Question

Under what circumstances will a Secretary correspond with the Banks?

Answer 1

The circumstances under which a Secretary correspond with the bank:
(1) Letter for opening the current account in the name of the company. Separate accounts may be opened for receiving application money, allotment money, call money, distribution of dividend, etc.
(2) Letter requesting the bank to stop the payment of a cheque issued but reported lost. In the case of wrong payment against a cheque issued by the company, either the banker or the company may be put to loss. In such a case, therefore, the Secretary first instructs the bank by telephone to stop the
Payment of such a cheque and then subsequently sends a letter confirming the instruction.
(3) Letter requesting the banker to grant an overdraft facility or cash credit or loan for meeting the financial needs of the company. It is a short term credit facility, which a bank gives to current account holders. Bank fixes the overdraft limit against securities given by the borrower.
(4) Letter requesting the banker to issue Letter of Credit. Letter of Credit is generally used for an international trade transaction. It is issued by the bank on behalf of his client promising to pay certain amount of money to the seller in case buyer fails to pay.