Banking: LESSON 10 BANK CUSTOMER RELATIONSHIP: CONCEPT AND CASES
The strength of the relationship between the banker and its customer will go a banker-customer relationship and in ensuring its survival; management has a. Chapter 4. Banker and Customer Relationship. Introduction. Before we take up relationship that exists between a banker and his customer, let us understand . may vary with the type of relationship between banker and customer and the Knowing banker customer relationship is necessary because this relates to.
It obviously means that to become a customer account relationship is must.
Account relationship is a contractual relationship. It is generally believed that any individual or an organisation, which conducts banking transactions with a bank, is the customer of bank. However, there are many persons who do utilize services of banks, but do not maintain any account with the bank. Thus bank customers can be categorized in to four broad categories as under: Technically they are not customers, as they do not maintain any account with the bank branch.
Those who intend to have account relationship with the bank. A person will be deemed to be a 'customer' even if he had only handed over the account opening form duly filled in and signed by him to the bank and the bank has accepted the it for opening the account, even though no account has actually been opened by the bank in its books or record.
The practice followed by banks in the past was that for opening account there has to be an initial deposit in cash. The term 'customer' is used only with respect to the branch, where the account is maintained. In the event of arising any cause of action, the customer is required to approach the branch with which it had opened account and not with any other branch.
Banking is a trust-based relationship.
There are numerous kinds of relationship between the bank and the customer. The relationship between a banker and a customer depends on the type of transaction. Thus the relationship is based on contract, and on certain terms and conditions.
These relationships confer certain rights and obligations both on the part of the banker and on the customer.
Relationship between Banker and Customer
However, the personal relationship between the bank and its customers is the long lasting relationship. Some banks even say that they have generation-to-generation banking relationship with their customers.
The banker customer relationship is fiducial relationship. The terms and conditions governing the relationship is not be leaked by the banker to a third party.
The relationship between a bank and its customers can be broadly categorized in to General Relationship and Special Relationship. Thus the relationship arising out of these two main activities are known as General Relationship.
In addition to these two activities banks also undertake other activities mentioned in Sec. Relationship arising out of the activities mentioned in Sec. When a 'customer' opens an account with a bank, he fills in and signs the account opening form.
When customer deposits money in his account the bank becomes a debtor of the customer and customer a creditor.
Banking & Insurance
The bank is not bound to inform the depositor the manner of utilization of funds deposited by him. Bank does not give any security to the depositor i. The bank has borrowed money and it is only when the depositor demands, banker pays. Banker does not pay money on its own, as banker is not required to repay the debt voluntarily.
The demand is to be made at the branch where the account exists and in a proper manner and during working days and working hours. The debtor has to follow the terms and conditions of bank said to have been mentioned in the account opening form.
In fact the terms and conditions are mentioned in the passbook, which is issued to the customer only after the account has been opened. This practice has since been discontinued. For convenience and information of prospective customers a few banks have uploaded the account opening form, terms and conditions for opening account, rate charge in respect of various services provided by the bank etc.
Lending money is the most important activities of a bank. The resources mobilized by banks are utilized for lending operations. Customer who borrows money from bank owns money to the bank. The relationship in the first case when a person deposits money with the bank reverses when he borrows money from the bank. Borrower executes documents and offer security to the bank before utilizing the credit facility.
Depending upon the type of services rendered and the nature of transaction, the banker acts as a bailee, trustee, principal, agent, lessor, custodian etc. Bank as a Trustee: However, they also share other relationships. Banker The term banking may define as accepting of deposit of money from the public for the purpose of lending or investing investment of that money which are repayable on demand or otherwise and with a draw by cheque, draft or order.
Features of Banking The definition of banking describes the following features of banking. A banking company must perform both of the essential functions.
Relationship between Banker and Customer
Lending or investing the same: The phrase deposit of money from the public is significant. The bankers accept a deposit of money and not of anything else.
The definition also implies the time and made to withdrawing of the deposit. The deposit money should be repayable to the depositor on demand made by the letter or according to the agreement reached between the two parties.
Bank is an Agent, Trustee, Executor, Administrator for Customers Customer A person who has a bank account in his name and for whom the banker undertakes to provide the facilities as a banker is considered to be a customer.
To constitute a customer the following requirements must be fulfilled; The bank account may be savings, current or fixed deposit must be operated in his name by making a necessary deposit of money. The dealing between the banker and customer must be of the nature of banking business.
The general relationship between banker and customer: Types of the Relationship between Banker and Customer The relationship between banker and Customer are categorized into three; Relationship as debtor and creditor.
Banker as a trustee. A depositor remains a creditor of his banker so long as his account carries a credit balance. Relationship with the customer is reserved as soon as the customer account is overdrawn. Banker becomes a creditor of the customer who has taken a loan from the banker and continues in that capacity fills the loan is repaid.
Banker as a Trustee Ordinally a banker is a debtor of his customer in the report of the deposit made by the letter but in certain circumstances, he acts as trustee also.