23-02-2013, 09:34 AM
BANKER AND CUSTOMER RELATION
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Before we take up the relationship that exists between a banker and his customer, let us understand the definitions of the terms ‘banker’ and ‘customer’. The definition of the business of banking and a large number of activities permissible for banks are given in the banking regulation act, 1949. The relationship between a banker and his customer depends upon the nature of service provided by a banker in any specific situation.
DEFINITION OF BANKING
The term ‘Banking’ is define as “ accepting, for the purpose of lending of investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft. Order of otherwise” [Section 5(b)].
DEFINITION OF CUSTOMER
According to Dr. Hart,B “A customer is one who has an account with a banker or for whom a banker habitually undertakes to act.
He must have some sort of an account-saving, current or fixed deposits.
The dealing must be of a banking nature.
Customers can be categorised as follow:
Existing Customers: Who maintain account relationship with bank.
Former Customers: Those who had account relationship with bank.
Visitors: Third type of customers are those who do not having any account relationship with the bank but frequently visit branch for availing banking facilities such as for purchasing a draft, encashing a cheque, etc.
Potential or Prospective customers: Potential customers are those who wanted to open an account with the bank. Potential customer will be deemed to be a `customer’ only after handed over the account opening form duly filled in and signed by him to the bank and the bank has accepted it for opening the account.
TRADITIONAL SERVICES
Accepting deposits
Granting loan and advances
Collection of bills and other instruments
Financial guarantee
Undertaking safe custody of valuables
Purchasing and selling of securities
Issuing letters of credit, travellers cheques, circular notes etc.
Collecting and supplying business information
Providing foreign exchange facilities to customers
Providing reports on the credit worthiness of customers
RIGHTS AND DUTIES OF BANKER
The rights of the banker include:
Right of general lien
Right of set-off
Right of appropriation
Right to charge interest, commission etc.
Right not to produce books of accounts
Right to close account
DUTIES OF A BANKER
Duty to honors the cheque
Duty to maintain secrecy and disclosure of information required by law
Duty to keep a proper record of transactions
Duty to abide by the instructions of the customer
Duty while dealing in foreign exchange
Collection of bill
Proper services
Security of articles