Chapter 4: Opening Accounts of Various Types of Customers

📚 JAIIB 2025 • PPB • Module A • Chapter 4 of 21

Opening Accounts of Various Customers

Account opening rules: individuals, joint accounts, illiterate (no current A/c, no cheque book), blind, minors (10+ can operate SB), HUF (Karta, coparceners), proprietorship (no SB in firm name), partnership (death dissolves, Sec 4 IPA 1932), LLP (DPIN), companies (resolution, MoA/AoA), trusts, cooperatives. LEI: 20-digit code.

⏱ 18 min read🎯 High Exam Weightage🧠 8 Memory Tricks⚡ 10 Flash Cards

Banky Opens All Types of Accounts! 📂

Every day you’ll open accounts for individuals, companies, partnerships, trusts, and more. Each type has different rules, documents, and operations. Get any of these wrong and you face audit observations or legal trouble!

“Sir, today a minor came with his father, a partnership firm, and a HUF family — all wanting accounts. Different rules for each?!” 📂
🤔
Section 1 of 9

Why Read This Chapter?

Opening the right type of account with correct documents = zero audit exceptions

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Are there really different rules for each type of customer?
👨‍🏫
Absolutely! Minor: guardian must sign, but minor aged 10+ can operate SB independently. HUF: Karta operates, all adults sign, death of Karta → next male coparcener. Partnership: death of partner dissolves the firm — stop operations! Company: board resolution + MoA + AoA + Certificate of Incorporation. Illiterate: NO current account, NO cheque book, thumb impression. Each has unique rules — know them ALL!
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Exam Marks

3-5 questions — introduction not to be taken (not compulsory!), minor for whom court appoints guardian = majority at 18, minor’s account guardian = mother or father, partnership min 2 adults, HUF Karta. Very high weightage!

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Career Growth

Account opening is the FIRST thing you do at a branch — errors here ripple through everything

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Real Life

You’ll know exactly how to open accounts for your family’s HUF, partnership business, or child’s savings

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Section 2 of 9

How Will It Benefit You?

Real career advantages

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Give me a real scenario!
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📂 Scenario: A customer wants to open an account for his 12-year-old daughter. You explain: ‘Sir, since your daughter is above 10, she can operate a savings bank account independently. We need her photograph, KYC, and your details as natural guardian. She can draw cheques under Section 26 of NI Act. But the account should not be overdrawn. When she turns 18, she must confirm the balance and give fresh operating instructions.’ Father: ‘My daughter will learn banking early!’ 🌟
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Section 3 of 9

What Is This Chapter About?

30-second summary

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Quick version, sir!
👨‍🏫
This chapter covers all account types with rules: Individuals: major, sound mind, not undischarged insolvent. Joint: mode of operation (jointly/E or S/A or S). Illiterate: NO current A/c, NO cheque book, thumb impression, bank officer + witness. Blind: no legal bar, extra care, signature + thumb if inconsistency. Minor: age 10+ can operate SB independently (Sec 26 NI Act), guardian signs, no overdraft, majority at 18 (court guardian also 18 — exam PYQ!). HUF: Karta operates, all adults sign, coparceners, daughters are coparceners since 2005 Amendment, death of Karta → next male. Proprietorship: treated as individual, NO savings A/c in firm name. Partnership: Sec 4 IPA 1932, registration optional (except Gujarat/Maharashtra), death DISSOLVES firm — stop A/c, retirement → new A/c. LLP: DPIN for designated partners, LLP Act 2008, small LLP = ₹25L contribution + ₹40L turnover. Company: Public (7+ members), Private (2-200), OPC (1 person). Board resolution + MoA + AoA + CoI. LEI: 20-digit alpha-numeric code, ₹50 Cr+ NEFT/RTGS, ₹5 Cr+ borrowers. Introduction NOT to be taken (exam PYQ!).
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Section 4 of 9

Key Definitions — Banky Asks, Mentor Explains

Every term explained like you’re 10

Critical Term
Individual Accounts
Major (18+), sound mind, not undischarged insolvent — guardian for minor/incapacitated persons
Basic rules

Banky’s Understanding: Individual account: must be major (18+), sound mind, competent to contract. Introduction NOT to be taken (exam PYQ! — replaced by KYC). Account opening form = contract between bank and customer. KYC/CDD as per CKYCR forms. Guardian signs for minors/incapacitated. Joint accounts: two or more individuals, mode of operation specified (jointly/E or S/A or S/Former or Survivor). KYC for ALL joint holders.

