Banker and Customer relationship

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How the Banker and Customer relationship exist ?

The legal relationship exist between Banker and customers as through various activities and service such as:-

  • By a contract i.e. opening on account in the bank by offer and acceptance.
  • The person who provides banking services is called banker.
  • The person who takes and enjoy services is known as customer.
  • In section 5(b) and section 6, Banking regulations act 1949.
    • Section 5(b) “banking” means the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise.
  • Section 6 Forms of business in which banking companies may engage.

General relationship between Banker and customers

Creditor- debitor

  • Creditor- debitor
    • primary relationship
    • customer- bank- in case of loan.

Trustee- beneficiary relationship

  • Trustee- beneficiary relationship
    • facilities like lokers, protection of assets and properties of the customer, saving account. Based on the bonafied intention.

Principle – agent

  • Principle – agent
    • case: L.Loyds banks v/s administration general of burma.
      • banker has a right to general lien.

Leasor – leasee

  • Leasor – leasee
    • section 105 of transfer and property act, which deals with the concept of lease.
    • transfer of right to enjoyment of a property for a specific time a certain consideration.

Pledger-pledge

  • Pledger-pledge
    • gold loan
  • Bailor-bailee
  • Mortgager-mortgagee
  • Investment (advisor-client)

Contract of indemnity

  • Contract of indemnity
    • Indemnity holder-indemnifier
    • Example: when the transaction fails due to some cases of the bank, the bank makes good from the loss.

Hypothecation

  • Hypothecation
    • Example:- Car loan, Auto riksha loan etc.
    • Means the possession enjoys by borrower, and legal ownership by lender.
      • In this hypothecation a Movable property given as a security , such as car, auto riksha, or any other Movable property.
      • In the case of default by the borrower, the lender can exercise his ownership rights to seize the asset.

All above mentioned are the contracts between banker and customers.

When banker and customer’s relationship come to an end

  • Objective achieved in general relation
  • Liquidation/ winding up
  • Death of customer.
  • Lunacy of customer
    • Craziness, Folly, Foolery, Madness, Mania, and Stupidity.
  • Voluntary closure
  • By the action of RBI, government or any other statutes.

Special relation between Banker and customers

To extent it is also arises from contract, but, RBI provides this to the bank and customer’s relations.

Example: Honouring the cheque, maintain the record, confidentiality( safety and security of the customer).

There is contract between customer and bank where customer and bank relation is very complier then they are specified customer. like, Minor, disable, married women.

Kinds of special customers to Banks

Minors special customers to Bank

  • No liability, bank must be very carefull dealing with minor.
  • Always bank open saving account not current account.
  • In case If the guardian died first then minor get to operate by 12 year old.
  • In case If minor died first then guardian operate.
  • Saving account
    • joint account with guardian
    • sole account operated by guardian.

Married women special customers to Bank

  • By own then open it else saving or current., by opening the current , bank has to check that they have personal assets.
  • to with husband if wife come they can open the joint account, together.
    • there is condition women will be liable for her liabilities
    • if the husband give freely consect to pay loan then husband is liable.
    • and women is taken loan for her basic liablity.

Joint account special customers to Bank

  • On opening the account bank must take both party in frame.
  • on giving to the parties on loan paper both party should be signed.
  • company account
    • on opening the account of company all core manager will have to sign.
    • on loan all person of a company key manager person independent directors, director all have must sign in loan paper.

Hindu undivided family special customers to Bank

  • on opening account in HUF karta have to sign in the paper.
  • on getting loan karta and all co-parcener to sign on the loan paper.

Co-operative society special customers to Bank

  • Not applicable in assam and orissa.
  • account can be open , but for loan is managment have there 2/3rd majority of co-operative society and all management to give there physical presence towards bank then only loan will be given to the co-operative society.

Partnership firm special customers to Bank

  • Either partnership firm register they have to submit partnership agreement to make for bank for opening account.
  • for getting loan in partnership firm registered or non-registered they have all partner have signs on loan paper if on the spot transaction was happening then they have to give personal presence.

Pradanashi women special customers to Bank

  • saving account can be open as they come to bank but only for saving account.
  • loan can be sanctioned only seeing their assets.

Illiterate persons special customers to Bank

  • Need of thumb impressions for opening an account.
  • no loan will be provided on thumb impression personal presence is required to get loan or withdrawl of money.
  • Retina impressions.

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