Banking: LESSON 10 BANK CUSTOMER RELATIONSHIP: CONCEPT AND CASES
“Trust” plays an important role in building healthy relationship between a banker and customer. Definition of a 'BANKER'. The Banking Regulations Act (B R Act). Feb 2, The Banker Customer Relationship According to J.W. Gilbert, to Dr. Herbert L. Hart, banker carries the definition of a person carrying on a. In this banker and customer relationships; both parties have some obligations and rights. The definition of banking describes the following features of banking.
Types of the Relationship between Banker and Customer The relationship between banker and Customer are categorized into three; Relationship as debtor and creditor.
Banker as a trustee.
A depositor remains a creditor of his banker so long as his account carries a credit balance. Relationship with the customer is reserved as soon as the customer account is overdrawn. Banker becomes a creditor of the customer who has taken a loan from the banker and continues in that capacity fills the loan is repaid.
Banker as a Trustee Ordinally a banker is a debtor of his customer in the report of the deposit made by the letter but in certain circumstances, he acts as trustee also. A trustee hold holds money or asset and performs certain functions for the benefit of some other person called the beneficiary.
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For example; If the customer deposits securities or other values with the banker for the safe custody, the letter acts as a trustee of his customer. Banker as an Agent A banker acts as an agent of his customer and performs a number of agency functions for the conveniences of his customer.
For example, he buys or sells securities on behalf of his customer, collects cheques on his behalf and makes payment of various dues of his customer. Through the primary relationship between a banker and his customer is that of a debtor and a creditor or vice versa, the special features of this relationship as a note above impose the following additional obligations on the banker.
The obligation to honor the cheques The deposit accepted by a banker is his liabilities repayable on demand or otherwise. According to section 31 of the negotiable instruments.
Relationship between Banker and Customer
Right to charge interest and commission: A banker has a right to charge interest on loans and advances. A bank also has the right to charge a commission for services that it renders to clients. Right to close the account: The banker has the right to close an account, if it is of the opinion that an account is not being operated properly. It may do so only by sending a written intimation to the customer. The most important duty of a banker is to help their clients with all their financial queries and needs.
- Special Relationship between the Banker and Customer
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The banker may do so by meeting their clients in person or speaking with them over the phone. Following are the duties of a banker: The banker should assist and guide them to meet their financial goals.
Documents such as loan applications, bank statements and so on, must be reviewed and filed by the banker. A banker should gather financial information from both new and existing clients.
Relationship between Banker and Customer
Merchants started to store their gold with the goldsmiths of Londonwho possessed private vaults, and charged a fee for that service. In exchange for each deposit of precious metal, the goldsmiths issued receipts certifying the quantity and purity of the metal they held as a bailee ; these receipts could not be assigned, only the original depositor could collect the stored goods. Gradually the goldsmiths began to lend the money out on behalf of the depositorwhich led to the development of modern banking practices; promissory notes which evolved into banknotes were issued for money deposited as a loan to the goldsmith.
Since the promissory notes were payable on demand, and the advances loans to the goldsmith's customers were repayable over a longer time period, this was an early form of fractional reserve banking.
The promissory notes developed into an assignable instrument which could circulate as a safe and convenient form of money backed by the goldsmith's promise to pay,  allowing goldsmiths to advance loans with little risk of default.
The Bank of England was the first to begin the permanent issue of banknotesin The Rothschilds pioneered international finance on a large scale, financing the purchase of the Suez canal for the British government.Banker vs customer
A BC one-third stater electrum coin from Lydiawhere gold and silver coins were used for the first time Etymology[ edit ] The word bank was borrowed in Middle English from Middle French banque, from Old Italian banco, meaning "table", from Old High German banc, bank "bench, counter".
Benches were used as makeshift desks or exchange counters during the Renaissance by Jewish  Florentine bankers, who used to make their transactions atop desks covered by green tablecloths.
See the relevant country pages under for more information. In most common law jurisdictions there is a Bills of Exchange Act that codifies the law in relation to negotiable instrumentsincluding chequesand this Act contains a statutory definition of the term banker: Although this definition seems circular, it is actually functional, because it ensures that the legal basis for bank transactions such as cheques does not depend on how the bank is structured or regulated.