TYPES OF ACCOUNTS AND

BANKING SERVICES
 Procedures for opening an account
REFERENCES: It is in the interest of the bank to
obtain satisfactory information about the stranger
before accepting him as a customer. References
may also be referred to as Letters of Introduction
(LOI). References are obtained due to the following
factors;
 IDENTITY: The identity of the new customer needs
to be confirmed to ensure that the customer has not
assumed a false name for the purpose of obtaining
payment through the bank of a stolen crossed
cheques.
 CHARACTER; The bank needs to confirm
that the character of the person is good and
would be a satisfactory customer and also
has the ability to operate an account.
 MEANS OF LIVELIHOOD/EMPLOYMENT;
The bank needs to know the employer of
the customer to forestall the payment of
cheques by the bank payable to his
employer and endorsed to the customer or
drawn by his employer in favour of a third
party and similarly endorsed.
 SOURCES OF OBTAINING REFERENCES
1.The customer’s employer
2. An existing customer of the same bank
3.A referee
4. The customers lawyers or auditors
(corporate entities)
5. The customer’s bankers (corporate entities)
In Ladbroke V Todd (1914) a bank was found
guilty of conversion, having collected
cheques for a new unknown customer
without taking up a reference.
 In Hampstead Guardians V Barclays Bank
Limited (1923) excellent references were
received from a stranger (whom it transpired
was the customer himself). The bank was
held to have been negligent by not having
made adequate enquiries
 IDENTIFICATION; Some banks prefer
asking their prospective customers to show
identification (passport, driving license,
voters ID, employers ID). The bank then
goes ahead to make its own verification.
The customer is asked to produce passport
size pictures.
 ADDRESS VERIFICATION; Banks usually
request prospective customers to provide
recent utility bills in customers name or the
owner of the resident.
 APPLICATION/ACCOUNT
OPENING FORM.
 Standard forms are provided by the banks and
fully completed by prospective customers. The
following items are usually found on the form.
 1. Full name and address of the account holder
 2. Residential address
 3. Telephone numbers (office and residential)
 4. Occupation/ Nature of business of account
holder. In the case of married women they are
requested to provide the name and place of work
of their husband.
 In E.B. Savorty & Co V Lloyds Bank Ltd., a
dishonest clerk paid in stolen cheques to his wife’s
account. As the bank had not enquired as to her
husband’s occupation when his wife’s account
was opened, it was held to have been at fault. As
a result of this, some banks ask for the occupation
of all account holders.
 However, some banks do not ask of occupation
details. This is because of the ruling in the case of
Orbit Mining and Trading Company Ltd. V
Westminster Bank Ltd. (1963), in which it was
stated that a bank should not be expected to keep
up to date information as to a customer’s
employment. This bank obviously feel that the risk
element is quite negligible
 5. Nationality and date of birth (personal
customers)
 6. Date of incorporation/ company
registered number
 7. Monthly/Annual income
 OTHER STEPS TAKEN WHEN
OPENING BANK ACOUNT
 A specimen signature card on the banks standard
signature card is obtained from the customers.
 Issue paying-in book
 Note frequency for the dispatch of statements as
requested by the customer.
 Arrange for the issue of cash dispense and credit
cards if required.
 In the case of interest bearing accounts, the
current rate of interest should be made known to
the customer. (bank charges, interest)
 Order cheques books, where applicable, but do
not send them out to the customer until
satisfactory references have been received and
there is a cleared credit balance on the account.
 PERSONAL/INDIVIDUAL
ACCOUNT
 REQUIREMENTS
 1.Identification (passport, identity cards)
 2.Reference/Letter of introduction
 3.Address verification
 4.Complete application form
 5.Complete signature card
 Death of a personal/individual account holder
 The death of a customer terminates the bank’s
mandate once the bank receives notice of it. It is
the receipt of notice, not the actual death, which
fixes the date of the mandates termination. The
bank may take the following steps on receipts of
notice of death of a personal/individual account
holder;
 1. Any credit balance or items held in safe custody
can be released to the estate’s executors or
administrators after the production probate or
letters of administration (LA). However, where the
will is held in safe custody, it will be needed by the
executors to obtain probate. This will be released
to the executors If they are known to the bank, or if
a satisfactory report is obtained from the solicitor
 Acting for the executors.
