Types of Account Holders

Let us discuss the Types of Account Holders.

Accounts of Individuals

Individuals generally open transaction accounts like Savings accounts or Current accounts. It has already been mentioned that any adult person/individual competent to contract can open an account with any bank after observing usual formalities provided that the bank is satisfied with his identity, respectability, and desirability. On many occasions, identity is ascertained by passports, voter identity cards (ID), certificates of ward commissioners, employer’s certificates, and tax identification numbers (TIN), etc. They are required to furnish a passport size photograph and an introduction from an acceptable person. Normally individuals – either singly or jointly – are allowed to open Savings account.

Joint Accounts

Accounts are allowed to be opened in two or more names (individuals). Documents required are similar to those applicable to the individual accounts. In the case of joint accounts, generally ‘Either or Survivorship’ instructions are obtained in the handwriting of the account holders concerned under their signatures. In such cases account may be operated by any one of them. In the event of the death of either one, the survivor can operate the account. In the absence of instructions otherwise, in the ‘Either or Survivorship’ declaration, the balance of the joint, account is payable to the survivor and the legal representatives of the deceased joint account holder if there is no nomination.

Accounts of Sole Proprietorship

The sole proprietorship concerns do not enjoy any legal status. Hence they are treated as individuals by the banks. While opening a new Current account, the owner is required to produce the trade license, a certificate from Chamber of Commerce, Tax Identification Number (TIN), and Value Added Tax (VAT) registration number as may be applicable or similar another document. In the case of savings accounts, documents required are similar to those applicable to individual accounts.

Accounts of Partnership Firms

A partnership account is allowed to be opened by the banks on the production of trade licenses and other documents evidencing the partnership business. If it is a registered partnership it is required to produce a registration number and partnership deed. If not, a standard partnership letter supplied by the banks is required to be signed by all the partners of the ‘firm’ in their individual capacities. The account may be in the name of the ‘firm’. But legally the firm does not have any existence. Hence partners jointly and severally have to bear all the responsibilities.

The partnership deed or partnership letter is thoroughly studied by the banks to ascertain the names and addresses of all the partners and the nature of the business. The names of the partners authorized to operate the account on behalf of the firm including the authority to draw, endorse and accept bills, mortgage, and sell property belonging to the firm, etc are also ascertained from the Deed or Letter. Banks also ascertain the position of the firm on retirement or death or insolvency of any of the partners.

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