Partnership Firm - Liability of a Minor Partner

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What happens to a minor who fails to give notice after attaining majority regarding their partnership?

They remain a partner with liabilities. (correct)

They are exempt from all liabilities of the firm.

They have no choice but to become a partner.

They are removed from the partnership.

What should branches do to determine the time period for a minor to elect partnership?

Consult the Account Opening Form.

Consult the minor's parents.

Consult the partnership agreement.

Consult local laws and regulations. (correct)

What is the status of an account with no operation for a year?

Closed

Active

Dormant (correct)

Frozen

Who should grant permission for the first withdrawal from a 'DORMANT' account?

Manager / Sub-Manager Signup and view all the answers

What happens to a 'DORMANT' account after the first withdrawal?

It's retransferred to Regular Client/s A/c Ledger. Signup and view all the answers

When is Enhanced Due Diligence (EDD) conducted by banks?

For high-risk individuals or entities, PEPs, and unusual transactions Signup and view all the answers

What is one of the measures included in Enhanced CDD?

Obtaining additional information on the source of funds or source of wealth Signup and view all the answers

What is the purpose of Enhanced Due Diligence (EDD)?

To minimize risk by obtaining additional information Signup and view all the answers

When should senior management approval be obtained, according to Enhanced CDD measures?

To commence or continue the business relationship when applicable Signup and view all the answers

What is the benefit of Enhanced Due Diligence (EDD) measures?

To minimize risk by obtaining more information Signup and view all the answers

What is a crucial concern for banks in general banking?

Fraud, money laundering, and other malpractices Signup and view all the answers

Why are malpractices particularly detrimental to banks?

Because they are widely perceived to be more fragile than other non-financial organizations Signup and view all the answers

What has been done to handle the challenges of malpractices in general banking?

Increasing stringency of compliance requirements Signup and view all the answers

Why is avoidance of procedures and compliance requirements in general banking challenging for banks?

Because they are difficult to implement Signup and view all the answers

What should receive adequate attention from the policy makers of the bank?

All associated risks of general banking Signup and view all the answers

What is the primary purpose of CDD obligations on banks?

To prevent the abuse of the banking industry for money laundering or terrorist financing Signup and view all the answers

What type of CDD measures should banks implement based on the risks of money laundering and terrorist financing?

Risk-based approach Signup and view all the answers

When should banks conduct Enhanced CDD measures?

When necessary, in addition to normal CDD measures Signup and view all the answers

What is the primary goal of banks in implementing CDD measures?

To understand who their customers are Signup and view all the answers

What is the purpose of documentary evidences in CDD?

To verify the customer's identity Signup and view all the answers

What is a key defense against fraud, forgery, and identity theft?

Customer awareness Signup and view all the answers

Why should banks educate customers about financial literacy?

To reduce fraud, forgery, and harassment Signup and view all the answers

What is the purpose of a Customer Awareness and Education Program?

To provide customers with knowledge and understanding of banking products and services Signup and view all the answers

What should banks do to minimize online threats?

Monitor offline risks and online threats Signup and view all the answers

What should banks publish or declare to customers through various communication channels?

Customer alert and precautionary messages on various banking products and services Signup and view all the answers

What should be examined by the banker before granting loans to the trustee?

The borrowing powers as given in the Trust Deed Signup and view all the answers

Why should no overdraft be allowed on a minor's account?

To minimize the risk of default Signup and view all the answers

What should be recorded on the Account Opening Form for a minor's account?

The date of birth and the date when the minor attains majority Signup and view all the answers

What should happen to a minor's account when the minor attains majority?

The account should be closed and the funds transferred to a new account Signup and view all the answers

What is required for opening an account in the name of an illiterate person?

Proper introduction from a trusted authority Signup and view all the answers

What can happen to banks if they do not conduct adequate due diligence on their customers?

Exposure to reputational, operational, legal, and concentration risks Signup and view all the answers

What is the primary obligation of a banker with respect to a customer's account?

To maintain secrecy of the customer's account Signup and view all the answers

Why is it essential for banks to maintain proper records of customer transactions?

To reduce the risk of financial loss due to mistakes Signup and view all the answers

What is the consequence of a banker's wrongful dishonor of a customer's cheque?

The banker is liable to compensate the customer Signup and view all the answers

What is the primary goal of a banker in maintaining a customer's account?

To offer excellent personalized services Signup and view all the answers

What can happen if a bank fails to maintain proper records of customer transactions?

The bank is held liable for any mistakes Signup and view all the answers

Why is it important for banks to have adequate controls and procedures in place?

