Commercial Banking

Banker & Customer Relationship

Who is Banker?
 A Banker is a dealer in capital or

more properly a dealer in money.  Banker is an intermediate party between the borrower and the lender.  He borrow from a party and lend to another party.

Dr. Herber Hart
 A banker or a bank is a person

carrying on the business of receiving money and collecting drafts for customers subject to the obligating of honoring cheques drawn upon them from time to time by the customers to the extent of the amounts available on their current account.

Banking Company Ordinance
 Banking has been define as

accepting for the purpose of lending or investment of deposits of money from the public repayable on demand or otherwise and withdrawals by cheques, draft, order or otherwise.

 Person who maintain a regular account with the

bank without taking into consideration the duration and frequency of operation of his account.  One should have an account.  One should deal with the bank in its nature of regular banking business.  One should deal with the bank without consideration of the duration and frequency of operation of his account.

General Relationship between Banker and Customer
 Customer brings the bread and

butter of the banker.  No banking is without a customer.  Customer act in various status and categories whereas the banker provide financial services in different ways.

Debtor & Creditor
 Customer deposit money with the bank then

bank become debtor and creditor is the customer.  The customer expect from the banker that the money deposited, remain safe at the bank and with the banker.  The money placed at the bank should have increase.  The position is reversed if the customer is advanced then the banker become the creditor and customer is the debtor

Principal & Agent
 The customer is Principal when it deposit

cash, cheques or draft for collection with the bank.  The bank act as an agent and get the funds credited to customers account by getting the proceeds against the instrument.  The bank as an agent of the customer purchase securities, paying insurance premium, installment of loans etc.

Bailer & Bailee
 Bailment is delivery of goods by one

person to another for some purpose on contract.  The banker provides safe custody facilities to their customer.  Bank accept valuables such as bonds documents or securities for safe custody on behalf of customer.  In all cases banks act as Bailee to customer on charging nominal fee for providing safe custody facilities

Mortgager & Mortgagee
Mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payment of money advance or to be advance by way of loan. When customer offer his property for mortgage to avail financial assistance the customer become the mortgager and banker act as mortgagee.

Banker is the Trustee
 Banker keep the customers valuable including

the documents and other items without physically seeing and in trust between the two.
 The banker act as the trustee and the customer

remain the owner to the valuables.

Executor- Attorney- Guarantor

The bank acts as an executor, attorney for its customer. The bank executes the standing instruction of its customers for making for making various periodic payments.

Customer Right & Duties
 Customer can deposit and withdrew funds

without any restrictions.  Customer avail financing facilities to the satisfaction of the banker.  Customer has the right to receive all the documents pertain to the activities of his account.  Customer has the right to sue the bank for compensation for a wrongful dishonor of his cheques

 Customer has a right to sue and demand

compensation if the bank fails to maintain the secrecy of his account.  Customer has the right to check his documents pertain to conduct of the account and all those document that signed for facilities.  Customer has the right to withdraw his amount during the banking hours and can see his banker during the time of banking

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