Category: bank-customer relationship

Banker-Customer Relationship Meaning and Definition of a Banker The 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 The 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 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 (1) Purchasing / selling of securities. (2) Collection of income (3) Making payments as instructed by his customers. (4) Collecting interest and dividend on securities lodged by customers. (5) Receiving safe custody valuables and securities lodged by his customers. (6) Collecting cheques, drafts of the customers. In 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. The 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.

Category: bank-customer relationship

Banker-Customer Relationship

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