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    Banker and Customer Relationship PDF

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    aaditya01
    This document discusses the relationship between bankers and customers. It defines a banker as someone who accepts deposits and lends money. A customer is someone who opens an account. The main types of relationships are general and special. In a general relationship, the banker is a debtor when accepting deposits and a creditor when lending money. The document outlines the obligations of bankers, such as honoring checks, maintaining secrecy, and collecting instruments. It also discusses the rights of bankers, including charging interest and fees, exercising liens, and setting off accounts.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Banker and Customer Relationship PDF

    Uploaded by

    aaditya01
    158 views25 pages
    This document discusses the relationship between bankers and customers. It defines a banker as someone who accepts deposits and lends money. A customer is someone who opens an account. The main types of relationships are general and special. In a general relationship, the banker is a debtor when accepting deposits and a creditor when lending money. The document outlines the obligations of bankers, such as honoring checks, maintaining secrecy, and collecting instruments. It also discusses the rights of bankers, including charging interest and fees, exercising liens, and setting off accounts.

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    2.-BANKER-AND-CUSTOMER-RELATIONSHIP.pdf

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    © © All Rights Reserved

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    This document discusses the relationship between bankers and customers. It defines a banker as someone who accepts deposits and lends money. A customer is someone who opens an account. The main types of relationships are general and special. In a general relationship, the banker is a debtor when accepting deposits and a creditor when lending money. The document outlines the obligations of bankers, such as honoring checks, maintaining secrecy, and collecting instruments. It also discusses the rights of bankers, including charging interest and fees, exercising liens, and setting off accounts.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    158 views25 pages

    Banker and Customer Relationship PDF

    Uploaded by

    aaditya01
    This document discusses the relationship between bankers and customers. It defines a banker as someone who accepts deposits and lends money. A customer is someone who opens an account. The main types of relationships are general and special. In a general relationship, the banker is a debtor when accepting deposits and a creditor when lending money. The document outlines the obligations of bankers, such as honoring checks, maintaining secrecy, and collecting instruments. It also discusses the rights of bankers, including charging interest and fees, exercising liens, and setting off accounts.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 25

    BANKER AND

    CUSTOMER
    RELATIONSHIP
    BANKER AND CUSTOMER
    RELATIONSHIP
    DEFINITION
    According to sec 5(c) of the Banking
    Regulation Act 1949, a banker is a
    person who undertakes business of
    banking. Banking means accepting
    deposits from public, for the purpose of
    lending, repayable on demand or
    otherwise with drawable by cheque,
    draft, order.
    Meaning of customer
    A customer means a person who seeks to
    open account which banker accepts with
    proper introduction. The relationship is
    not based on frequency of transactions,
    and durations.

    Features of bank or banker


    Receiving money and collecting drafts.
    The obligation of honouring cheques
    drawn upon them, making payments
    across the counter on demand.
    The main line of activity of the
    organisation should be banking
    TYPES OF RELATIONSHIP
    BANKER AND CUSTOMER RELATIONSHIP
    I. GENERAL RELATIONSHIP
    II. SPECIAL RELATIONSHIP

    GENERAL RELATIONSHIP BETWEEN


    BANKER AND CUSTOMER
    1. PRIMARY RELATIONSHIP
    2. SECONDARY RELATIONSHIP
    CONT..
    1. PRIMARY RELATIONSHIP
    a. DEBTOR AND CRDITOR RELATIONSHIP
    b. CREDITOR AND DEBTOR RELATIONSHIP

    DEBTOR AND CRDITOR RELATIONSHIP


    When banker accepts deposits from the
    customer he becomes the debtor and the customer
    is the creditor. The only obligation is to return the
    amount deposited with interest on demand. The
    banker can deal with the money anyway he likes.
    Features of debtor and creditor

    Banker is called a dignified debtor


    Customer is not the secured creditor of the
    bank
    Customer’s balance at bank is not repayable
    Banker should pay the deposit money on
    demand by the customer.
    The deposit should be paid at the
    appropriate place.
    The demand should be made by the
    customer on working days and during the
    business hours.
    CREDITOR AND DEBTOR
    RELATIONSHIP
    b. CREDITOR AND DEBTOR RELATIONSHIP
    Here the banker acts as a creditor.
    The debtor creditor relationship holds
    good in the case of deposit account. But
    in the case of loan cash credit and
    overdraft the banker becomes a creditor
    and the customer assumes the role of a
    debtor.
    SECONDARY
    RELATIONSHIP
    a) Banker as a trustee
    b) Banker as an agent
    c) Banker as a Bailee
    d) Banker as lessor
    SPECIAL RELATIONSHIP BETWEEN
    BANKER AND CUSTOMER
    1. Obligation of a banker
    2. Rights of a banker

    Obligation of a banker
    Banker as certain obligation to be fulfilled
    towards the customer
    3. Obligation to honour the customers cheque
    4. Obligation to maintain secrecy of customer’s
    account
    Obligation of a banker

