includes types of banker and customer relationship. functions of bank. bankers obligations. banker rights

1. Banker & Customer
Relationship
MR. RATHESH J
ASST. PROF,
NEW HORIZON COLLEGE,
KASTURINAGAR

2. INTRODUCTION
 The word Bank derived from the Italian word “Banco” means “desk /
bench”.
 Berenberg Bank is the oldest bank founded in 1472 in Italy.
 The Bank of Hindustan, was established in 1770 and liquidated in 1829–32
 The General Bank of India, established in 1786 but failed in 1791
 The largest bank, and the oldest still in existence, is the State Bank of India
(S.B.I).
 It originated and started working as the Bank of Calcutta 1806. In 1809, it
was renamed as the Bank of Bengal. This was one of the three banks
founded by a presidency government, in 1843. The three banks were
merged in 1921 to form the Imperial Bank of India, which upon India's
independence, became the State Bank of India in 1955

3. Functions of Banks
Primary functions
 Accepting function
 Lending function
Overdraft, Cash Credit, Discounting of Bills, Loans & Advances.
Secondary functions
 Agency functions
Purchase & sell securities, collection& clear cheques, foreign
exchange, tax filings
 General / Utility functions
Safety lockers, Money transfer, traveler’s cheque, Utility payments,
Cards

4. BANKER
 DEFINITION
 According to sec 5(c) of the Banking Regulation Act
1949, “a banker is a person who undertakes
business of banking. Banking means accepting
deposits from public, for the purpose of lending,
repayable on demand or otherwise with drawable by
cheque, draft, order”.

5. CUSTOMER
 Meaning of customer
 A customer means a person who seeks to open
account which banker accepts with proper
introduction. The relationship is not based on
frequency of transactions, and durations.

6. BANKER AND CUSTOMER
RELATIONSHIP
Banker & Customer Relationship
Primary
Relationship
Secondary
Relationship
Special
Relationship
ObligationsRights

7. Primary Relationship
 Debtor & Creditor Relationship
Bank is Privileged Debtor:
 Banker is dignified debtor
 Repayment of deposits on demand
 Customer is unsecured creditor
 Demand must in right place
 Demand must in right time

8. Secondary Relationship
1. Bailee & Bailor Relationship
Bailor is a person who gives up the
possession of the goods to another
person (customer)
Bailee is an person who possess the
goods belongs to others (banker)

9. 2. Trustee & Beneficiary Relationship
 Trustee is a person administrates the assets or fund for the benefit
of third party.
 Beneficiary is a person who receives benefits from trustee as per
the instruction given.
3. Agent & Principal Relationship
 Payment of bills, Tax, Bill of exchange purchase of securities, etc,.
4. Mortgagee & Mortgagor Relationship
 Banker is Mortgagee & customer is Mortgagor
5. Guarantor & Guarantee Relationship

10. Special Relationship
Obligations:
 a. Statutory Obligation to honour cheque
Banker honour cheque in following situation:
When there is balance inaccount
Correctness of cheque
Time of presentation of cheque
Legal restriction

11. b. Obligation to maintain secrecy of
customer
 Banker can disclosure of information in following situations:
Disclosure of info under compulsion of law
Disclosure of info under baking practice (if fails to repay)
Disclosure by the instruction of customer
Disclosure for the interest of the nation
Disclosure as common courtesy (issuing LOC, discounting
bills)

12. Rights:
 Right of banker’s Lien:
 Lien is the right to retain the property belonging to
another until the debt due from the owner of that
property is repaid.
 Types of Lien:
Particular Lien
General Lien

13. Right to charge interest
Right to charge commission
Right to charge incidental charges
Right to charge commitment charges
Right to Set off
Right to apportion of payment
Right to produce books of account
Right to Garnishee order