Position of A Banker in Extending Credit Facilities
A banker dealing with Hindu undivided families will have to be cautious while extending credit facilities to HUF because certain laws and customers relating to succession and transfer of rights among Hindus, put serious obstacles in the way of the Banker’s providing financial accommodation on the security of what is ordinarily considered to be normal and reliable bank security.
HUF can be governed either by Mitakshara Laws or by Dayabhaga Laws. All the HUF to the exception of West Bengal are governed by Mitakshara Law. West Bengal follows the Dayabhaga system. Let us take an example of a HUF governed by the Mitakshara law wherein all the members acquire a right in the ancestral property by birth and the accrual of that right dates from conception of the child who by legal fiction becomes the member of HUF. So that there is always the danger of having transaction impugned by even a person who at the date of the transaction was not born. In order to charge a joint family estate, it is necessary that all the members of the family should join the execution of the deed, or should give their consent, or that the deed should be made by the head of the family in his capacity as karta or manager.
The powers of the karta are, however, limited and charge created by him is binding on the family property, only if the loan for which the charge is created, is taken for a purpose necessary or beneficial to the family, or is in discharge of a lawful antecedent debt due from the family. This is also called as vyavaharika debt. . In the event of a suit being filed by a banker, who has granted a loan on the security of the joint family estate, the burden of proof that, before he granted the loan, the banker had satisfied himself that the loan was taken for purposes beneficial to the family, lies on the banker. To avoid this and several other difficulties, some banks require a Hindu customer desiring to open an account, to furnish a statement to the effect that the money deposited in a fixed deposit, current or savings bank account is the personal or self-acquired property of himself or himself and not that of a joint Hindu family. The manager of a trading Hindu family may be such a person as the family appoints or who holds out as its accredited representative. He need not be the Karta, for there can be more than one Manager, particularly if the business is carried on at different places
Read more about this topic: Hindu Undivided Family
Famous quotes containing the words position, banker, extending, credit and/or facilities:
“They who say that women do not desire the right of suffrage, that they prefer masculine domination to self-government, falsify every page of history, every fact in human experience. It has taken the whole power of the civil and canon law to hold woman in the subordinate position which it is said she willingly accepts.”
—Elizabeth Cady Stanton (1815–1902)
“The banker rubs his nose, thinking of his cat stalking something on the lawn.”
—Mason Cooley (b. 1927)
“The radiance was that of the full, setting, and blood-red moon, which now shone vividly through that once barely- discernible fissure,... extending from the roof of the building, in a zigzag direction, to the base. While I gazed, this fissure rapidly widened.”
—Edgar Allan Poe (1809–1849)
“Especially with our first child, we tend to take too much responsibility—both credit and blame—for everything. The more we want to be good parents, the more we tend to see ourselves as making or breaking our children.”
—Polly Berrien Berends (20th century)
“Marriage is good enough for the lower classes: they have facilities for desertion that are denied to us.”
—George Bernard Shaw (1856–1950)