To know the customers with whom they are dealing Signup and view all the answers

What is the primary risk of not conducting adequate due diligence on customers?

Reputational risk Signup and view all the answers

What is the primary goal of banks in implementing customer due diligence?

To minimize risks Signup and view all the answers

What can happen if a bank fails to maintain secrecy of a customer's account?

The customer's credit and business are adversely affected Signup and view all the answers

What is the status of an account with no operation for a specified period of time?

Dormant Account Signup and view all the answers

What should be recorded on the Account Opening Form for a minor's account?

Date of birth of the minor Signup and view all the answers

What happens if a minor fails to give notice after attaining majority regarding their partnership?

The minor is liable to the liabilities of the firm Signup and view all the answers

What is required for the first withdrawal from a 'DORMANT' account?

Prior permission from the Manager or Sub-Manager Signup and view all the answers

Why should branches consult the local lawyer regarding a minor's partnership?

To determine the period within which a minor should elect to become a partner Signup and view all the answers

What is the primary challenge in general banking that banks are more fragile than other non-financial organizations?

Fraud and money laundering Signup and view all the answers

What is the main goal of implementing legislative measures and stringent compliance requirements in general banking?

To minimize the risk of malpractices and fraud Signup and view all the answers

Why are malpractices particularly detrimental to banks?

Because they can be particularly detrimental to banks that are widely perceived to be more fragile than other non-financial organizations Signup and view all the answers

What is the main risk associated with not implementing adequate due diligence on customers?

Increased risk of fraud and money laundering Signup and view all the answers

What is the primary goal of banks in implementing risk minimization measures?

To minimize the risk of fraud and money laundering Signup and view all the answers

What is the primary goal of implementing Customer Due Diligence (CDD) measures?

To reduce the risk of money laundering and terrorist financing Signup and view all the answers

What should banks consider when implementing risk-sensitive CDD measures?

The type of customers, business relationship, and banking products Signup and view all the answers

What is the purpose of Enhanced Due Diligence (EDD) measures?

To conduct additional due diligence when necessary Signup and view all the answers

What is a key factor in determining the level of risk associated with a customer?

The business relationship with the customer Signup and view all the answers

Why is it important for banks to implement adequate CDD measures?

To reduce the risk of money laundering and terrorist financing Signup and view all the answers

Under what circumstances should banks conduct Enhanced Due Diligence (EDD)?

When dealing with high-risk customers or politically exposed persons Signup and view all the answers

What is included in Enhanced CDD measures?

Obtaining additional information on the customer and updating identification data regularly Signup and view all the answers

Why is it important for banks to conduct regular monitoring of business relationships?

To identify unusual transaction patterns and minimize risk Signup and view all the answers

What is the purpose of obtaining information on the source of funds or source of wealth of the customer?

To identify possible money laundering or terrorist financing activities Signup and view all the answers

Why is it important for banks to obtain senior management approval to commence or continue a business relationship?

To reduce the risk of money laundering and terrorist financing Signup and view all the answers

What is the primary goal of a Customer Awareness and Education Program?

To provide customers with knowledge and understanding of banking products and services Signup and view all the answers

What should banks do to minimize online threats?

Monitor off-line risks and online threats regularly Signup and view all the answers

Why is customer awareness crucial in minimizing fraud and identity theft?

To strengthen customers' knowledge and experience Signup and view all the answers

What should banks publish or declare to customers through various communication channels?

Customer alert and precautionary messages on banking products and services Signup and view all the answers

What is a key defense against fraud, forgery, and identity theft?

Customer awareness and education Signup and view all the answers

Why should no overdraft be allowed on a minor's account?

To reduce the bank's risk of loss Signup and view all the answers

What should be examined by the banker before granting loans to the trustee?

The borrowing powers as given in the Trust Deed Signup and view all the answers

What should happen to a minor's account when the minor attains majority?

The account should be transferred to a new account Signup and view all the answers

What should be recorded on the Account Opening Form for a minor's account?

Both a and b Signup and view all the answers

What should be done before authorizing a legal guardian to open an account in the name of a minor?

Examine the appointment order issued by the Court Signup and view all the answers

What is the primary risk of not conducting adequate due diligence on customers?

Legal and reputational risk Signup and view all the answers

What is the primary goal of banks in implementing customer due diligence?

To know the customers with whom they are dealing Signup and view all the answers

What can happen to banks if they do not conduct adequate due diligence on their customers?

All of the above Signup and view all the answers

What is the main benefit of conducting adequate due diligence on customers?

Identifying and managing risk Signup and view all the answers

What is the primary challenge in general banking that banks are more fragile than other non-financial organizations?