    3. Obligation to receive the cheques and other


    instrument for collection
    4. Obligation to honour the cheque of customer
    across the counter.
    5. Obligation to give reasonable notice before
    closing the customer’s accounts
    Cont..
    1. Banker Obligation to honour the customers cheque
    The bank has the obligation to honour
    customer’s cheque as and when they are
    presented. A banker must honour the customer’s
    cheque drawn on him provided
    a. Sufficient funds
    b. Correctness of the cheque
    c. Proper drawing of the cheque
    d. Proper application of funds
    e. Proper presentation
    f. Reasonable time for collection
    Dishonour of Cheque
    A cheque is said to be dishonoured when the
    payment is not made.
    Circumstance for dishonour of cheque
    1. Insufficiency of funds
    2. Notice of the customer’s death
    3. Notice of the customer’s Insolvency
    4. Trust accounts
    5. Suspicion about the title over the cheque
    6. Presentation of a post dated cheque
    Cont...
    7. Joint account
    8. Material alterations
    9. Drawer’s signature
    10. Proper form of the cheque
    11. Drawn on another branch
    Wrongful dishonour of
    cheque
    A cheque may be dishonoured by a banker by
    mistake or by negligence on the part of any of
    the employees, even though there is sufficient
    balance and cheque has been drawn in a
    proper manner. The banker will be held
    responsible for the wrongful dishonour of a
    cheque because of loss or damage to the
    customer.
    RIGHTS OF BANKER
    1. Bankers right to charge interest,
    commission, Incidental charges and
    commitment charges
    2. Right not to produce books of accounts
    3. Right to set of
    4. Right to appropriate payment
    5. Right to lien
    Banker’s right to charge interest,
    commission, Incidental Charges
    Banker has an implied right to charge for
    service rendered to a customer.
    a. Rights to charge interest: As a creditor the
    banker has the implied right to charge
    interest on the advance granted to the
    customer.
    b. Right to charge commission: A banker render
    several services to the customers and they
    cannot be ofered free hence the banker has
    an implied right to levy certain charges
    known as commission.
    Cont...
    c. Incidental charges: Incidental charges are
    levied by banker on the inoperative or
    unremunerative current accounts of the
    customer’s. Incidental charges rates are
    revised by the bank from time to time.
    Cont...
    2. Right not to produce books of accounts
    According to the provisions of the banker
    books Evidence Act 1891, the banker need not
    produce the original books of accounts as
    evidence in cases in which the banker is not a
    party. He can issue only an attested copy of
    the required portion of the account which can
    be utilized as evidence before the court.
    3. Right to setof
    The right of setof is the process of combining
    two or more accounts of a customers. It is a
    statutory right available to a banker to set of
    a debt owed to him by a debtor from credit
    balance held in other account of the debtor.
    Conditions for exercising right to setof
    Two or more account should be in the name of
    same customer.
    The amount of debts must be certain
    4. BANKER RIGHT OF GENERAL LIEN
    Meaning of Lien
    Lien is the right of a payment to retain the
    property belonging to another until the debt
    due from the owner of that property is repaid.
    Banker general lien
    It is the right of the banker to retain the
    goods ad securities entrusted to him as a
    banker by a customer in respect of the
    general balance due from the customer.
    Cont..
    Objectives of banker general lien
    The objectives of the banker general lien is
    to ensure the safety of the banker fund by
    serving as a protection against the loss that
    may arise on a loan, overdraft or any other
    advance to a customer.
    Banker general lien an implied pledge
    A bankers general lien empowers the bank not
    only to retain the securities but also to sell
    them without getting any orders from the
    court so the banker lien is considered as an
    implied pledge
    Conditions for exercising general
    lien by banker

    The securities should belong to the


    customer
    The banker should be in possession of the
    securities
    There should be lawful possession of the
    goods
    The loan should be due for payment .
    Cont..
    Circumstances under which a banker can exercise
    right of general lien
    Banker can exercise lien on bills and cheques deposited
    for collection
    Banker can exercise lien on documents of title to goods
    Lien on specific securities left with the banker after the
    repayment of the specific loan
    Lien on funds deposited with the banker in his capacity
    as a banker.
    Lien on life insurance policy that comes into his hands as
    a banker.
    Lien on duty discharged fixed deposit receipt that comes
    into his hand as a banker
    Circumstances under which a banker
    cannot exercise right of general lien

    No lien on safe custody deposits


    No lien on money deposit for a specific
    purpose.
    No lien on securities left with the banker by
    mistake
    No lien on joint accounts where in one joint
    account holder is a customer.
    No lien on securities received for sale.
    If a banker acts as a trustee under an
    agreement he cannot exercise lien on trust
    property.
    Garnishee order
    Garnishee order is a order issued by the court
    at the request of a judgmental creditor(bank)
    to the garnishee waring him not to pay the
    money which is with him to the judgement
    debtor until the claims of the judgement credit
    is disposed of.

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