🧒 Analogy: Like getting a driving licence — you must be the right age (18+), mentally fit, and not legally disqualified. The account opening form is your banking licence!
Critical Term
Illiterate & Blind Persons
Illiterate: NO current A/c, NO cheque book, thumb impression + witness. Blind: no legal bar, extra care.
Special rules

Banky’s Understanding: Illiterate: NO current account. NO cheque book (even in joint A/c). Left thumb impression + bank officer + witness attestation. Passport photo on A/c form + passbook. Every withdrawal: oral confirmation. Can authorise literate person: JOINTLY only (not E or S or alone). Blind: No legal bar. Extra care (signature may be inconsistent). Signature + thumb impression if inconsistency noticed. Entries read out. Branch Manager can allow self-operation.

🧒 Analogy: Illiterate = extra safeguards (like child-proof packaging — more protection needed). Blind = no restriction but extra care (like driving with extra mirrors)!
Critical Term
Minor’s Account
10+ can operate SB independently. Guardian (mother/father) signs. Sec 26 NI Act. No overdraft. Majority at 18.
10+ independent

Banky’s Understanding: Minor: Person below 18 years (Indian Majority Act 1875). Court-appointed guardian → also majority at 18 (exam PYQ!). Banks decide minimum age for independent operation (typically 10+ years). Minor can draw/endorse/negotiate NI under Sec 26 NI Act. NO overdraft. Guardian = mother or father (exam PYQ! — natural guardian). Death of guardian → balance paid to minor after majority. On majority: fresh confirmation, new specimen signature, fresh operating instructions.

🧒 Analogy: Like a learner driver — the minor can ‘drive’ (operate) the account, but with restrictions (no overdraft = no speeding), and the guardian co-signs (like the instructor)!
Critical Term
HUF Account
Karta operates, all adults sign, coparceners, daughters since 2005, death of Karta → next coparcener
Karta manages

Banky’s Understanding: HUF (Hindu Undivided Family): Business is inheritable. Karta (eldest male) manages. Since 2005 Hindu Succession Amendment: daughters are coparceners too. Delhi HC: eldest female can be Karta. All adults sign A/c opening form. Karta has implied authority to borrow. Minor coparceners: guardian signs. Withdrawal of coparcener ≠ dissolution. Death of Karta → next senior coparcener becomes Karta (exam PYQ!).

🧒 Analogy: HUF = a family business where the eldest (Karta) is the CEO. All adult family members are shareholders (coparceners). CEO changes on death — next senior takes over!
Critical Term
Proprietorship & Partnership
Proprietorship: no SB in firm name, treated as individual. Partnership: Sec 4 IPA 1932, death dissolves.
Business accounts

Banky’s Understanding: Proprietorship: Treated as individual. NO savings A/c in firm name. No separate incorporation. Proprietor signs everything. Partnership: Sec 4 Indian Partnership Act 1932. Registration optional (except Gujarat/Maharashtra). All partners sign partnership letter. Death of partner dissolves firm — stop A/c operations immediately! Retirement → new A/c. No partner can open bank A/c in own name for firm. Clayton’s rule applies (new credits reduce oldest debits).

