Banker and customer Relationship

Banker and customer Relationship

The relationship between the banker and the customer arise out of the contract entered in between them. The relationship between the banker and customer is vital. The relationship start right from the moment an account is opened and it come to an end immediately on closure of the account. This the relationship two of type:

• General relationship 
•     Special relationship.

A.    General Relationship

       The General relationship between the banker and customer can be classified into two type :

•  Primary relationship

•  Secondary relationship, show the below:

It will be inform of

       a.       Banker agent : a bank act as an agent of his customer and perform the number of agent 

function for the convenience of his customer. These are below:

1.      Purchase and sell securities.

2.      Collection of income and profit.

3.      Making periodical payment instruction by his customers.

4.      Collecting interest and dividend on securities lodge by his customer.

b.      Banker as Trustee: ordinary the banker is the debtor of his customer in respect of the deposits    mad by the latter, but in certain circumstance he act as the trustee also. The customer may be request the banker to keep his valuable in safe vault or once may deposit with the some amount and can request the bank o manage that fund for the special purpose, which the bank does.

c.       Banker as bailed: as the bailed, the banker should protect the value in his custody with the responsible care. If the customer suffered any loss due to negligence of the banker protecting the valuable, banker is liable to pay such loss. If any loss is incurred due to the situation beyond the control of the banker, he is not liable for penalty.

B.     Special relationship: The special relationship between banker and customer take the form of right which the banker can exercise and the obligation which he give the good service to the customer and perform it for them. Following are the right enjoyed by the banker with regard to the customer account.

1.      Right of general lien: once of the important right enjoyed by the banker is that the general lien. The liens may be defined as the right to retain property belonging to the debtor. In cause the lien exercise by the trader on his customer’s goods. He has no right to use the goods nor any right to sell them. All that he can do is to the retain the goods until the obligation are cleared.

2.      Right to appropriate payment : whenever the customer deposits fund into his account in the bank. It is the duty to inform the bank to which the account they are to be the credit ( provide the customer has more than one account at the same bank). Once the customer give that the specific direction regarding appropriation. The bank has no right to alter them. It is his bounden duty to carry out the instruction of the customer. The right of appropriation is to the exercise by the customer at the time of deposit fund and not later.

3.      Right to charge an interest, incidental charge: As a creditor, the banker has the implied right to charge interest on the advance grant to the customer. It is charger on half yearly or quarterly basic and generally compound interest is use. The interest is directly debited, charge to the customer account and then the interest is calculate on the principle with interest.

4.      Right to close account: Banker also enjoys the right to close his customer’s account and discount operations.  These process terminates the relationship between banker and customer. This is done only situations where the continuation of relationship seems unprofitable to the banker.