 2.During the period between the bank receiving notice and
the granting of probate or LA, any credits received can
either be placed in a suspense account or in the accounts
itself.
 3.Any matters that were in course prior to the customer’s
death e.g. purchase of stocks and shares can be
completed.
 4.If the deceased’s account was overdrawn at the time of
receipts of notice of death, the bank should claim in the
deceased’s estate for the full amount owing plus interest. It
should also give details of security held.
 5.Where the value of the estate is small, the credit balance
can be released to a closer relative provided that
 A) The relative has been identified
 B) The bank has had a satisfactory report on the relative
 C) The bank has seen the death certificate
 Mental Incapacity of a personal/individual account
holder
 It terminates the mandate
 No further cheques are paid until the appointment of a
receiver by the courts and has presented this authority to
the banks
 The receiver takes over the assets of the mentally
incapacitated customer, open an account at the same
branch.
 The receiver cannot borrow unless authorized by the
court to do so.
 The authority of the receiver ceases upon the death of
the mentally incapacitated customer.
 The executors or administrators then
take over.
 The bank can allow the operation of the
account without the appointment of a
receiver.
 The bank is sometimes prepared to allow a
close relative to operate the account where
the money will be used for necessities like
food, clothing lodging and medication.
 This will only be agreed to where the
relative is considered to be trustworthy and
is prepared to provide the bank with a
suitable indemnity.
 JOINT ACCOUNT
 Is an effective arrangement where two or more
individuals, operate a bank account in the name of
joint account holders. The most common form is
that of husband and wife.
 REQUIREMENTS
 1.Identification(passport, identity card)
 2.Reference/Letter of Introduction
 3.Address verification
 4.Complete application form for joint holders
 5.Complete signature card for joint account
holders. This will state how many signatures
are needed to activate instructions on the account
 The mandate taken will include a joint and
several liability clauses. By the terms of this
mandate, the joint account holders agree to
be jointly and severally liable to the bank for
any liability that they may incur to the bank.
The bank may claim from both holders
together or from one or other of them
 Death of a joint account holder
 The mandate should be clear on the ‘’right
of survivorship’’. This is the issue of paying
any existing balance to the survivor in case
of death of one of the parties.
 Otherwise, death terminates the mandate
and the bank would have to seek further
instructions from the deceased persons
personal representative as to how to deal
with the deceased’s share of the funds.
 Steps to take on notice of death of a joint
account holder.
 1.If a joint account is in credit, it can continue. The
survivor will be able to continue to use the balance
of the account without having to wait for probate or
LA to be obtained.
 2.If cheques are presented drawn on a joint
account, signed by the deceased, they should be
returned marked ‘’Drawer deceased, unless the
surviving account holder is willing to authorize
payment.
 3.If the account is overdrawn when the death
occurred, the account should be stopped if the
bank wishes to retain its claim against the
deceased’s estate.
 4. If an overdrawn joint account is stopped
to preserve the bank’s claim, arrangements
should be made with the survivor for a new
account to be opened in the survivors
name.
 5. Where items are held in safe custody in
joint names, banks will require a receipt
from the survivor and also the executor or
administrator of the deceased. This is
because these items may not be jointly
owned e.g. jewellery.
 Mental incapacity of a joint account holder
 If it becomes apparent that a joint account holder
is mentally incapacitated, then the bank mandate
should be cancelled and no further cheques paid
until a receiver has been appointed by the courts.
 The receiver will act in conjunction with the sane
joint account holder.
