor, Administrator.
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 Minor

Definition:
A minor is a person who has not completed 18
years of age.
In case a guardian of his person or property is
appointed by a Court of Law before he attains at
the age of 18 Years, the period of minority is
extended up to 21 Years.
6
 Legal frame-work to open Minor’s
Account
As per section 11 of the Contract Act a minor is
incompetent to contract but section 26 of
Negotiable Instrument Act a minor can draw,
endorse, deliver and negotiate a negotiable
instrument. So a banker can open an account in
a minor’s name in any of the following ways:
• In the name of Minor himself.
• In the joint names of Minor and his/her
Guardian.
• In the name of Guardian. 7
 Procedure to open Account and its
operation

In the name of Minor himself:

The account will be operated by the Minor

alone.
In his personal presence in the Bank he can with
draw money from his account.

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 In the joint names of Minor and his/her
Guardian

• In this case the account will be operated

jointly by the Minor and his/her Guardian.

• In above both cases, the Minor must have at

least attained the age of 10 Years or above and
able to sign his name uniformly.

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 In the name of Guardian
This account will be operated by the Guardian
on behalf of the Minor.
In the event of death of a minor the money
will be payable to his guardian. And in case
the Guardian dies before the minor attains
majority and the account is a joint account or
operated by the Guardian only the money is to
be paid by the banker to the minor on attaining
majority or to someone else who has
appointed as Guardian by the Court. 10
 In the name of Guardian

While opening a minor’s account the banker

should record the date of birth of the minor as
disclosed by his Guardian.

All other usual formalities to open account are

to be followed.

11
 Suggestions
• Banker should open SB Account in Minor’s name
and not to open a Current Account. Because an over
draft may be created at any time in current account.
Once money lent to minor cannot be recovered from
him as he is free from personal liability.
• Like SB Account a FDR or Special Deposit Account
may be opened by a minor along with a Guardian.
• Periodical Balance Confirmation Certificate to be
obtained.
12
 Illiterate Person

Definition:
An illiterate Person means who can’t sign his
name.

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 Procedure to open Account and its
operation

• While opening of an account of such a person,

the banker should obtain left thumb
impression on the Account Opening Form and
Specimen Signature Card in the presence of an
authorized Bank Official.
• The thumb impression must be authenticated
and accepted by that Bank’s official with
his/her authorized signature. 14
 Procedure to open Account and its
operation
• Details of identification marks should be noted
on the Account Opening Form and Specimen
Signature Card.
• Except his/her physical presence in the Bank
any withdraws from the account will not be
allowed.
• All other usual formalities to open account are
to be followed.
15
 Pardanashin Lady
Definition:
A Pardanashin Lady is one who, by the custom
of the country or the usage of the particular
community to which she belongs, is obliged to
observe complete seclusion.
A contract with a Pardanashin Lady is
presumed to have been induced by undue
influence and therefore, a banker has to be
extra cautious while dealing with her. 16
 Pardanashin Lady
In order that lady may not set aside any contract on the
ground of undue influence, in that case, the banker
will have to prove that:
• the term of the contract are fare and
reasonable;
• the transaction is real and bonafide;
• the lady had an independent advice in the
matter;
• the deed was explained to her; and
• she understood it and its effect on her interest
in full. 17
 Suggestion/Practice

The identity of such a lady is not possible to

determine and therefore, usually the banker
refuses to open such account.

18
 Executors / Administrators
Definition:
• The person appointed to wind up and distribute a
deceased’s estate or to administer the property of the
testator or to carry into effect the provisions of the
Will are called Personal Representatives.
• Personal representatives appointed by the
deceased’s will or codicil are known as Executors
and those are appointed by the Court are called
Administrators. The case of appointment of
administrator arises where the deceased dies
intestate. 19
 Procedure to open Account and its
operation
• An executor should submit a probate and an
Administrator should submit the Letter of
Administrator to the Bank as a proof of their
authority to operate account of a deceased
person.

• The banker should thoroughly examine the

probate/ Letter of Administrator to acquaint
himself with the power and functions of
Executor / Administrator.
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 Procedure to open Account and its
operation

• An account may be opened in the name of

Executor / Administrator in the following
style:
• XYZ – Executor or Administrator of the
Estate of A, The deceased.
• In case of joint Executor / Administrator a
mandate signed by all of them is to be
obtained regarding operation of the
account. 21
 Procedure to open Account and its
operation

• The insolvency of the Executor /

Administrator will terminate his authority to
operate the account unless it has been
overdrawn.
• All other usual formalities to open account are
to be followed.

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Thanks to all

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