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The-procedure-of-account-opening-of-local-bodies

The procedure of account opening of local bodies

Posted on February 4, 2022 by Banker Makhluk

The procedure of account opening of local bodies

The procedure of account opening of Local Bodies/Authorities, Club, Association, Society & School/College
Accounts of local Bodies/Authorities:
 A banker has to exercise care/caution in its dealing with accounts of local Bodies/Authorities, like the account of any Govt. or Semi-Govt. Organization (Autonomous Bodies & Corporations are Semi-Govt Organizations viz PDB, WAPDA, BADC, BSCIC etc.). .This is because these local authorities are trustees for the public as regards the fund under their control:
i) The bank shall be obtained the certified copy of a statue or any other law by which the body is created and governed. Before opening the account the relevant Act for concerned local Bodies/Authorities specifies the name of a bank at which it may be desirable for the local Bodies/Authorities to have funds in the deposit. The banker should see to it that it is his name.
 ii) The Bank shall be obtained the certified copy of the constitution or any other law by which the body is formed and governed shall be obtained.

The-procedure-of-account-opening-of-local-bodies
The-procedure-of-account-opening-of-local-bodies




iii)If the law does not specify the particular banker, a resolution of such a body regarding opening and operation of the account, duly certified to be a true copy by the President or Chairman and countersigned by the Chief Executive Officer of such body.
iv) Such accounts shall not be opened or allowed to be operated on the contravention of the provisions of the law governing the accounts of those operations.
v) By-Laws.

 Accounts of Club, Association, Society & School/College etc.

 In case a Club, Association, Society & School/College etc. and other non –Trading organization wants to open an account in its name, the banker should take the following precautions:
 i)The society must be incorporated. The society is it a Club, Association, & School/College etc.must be registered as a corporate body under the Societies Registration Act or the Company Act or the Co-operative Societies Act. In absence of any such registration, the society will have no legal existence and have no contraction power.
ii)Copies of the memorandum and articles of association or Constitution/By-laws must be obtained.
 iii) Resolution of the Managing Committee. The banker should also call for a duly certified copy resolution passed by the Managing Committee of the society authorizing the opening of the society’s account with the banker. The resolution should also state the names of persons who  should be entitled to operate the account on behalf of the society.
In the event of death, the lunacy of the person entitled to operate the account, the banker should stop operation of the account till the Managing Committee communicates the appointment of a new person in his place.
iv) Power to borrow. As stated earlier a non-trading organization has no implied power to borrow. Such power must be given by its memorandum/by laws /articles. The banker should see the memorandum/by laws/articles of the society to find out the extent of society’s and office bearers’ power to borrow and create charge on the assets of the society and the procedure to be followed for such borrowings and the purposes for which money can be borrowed.



v) No mixing of the personal account with the society. In case an office bearer of the society has also his personal account with the society, the banker should see that the society money does not find its way into the personal account of the office bearer otherwise the banker may be held liable by the society for wrongful conversion of funds.

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