Individual:

A single person or a sole proprietorship concern having valid trade Licence issued by concerned authority can open current accounts with any banks. An account holder can mandate to his / her representative to operate the respective account credit may be allowed to him/her or to the firm.   In case of an account opened jointly, joint account mandate should invariably be signed by the all parties to the account. This enables the bank to set-off a credit balance in the person of any of the joint account holders against debit balance in the joint account.   Upon receipt of notice of death, in solvency or mental incapacity of one of the joint holders, no further withdrawal should be allowed unless a fresh account is opened in the name of remaining joint accounts.

Partnership :

Every partner is liable jointly and severally for all debts and obligations of the firm incurred while he is a partner. Partnerships are two types.

• Unlimited liability of partners
• Limited liability of partners.

In partnership with unlimited liability of partners, the personal assets of all the partners are liable, if the assets of the firm are not sufficient to meet the entire debt of the firm.   In a limited partnership, also called a company limited by guarantee, a partner’s liability is limited to his contribution to the firm’s capital (like professional institutes, societies etc.).   Any change in the partnership due to death, bankruptcy, retirement/addition- dissolves the firm. After such an event, the account of the partnership must be stooped i.e., no further operations to be allowed after receipt of notice of death or any other change in the composition of the partnership. Further, operations, if any should be allowed in a new account with the remaining partners. The branch manager should see the partnerships legal composition / contained and the deed of partnership should a registered one with Registrar of Joint Stock Companies and Firms.

Limited Companies:

A company is separate legal entity distinct from its directors and share holders.   The branch manager before opening an account of a private limited company or a public limited company, should see that the Memorandum and Articles of Association are duly registered with the Registrar of Joint Stock Companies and obtain a certificate copy thereof alongwith copy of certificate of incorporation, commencement of business (in case of public limited company) and further obtain the following :

• List of directors, father’s / husband’s name, permanent address, specimen signature to be certified by the Managing Director of the company.

• Duly adopted Board Resolution of the company certified by the Chairman

of the Board or Secretary of the company also showing attendance in the meeting.   In case of considering any credit facility, the branch manager should be satisfied to the following :

• Whether the company and / or its directors has the power to borrow. These borrows must be expressly mentioned in the Articles of Association. The branch manager should ascertain by a reference to the Articles of Association whether any limitation has been places on the director
• What is the purpose of borrowing?

It must be within the scope of the company’s objectives. It also be ensured that the directors exercise their authority legally and in the general interest of the company.

• What powers are there to give security?

The Articles of Association specifies the powers enjoyed by the company in giving charge on its assets.

• Any charge against company’s assets must be registered with the RJSC with 21 days from the date of execution of the deed of charge documents.

Trusts/ Clubs/Societies :

Trustees have no automatic implied powers to borrow for the purpose of the Trust. The branch manager should ascertain from the Trust Deed of the rules any by laws of the charity whether the Trustees possess the necessary powers to borrow.   Similarly, Trustees do not have the power to offer any asset belonging to the Trust as security, unless the Trust Deed or similar documents has expressly empowered them to do so.   The branch manager should not allow any advance including temporary overdraft to any unincorporated societies or clubs as because the can not be used for a debt.

Person’s in fiduciary capacity:

• Trustees :

Borrowings by Trustees are governed by Statute or by the Trust Deed, if any. Otherwise, Trustees have no power to borrow money, which binds the estate of the Trust or any securities belonging to the Trust.

Executors :

Executors or administrators are appointed to wind up the estate of deceased person according to instructions containing the will.   Any administrator is appointed by the court when a person dies wholly infested or where the will left by the deceased does not name an executor or any executor’s name in the will dies before the testator. Therefore, a court appoints an administrator at the request of an interested party. Therefore, an executor drives his power from the letter of administration guaranteed to him by the court.  

Liquidators :   Liquidators are appointed by the court in a compulsory winding up. In a voluntary winding up they are appointed by creditors or members of a company.