Banker-Customer Relationship


Meaning and Definition of a Banker

term ‘banker’ refers to a person or company carrying on the business of
receiving moneys, and collecting drafts, for customers subject to the
obligation of honoring cheques drawn upon them by the customers to the extent
of the amounts available on their current accounts.
Meaning and Definition of a Customer: In order to constitute a
person as a customer, he must satisfy the following conditions:

bank customer

  • He
    must have an account with the bank – i.e., savings bank account, current
    deposit account or a fixed deposit account.
  • The transactions between them
    the banker and the customer)
    should be of banking nature.
  •  Frequency of transactions is not quite necessary though preferred.

The Banker-Customer Relationship

relationship between the banker and the customer arises out of the contract
entered in between them. This contract is created by mutual consent. The
relationship starts right from the moment an account is opened and it comes to
an end immediately on closure of the account. This relationship is of two types:
1. General relationship 2. Special relationship

 1.  General relationship:
The general relationship between
banker and customer can be classified into two types, namely : 
Primary Relationship
is in the form of a ‘Debtor’ which arises out of a contract
between the banker and customer. The authorities on banking law and many court
decisions have said that primary relationship is that of ‘Debtor and Creditor’.
When a customer deposits money to its account customer is creditor and banker is
debtor. But when banker lends a loan to customer the banker becomes creditor
and customer is the debtor. Thus for
Saving account, current account, fixed
deposit—–customer is creditor and banker is debtor.
For loan and overdraft account————————customer
is debtor and bank is creditor.
Secondary Relationship :
It will be in the form of

Banker as Agent: A
banker acts as an agent of his customer in the following conditions
Purchasing / selling of securities.
Collection of income
Making payments as instructed by
his customers.
Collecting interest and dividend on securities lodged by customers.
Receiving safe custody valuables and securities lodged by his customers.
Collecting cheques,  drafts
of the customers.
this case, the banker and customer relationship is, in the form of an ‘Agent’
and  ‘Principal’
 (b)  Banker
as Trustee
: in certain circumstances he acts as a trustee also. The customer
may request the banker to keep his valuables in safe vaults or one may deposit
some amount and can request the bank to manage that fund for a specific purpose, which the bank does. Thus,
there are wide varieties of trustee functions discharged by the banker.
(c) Banker
as Bailee:
As a Bailee, the banker should protect the valuables in his
custody with reasonable care. If the customer suffered any loss due to the
negligence of the banker in protecting the valuables, banker is liable to pay
such loss. If any loss is incurred due to the situation beyond the control of
the banker, he is not liable for penalty.
(d)  Banker
as lessor:
The banks provide safe deposit lockers
to the customers who hire them on lease basis. The relationship is that of
lessor and lessee.
special relationship between banker and customer takes the form of rights which
the banker can exercise and the obligations which he owes to his customers.

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