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The presentation was on the relationship between the banker and the customer. A
banker is a person who is doing the banking business. There is no clear definition for
banking as it performs multifarious functions.
A customer is a person who maintains an account with the banks. He must have some
sort of account. Even a single transaction may constitute him as a customer.
Frequency of transactions is anticipated but not insisted upon. The dealings must be of
banking nature.
1. Duty of secrecy
2. Duty to honour cheques.
3. Duty to submit periodical statements.
4. Duty to collect cheques/bills.
When a customer deposits money with his bank, the customer becomes a
lender and the bank becomes a borrower. The money handed over to the bank
is a debt. The relationship between the banker and the customer is that of a
debtor and a creditor. The features of this relationship are:
The money is lent to the bank and the bank is free to use it in a way most
beneficial to it. The bank is not bound to keep such money intact. It is not
bound to return the notes and coins of the same denomination as it was
deposited.
Demand of payment should be made by the customer. The banker is not
required to repay the debt voluntarily, unlike in the case of commercial debt.
Demand should be made at the branch where the account exists. Except in the
case of drafts, traveler’s cheque, ATM card etc.the branch is not required to
make the payment to the customer elsewhere.
The demand should be made in proper manner.
For the amount deposited , the creditor (customer) does not call for any security
from the debtor (bank)
Eg: when customer deposits money with the bank the bank becomes creditor
as the bank borrows it from the customer and here the customer is a debtor as it
lends money to the bank.
2. Creditor-Debtor
When the bank lends money to the customer, the customer is the borrower and
the bank is the lender. The relationship between the banker and the customer
is therefore that of a creditor and debtor.
Eg: when the bank provides loan to the customer the bank becomes the debtor and the
customer is a creditor as the customer owes money to the bank
If a customer keeps certain valuables or securities with the bank for safe-keeping
or deposits a certain amount of money for a specific purpose, the banker besides
becoming a bailee, is also a trustee.
The bank provide safe deposit lockers to the customers who hire them on lease
basis. The relationship therefore, is that of lessor and lessee. In certain banks,
this relationship is termed as licensor and licensee. The bank leases out the
space for the use of clients. The bank is not responsible for nay loss that arises
to the lessee in this form of transaction except due to the negligence of that
bank.
The right of setoff- is nothing but combine the two or more accounts of a
customer of the customer. If the customer have two or more account and in
case of absence of agreement the banker can exercise has right of set off
a. The two or more accounts must be in the name of same customer
b. There must be same capacity
c. There must be same bank ,though different branches
d. One account should show debit balance and other should show a credit
balance
e. The debt must be manual
f. The amount of debit should be certain one
Thus set off is adjustment of debit balance with that of credit balance
Right to close an account
The banker has the right to appropriate the money deposited by a customer
to any one of the loan account due by him. The appropriation arises when
the customer has more than one account one showing the debit balance and
the other with a credit balance. The customer is given the first option to
decide the account to which the amount should be credited. If the customer
fails to indicate his choice then the banker has every legal right to credit the
amount in any one account of that customer .