Relationship between Banker and Customer notes

Relationship between Banker and Customer notes


Relationship between Banker and Customer

The relationship between a banker and a client depends on the kind of group action. during this banker and client relationship, each parties have some obligations and rights. the connection between banker and client isn't solely that of a somebody and mortal. However, they additionally share different relationships.


The term banking might outline as acceptive of deposit of cash from the general public for loaning or investment investment of that cash that square measure owed on demand or otherwise and with a draw by cheque, draft, or order.
Features of Banking
The definition of banking describes the subsequent options of banking.
A depository financial institution should perform each of the essential functions.
Accepting of deposit.
Lending or investment the same: The phrase deposit of cash from the general public is important. The bankers settle for a deposit of cash and not of anything. the planet public implies that a banker accepts a deposit from anyone UN agency offers his/her cash for such a purpose.
The definition additionally tacit the time and created to withdraw the deposit. The deposit cash ought to be owed to the investor on demand created by the letter or in keeping with the agreement between the 2 parties.


A person UN agency features a checking account in his name and also the banker undertakes to produce the facilities as a banker is taken into account a client.

To represent a client, the subsequent necessities should be fulfilled;
The checking account is also savings, current or mounted deposit should be operated in his name by creating a necessary deposit of cash.
The dealing between the banker and client should be of the character of the banking business. the overall relationship between banker and customer:
Types of the Relationship between Banker and Customer

The relationship between banker and Customer are categorized into three;

Relationship as individual and person.
Banker as a trustee.
Banker as AN agent.
Other special relationships with the client, obligations of a banker
Relationship as individual and person

On the gap of AN account, the banker assumes the position of a individual. A investor remains a person of his banker see you later as his account carries a credit balance.

The relationship with the client is reserved as presently because the client account is overdrawn.

The banker becomes a person of the client UN agency has taken a loan from the banker and continues in this capability fills the loan is repaid.

Banker as a Trustee

Ordinally a banker may be a individual of his client within the report of the deposit created by the letter, however in sure circumstances, he acts as trustee additionally.

A trustee holds cash or plus and performs sure functions to learn another person referred to as the beneficiary.

For example;

If the client deposits securities or alternative values with the banker for safe custody, the letter acts as a trustee of his client.
Banker as AN Agent

For example, he buys or sells securities on behalf of his client, collects checks/cheques on his behalf, and pays varied client dues.
Special relationship with customer/obligation of a banker:

The primary relationship between a banker and his client may be a individual and a person or the other way around. The special options of this relationship, as a note on top of, impose the subsequent further obligations on the banker.
The obligation to honor the Check/Cheques

The deposit accepted by a banker is his liabilities owed on demand or otherwise. Therefore, the banker is beneath a statutory obligation to honor his customer’s check/cheque within the usual course.

According to section thirty one of the negotiable instruments. Act 1881, the banker is guaranteed to honor his customer’s check/cheque provided by following conditions area unit fulfilled:
Availability of sufficient  funds of the client.
The correctness of the check/cheque.
Proper presentation of the check/cheque.
A reasonable time for assortment.
Proper drawing of the check/cheque.
The obligation to keep up the secrecy of the client accounts

The banker is indebted to require the utmost care to keep secrecy concerning his customer’s account.

By keeping secrecy is that the account books of the bank won't be thrown hospitable the general public or officialdom if the subsequent affordable scenario doesn't occur,
Discloser of knowledge needed by law.
Discloser allowable by bankers’ follow and wages. The follow and wages area unit customary amongst bankers to allow speech act of sure data and also the following circumstances.
With specific or implicit  consent of the client.
Banker reference.
Duty to the general public to disclose.

When Banks needed to Disclose
Customer data.

Bank has associate degree obligation to require utmost care to keep secrecy concerning the account of its customers. however generally, banks may need revealing the customers’ info that may need a law or allowable by the banker’s practices and usages.

Disclose of data needed by law

A banker is underneath a statutory obligation to disclose the data about his customer’s account once the law specifies needed to try and do therefore.

The banker would, therefore, be even in revealing info to satisfy the subsequent statutory requirements:

Under the revenue enhancement act.
Under the corporate acts.
Disclose to the police.
Under the interchange regulation act.
Disclose allowable by the banker’s practices and usages

The practices and usages customary amongst bankers allow the speech act of

certain info underneath the subsequent circumstances:
With specific or inexplicit consent of the client

The will be excusable in revealing any info about his customers

account with the letters of consent. The consent of consumers could also be expressed

or implied.
To protect his own interest.

