Banker-Customer\nRelationship\n\nMeaning and Definition of a Banker\n\nThe\nterm \u2018banker\u2019 refers to a person or company carrying on the business of\nreceiving moneys, and collecting drafts, for customers subject to the\nobligation of honoring cheques drawn upon them by the customers to the extent\nof the amounts available on their current accounts. \n\n\n\nMeaning and Definition of a Customer: In order to constitute a\nperson as a customer, he must satisfy the following conditions:\n\nbank customer\n\n\n\n\n\nHe\nmust have an account with the bank \u2013 i.e., savings bank account, current\ndeposit account or a fixed deposit account.\nThe transactions between them\n(the banker and the customer)\nshould be of banking nature.\n Frequency of transactions is not quite necessary though preferred.\n\n\n\n\n\nThe Banker-Customer Relationship\n\n\n\nThe\nrelationship between the banker and the customer arises out of the contract\nentered in between them. This contract is created by mutual consent. The\nrelationship starts right from the moment an account is opened and it comes to\nan end immediately on closure of the account. This relationship is of two types:\n1. General relationship 2. Special relationship\n\n\n\n 1. General relationship:\n\nThe general relationship between\nbanker and customer can be classified into two types, namely : Primary Relationship\n\nPrimary\nrelationship is in the form of a \u2018Debtor\u2019 which arises out of a contract\nbetween the banker and customer. The authorities on banking law and many court\ndecisions have said that primary relationship is that of \u2018Debtor and Creditor\u2019.\nWhen a customer deposits money to its account customer is creditor and banker is\ndebtor. But when banker lends a loan to customer the banker becomes creditor\nand customer is the debtor. Thus for \n\n\n\nSaving account, current account, fixed\ndeposit-----customer is creditor and banker is debtor.\n\nFor loan and overdraft account------------------------customer\nis debtor and bank is creditor.\n\nSecondary Relationship :\nIt will be in the form of\n\n\n\n\n\n\nBanker as Agent: A\nbanker acts as an agent of his customer in the following conditions\n\n(1) \nPurchasing \/ selling of securities.\n\n(2) \nCollection of income\n\n(3) \nMaking payments as instructed by\nhis customers.\n\n(4) \nCollecting interest and dividend on securities lodged by customers.\n\n(5) \nReceiving safe custody valuables and securities lodged by his customers.\n\n(6) \nCollecting cheques, drafts\nof the customers.\n\n\n\nIn\nthis case, the banker and customer relationship is, in the form of an \u2018Agent\u2019\nand \u2018Principal\u2019\n\n (b) Banker\nas Trustee: in certain circumstances he acts as a trustee also. The customer\nmay request the banker to keep his valuables in safe vaults or one may deposit\nsome amount and can request the bank to manage that fund for a specific purpose, which the bank does. Thus,\nthere are wide varieties of trustee functions discharged by the banker.\n\n(c) Banker\nas Bailee: As a Bailee, the banker should protect the valuables in his\ncustody with reasonable care. If the customer suffered any loss due to the\nnegligence of the banker in protecting the valuables, banker is liable to pay\nsuch loss. If any loss is incurred due to the situation beyond the control of\nthe banker, he is not liable for penalty.\n\n(d) Banker\nas lessor: The banks provide safe deposit lockers\nto the customers who hire them on lease basis. The relationship is that of\nlessor and lessee.\n\n\n\nThe\nspecial relationship between banker and customer takes the form of rights which\nthe banker can exercise and the obligations which he owes to his customers.