customer banker relationship ppt

1. Definition of a Banker
According to Sir John Paget “ a bank or banker is a corporation or person(or group of
persons) who accepts money on current account, pays cheques drawn upon such account
on demand and collects cheques for customers”.
Dr. HL hart defines a Banker as -a person or company carrying on the business of receiving
money and collecting drafts for customers subject to the obligation of honoring cheques
drawn upon them from time to time by the customers to the extent of the amounts
available on their current accounts.
Section-3b of the NI Act, 1881 says
--Banker means a person transacting the business of accepting, for the purpose of
lending or investment of deposits of money from the public, repayable on demand or
otherwise and withdraw able by cheque, draft, order or otherwise and includes any
post office savings Bank.

2. Definition of a customer
According to Sir John Paget
to constitute a customer there must have dealing in the nature of regular Banking
Business.
-- “that is customer of a bank should have a Bank Account and transaction were to be in
nature of regular bank business”.
A customer is a person who has entered into a contract with a bank for the opening of an
account in his or her name.
The term customer has not yet been statutorily defined.

3. Qualification of a customer
1. Any one who is capable of entering a contract can be a customer
2. He/she must not be a minor. Should have attained the age of 18
3. Should be a person of sound mind.
4. He/she should not be debarred from entering into any contract under any law.

4. BANKER CUSTOMER RELATIONSHIP
It means that to become a customer account relationship is a
must. Account relationship is a contractual relationship.
Banking is a trust-based relationship. There are numerous
kinds of relationships 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 certain terms and conditions.
There are two types of banker customer relationships
General relationship
Special relationship

5. General relationship
1. DEBTOR AND CREDITOR
When a ‘customer’ opens an account with a
bank, he fills in and signs the account opening
form. By signing the form he agrees/contracts
with the bank. When a customer deposits
money in his account the bank becomes a
debtor of the customer and the customer a
creditor.
2. CREDITOR AND DEBTOR
Lending money is the most important activity
of a bank. The resources mobilized by banks
are utilized for lending operations. Customer
who borrows money from the bank own
money to the bank. In the case of any
loan/advances account, the banker is the
creditor and the customer is the debtor

6. SPECIAL RELATIONSHIP
1. TRUSTEE AND BENEFICIARY
(BANK AS A TRUSTEE AND
CUSTOMER AS A BENEFICIARY):
As per Sec. 3of Indian Trust Act 1882, a “trust” is
an obligation annexed to the ownership of
property, and arising out of a confidence reposed
in and accepted by the owner, or declared and
accepted by him, for the benefit of another, or of
another and the owner. Thus, the trustee is the
holder of property on behalf of a beneficiary.
2. BAILEE AND BAILOR (BANK-
BAILEE AND CUSTOMER- BAILOR):
Sec.148 of Indian Contract Act, 1872, defines
“Bailment” “bailor” and “bailee”. A “bailment” is
the delivery of goods by one person to another
for some purpose, upon a contract that they
shall, when the purpose is accomplished, be
returned or otherwise disposed of according to
the directions of the person delivering them. The
person delivering the goods is called the “bailor”.
The person to whom they are delivered is called,
the “bailee”.

7. SPECIAL RELATIONSHIP
3. LESSOR AND LESSEE (BANK- LESSOR
AND CUSTOMER- LESSEE):
Definition of Lessor, lessee, premium, and rent:
(1) The transferor is called the lessor,
(2) The transferee is called the lessee
The relationship between the bank and the
customer is that of the lessor and lessee. Banks
lease (hire lockers to their customers) their
immovable property to the customer and give them
the right to enjoy such property during the
specified period i.e. during the office/ banking
hours and charge rentals.
4. AGENT AND PRINCIPAL (BANK-
AGENT AND CUSTOMER- PRINCIPAL):
Banks collect cheques, bills, and makes
payment to various authorities’ viz., rent,
telephone bills, insurance premium, etc.,
on behalf of customers. . Banks also
abides by the standing instructions given
by their customers.

8. SPECIAL RELATIONSHIP
7. PLEDGER AND PLEDGEE
(BANK- PLEDGEE OR PAWNEE
AND CUSTOMER- PLEDGER OR
PAWNOR):
The relationship between customer and
banker can be that of Pledger and
Pledgee. This happens when the customer
pledges (promises) certain assets or
security with the bank to get a loan. In this
case, the customer becomes the Pledger
or Pawnor, and the bank becomes the
Pledgee or Pawnee.
8. MORTGAGOR AND MORTGAGEE
(BANK- MORTGAGEE AND
CUSTOMER- MORTGAGOR):
The transferor of interest in the property is
called a mortgagor and the transferee is
called a mortgagee. In this case, the
customer became the Mortgagor, and the
Banker became the Mortgagee.

9. SPECIAL RELATIONSHIP
9. AS A CUSTODIAN:
A custodian is a person who acts as a
caretaker of something. Banks take
legal responsibility for a customer’s
securities. While opening a D-Mat
account bank becomes a custodian.
10. AS A GUARANTOR:
Banks give guarantees on behalf of their
customers and enter into their shoes. A
guarantee is a contingent contract. As per sec
31, of Indian contract Act guarantee is a
“contingent contract”. A contingent contract is
a contract to do or not to do something, if
some event, collateral to such contract, does
or does not happen.

10. TERMINATION OF THE RELATIONSHIP
BETWEEN A BANKER AND A CUSTOMER:
It would thus be observed that the banker customer relationship is a transaction relationship. The
relationship between a bank and a customer ceases on:
(a) The death, insolvency, lunacy of the customer;
(b) The customer closing the account i.e. Voluntary termination;
(c) Liquidation of the company;

11. TERMINATION OF THE RELATIONSHIP
BETWEEN A BANKER AND A CUSTOMER:
(d) The closing of the account by the bank after giving due notice;
(e) The completion of the contract or the specific transaction;
(f) Lends to the borrower; or
(g) Invests the money so collected by way of deposits.

12. Rights of a customer
1. Right to fair treatment
This right prohibits banks from discriminating against customers on grounds of gender, age, religion, caste and
physical ability while offering products and services.
2. Right to transparency, fair and honest dealing
You can expect language in bank documents to be simplified and transparent.
3. Right to suitability
Despite several regulations, complaints related to mis-selling continue to plague the distribution space, particularly
in case of life insurance policies
5. Right to grievance redressal and compensation
The right to grievance redressal is at your aid if your bank fails to adhere to basic norms. The charter makes banks
accountable for their own products as well as those of third parties like insurance companies and fund houses.
4. Right to privacy
Banks are duty-bound to keep customers’ personal information confidential, unless the disclosure is required by law
or customers have given their consent.

13. Rights of a banker
Right to return deposit if not proper manner and time.
Right to return the cheque if not drawn properly or intime
or for some other reason.
Right to debit customer’s account for any charges/interest/
and commission if recoverable.
Right of lien- bankers lien, right of set'off etc.

14. Duties of a banker
Must credit the deposited amount to the customer’s account.
Must honour cheque if otherwise in order.
Must supply pass book Statement of account as demanded.
Must abide by the stop payment order.
Must abide by the instruction.
Must pay interest as per rule.
Must maintain secrecy of customer account if the banker’s not bound to disclose it under
certain conditions.
Must compensate the loss if it is incurred for bankers negligent.

15. Thank you