Banker-Customer Relationship Explained in Detail
The relationship between banker and Customer are categorized into three; relationship as debtor and creditor, banker as a trustee and banker as an agent. Abstract. The relationship subsisting between banker and customer is basically contractual and fundamentally that of debtor and creditor. It also consists of. Dr. Ashish Kumar. LBSIM. The relationship between a banker and a customer depends on the activities; products or services provided by bank to its customers .
When the customer deposits some money in the bank without specific instructions and the amount is not sufficient to discharge all debts, then the problem arises as towards which debt this amount should be adjusted.
In the absence of any specific instructions, the bank has the right to appropriate the deposited amount to any loan, even to a time barred-debt. But the banker must inform the customer about the appropriation.Banker Customer Relationship for SBI clerk 2018
Right to charge interest and commission: A banker has a right to charge interest on loans and advances. A bank also has the right to charge a commission for services that it renders to clients. Right to close the account: The banker has the right to close an account, if it is of the opinion that an account is not being operated properly.
It may do so only by sending a written intimation to the customer.
The most important duty of a banker is to help their clients with all their financial queries and needs. The banker may do so by meeting their clients in person or speaking with them over the phone. Following are the duties of a banker: Buying and selling securities on his behalf, Collection of cheques, dividends, bills or promissory notes on his behalf, and Acting as a trustee, attorney, executor, correspondent or representative of a customer. Banker as an agent performs many other functions such as payment of insurance premium, electricity and gas bills, handling tax problems, etc.
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. Other Relationships Other miscellaneous banker-customer relationships are as follows: Obligation to honour cheques: As long as there is sufficient balance in the account of the customer, the banker must honour all his cheques.
The cheques must be complete and in proper order. They must be presented within six months from the date of issue. However, the banker can refuse to honour the cheques only in certain cases. 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. 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.
Relationship between Banker and Customer
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 since last 10 years. The banker, by providing these services acts as an agent and the customer who gives the standing instructions, acts as a principal.
Hence, the relation of banker and customer is that of agent and principal as far as these services are concerned.
Under a commercial debt, the liability of the debt arises only at the maturity of the debt i. The customer must demand in writing for repayment, only then, will the payment be made to the customer. Banker as a bailee: Bailee is one who posses goods or articles on behalf of the owner called bailor of the goods.
Banking: LESSON 10 BANK CUSTOMER RELATIONSHIP: CONCEPT AND CASES
According to the Sec. In other words, when customer leaves with the banker some valuables for safe custody in the safe deposit vaults or lockers, the banker performs the functions of the bailee and the relationship between the banker and the customer in such a case is that of a bailee and the bailor.
Banker as a Trustee: A trust is a relation between two persons by virtue of which one of them called trustee holds property vested in him for the benefit of the other called beneficiary. The customer continues to be the owner of the valuables deposited with the banker. The legal position of the banker as a trustee differs from that of a debtor of his customer. In the event of bank's liquidation, such trust properties held by the banker are not available for the distribution to general creditors of the bank.
Proper place and time of demand: The demand by the creditor i.