 In exceptionally cases, where a joint account is
overdrawn and one party becomes mentally
incapacitated, a bank may decide to release the
mentally incapacitated customer’s estate from
liability and allow the account to be operated by
the sane party, who would be liable for all future
borrowings.
 MINOR ACCOUNT
 Minors are not liable for contracts that they
enter into unless they are for the purchase
of necessities, contracts of service, vocation
etc.
 However, on attaining the age of majority, a
minor can ratify an otherwise unenforceable
contract.
 Children under the age of (7) may have
accounts operated in their names but
operated on their behalf by their parents or
guardians as their trustee
 After they have obtained a reasonable age but
still under minority, they are usually permitted
to operate the accounts personally provided
the balances on their accounts always remain
in credit.
 The guardian or parents of the minor will
satisfy requirements as in personal customer.
 The minor may not provide proof of
identification and address, however, the bank
must obtain a copy of the minors’ birth
certificate.
 REQUIREMENTS
 1. The parents or guardian of the minor will
satisfy requirement as in personal
customers.
 2. The minor may not provide proof of
identification and address, however the
bank must obtain a copy of the minor/s birth
certificate.
 3.Banks do not usually issue cheque
guarantee cards to minors since it is
doubtful whether the guarantee contract
relating to the use of the card is binding on
the minor.
 However, cash dispenser cards or
Automated Teller Machine cards are given
to minors since they are legally a means for
the minor to access his own funds.
 Other important points concerning minors.
 Provided an account holder has full contractual
capacity, a minor can act as that person’s agent
on that account.
 A minor can be a director of a limited liability
company provided the articles allow this.
 A minor cannot act as a trustee or an executor.
 A minor cannot make a valid will unless he is on
active service with the armed forces (in case of an
emergency).
 A minor cannot give an enforceable guarantee,
although he could ratify such a guarantee upon
attaining the age of maturity.
 PARTNERSHIP ACCOUNT
 A partnership is a relationship that takes
place between persons carrying on the
business in common with a view to make
profit.
 Professionals like doctors, lawyers,
engineers, architects are some of the
common groups that form partnership with
any number of individuals.
 Any partner may cancel the mandate as
well as stop the payment of a cheque even
though he or she did not sign it.
DEATH OF A PARTNER
 On the death of a partner, if the partnership
continues in business, the remaining
partners should sign fresh mandate forms.
 If the partnership account is overdrawn
upon the death of a partner and the bank
wishes to preserve its rights against the
deceased’s estate, it should stop the
account and lodge a claim in the estate.
 Retirement of a partner; A retiring partner
must give due notice of retirement to gain
release from liability for partnership debts
after he or she has retired.
 Where the partnership account is overdrawn
at the time the partner wishes to retire, the
bank should stop the account to prevent the
rule in Clayton’s case operating against it if
it wishes to preserve its right against the
retiring partner .
 The remaining partners should then open a
new account.
 A retiring partner can only be released from
liability for partnership debts incurred prior
to his or her retirement if the firm’s creditors
agree to accept the new partnership as the
debtor in substitution.
 MENTAL INCAPACITY OF A PARTNER
 This does not automatically dissolved the
partnership. The partners may, however,
apply to the court for its dissolution.
 If the partnership account is overdrawn, and
the bank wishes to preserve its rights
against the estate of the mentally
incapacitated partner it should stop the
account, otherwise the rule in Clayton’s
case apply.
 ADMISSION OF A NEW PARTNER
 When a new partner joins the firm it is necessary
to establish whether he or she will accept liabilities
incurred by the partnership prior to the
appointment, or not.
 If he or she will not accept liability, the old
partnership account may be stopped and a new
account opened for the new partnership.
 Alternatively, the bank may decide to allow the old
partners to continue, as the operation of the rule in
Clayton’s case will mean that any debt incurred by
the old partnership will be repaid and any further
borrowing will be monies drawn by the new firm
upon which the new partner will be liable.
 SECURITY OF A PARTNERSHIP
 All the partners are required to sign the bank’s
charge forms when giving a charge over the
partnership property.
