Justify the following statement.

Question 14 Marks

No interest is paid by the bank on the current account.

Answer

The Current account is normally opened by businessmen, firms, or companies.
A current account is a running account and in practice it never becomes time-barred.
This account is opened with a minimum deposit.
There is no limit on the amount or number of withdrawals.
Interest is not payable on this account.
Overdraft facility is given only to current depositors after following the prescribed bank procedure.
Hence, interest is paid only in the case of recurring, fixed, and saving accounts and not in the case of the current account.
Thus, no interest is paid by the bank on the current account.

Question 24 Marks

Bank correspondence should be brief and to the point.

Answer

The bank is a financial institution.
A company secretary has to conduct bank correspondence as per the instruction of the Board.
Bank correspondence needs careful and cautious drafting.
The company secretary has to use his knowledge, skill, and experience while conducting bank correspondence,
The company secretary has to conduct bank correspondence promptly and accurately.
Mistakes and delays in bank correspondence may bring financial loss to the company.
Bank correspondence should be always brief, compact, and precise.
Unnecessary or irrelevant information should be avoided in bank correspondence.
Thus, bank correspondence should be brief and to the point.

Question 34 Marks

In cash credit, the customer’s account is credited by a bank with the sanctioned amount.

Answer

Cash credit is another kind of credit facility given by the bank to its customers including businessmen, companies, etc.

A separate bank account known as a “Cash Credit Account” is required to be opened in the name of the borrower.
The bank credits the account as per the sanctioned cash limit from which the customer can utilize funds whenever required for cash credit.
Generally, the security of tangible assets like goods, finished stock is required to be kept.
The interest is charged only on the actual amount utilized by the customer.
Cash credit arrangement is for a longer period as compared to overdraft.
This system of lending is prevalent in India only.
Thus, in cash credit, the customer’s account is credited by a bank with the sanctioned amount.

Secretarial Practice Justify the following statement.