🧒 Analogy: Proprietorship = one-man show (firm = individual). Partnership = a band — if one member dies, the band breaks up (dissolution). New A/c needed for the reconstituted band!
Critical Term
LLP & Companies
LLP: DPIN, LLP Act 2008, small LLP ₹25L/₹40L. Company: resolution + MoA + AoA + CoI.
Corporate accounts

Banky’s Understanding: LLP: LLP Act 2008. Min 2 Designated Partners with DPIN. Small LLP = contribution ≤₹25L, turnover ≤₹40L. Corporate person — not affected by partner changes. Partners NOT personally liable. Resolution by Designated Partners. Company: Public (min 7 members), Private (2-200), OPC (1 person). Documents: Board Resolution + MoA + AoA + Certificate of Incorporation + PAN. Company is separate legal entity (Salomon vs Salomon case).

🧒 Analogy: LLP = a modern partnership with limited liability (like a hybrid car — best of both worlds). Company = a full corporation with its own identity (like a person born by law)!
Critical Term
LEI
20-digit alpha-numeric code for legal entities — mandatory for ₹50 Cr+ NEFT/RTGS, ₹5 Cr+ borrowers
20-digit code

Banky’s Understanding: LEI (Legal Entity Identifier): 20-digit alpha-numeric code to uniquely identify parties to financial transactions globally. Issued by LEIL (subsidiary of CCIL), accredited by GLEIF. Mandatory for: ₹50 Cr+ NEFT/RTGS transactions, ₹5 Cr+ borrowers (aggregate exposure), OTC derivatives participants. No new exposure without LEI. Govt departments (not PSUs) exempt.

🧒 Analogy: LEI is like Aadhaar for companies — a unique global ID that identifies every legal entity in financial transactions worldwide!
Critical Term
Introduction Rule
Introduction NOT to be taken for new accounts — replaced by KYC norms
Not required

Banky’s Understanding: Prior to KYC guidelines (2002), banks required introduction from existing account holder. After RBI KYC guidelines: introduction NOT to be taken (exam PYQ! — answer is ‘not to be taken’, not optional/compulsory/discretionary). KYC/CDD process replaced the need for introduction. Banks should NOT deny accounts due to lack of introduction.

🧒 Analogy: Like the old referral system for club membership — you used to need a member to vouch for you. Now KYC documents are your passport — no referral needed!
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Section 5 of 9

Chapter Explained in Simple Stories

So easy even Banky’s nephew understands

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Sir, explain this like a story!
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Three bite-sized stories coming up — impossible to forget! 🚀

📂 Block 1: Individuals, Minors & Special Accounts

Introduction: NOT to be taken (exam PYQ! — KYC replaced introduction).

Minor: 10+ can operate SB independently. Guardian = mother/father. Sec 26 NI Act (draw/endorse). No overdraft. Court guardian: majority at 18. On majority: fresh confirmation + specimen signature.

Illiterate: NO current A/c, NO cheque book. Thumb impression + witness. Withdrawal: oral confirmation.

Blind: No legal bar. Signature + thumb if inconsistent. Entries read out.

Key Term
Intro NOT Required
Introduction while opening accounts is NOT to be taken (not optional, not compulsory). KYC norms have replaced the old introduction system since 2002.
🧑‍💼 Banky: “Introduction = NOT needed, minor 10+ operates SB, illiterate = no CA no cheque book! 📂”

🏢 Block 2: HUF, Partnership, LLP & Companies

HUF: Karta operates. All adults sign. Daughters = coparceners (2005). Death of Karta → next senior coparcener.

Proprietorship: NO savings A/c in firm name. Treated as individual.

Partnership: Sec 4 IPA 1932. Registration optional (except Gujarat/Maharashtra). Death of partner → firm dissolves → stop A/c!

LLP: DPIN for partners. Small LLP: ₹25L/₹40L. Partners not personally liable.

Company: Resolution + MoA + AoA + CoI. Public 7+, Private 2-200, OPC 1.

LEI: 20-digit code. ₹50 Cr+ NEFT/RTGS. ₹5 Cr+ borrowers.