 A clause in the form will state that the security
remains good despite any change in the constitution
of the firm, such as the appointment of a new
partner.
 Where only one partner executes a legal mortgage
over partnership property without authority, this may
constitute an equitable charge, but difficulties are
likely to arise with the realization, particularly if there
is a partnership dispute.
 COMPANY ACCOUNTS
 A company is a corporation, that is, an
association of one or more persons called
shareholders formed for the purpose of
carrying on any business that has for its
object or aim the acquisition of gain or profit.
 It is a legal entity with the power to own
property, open bank accounts, to borrow, to
enter into contracts and to sue and be sued.
 All companies in Ghana are registered
under the Companies Code 1963.
 REQUIREMENTS
 1.Identification of all the directors (passport,
ID).
 2.Reference/ Letter of Introduction
 3.Address verification
 4. Certificate of Incorporation
 5.Company Regulation
 6. Certificate to Commence Business
 7.Complete application form on Bank’s
standard form for companies.
 8. A resolution appointing the bank as
bankers and give names of officials who will
act on behalf of the company together with
detailed instructions for the signing of
cheques and the deposit and withdrawal of
security and safe custody items. The
resolution should be signed by the
Chairman of the meeting and countersigned
by the Secretary.
 9. Complete signature card i.e. specimen
signatures of all signing officers.
 10. Latest accounts or business plans or
statement or of business affairs.
 MEMORANDUM OF ASSOCIATION: This is a
statement of the powers and constitution of the
company and it contains six major clauses
 1.A statement quoting the full name of the
company.
 2. Details of the company’s registered office
 3. A clause itemising the powers and objects of
the company.
 4. A statement that the liability of the members is
limited to the amount on the unpaid shares.
 5.A statement of the maximum amount of share
capital that the company can currently issue.
 6. The association clause which gives detail of the
original shareholders.
 ARTICLES OF ASSOCIATION: These cover the
following matters.
 1. The powers of the directors
 2. The issue and transfer of shares
 3. The right of the shareholders
 4. The conduct of meetings
 5.The appointment of directors
 6. The retirement of directors
 7. The disqualification and removal of directors
 8. The accounts of the company
 9. The winding up of the company
 DEATH OF A DIRECTOR OF A COMPANY
 It has a minimal effect of the operation of
the company’s bank account.
 Cheques could still be paid after the death
of the director.
 The bank will normally refer to the mandate
to find out about any action to be taken
regarding the future of the account.
 With a private company with two directors,
when one dies, the company regulations will
contain instructions concerning the
appointment of a new director.
 Where both directors die, their personal
representative would have to apply to the
courts to be appointed as shareholders and
for the appointment of new directors.
 TRUSTEE ACCOUNT; A trustee is a person
who deals with property for the benefit of
persons, of whom he may himself be one.
 REQUIREMENTS
 1.Identification of the trustees (passport, ID)
 2.Reference/Letter of Introduction
 3.Address Verification
 4.Complete application form for trustees
 5.Complete signature card
 RULES REGARDING TRUSTEE ACCOUNT
 1.Trustees are not allowed to delegate.
 2. A trustee does not have the implied
powers to borrow or use trust property as a
security for a loan if the terms of the trust do
not provide for this.
 3. A trustee would have to admit joint and
several liability if he/she wants to borrow.
This will enable the bank to transfer any
credit balances on his accounts to reduce a
debit balance on the trust account
 4. A bank should not allow a trustee to draw
a cheque on the trust account to hi/her
personal overdrawn account. The bank will
be held liable for negligence facilitating
breach of trust.
 DEATH OF A TRUSTEE
 1.Upon the death of a trustee, the surviving
trustees can continue to operate the
account. However, the trust deed must be
examined to find out if a replacement
trustee should be appointed.
 2.Where a trustee dies and there are no
replacement, the personal representatives
can take over till a new trustee is appointed.