1. What are the distinguish between OD & CC?

Ans.  Basically nature of OD &  CC are almost same but in some cases they differ from each other. Overdraft is a kind of advance always allowed on a current account, with a certain limit upon which a borrower can overdraw his current account through cheque within a stipulated time. Overdraft facilities are generally granted to businessmen for expansion of their business against the securities of stock in trade, shares, debentures, Govt. promissory note, FDR, life policies, gold & gold ornaments etc. OD may be clean or unclean.  

On the other hand Cash credit is the favorite mode of borrowings by traders, industrialist, agriculturists etc for meeting their working capital requirement with an elastic forms because limits increase or decrease on the basis of volume of goods. This type of facility is always allowed against pledge or hypothecation of goods.   The most significant difference between OD & CC is that a cash credit is used for long term by commercial and industrial concerns doing regular business while Overdraft is supposed to be a form of bank credit to be made use of occasionally and for shorter period of time.06.07.09 reviewed.

1. What precautions Bank should take prior opening of Account or considering any credit proposal of Minor?

Ans. Under the contract act the contract entered in to by a Minor is void i.e. neither he can sue or he can be sued. So, following precautions to be taken while opening of account or allowing credit to minor:  

i). The Guardian of a minor can make a contract for the minor if it is within the guardian competence & for the benefit of minor & for his necessity.  

ii). A minor can not be compelled for the money borrowed by him except those which were borrowed for his benefit & necessary for life.  

iii). Any securities pledged by minor is invalid but if it is given by third party will be chargeable.

  iv). Any third party guarantee for minor will not be supported by law because as the minor is not liable as principal debtor, the original agreement is void & thus ancillary agreement will also be void.  

v).  A minor can not be liable on a bill or a cheque although the bill, or cheque is not invalid merely be reason of having been drawn by the minor.  

vi). A minor can accept benefit and can be a transferee although a sale or mortgage of his property is void but minor is competent to sue possession of the property conveyed through a deed of sale.  

vii). If an overdraft is granted to minor even by mistake or unintentionally, the banker has no legal remedy to recover the amount form the minor.