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Principles & Practices of Banking

Unit – 16 : Opening Accounts of Various Types of Customers

1. Indian Majority Act 1875 defines the age of majority to be 18 years.

2. Section 26 of the NI Act provides that a minor may draw, endorse, deliver and negotiate a negotiable instrument and as such, a minor can draw a cheque. The minor’s age should be above 13 years and should be literate. No overdraft is allowed in these accounts.

3. Two minors cannot open a joint account.

4. In an HUF, the members of a family are called coparceners and the eldest male child is called Karta (Manager), the Karta operates the account.

5. All the adult members have to sign account opening form while opening HUF account.

6. Registration of a partnership is optional (except in states of Gujarat and Maharashtra where it is compulsory).

7. When there is an addition into the partnership, the old account can be continued ifthe balance is in credit, else old account should be closed and a new one should be opened. This process avoids Clayton’s Rule.

8. Death of a partner dissolves the partnership firm.

9. A public limited company – minimum 7 members, maximum unlimited members. Minimum paid up capital of Rs 5 Lakh.

10. A private limited company – minimum 2 members, maximum 50 members. For banking business maximum number is 20. Minimum paid up capital of Rs 1 Lakh.

11. A government company – minimum 51% of the shares are held by the government.

12. Internal rules of a company are mentioned in articles.




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