The banker could disclose the state of his customer’s account to safeguard his own

interest wrongfully.
Banker reference

Banker follows the apply of constructing necessary esquires concerning the purchasers,

their sureties or the acceptors of the bills from different bankers.

This is a longtime apply amongst the banker associate degreed is excusable as a result of an inexplicit consent of the client is likely to exist.
Duty to the general public to disclose

The banker could justify revealing any info about his customer’s account once it's his duty to the general public to disclose such information; such a

situation is:
When a bank asked for info from administration regarding the commission of a criminal offense.
Where the bank thought of that the client is concerned in activities
prejudicial to the interest of the country.
Where the bank’s book reveals that the client is contravening the supply of any law.
Where sizable funds square measure received from foreign countries by a constituent.

Bank is associate degree Agent, Trustee, Executor, Administrator for purchasers

Modern industrial banks, besides performing arts the most functions that area unit acceptive deposits and loaning cash, cowl a good vary of economic and non-financial services to the shoppers and therefore the general public. fashionable industrial banks act as Agents, Trustees, Executors, and directors for his or her Customers.

The services area unit as follows:
Agency service,
Banker as a trustee,
Banker as Associate in Nursing fiduciary,
Banker as administrator.
Banker as Associate in Nursing Agent

The banker act because the agent of his client in performing arts the subsequent functions:

_Payment and assortment of subscription, dividends, salaries, pensions. Bankers create _payment and receive cash on behalf of their customers within the following ways:
Payment of payment.
Payment of membership subscription to club, library, and association
Payment of rents and salaries.
Collections of dividends on behalf of shoppers.
A collection of pensions, rents, etc.
Transfers of tunas from one account to a different.
The bank charges a nominal quantity for this service. For doing this service, the banker ought to get clear directions in writing from customers. The directions of the client ought to be clear and not be finish unsure loans, that bring about to controversial  which means. The banker might not settle for the directions, that area unit troublesome to befits however once accepted it's the duty of the banker to hold out the directions.
Purchases and sales of securities: Banker undertakes to buy and sell shares and debentures of company on behalf of his client solely. Whenever the client delegates the work to the bank, the banker ought to get clear and precise directions in special forms used for this purpose. the shape ought to contain the subsequent things:
The particulars of securities to be sold  or purchased.
The minimum and most value at that the securities area unit to be sold  or purchased.
The period among that they're to be sold  or purchased.
The names, addresses of the persons in whose name they're to be registered.
In corporal punishment these services, the banker act as Associate in Nursing agent of his client. solely members of the stock market will sell or purchase securities. because the bank isn't a member of the stock market, they appoint brokers United Nations agency act as sub-agents of the bank to hold out the directions.
Acting as Associate in Nursing professional person: Power of attorney is also given by a client to the Tanker. By granting power of professional person, the client licensed the banker to receive dividends and interest on securities happiness to him and provides a legitimate discharge, therefore.
Banker as a Trustee

A person might want that when his death, a neighborhood or whole of his property be command in an exceedingly trust to profit numerous beneficiaries named within the can.

In such a case, he might produce a trust below his can, directive an exact person to carry the property to such persons when a such time. once the bankers take the liability to deal this property sort, they're going to be referred to as the trustee.
Banker as Associate in Nursing fiduciary

A person might create can expressing his intention concerning the disposal of his property when his death. A can must be in writing, signed by the person creating the need, trusted, and genuine  by 2 witnesses.

A can becomes effective solely when the court approves it as a personal. a personal could be a copy of the need punctually certify below the court’s seal along side a grant administrator.

The person appointed as Associate in Nursing administrator of the deceased is understood because the fiduciary. The bank might appoint as Associate in Nursing fiduciary for such service.
Banker as Associate in Nursing Administrator

If someone dies while not creating a legitimate can, the deceased’s property is also administered consistent with law.

The bank is also appointed to administer this property, so the banker are referred to as the administrator.

