Which of the following actions of a minor is not correct?
AMinor can nominate
BMinor can draw a cheque
CMinor can be a nominee
DMinor can endorse a cheque
Answer:
A. Minor can nominate
Read Explanation:
Legal Status of Minors in Banking
- The Indian Contract Act, 1872: Under Section 11, a person who has not attained the age of majority (18 years) is considered incompetent to contract. An agreement with a minor is void ab initio (void from the beginning).
- Banking Regulations: While a minor can open and operate a savings bank account, they cannot enter into binding contracts that impose liabilities.
- Nomination Rules: The Banking Regulation Act, 1949, and the associated rules (Nomination Rules, 1985) do not permit a minor to appoint a nominee. A nominee must be a person capable of entering into a legal contract to receive the balance in the account in the event of the account holder's death.
- Guardianship: In the case of a minor's account, the nomination must be made by the natural guardian or the legally appointed guardian on behalf of the minor, not by the minor themselves.
- Key Restrictions: A minor cannot borrow money, execute a promissory note, or become a partner in a firm, although they may be admitted to the benefits of an existing partnership with the consent of all partners.