Malpractices Signup and view all the answers

What is the consequence of a banker's wrongful dishonor of a customer's cheque?

The banker is liable to compensate the customer Signup and view all the answers

Why should banks maintain secrecy of customers' accounts?

To maintain customer trust Signup and view all the answers

What is the primary goal of banks in maintaining proper records of customer transactions?

To identify and manage risk Signup and view all the answers

What can happen if a bank fails to maintain proper records of customer transactions?

The bank may face legal action Signup and view all the answers

What is the primary goal of banks in implementing risk minimization measures?

To identify and manage risk Signup and view all the answers

What is the primary risk associated with admitting a minor as a partner in a firm?

The minor may not be liable for the firm's liabilities. Signup and view all the answers

What is the purpose of treating an account as 'DORMANT' after a year of inactivity?

To prevent fraudulent activities. Signup and view all the answers

What is the consequence of a minor failing to give notice after attaining majority regarding their partnership?

The minor becomes a partner in the firm. Signup and view all the answers

What is the primary goal of banks in maintaining proper records of customer transactions?

To prevent fraudulent activities. Signup and view all the answers

Why should branches consult the local lawyer regarding a minor's partnership?

To determine the period within which a minor should elect to become a partner. Signup and view all the answers

What is the primary consideration for banks in implementing risk-sensitive CDD measures?

Type of customer Signup and view all the answers

What is the primary purpose of implementing Enhanced Due Diligence (EDD) measures in banks?

To reduce the risk of money laundering Signup and view all the answers

What is the primary benefit of conducting adequate due diligence on customers for banks?

To minimize the risk of money laundering Signup and view all the answers

What is the primary goal of banks in implementing risk minimization measures?

To reduce the risk of money laundering Signup and view all the answers

What is the primary consequence of not implementing adequate CDD measures in banks?

Increased risk of money laundering and terrorist financing Signup and view all the answers

What is a significant challenge that banks face in general banking due to their perceived fragility?

Vulnerability to fraud and money laundering activities Signup and view all the answers

Why is it crucial for banks to implement risk minimization measures in general banking?

To manage fraud and money laundering risks effectively Signup and view all the answers

What is a major consequence of banks failing to implement adequate risk minimization measures?

Increased vulnerability to fraud and money laundering Signup and view all the answers

What is the primary purpose of implementing legislative measures and stringent compliance requirements in general banking?

To minimize risks associated with fraud and money laundering Signup and view all the answers

What is a critical challenge that banks face in general banking, particularly in managing risks associated with fraudulent activities?

Malpractices, including fraud and money laundering Signup and view all the answers

Under which of the following circumstances should a bank conduct Enhanced Due Diligence (EDD)?

When an individual is identified as a politically exposed person Signup and view all the answers

What is included in Enhanced CDD measures to minimize risk?

Obtaining additional information on the source of funds or source of wealth of the customer Signup and view all the answers

Why is it necessary to obtain information on the intended nature of the business relationship?

To minimize the risk of money laundering and terrorist financing Signup and view all the answers

What is the purpose of making bank officials aware of the risk level of the customer?

To minimize the risk of fraud and money laundering Signup and view all the answers

Why is it necessary to conduct regular monitoring of high-risk business relationships?

To identify potential fraud risks Signup and view all the answers

What is the primary objective of a Customer Awareness and Education Program in the context of risk minimization?

To strengthen customers' knowledge and experience to reduce fraud, forgery, and harassment Signup and view all the answers

What is the primary benefit of publishing customer alert and precautionary messages through various communication channels?

To reduce the risk of fraud, forgery, and identity theft Signup and view all the answers

What is the primary reason why banks should continue to monitor offline risks and online threats?

To reduce the risk of fraud, forgery, and identity theft Signup and view all the answers

What is the primary goal of a bank's customer awareness program in the context of financial literacy?

To make customers aware of their rights and responsibilities Signup and view all the answers

What is the primary objective of a bank's efforts to educate customers about financial literacy?

To strengthen customers' knowledge and experience Signup and view all the answers

What is the primary reason for not allowing overdrafts on a minor's account?

To comply with the Contract Act, 1872 Signup and view all the answers

What is the purpose of obtaining the appointment order issued by the Court in the name of the legal guardian of a minor?

To ensure the guardian's authority to operate the minor's account Signup and view all the answers

What should be done with the outstanding balance in a minor's account when the minor attains majority?

The account should be closed and the balance should be transferred to a new account Signup and view all the answers

What is the primary reason for recording the date of birth of the minor and the date when the minor attains majority on the Account Opening Form?

To determine when the minor's account should be closed and a new account opened Signup and view all the answers