Banker-Customer Relationship Explained in Detail
As such, the relationship existing between banker and customer cannot be obligations on banker and customer as well as corresponding rights on the banker. Chapter 4. Banker and Customer Relationship. Introduction. Before we take up relationship that exists between a banker and his customer, let us understand . BANKER AND CUSTOMER. RELATIONSHIP. DEFINITION. According to sec 5(c) of the Banking. Regulation Act , a banker is a person who undertakes.
He should draw cheques very carefully and in such a way that there is no room left for any fraudulent alterations and additions.
To pay charges to the bank. Bankers have the right to charge for the services they provide to their customers. Bailment is delivery of goods by one person to another for some purpose, upon a contract.
When the banker provides safe custody facilities to his customers for their valuables the relationship becomes that of a Bailor and Bailee. Where the customer is the bailor and the banker is the bailee.
Old relationship started from earlier bankers-goldsmiths. When a banker performs agency services he becomes agent of his customer. These services include collection of cheques and other instruments. Collection of utility bills and fees etc. When a customer pledges goods and documents with the bank as security for an advance, he becomes the pawner and the banker becomes the pawnee.
Similarly when advance to the customer is made against security of immovable property the relationship becomes that of mortgagor and the mortgagee, where banker is the mortgagee and customer is the mortgagor. Notice by a customer: Change in the residence of the customer.
Special Relationship between the Banker and Customer
Customer may not be satisfied with the services offered by the banker. Right of general lien: Lien is a right to keep possession of a property belonging to someone else until that person discharges the debt they owe you.
The right of general lien is conferred on the bankers by Section of the Indian Contract Act. A banker should exercise his right of general lien only as a banker not as a bailee. Banks cannot realize valuables deposited with them for safe custody. This is a case of bailment. Hence, the bank cannot exercise the right of general lien in case of bailments.
Banker customer relationship - ppt download
A banker cannot exercise the right of general lien in the following cases: If valuables are deposited for safe custody b. If money or documents are deposited for specific purposes c. If there is an express agreement that the bank shall not exercise this right.
The Right of Set-off: Ashish Kumar LBSIM The relationship between a banker and a customer depends on the activities; products or services provided by bank to its customers or availed by the customer. Thus the relationship between a banker and customer is the transactional relationship. Since a banker or a banking company undertakes banking related activities we can derive the meaning of banker or a banking company from Sec 5 b as a body corporate that: Unless a person has an account with the bank, it does not accept deposit.
For depositing or borrowing money there has to be an account relationship with the bank. A bank can refuse to open an account for undesirable persons.
It is banks right to open an account. In addition to the activities mentioned in Sec. The term Customer has not been defined by any act. In terms of Sec. It obviously means that to become a customer account relationship is must. Account relationship is a contractual relationship. It is generally believed that any individual or an organisation, which conducts banking transactions with a bank, is the customer of bank. However, there are many persons who do utilize services of banks, but do not maintain any account with the bank.
Thus bank customers can be categorized in to four broad categories as under: Technically they are not customers, as they do not maintain any account with the bank branch. Those who intend to have account relationship with the bank. A person will be deemed to be a 'customer' even if he had only handed over the account opening form duly filled in and signed by him to the bank and the bank has accepted the it for opening the account, even though no account has actually been opened by the bank in its books or record.
The practice followed by banks in the past was that for opening account there has to be an initial deposit in cash.
The term 'customer' is used only with respect to the branch, where the account is maintained. In the event of arising any cause of action, the customer is required to approach the branch with which it had opened account and not with any other branch. Banking is a trust-based relationship. There are numerous kinds of relationship between the bank and the customer.
The relationship between a banker and a customer depends on the type of transaction. Thus the relationship is based on contract, and on certain terms and conditions.
These relationships confer certain rights and obligations both on the part of the banker and on the customer. However, the personal relationship between the bank and its customers is the long lasting relationship.
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Some banks even say that they have generation-to-generation banking relationship with their customers.