Key Term
Death = Dissolves Partnership
Death of a partner automatically dissolves the partnership firm. Bank must STOP operations immediately. A new account must be opened for the reconstituted firm.
🧑‍💼 Banky: “HUF=Karta, proprietorship=no SB, partnership death=dissolves, LLP=DPIN, company=resolution! 🏢”
🎯
Section 6 of 9

Exam Angle — Every Testable Point

All facts, numbers, definitions JAIIB tests

✅ Must-Know Facts — Highest Probability

  • Introduction while opening accounts = NOT to be taken (not optional/compulsory!)
  • Minor for whom court appoints guardian = majority at 18 years (not 21!)
  • Minor’s account guardian = mother or father (natural guardian)
  • Minor aged 10+ can operate SB account independently (Sec 26 NI Act)
  • Illiterate: NO current account, NO cheque book — thumb impression + witness
  • HUF: Karta operates | Death of Karta → next senior coparcener becomes Karta
  • Daughters are coparceners since 2005 Hindu Succession Amendment
  • Proprietorship firm: NO savings account in firm name — treated as individual
  • Partnership: Sec 4 Indian Partnership Act 1932 | Registration optional (except Gujarat/Maharashtra)
  • Death of partner DISSOLVES partnership — stop account operations immediately!
  • Partnership: min 2 persons to open account — both must be adults (exam PYQ!)
  • LLP: LLP Act 2008 | DPIN for Designated Partners | Small LLP: ₹25L contribution + ₹40L turnover
  • Company: Board Resolution + MoA + AoA + CoI + PAN | Public 7+, Private 2-200, OPC 1
  • LEI: 20-digit alpha-numeric | ₹50 Cr+ NEFT/RTGS | ₹5 Cr+ borrowers | Issued by LEIL (CCIL subsidiary)
  • Photographs: Pardanashin women also | HUF = Karta’s photo | Minor 10+ = minor’s photo
  • No account in benami name | CDD for ALL joint holders

📝 Previous Year Questions

Q: Introduction while opening accounts:
A: (b) Not to be taken ✅ (replaced by KYC)
Q: Minor with court-appointed guardian, majority at:
A: (b) 18 years ✅
Q: Minor’s account guardian:
A: (b) Mother or father ✅ (natural guardian)
Q: Partnership account — who can open?
A: (b) X 25yrs + Y 21yrs ✅ (both adults needed)
Q: Who can be Karta of HUF?
A: (a) Shivkumar (eldest male/senior coparcener) ✅
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Section 7 of 9

Memory Tricks That STICK

Lock every fact permanently

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Too many facts! Help! 🤯
👨‍🏫
These tricks will lock everything in forever! 🧲

🧠 Trick 1 — Intro NOT Taken

#1 exam point
Introduction = NOT to be taken! (Not optional, not compulsory!) KYC replaced introduction in 2002
Since 2002 KYC guidelines, banks don’t require introduction from existing account holders. KYC documents serve the purpose.

🧠 Trick 2 — Minor 10+ Operates SB

Independent operation
Minor 10+ = can operate SB! Sec 26 NI Act = draw cheques But NO overdraft allowed!
Banks allow minors aged 10+ to operate savings accounts independently. They can draw cheques (Sec 26 NI Act). But account must never be overdrawn.

🧠 Trick 3 — Court Guardian = 18

Majority age
Court-appointed guardian → 18 years! (Not 21 years!) Indian Majority Act 1875
Even when a court appoints a guardian, the minor attains majority at 18 (not 21). Indian Majority Act 1875 — uniform majority age of 18.

🧠 Trick 4 — Death Dissolves Partnership

Critical rule
Partner DIES → firm DISSOLVES! STOP account operations! New A/c for reconstituted firm
Death of any partner automatically dissolves the partnership firm. Bank must stop all operations, crystallise liabilities, and open a new account if the business continues.

🧠 Trick 5 — Proprietorship ≠ SB

No savings account
Proprietorship firm = NO savings A/c! (Only current account) Treated as individual otherwise
Savings account cannot be opened in the name of a proprietorship firm. Only current account. The firm is treated as the individual proprietor for all other purposes.

