Special Relationship between Banker and Customer | Gr8AmbitionZ
General Relationship of Banker and Customer. Banker as an Attorney: The customer may grant a special power of attorney to his banker to. The general legal relationship of bank and customer is contractual As such, an investment adviser stands in a special relationship of trust and. The dealing between the banker and customer must be of the nature of banking business. The general relationship between banker and customer.
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.
- Banking & Insurance
- Special Relationship between the Banker and Customer
- Relationship between Banker and 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. Some banks even say that they have generation-to-generation banking relationship with their customers. The banker customer relationship is fiducial relationship.
The terms and conditions governing the relationship is not be leaked by the banker to a third party. The relationship between a bank and its customers can be broadly categorized in to General Relationship and Special Relationship. Thus the relationship arising out of these two main activities are known as General Relationship. In addition to these two activities banks also undertake other activities mentioned in Sec. Relationship arising out of the activities mentioned in Sec.
As such, the relationship is that of a debtor and creditor. It is a general relationship between banker and his customer. Some important points to note in Debtor-Creditor Relationship are, Image Source The banker is the debtor of the customer with the obligation to honor his customer's cheque drawn upon his balance. When the banker lends money to his customer, the customer becomes the debtor and the banker, the creditor. Banker as an agent: Generally, bankers render agency services for their customers.
They pay insurance premium, electricity bills, taxes, etc. They collect interest on investments, dividends on shares, collect cheques, etc. Bankers act as per the 'Standing instructions' of their customers. For these services, the banker charges a nominal commission from the customer.
The banker, by providing these services acts as an agent and the customer who gives the standing instructions, acts as a principal.
Special Relationship between Banker and Customer
Hence, the relation of banker and customer is that of agent and principal as far as these services are concerned. Under a commercial debt, the liability of the debt arises only at the maturity of the debt i. The customer must demand in writing for repayment, only then, will the payment be made to the customer. Banker as a bailee: This happens when the banker gives a sale deposit locker to the customer.
So, the banker will become the Licensor, and the customer will become the Licensee.Banker customer Relationship
Relationship of Bailor and Bailee The relationship between banker and customer can be that of Bailor and Bailee. Bailment is a contract for delivering goods by one party to another to be held in trust for a specific period and returned when the purpose is ended.
Bailor is the party that delivers property to another. Bailee is the party to whom the property is delivered. So, when a customer gives a sealed box to the bank for safe keeping, the customer became the bailor, and the bank became the bailee. Relationship of Hypothecator and Hypothecatee The relationship between customer and banker can be that of Hypothecator and Hypotheatee.
This happens when the customer hypothecates pledges certain movable or non-movable property or assets with the banker in order to get a loan.
Banking: LESSON 10 BANK CUSTOMER RELATIONSHIP: CONCEPT AND CASES
In this case, the customer became the Hypothecator, and the Banker became the Hypothecatee. Relationship of Trustee and Beneficiary A trustee holds property for the beneficiary, and the profit earned from this property belongs to the beneficiary. If the customer deposits securities or valuables with the banker for safe custody, banker becomes a trustee of his customer.
The customer is the beneficiary so the ownership remains with the customer. Relationship of Agent and Principal The banker acts as an agent of the customer principal by providing the following agency services: Buying and selling securities on his behalf, Collection of cheques, dividends, bills or promissory notes on his behalf, and Acting as a trustee, attorney, executor, correspondent or representative of a customer.
Banker as an agent performs many other functions such as payment of insurance premium, electricity and gas bills, handling tax problems, etc. Relationship of Advisor and Client When a customer invests in securities, the banker acts as an advisor.
The advice can be given officially or unofficially.