Banker-Customer Relationship

Module Five: Session One

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Overall Training objective:

To review the relationship between Financing Institutions and the road contractors

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Training outcomeBy the end of the session trainees should:

a) Be able to appreciate the importance of the relationship between financial institutions and road construction firms.

b) Understand the need to enhance the relationship.

c) Be able to identify the various categories of relationships and to appreciate them.

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WHAT IS A BANK?

• A bank is any institution carrying on banking business.

• Banking business is the business of accepting deposits, accepting money on current account and investing that money as the bank sees fit.

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WHO IS A BANK CUSTOMER ?

• A bank customer is any account holder or:• Someone who seeks the bank's advice or

other services.• There is no requirement on the number of

transactions that must have passed through that account.

• There is no requirement as to the duration for which the account should have existed.

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WHEN DOES THE BANKER - CUSTOMER RELATIONSHIP START?

• The banker-customer relationship commences at the point of opening the account.

• Other relationship commences when a customer acquires a credit facility from a bank

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NATURE OF THE BANKER - CUSTOMER RELATIONSHIP

The banker-customer relationship is primarily contractual.

Principally a principal-agent relationship.Customer (principal) appoints the bank as

his agent/Other aspects of this relationship include:

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Contd. Debtor - Borrower RelationshipBailor-bailee RelationshipTrustee/Beneficiary RelationshipMortgagor-Mortgagee Relationship

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DUTIES OF A BANK• To receive the customer's money and

cheques and other instruments of collection.• To repay the whole / part of the money upon

presentation of the customer's written authority.

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DUTIES OF THE BANK -• To abide by any express mandate from

his / her customer such as a standing order.

• To render statements of accounts to his customer periodically or upon request.

• To maintain secrecy.

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DUTIES OF THE BANK

Exemptions• The law so compels (court order). .

• Banker has duty to the public e.g. has knowledge of terrorist activity involving the customer.

• It is in the interest of the banker e.g. where legal proceedings are required to enforce payments of an overdraft or CRB.

• Banker has express or implied consent of customer e.g. (s)he is acting as a referee.

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DUTIES OF THE BANK 1) To honour the customers' cheques that are

presented to the bank;-

2) To effect stop Instructions (countermand).

3) To honour instruction to pay.

4) To abide by any express mandate from his / her customer such as a standing orders.

5) To render statements of accounts to his customer periodically or upon request.

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Duties of the bankBanker’s duty of care.

While giving advice While posting transactions

Duty of confidentiality

Key considerations in establishing the relationship: Choose a right bank Get to know the bank inside procedures Avoid multiple borrowing Understand the contract terms and conditions Read all documents before signing them.

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Termination of Banker Customer ContractThe banker customer contract ends once the

customer closes his account. Termination by the bank.Other ways of termination .

Express Notice by the customerDeath or mental incapacity of customerBankruptcy of a customerTermination by Operation of Law

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GROUP DISCUSSIONS1 Discuss the possible services financial institutions can

provide to the road contractors.2 Discuss an ideal banker-customer relationship. 3 Describe why banker-customer relationship may be

terminated and the likely consequences of termination.4 Discuss the rights and obligations which flow from the

banker – customer relationship.5 Identify the key challenges to road contractors in

enhancing the banker – customer relationship and suggest how they can be addressed.

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