🧠 Trick 6 — HUF Karta Succession

Death of Karta
Karta dies → NEXT senior coparcener! (Not elected, not appointed) Automatic succession by seniority
On death of Karta, the next senior male coparcener automatically becomes Karta. Since 2005, eldest female member can also be Karta (Delhi HC ruling).

🧠 Trick 7 — LEI = 20 Digits

Legal Entity Identifier
LEI = 20-digit code (alpha-numeric) ₹50 Cr+ NEFT/RTGS ₹5 Cr+ borrowers
LEI is a 20-digit global identifier for legal entities. Mandatory for large transactions (₹50 Cr+) and borrowers (₹5 Cr+ exposure).

🧠 Trick 8 — Illiterate = No CA No CB

Restrictions
Illiterate = NO Current Account! NO Cheque Book! Thumb impression + witness + oral confirm
Illiterate persons cannot open current accounts or get cheque books. They use thumb impression, witnessed by a bank officer and a person known to the bank.
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Section 8 of 9

Visual Summary — Chapter Map

Entire chapter in one diagram

Opening Accounts — Chapter 4 Map👤 Individual/JointMajor 18+ | Sound mindIntro NOT taken!👶 Minor10+ operates SB | Sec 26 NINo OD | Guardian=parent👨‍👩‍👦 HUFKarta operates | All adults signDaughters=coparcener 2005🤝 PartnershipSec 4 IPA 1932 | Optional regDeath = Dissolves!🏢 LLP (DPIN) + Company (Resolution+MoA+AoA+CoI)LLP Act 2008 | Public 7+ | Private 2-200 | OPC 1📋 LEI (20-digit) + Illiterate (No CA/CB) + Blind₹50Cr+ NEFT/RTGS | Proprietorship = no SBbankerbro.com/ • JAIIB PPB Chapter 4 • Module A
Section 9 of 9

Flash Revision — Last-Minute Cards

Read these 10 minutes before exam

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EXAM IN 15 MINUTES! 😰
👨‍🏫
10 cards — read twice, you’ll get every question right! 💪
Introduction
NOT to be taken (replaced by KYC)
Not optional/compulsory — KYC since 2002
Minor
10+ operates SB | Guardian: mother/father
Sec 26 NI Act | No overdraft | Majority at 18
Illiterate
NO current A/c | NO cheque book
Thumb impression + witness + oral confirm
HUF
Karta operates | All adults sign
Daughters = coparceners (2005) | Death → next senior
Proprietorship
NO savings A/c in firm name
Treated as individual | Only current A/c
Partnership
Sec 4 IPA 1932 | Death dissolves firm!
Registration optional (except Guj/Mah) | Stop A/c on death
LLP
LLP Act 2008 | DPIN | Partners not personally liable
Small LLP: ₹25L contribution + ₹40L turnover
Company
Resolution + MoA + AoA + CoI + PAN
Public 7+ | Private 2-200 | OPC 1
LEI
20-digit alpha-numeric | Global ID for entities
₹50Cr+ NEFT/RTGS | ₹5Cr+ borrowers
Photographs
Required for ALL account holders
Pardanashin | HUF=Karta | Minor 10+=minor’s photo

⚡ Chapter 4 Complete — Opening Accounts of Various Types of Customers

  • Introduction: NOT to be taken | Minor: 10+ operates SB, Sec 26 NI Act, guardian=mother/father, majority 18
  • Illiterate: no CA/cheque book | Blind: no legal bar | HUF: Karta, coparceners, daughters 2005
  • Proprietorship: no SB in firm name | Partnership: death dissolves, Sec 4 IPA 1932
  • LLP: DPIN, LLP Act 2008 | Company: resolution+MoA+AoA+CoI | LEI: 20-digit, ₹50Cr+

Banky says: “Intro NOT taken, minor 10+=SB, HUF=Karta, death=dissolves partnership, LEI=20 digits!” 🎉📂

You now know how to open accounts for EVERY type of customer — from minors to companies. Zero audit exceptions ahead! 💪

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