BANKER - CUSTOMER RELATIONSHIP

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BANKER - CUSTOMER RELATIONSHIP
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Banker Customer Relationship

• What is a Banking?
• Banking means the accepting, for the purpose of
  lending or investment, of deposits of money from
  public, repayable on demand or otherwise, and
  withdrawable by cheque, draft, order or
  otherwise
• Any company doing banking business on these lines
  will be termed as a bank and individuals involved
  are the bankers.

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Banker Customer Relationship

• Different activities undertaken by a bank.
• Borrowing and lending of money.
• Collecting Negotiable instruments on behalf of
  the customer.
• Dealing in foreign exchange.
• Granting Letter of Credit to customers.
• Providing Safe custody facility / lockers.

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Banker Customer Relationship

• Acting as an agent on behalf of the customer.
• Underwriting dealing in stocks, shares on
  behalf of the customer.
• Issuance of Guarantees.
• Dealing with property that may come to it as
  security in satisfaction of its outstanding
  claims.
• Offering different value added services like ATM,
  Online banking and internet banking.
• Issuance of currency notes.

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Banker Customer Relationship

• Qualification of a Customer.
• He should not be a minor.
• He should be a person of a sound mind (he
  understands the contract at the time of making
  it).
• He shall not have been debarred from entering
  into any contract under any law.
• He deposits money and bank accepts it.

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Banker Customer Relationship

• Rights Duties of the Customer.
• RIGHTS.
• To draw cheque against his credit balance.
• To get passbook, cheque book, and periodic
  accounts statement.
• To make bank liable to correct any over crediting
  or over debiting.
• To sue the bank for the cost, loss, and damages
  when his cheque is wrongfully dishonored.
• To sue the bank if the secrecy of his account was
  not maintained.

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Banker Customer Relationship

• DUTIES.
• To present the cheque for payment or collection
  with in the banking hours.
• To insure that cheques should not be Stale or
  Post dated.
• To keep his cheque book / ATM in safe custody.
• He should draw the cheque in a manner that no
  alteration can be done for fraud.

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Banker Customer Relationship

• Different types of Banker Customer Relationships.
• As Creditor and Debtor.
• When customer deposit money, he becomes creditor
  and bank as debtor by accepting and then further
  utilizing it.
• As Bailor and Bailee.
• When a person gives goods to some one for some
  purpose.
• When banks provide safe custody facility to
  customers to keep their valuable belongings.
• Customer is bailor and bank is bailee

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Banker Customer Relationship

• As Principal and Agent.
• When a banker performs Agency service he becomes
  Agent of his customer.
• This may include collection of cheques and other
  instruments or payments on behalf of the customer
  with his standing instructions.

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Banker Customer Relationship

• As Pawner/Pawnee, Mortgagor and Mortgagee.
• When a customer pledges goods and documents with
  the bank as security for an advance, he becomes
  the Pawner and the bank becomes Pawnee.
  Similarly, when advance to the customer is made
  against security of immovable property, the
  relationship becomes that of Mortgagor and
  Mortgage.

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Banker Customer Relationship

• Special feature of Relationship.
• The following are special features of this
  relationship.
• Obligation to honor cheque.
• It is obligation on the bank to honor the
  cheques drawn on him by his customer as long as
  his balance is sufficient, provided the cheque is
  not Stale or Postdated and that there is no
  prohibiting order of any court against the
  account of the customer.

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Banker Customer Relationship

• Right to Lien.
• Lien means right to retain the property
  belonging to another until the debt due from the
  latter has been paid
• Bank has a right of Lien on any kind of
  securities deposited by the customer.
• Following conditions do apply for exercising
  right of Lien
• The property of the customer must come into the
  hands of the banker.
• There should not be any entrustment for special
  purpose.

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Banker Customer Relationship

• Banker should obtain possession lawfully.
• There should be no agreement inconsistent with
  the right of Lien.

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Banker Customer Relationship

• Right of Set Off.
• Set-off means adjusting debit balance against
  credit balance in other account or accounts of
  the same borrower
• It is a legal right of the banker.
• Normally, banks get written authority from the
  customer in advance for this so that there is no
  need of notice.
• Credit balance of one account of the customer can
  be used to adjust the debit balance in another
  branch.

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Banker Customer Relationship

• For partnership, the personal account of the
  partner cannot be used to set-off the firm
  account but for sole proprietor it can be used.
• The balance of the single account cannot be
  set-off for any joint account un till otherwise
  agreed by the joint account holders.
• Individual account can be used for set-off for
  Trust account but Trust account cannot be used.

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Banker Customer Relationship

• The Bankers duty of Secrecy.
• The banker customer relation is a confidential
  agreement/contract so it is the duty of the
  banker not to disclose any kind of information to
  third party who so ever he/she may be.
• It include both personal information and the
  information of the status of the account.

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Banker Customer Relationship

• Banks can disclose information in the following
  cases.
• Under Compulsion of Law.
• Duty to public to disclose.
• In the Interest of the bank.
• Express or Implied Consent of the customer.
• Common courtesy to the other banks.

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Banker Customer Relationship

• Termination of Relationship.
• Since banker-customer relationship is a
  contractual one, it may be terminated by any one
  of the two by serving a notice to other.
• Notice by the customer.
• The following are reasons when customer serves
  notices to the bank for termination of the
  contract.

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Banker Customer Relationship

1. Due to the change in residence.
2. Unsatisfactory services by the bank.
3. Death of the customer.
4. Shifting of account to the other branch/bank.
5. Changing of account nature.
6. To close accounts for special purposes like
   salary accounts.

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Banker Customer Relationship

• Notice by the Banker.
• Banks normally serve notice to the customer
  before closing their accounts for any reason.
• This notice can be served due to many valid
  reason like
• Insufficient balance in the account.
• Presenting cheques after business hours.
• Having very less balance for a long time.