18 kinds of Bank Services

Banks offer bank services to draw in customers, from giving loans, credit and debit cards, digital money services, and even personal services. However, some essential trendy services ar offered by most industrial banks. eighteen varieties of banking services are;

Advancing of Loans.
Discounting of Bills of Exchange.
Check/Cheque Payment
Collection and Payment Of Credit Instruments
Foreign Currency Exchange.
Bank Guarantee.
Remittance of Funds.
Credit cards.
ATMs Services.
Debit cards.
Home banking.
Online banking.
Mobile Banking.
Accepting Deposit.
Priority banking.
Private banking.
1. Advancing of Loans

Banks ar profit-oriented business organizations. so that they need to advance a loan to the general public and generate interest from them as profit. when keeping sure money reserves, banks offer short-run, medium-term, and long loans to impoverished borrowers.
2. Overdraft

Sometimes, the bank provides draft facilities to its customers through that they're allowed to withdraw over their deposits. Interest is charged from the purchasers on the overdrawn amount. Bank Overdraft is different from cash credit.

3. Discounting of Bills of Exchange

Discounting of Bills of Exchange is another popular type of lending by modern banks. Through this method, a holder of a bill of exchange can get it discounted by the bank. In a bill of exchange, the debtor accepts the bill drawn upon him by the creditor (i.e., holder of the bill) and agrees to pay the amount mentioned on maturity.

After making some marginal deductions (in the form of commission), the bank pays the bill’s value to the holder. When the bill of exchange matures, the bank gets its payment from the party, which had accepted the bill.
4. Check/Cheque Payment

Banks provide cheque pads to the account holders. Account-holders can draw cheques upon the bank to pay money.

5.Banks pay for cheques of customers after formal verification and official procedures.

Different credit instruments such as the bill of exchange, promissory notes, cheques, etc., are used in modern business.

Banks deal with such instruments. Modern banks collect and pay different types of credit instruments as the representative of the customers.

6.Banks deal with foreign currencies. As customers’ requirement, banks exchange foreign currencies with local currencies, which is essential to settle down the dues in the international trade.

7.Remittance of funds

Modern commercial banks are large organizations. In this function, banks hire financial, legal, and market experts who advise customers regarding investment, industry, trade, income, tax, etc. They can expand their function to consultancy business.

However, for several reasons, banks need to disclose customers’ information to government and regulatory authorities.
8. A Guarantee

Customers are provided the facility of bank guarantee by modern commercial banks.

When customers have to deposit certain funds in governmental offices or courts for a specific purpose, a bank can present itself as the guarantee for the customer instead of depositing funds by customers.
9. Remittance of Funds

Banks help their customers in transferring funds from one place to another through cheques, drafts, etc.
10. Credit cards

A credit card is cards that allow their holders to make purchases of goods and services in exchange for the credit card’s provider immediately paying for the goods or service, and the cardholder promising to pay back the amount of the purchase to the card provider over a period of time, and with interest.
11. ATMs Services

ATMs replace human bank tellers in performing giving banking functions such as deposits, withdrawals, account inquiries. Key advantages of ATMs include:
24-hour availability
Elimination of labor cost
Convenience of location
12. Debit cards

Debit cards are used to withdraw funds directly from the cardholders’ accounts electronically. Most debit cards require a Personal Identification Number (PIN) to be used to verify the transaction.
13. Home banking

Home banking is the process of completing the financial transaction from one’s own home instead of utilizing a branch of a bank. It includes making account inquiries, transferring money, paying bills, applying for loans, directing deposits.
14. Online banking

Online banking is a service offered by banks that allows account holders to access their account data via the internet. Online banking is also known as “Internet banking” or “Web banking.”

Online banking through traditional banks enables customers to perform all routine transactions, such as account transfers, balance inquiries, bill payments, and stop-payment requests. Some even offer online loans and credit card applications.

Account information can be accessed anytime, day or night, and can be done from anywhere.
15. Mobile Banking

Mobile banking (also known as M-Banking) is a term used for performing balance checks, account transactions, payments, credit applications, and other banking transactions through a mobile device such as a mobile phone or Personal Digital Assistant (PDA),
16. Accepting Deposit

Accepting deposits from savers or account holders is the primary function of a bank. Banks receive the deposit from those who can save money but cannot utilize it in profitable sectors.

People prefer to deposit their savings in a bank because by doing so, they earn interest.
17. Priority banking

Priority banking can include several various services, but some popular ones include free checking, online bill pay, financial consultation, and information.
18. Private banking

Personalized financial and banking services are traditionally offered to a bank’s digital, high-net-worth individuals (HNWIs). For wealth management purposes,

HNWIs have accrued far more wealth than the average person, and therefore have the means to access a larger variety of conventional and alternative investments.

Private Banks aim to match such individuals with the most appropriate options.

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