Good evening aspirants, Today we are with a special article for SBI CBO 2020 preparation on Legal Issues. Hope you find this informative and helpful.
Topic : Legal Issues
1.We do not open account in the name of undischarged bankrupt person. Why ?
Ans :Undischarged bankrupt person is incompetent to enter into valid contract. All the rights of an undischarged person vest in the hands of official Receiver/assignee. Hence bank does not open any account to avoid any legal complications to meet obligation of a bankrupt person.
2.Payment of a crossed cheque is not made in cash over the counter even if the holder is identified to the bank. Why ?
Ans : Crossing is the mandate of drawer to the paying banker, not to pay the cheque in cash. If it is paid in cash, it will contravene drawer’s direction and the paying banker will not get protection which is otherwise available under Negotiable Instrument Act, 1881.
3.Bank is liable for any damage caused to the articles in Safe Deposit. Why ?
Ans : Section 151 of Indian Contract Act, 1872 makes the Bank liable for any damage caused by negligence, because the relationship is that of bailer and bailee.
4.In case of Gold Loans, ornaments can be auctioned without resorting to Court of Law. Why ?
Ans : This is a pledge advance. Under section 172 of Indian Contract Act, 1872, there is no necessity to go to Court of Law for realising overdue.
5.Banks are more secured, in case of hypothecation advances to Limited Companies than to partnership firms. Why ?
Ans : As per section 125 of companies Act, 1956 the registration of bank’s charges on assets of Limited Companies should be registered with the Registrar of Companies whereas, no such charge is registered in case of partnership firms.
6.A search is made in the office of Sub-Register, regarding registration in respect of landed property for the last 12 years only.Why ?
Ans : Under limitation Act, 1963 the charge of mortgage is valid only for 12 years there after, it gets time barred.
7.Transactions on the Trust Accounts should be allowed only after proper scrutiny. Why?
Ans : With a view to ensure that no provisions of Trust Deed are overlooked, as these accounts are of fiduciary nature and any violation of the provisions, may land the bank in serious trouble.
8.Advances against ‘Pledge of Goods’ need not be registered with the Register of Companies.
Ans : In term of Section 125 of Companies Act, 1956. ‘Pledge’ is a specific and not a floating charge. Only floating charges need be registered.
9.All Commercial/Scheduled Banks are required to maintain the stipulated Cash Reserve Ratio & Statutory Liquidity Ratio. Why ?
Ans : The RBI has the control over the Scheduled Commercial Banks and CRR & SLR are the effective tools in the hands of RBI to regulate flow of credit as per national priorities through organised sector like Banking. The banks are, Therefore, statutory required to maintain SLR/CRR ,as stipulated by RBI.
10.Joint Hindu Family letter is obtained for opening an account in the name of the Joint Hindu Family. Why ?
Ans : It acts as a mandate from all the co-parceners of Joint Hindu Family that will open and operate the account. At the same time it also binds all the signatories personally in the event of the business undertaken by the firm, proving outside the scope of the family ancestral business.