Question

What is the maximum number of partners in Banking business

• A. Eight
• B. Ten
• C. Twelve
• D. Sixteen

Hint:

Be aware of changes in law. While the old limit for banking partnerships was 10, the current general limit for any partnership is 50. Competitive exams sometimes use questions based on old patterns, so knowing the historical context can be helpful.

Answer 1

The Correct Option is B

Step 1: Understanding the Concept:
This question pertains to the maximum number of partners allowed in a partnership firm, a limit historically set by company law to prevent large, unincorporated associations. The limits used to be different for banking and non-banking businesses.

Step 2: Detailed Explanation:
This question is based on the provisions of the erstwhile Indian Companies Act, 1956.
- Section 11 of the 1956 Act stipulated that no company, association, or partnership consisting of more than a certain number of persons shall be formed for the purpose of carrying on any business, unless it is registered as a company under the Act.
- The maximum number prescribed was ten for a banking business and twenty for any other business.
Note: This law has been changed. Under the current Companies Act, 2013, Section 464, read with Rule 10 of the Companies (Miscellaneous) Rules, 2014, the maximum number of partners in any firm is prescribed by the Central Government, which is currently set at fifty. The old distinction between banking and non-banking business has been removed. However, given the options, the question is clearly testing the old law.

Step 3: Final Answer:
Under the old Companies Act, 1956, the maximum number of partners in a banking business was ten.