Liability of head office,

Before high improvement of Information and Communication Technology (ICT), the principal
of bank separateness barred the liability of the head office for the any wrong done by its branch
to customer simply because the branch termed to be self entity while the improvement of the
Information and Communication Technology (ICT)overlap the principal and no longer applied in
modern banking system processes, whereby any wrong done by a branch directly make the head
office to be liable, in hence the principal of bank separateness enunciated in the case of
Joackimson v. Swiss Bank Corporation to be overtaken. Branch failure is one area where the
common law courts have sometimes rejected the principle of branch separateness. Instead they
have applied the ordinary rule that the bank as a whole is liable for the debts of any of its offices
not separately incorporated.(In principle the head office would also be liable for separately
incorporated branches or affiliates if it had guaranteed their liabilities.) The problem has mainly
arisen where a bank's branches abroad have been closed because of civil war or have been
expropriated, or a moratorium has been imposed by the host government on their repayment of
deposits. Depositors have then claimed against the bank elsewhere. Such claims are, of course,
subject to contract: for example, a contract of deposit could expressly limit claims to the
particular branch which entered it and subject the deposit contract to the local law and the
exclusive jurisdiction of the local courts. As a result of a series of court decisions making the
head offices of American banks liable in these circumstances federal legislation was enacted in
1994—followed by New York legislation—to give them statutory protection against such claims,
where they have not expressly agreed in writing to repay deposits made with their foreign
branches. Customers henceforth have to bear certain sovereign and other risks if they bank with
American banks abroad. The statutory protection does not extend to non-payment because of
illiquidity or insolvency.1

Transaction

Also the system of deposit and withdraw money become to be affected or overlap the principal
of bank separateness, whereby prior the advancement of Information and Communication
Technology it was mandatory to withdraw at the place where money deposited in system of
writing demand to the banker, while the advancement of the technology such as E-banking

1
Principle of Banking Law(2002),Oxford University
system brought changes and overtake the principal of bank separateness in term of transaction in
various ways as follows:

Automated Teller Machines (ATMs) provide many more services than simple dispensing cash.
ATMs verify checking account balances and obtain statements. The issue of an ATM/debit card
can also be interpreted as overriding this requirement by a contrary agreement. The Singaporean
Court of Appeal has in fact suggested that ‘in the light of modern technological and business
development it is doubtful whether the principle of banking law that a demand for payment must
be made at the branch where the account is kept in order to found a cause of action is still good
law. In this context it is respectfully submitted that greater innovation by courts to cater to
developments in modern day banking is preferable.2 Thus, the principle that the bank is not liable
to pay the customer the full amount until he demands payment from the bank at the branch at
which the current account is kept, no doubt this principle to the great extent is overtaken by
technological development.This technology allows banking services to be provided through a
group of networked bank branches, allowing the banks’ customers to have access to their funds
and carry out transactions from any branch in the network.

In case of Sim banking also seems to overtake the principle of bank separateness, since a
customer wherever locate he or she may make demand for transaction by his or her mobile phone
network .

2
Ibid