8 Emerging Relationship Between Banker And Customer

Content

1. Meaning of banker
2. Meaning of customer
3. Relationship Between Banker And Customer
 (a) General Relationship
 (b) Special Relationship
4. Video is available
5. Download PPT

1. Who is banker

DEFINITION:- According to sec 5(c) of the Banking Regulation Act 1949, a banker is a person or institution who undertakes the business of banking.

Banking means accepting deposits from the public, for lending, repayable on demand or otherwise withdrawable by cheque, draft, order.

2. Who is customer

Meaning:- A person who has a bank account in his name and for whom the banker undertakes to provide the facilities as a banker is considered to be a customer.

3. Relationship between Banker and Customer

1. General Relationship
   1. Debtor and Creditor
   2. Pledger and Pledgee
   3. Licensor and Licensee
   4. Bailor and Bailee
   5. Trustee and Beneficiary
   6. Agent and Principal
   7. Advisor and Client

1. Debtor and creditor relationship:-
   When the banker accepts deposits from the customer then the bank becomes the debtor and the customer is the creditor. If a customer takes loans from a bank then the customer becomes a debtor and the banks becomes a creditor.

2. Pledger and Pledgee relationship:–
when customer pledges (promises) certain assets or security with the bank in order to get a loan.

In this case, the customer becomes the Pledger, and the bank becomes the Pledgee. Under this agreement, the assets or security will remain with the bank until a customer repays the loan.

3. Licensor (Lessor) and Licensee (Lessee) relationship:-

The relationship between banker and customer can be that of a Licensor and Licensee. This happens when the banker gives a sale deposit locker to the customer. So, the banker will become the Licensor, and the customer will become the Licensee.

4. Relationship of Trustee and Beneficiary:- A trustee holds property for the beneficiary, and the profit earned from this property belongs to the beneficiary.

If the customer deposits securities or valuables with the banker for safe custody, the banker becomes a trustee of his customer. The customer is the beneficiary so the ownership remains with the customer.

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5. Relationship of Bailor and Bailee:-
The relationship between banker and customer can be that of Bailor and Bailee.

A bailment is a contract for delivering goods by one party to another to be held in trust for a specific period and returned when the purpose is ended.
Bailor is the party that delivers property to another.
Bailee is the party to whom the property is delivered.
So, when a customer gives a sealed box to the bank for safekeeping, the customer became the bailor, and the bank became the bailee.

6. Relationship of Advisor and Client:- When a customer invests in securities, the banker acts as an advisor. The advice can be given officially or unofficially. While giving advice the banker has to take maximum care and caution. Here, the banker is an Advisor, and the customer is a Client.

7. Relationship of Agent and Principal:- The banker acts as an agent of the customer (principal) by providing the following agency services:
Buying and selling securities on his behalf,
Collection of cheques, dividends, bills or promissory notes on his behalf.

2. Special Relationships

1. Statutory Obligation to honour cheques
2. Banker’s duty to maintain secrecy of customer’s account
3. Banker’s right to claim incidental charges
4. Law of limitation on bank deposits

1. Statutory Obligation to honour cheques: When a customer opens an account there arises a contractual relationship between the banker and the customer. As long as there is sufficient balance in the account of the customer, the banker must honour all his cheques. However, the banker can refuse to honour the cheques only in certain cases like wrong details.
2. Secrecy of customer’s account: When a customer opens an account in a bank, the banker must not give information about the customer’s account to others. It is one of the principal duties of the banker. There are certain circumstances in which the banker is entitled to or required to make disclosures about a customer’s account.
3. Banker’s right to claim incidental charges: A banker has a right to charge a commission, interest or other charges for the various services given by him to the customer. For e.g. an overdraft facility.
4. Law of limitation on bank deposits: Under the law of limitation, generally, a customer gives up the right to recover the amount due at a banker if he has not operated his account for the last 10 years. When a customer opens an account there arises a contractual relationship between the banker and the customer

So, these were some important banker-customer relationships

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