8-Banker Customer Relationship

8/10/2019 8-Banker Customer Relationship

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Banker Customer Relationship

Dr.S.C.Bihari

Presented by

I BS,HYDERABADI B S, HYDERABAD


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Banker Customer Relationship

The position is either a creditor or a debtor

depending upon whether the bank has lent

money or accepted deposits.

Various transactions gives rise to different

relations.


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TRANSACTION-RELATIONSHIP Transaction Bank Customer

Deposits in the bank Debtor Creditor

Loan from bank Creditor Debtor

Locker Lessor Lessee

Safe custody Bailee Bailor

Purchase of draft Debtor Creditor


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TRANSACTION-RELATIONSHIP

Transaction Bank Customer

Payee of draft Trustee Beneficiary

Cheque Collection Agent Principal Pledge Pawner Pawnee (Pledger)

Mortgage Mortgagee Mortgagor

Standing instruction Agent Principal


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TRANSACTION-RELATIONSHIP

Transaction Bank Customer

Sale / purchase of securities on behalf of

customer Agent Principal

Money deposited but instructions not given

for its disposal Trustee Beneficiary

Shares given for sale Agent Principal

Assignment Assignee Assignor

Hypothecation Hypothecatee Hypothecator


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Bankers Obligation

Banks have an obligation to honor chequesdrawn on it if the customer has sufficient

funds.

The obligation is extinguished by a garnisheeorder from the court.

If a cheque is dishonored without

justification, banks are liable to compensate

the customer for injury to his credit.

The bank is obliged to return dishonored

cheque to the customer.


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Bankers Obligation contd.

Banker is bound to act according to thedirections given by the customer.

Banks are liable for thefts or embezzlement

by employees committed during the courseof banks business.

Banks are obliged to provide service to itscustomers (even if the customer has not paiddues).

Banks are obliged to maintain secrecy ofclient accounts.


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The banker may give information:

When he is statutorily required to do so.

Where disclosure is under compulsion oflaw.

With express or implied consent of thecustomer.

To other banks. This is known ascommon courtesy between banks.

In this case apart from making generalstatements no specific information aregiven.


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The banker may give information:

If it is in the banks interest.

If the disclosure is in public/national

interest. There is a duty to the public to

disclose.

Only facts that are evident arerevealed, avoiding opinions.


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Customers Obligations

Repay amounts drawn from bank.

Pay bank charges.

Take due care in drawing cheques.

Inform bank without delay if he/shediscovers that another person has forged

his/her signature.

If he/she does not do so, he/she is estoppedin future from claiming cheques as forgeries

if the bank paid them in good faith and

without negligence.


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Bankers Rights

Combine Accounts

A banker can combine one or more accounts

kept by a customer .

However, a banker cannot combine acustomers personal account with a joint

account.

The right to combine two or more accounts isnot applicable to contingent or future debts.


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Bankers Lien

The bankers lien gives him the right to sell

to realize his dues in case of default.

The right can be exercised on the customers

property only and not on joint accounts the

debtor has.

The bankers right of lien extends over goods

and securities handed over to the banker. The Banker can draw upon them to liquidate

a general balance due from the customer.


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Right of set off

This enables the banker to set off a debt owned to

them by a customer before the latter recovers a debt

due to him from the bank.

There is an automatic right of set-off on: Death of the customer.

When a customer becomes insolvent.

Garnishee order issued on the customersaccount by court.

But, the accounts must be in the same name

and in the same right.


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Right of Appropriation

If customers have more than one a/c or loan, thecustomer can direct the banker against which

debt the payment should be appropriated.

If the customer does not advise the bank, thebank can exercise the right and apply it in

payment of any debt.

The banker can even apply it against time barred

debts.

However, once an appropriation has been made

it cannot be reversed.


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Right to charge interest

As a creditor the banker has the implied right to

charge interest on the advances granted to the

customer.

Bankers normally charge interest monthly now-a-days.

Right to charge service charges

Banks charge customers if their balance is

below a stipulated amount, for the usage of

ATM (Automated Teller Machines) and

withdrawals.


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Right to charge service charges

Banks are required to display details of thevarious service charges on their website andat their offices / branches .

Bank should advise customers at least amonth before it proposes to change its rates.

Banks charge lower charges for individuals,senior citizens, pensioners, rural customers

and special customers as compared tocompanies and institutions.


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Code of Banks Commitment to

Customers

The Banking Codes and standardBoard of India (BCSBI) is anindependent watch dog to monitor and

ensure the adherence of BankingCodes and Standards by the banks .

This is a voluntary code, which sets

minimum standards of bankingpractices for banks to follow whiledealing with customers.


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Termination of Relationship

The banker customer relationshipterminates on:

Voluntary termination; Death of the customer;

Bankruptcy of the customer;

Liquidation of the company;

Insanity of the customer;

Garnishee order.


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Thanks for your attention

Dr. S. C. Bihari Tell:Tell:0841708417--236660 to 65(Extn: 6214)236660 to 65(Extn: 6214)

Mail:[email protected]
mailto:Mail:[email protected]:Mail:[email protected]

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8-Banker Customer Relationship

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