BANKER & CUSTOMER

Module 3
 BANK & BANKER

 BANK- A Financial Institution which accepts deposits

from the public , makes funds available to those who
need them, helps in the remittance of money from one
place to another and functions as per the instructions
of Central Bank of the country
BANKER- any person or institution involved in
banking business
Customer-
RELATIONSHIP BETWEEN
BANKER AND CUSTOMER

 Classified into –General Relationship –Special Relationship

 •General : Debtor and Creditor, Creditor and Debtor, Agent and

Principal, trustee and beneficiary, Pledgee and Pledger, Bailee and
Bailor, Advisor and Client

 •Special : Rights of a banker, Obligations of a banker

 1. DEBTOR AND CREDITOR
 •Customer opens an account, deposits money

 –Banker : Debtor & Customer : Creditor

 •Money becomes bank’s property ; and has the right to

use the money ; not bound to inform the customer the
manner of use ; pays when the depositor demands –in a
proper manner during working days ; customer has to
follow terms and conditions of the bank.
2. CREDITOR AND DEBTOR

 •Lending money –one of the primary activity ; resources

mobilized by banks –used for lending;
 - Banker : Creditor & Customer : Debtor
 •Borrower provides documents and offers security to the
bank.
 •A deposit/loan account is opened.
 •Banks provide additional related services : makes the
relationship more wide and complex
 3. AGENT AND PRINCIPAL
 –Agent acts for and on behalf of the principal

 •Banks collect cheques, bills and make payment to various

authorities on behalf of its customers.

 •Also carry out standing instructions given by its customers

 •Charges for these services

4. TRUSTEE &BENEFICIARY
 –Trustee is an entity who take care of assets and
perform certain functions for the gain or benefit of the
other person (beneficiary)


 5. BAILEE AND BAILOR
 –Bailment: A contract for delivering goods by one party to
another to be held in trust for specific period and returned
when the purpose is ended ; when customer gives valuables
to banker for safe keeping
 SPECIAL RELATIONSHIP
 Obligation to honour cheques

 Maintain secrecy of customer’s account

 Right of general Lien * Right to set off accounts

 Appropriation of payments * Bankers Books of Evidence

 Charge compound interest * Charge incidental charges

 Levy commitment charges * Law of limitation Act

 Garnishee order
TYPES OF ACCOUNTS

NRI Accounts
CHEQUE
 TYPES OF CHEQUES

8. Blank Cheque
9. Mutilated Cheque
 MICR CHEQUES
 This is known as magnetic ink character recognition. This code is printed at the
bottom of each cheque provide to the customers. This is a nine digit numerical
code. Once the cheques are accepted for collection by the branch of any bank, it is
routed through a scanner and the scanner reads the above information
instantaneously and this is used for clearing through MICR centres
BANK DRAFT
CROSSING OF CHEQUES
TYPES OF CROSSING
 DISHONOUR OF CHEQUES
Non payment of money by the drawer when the Cheque is presented

Reasons: Pg 3.35
ENDORSEMENT OF CHEQUES
TYPES OF ENDORSEMENT
1. BLANK ENDORSEMENT
2. FULL ENDORSEMENT
3. RESTRICTIVE ENDORSEMENT
4. SANS RECOURSE
ENDORSEMENT
5. SANS FRAIS ENDORSEMENT
6. PARTIAL ENDORSEMENT
7. CONDITIONAL ENDORSEMENT
2. FULL ENDORSEMENT