BANKER AND CUSTOMER RELATION

SUBMITTED TO:- VANDANA MAM

Before we take up the relationship that exists between a banker and his customer, let us understand the definitions of the terms banker and customer. The definition of the business of banking and a large number of activities permissible for banks are given in the banking regulation act, 1949. The relationship between a banker and his customer depends upon the nature of service provided by a banker in any specific situation.

DEFINITION OF BANKING

The term Banking is define as

accepting, for the purpose of lending of investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft. Order of otherwise [Section 5(b)].

DEFINITION OF CUSTOMER
According to Dr. Hart,B A customer is one who has an account with a banker or for whom a banker habitually undertakes to act. He must have some sort of an accountsaving, current or fixed deposits. The dealing must be of a banking nature.

Customers can be categorised as follow:

(a)
(b) (c)

(d)

Existing Customers: Who maintain account relationship with bank. Former Customers: Those who had account relationship with bank. Visitors: Third type of customers are those who do not having any account relationship with the bank but frequently visit branch for availing banking facilities such as for purchasing a draft, encashing a cheque, etc. Potential or Prospective customers: Potential customers are those who wanted to open an account with the bank. Potential customer will be deemed to be a `customer only after handed over the account opening form duly filled in and signed by him to the bank and the bank has accepted it for opening the account.

RELATIONSHIP BETWEEN A BANKER AND CUSTOMER

The relationship between a banker and customer exists with the services rendered by the banker. In our country, Service provided by the commerical banks can be classified into two categories. Traditional Services Modern Services

a) b)

TRADITIONAL SERVICES
1)
2) 3) 4) 5)

6)
7) 8) 9) 10)

Accepting deposits Granting loan and advances Collection of bills and other instruments Financial guarantee Undertaking safe custody of valuables Purchasing and selling of securities Issuing letters of credit, travellers cheques, circular notes etc. Collecting and supplying business information Providing foreign exchange facilities to customers Providing reports on the credit worthiness of customers

b) MODERN SERVICES
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16.

Automated Teller Machines (ATMs) Debit Cards Home Banking Automatic Clearing House (ACHs) Stored Value Cards Centralised Banking Solution (CBS) Online Payments E-money India Corporate Internet Banking Retail Internet Banking Online Shopping Depository Service Electronic Clearing Service and Electronic Funds Transfer (EFT) Online Trading Online Insta Remit-RTGS Online Air Ticket Booking

Termination of relationship by a customer

A customer can terminate the relationship with the bank on the following grounds: Change of place: a customer, due to change of place may like to close the account with the bank. Satisfaction: if the customer is not satisfied with the working of the bank. He may then close his account with the bank. Death of a customer: the account is also closed on the death of a customer. The outstanding balance is paid to the nominee of the customer. Mutual agreement: the customer collects his credit or pays off any debits.

Termination of relationship by a banker

A banker can close the account of the customer on the following grounds: Sufficient balances: if a customer repeatedly presents cheques after the business hours, or does not have sufficient balances but draws cheque on the account, the banker may after giving due notice to him, close his account. Death of a customer: the banker shall close the account on receiving the intimation of the death of a customer. Insolvency of a customer: after receiving the notice of insolvency of a customer, the bank cannot honor the cheque drawn by the customer. Court order: if a company is wound up by the order of the court, the banker then cannot honor the cheque of its customer.

RIGHTS AND DUTIES OF BANKER

The rights of the banker include: Right of general lien Right of set-off Right of appropriation Right to charge interest, commission etc. Right not to produce books of accounts Right to close account

DUTIES OF A BANKER
Duty to honors the cheque Duty to maintain secrecy and disclosure of information required by law Duty to keep a proper record of transactions Duty to abide by the instructions of the customer Duty while dealing in foreign exchange Collection of bill Proper services Security of articles

RIGHTS OF CUSTOMER
Rights to repayment Rights to interest on deposits Rights to close account Rights to draw cheques

DUTIES OF CUSTOMER

Interest rate related complints Penal interest Service charges Loan documents; return of securites Recovery of bank dues Credit cards ATMs TDs Cheque collection