Who is banker?
A banker is defined as a person or organization that engages in the banking industry in Section 5(c) of the Banking Regulation Act of 1949.
Accepting public deposits for loans that are repayable immediately or that are otherwise withdrawable by check, or drafts, is referred to as banking.
Meaning Of Customer
Who is customer?
A customer refers to a person who has a bank account in his or her name and for whom the banker agrees to perform the services of a banker.
Relationship Between Banker And Customer
1. General Relationship
- Debtor and Creditor
- Licensor and Licensee
- Pledger and Pledgee
- Trustee and Beneficiary
- Bailor and Bailee
- Advisor and Client
- Agent and Principal
Debtor and creditor relationship : When a banker accepts a client’s deposits, the client becomes the creditor and the bank becomes the debtor. When a customer borrows money from a bank, the customer becomes a debtor and the bank turns into a creditor.
Licensor (Lessor) and Licensee (Lessee) relationship : The relationship between a banker and a client can resemble that of a licensee and licensor. This occurs when the banking provides the customer with a sale deposit locker. Thus, the banker will take on the role of the Licensor while the client will assume the role of the Licensee.
Pledger and Pledgee relationship : When a consumer promises to the bank certain assets or security in exchange for a loan. In this instance, the consumer and the bank are the pledger and pledgee, respectively. According to this contract, the assets or security will stay with the bank up until the loan is repaid by the consumer.
Trustee and Beneficiary : The trustee manages the recipient’s assets, and the beneficiary is the rightful owner of any profits. The banker becomes the customer’s trustee if the client deposits securities or jewels with him or her for safekeeping. Since the client is the beneficiary, ownership is still hers.
Bailor and Bailee : Customers and bankers can have a relationship similar to that of Bailor and Bailee.
A bailment is an agreement in which things are delivered to a third party to be held in trust for a predetermined amount of time before being returned.
The party that delivers property to another is the bailor.
The recipient of the property is the bailee.
As a result, the client became the bailor and the bank became the bailee when the customer gave the bank a sealed box for keeping.
Agent and Principal : By performing the following agency services on behalf of the client (principal), the banker represents the client as an agent –
On his behalf, collect checks, dividends, invoices, or promissory notes.
2. Special Relationship
1. Statutory Obligation to honour cheques
2. Banker’s right to claim incidental charges
3. Law of limitation on bank deposits
4. Banker’s duty to maintain secrecy of customer’s account
Statutory Obligation to honor cheques : A contractual relationship between the banker and the customer is established when the customer opens an account. The banker is required to honor all of the customer’s cheques as long as there is enough money in his account. The banker can only refuse to honor cheques in specific circumstances, such as those involving incorrect information.
Banker’s right to claim incidental charges : A banker is entitled to charge a commission, interest, or other fees for the various services that he provides to the client. an overdraft facility, as an example.
Law of limitation on bank deposits : According to the law of limitations, a customer typically forfeits the ability to sue a banker for the money owed if they haven’t used their account in the previous 10 years. A contractual relationship between the banker and the customer establishes when the customer opens an account.
Banker’s duty to maintain secrecy of customer’s account : When a person opens an account with a bank, the banker is prohibited from disclosing details of the customer’s account to third parties. It is one of the banker’s primary duties. The banker may or may not disclose information regarding a customer’s account depending on the circumstances.
These were some crucial banker-customer relationships.