Banker and Customer Relationship

What is Banker?

Various writer define the banker term according his own point of view.

We are analyze few definition of that term.J.W .Gilbert in his book

“Principles and practice of banking”A banker is the dealer in capital, or more properly dealer of money, he is intermediate party between the borrower and lender. he borrowed of one party and lend to other.

Sir JOHN Paget definition

A person or a body of corporate doing the following activities is called banker

a) Takes deposit accountsb) Issue and pay chequesc) Collect crossed cheques for his

customers

What is banker?

According to Negotiable instrument act 1881

banker as a person transacting the business of accepting, for the purpose of lending or investment, of deposit from people and payable on demand by cheques or draft.

Functions of banker

in order to understand the functions and duties of a banker the following decision given by LORD ATKIN , BANKING CORPORATION 1921

1. Borrowing and lending of money2. Discounting bills of exchange3. Collecting negotiable instrument on behalf of

customers4. Buying and selling foreign exchange5. Acting as a agent of customer6. Dealing with property that may come to it as

security in satisfaction of its loan7. L /C issuing8. Lockers for precious things

Who is the customer?

Now according to law we are going to define “customer” yet generally it believed that anyone conducting banking transaction with the bank is a customer, but that is not exact definition.According 1881 act

Only the person are said to be customer who maintain regular bank account.

Account of customers relations

The opening the account is the establishment of customer and bank relation. By opining an account at the bank a person become a 'customer'‘

That person become the customer of bank who open account and receive the cheques book from bank.

Qualification of a Customer

The relationship between banker and customer is purely a contractual one. Anyone entered into that contract become customer. But customer should have following qualities.

1 He should not be the minor, he should have 18 years ago.

2 He should the sound mind, if not, then he is incompetent to contracts.

3 He shall not enter into any law like un-discharged bankrupt, pro-claimed offender.

Rights and Duties of a customer towards the banker

customer

RIGHTS DUTIES

Rights of customer

The following are the rights: 1 To draw cheques against his credit

balance. 2 To receive passbook or statement

containing a copy of his account. 3 To save the bank for the lost, loss and

damage when his cheque is wrongfully dishonored.

4 To sue the baker when his secrecy not maintain.

5 To claim and receive the profit promised the banks.

Duties of customer

1 Customer must present the cheques for payments within business hours of bank.

2 Customer should see the cheques and other instrument date before presenting to cash counter.

3 He should keep his cheque book safe. He has to hold responsible for negligence.

4 he should his such way that no room left for fraud.

The bankers duty of secrecy

The relationship between banker and his customer is obviously confidential, therefore, a banker must maintain the secrecy of his customer.

According to national bank of England 1924 “it is decided that banker must not disclose the condition of his customer account except on reasonable and proper occasion and obligation to observe secrecy does not end even with closing of customer account”

Secrecy may not considered in following conditions

1. Under compulsion of law2. Duty to public to disclose3. In the interests of bank4. Express or implied consent of

customer5. Common courtesy to other bank

Under compulsion of law

Banker Book evidence act 1891 permits the banker to produce certificate copies of the relevant parts from ordinary books of banker to the court as evidence.criminal procedure code authorizes an investigating police officer to search the record of a bank of a particular customer, but providing prior permission has been obtained from high court.income tax officer may also inspect the book as with permission of tax authority.

Duty to public to disclose

Sometimes it’s the duty of banker to disclose the account nature and operation of a customer to the public during emergencies.

Banker sure himself before disclosing the customer account, like those will be disclose to public which is suspicious and unsatisfactory in nature.

When Govt doubt on account so that will disclosed

In the interests of bank

Sometimes sue their customer to recover the amount due in their loan or overdraft account. In this case baker will disclose will some aspect of his account.

The banker also disclose the account nature of customer as well in order to defend himself against some charges.

Express or implied consent of customer

A customer may give instruction to the baker to supply certain information about the account for balance sheet. Or

Send periodic statements of an account to some professional adviser for certain period of time.

While answering to inquires on telephone banker must be very careful. He should not pass any information under any circumstance about his customer on telephone.

Common courtesy to other bank

Banker establish practice of giving confidential opinion on their customer fellow banks when requested to do so. Its based on reciprocal grounds.

However banker will not disclose the position of account of his customer.

Opinion should express about his customer as "‘fair”, “good”, “Satisfactory”.At the same time information should not signed from banker side

Termination of relationship

Since banker- customer relationship is a contractual one. It may be terminated by any one of two by serving notice on other.

Notice Notice from customer side Notice from banker side

Notice from customer side

Customer may terminate his relation with bank or means closing his account because of any following grounds

a) Due to change in the residence the customer may not be able conveniently operate his account from his new place. So he will request to the banker to close his account.

Customer close his account

2 A customer may not be satisfied with the service offered by bank. The impoliteness of the staff members, undue delay encashment of cheques, unsatisfactory manner of sending periodic statement, in such situation the banker must improve his performance so that customer not close his account

Customer close his account

Account may close because of death of customer. The law does not authorizes heirs to operate the account of deceased customer. Therefore, the account is closed and credit balance available in the account of the deceased customer is paid to the heirs according to the legal requirement in specific case.

Notice by the banker

Bank notice

On the other hand the banker may like to close the account of his customer for a number of reasons, but this cannot be done without giving reasonable notice to the customer. The notice period depends upon the character of the account and circumstances of case.

Sending notice to the customer on the following grounds

i. Presentation of customer cheques for payment without having sufficient funds in the account.

ii. When a customer is the unable to keep minimum balance in his account. An account is un-remunerative when minimum balance is maintain

iii. A regular presentation of cheques for payment after business hours.