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Banker And Customer Relationship Pdf

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The relationship between a banker and a customer depends on the activities; products or services provided by bank to its customers or availed by the customer.

Relationship between Banker and Customer

Banks are becoming increasingly complex organizations. Investors are finding it harder to understand the quality of financial performance and risk exposures of banks. Conscious efforts are made towards increasing the quality and quantity of disclosures in banks balance sheets.

The technology-intensive new private and foreign banks are positioning themselves as one-stopshop financial services and providing customers greater convenience and high quality services backed by appropriate investments in technology and other infrastructure The future profitability of public sector banks would depend on their ability to generate greater non-interest income and control operating expenses.

Apart from the applicability of capital adequacy standards being in force New methods of measuring market risk such as valueat-risk and pre-commitment approaches are expected to provide a more standardized but tighter framework for the banking sector. Banking industry is undergoing a change driven by technological advancements Banks FIs are in the process of adjusting business relationship with their customer. The bank customer relationship is an emerging area that has attracted the attention of many stakeholders.

Bank can be distinguished from any other commercial institutions of the basis of the following features: Deposit Accounts Current Accounts Cheque Facility.

Ordinarily a person who has an account in a bank is considered its customer. In chambers dictionary, it is written, A customer is one who is accomplished to frequent a certain place of business. Therefore, neither the number of transactions nor the period during which business has been conducted between the parties is material in determining whether a person is a customer.

Even a single transaction can constitute a customer. Frequency anticipated: Although frequency of transactions is not essential to constitute a person as customer, still his position must be such that transactions are likely to become frequent.

Dealings to be of banking nature: He should have dealing with the bank, which should be in the nature of regular banking business. That is, the person should have some type of account with the bankeither deposit, current or loan account. A person having dealings with the bank only in respect of its utility service viz.

Safe deposit lockers, safe custody, remittances etc. This is necessary to institute the persons as customers for the purpose of protection of the banker under Negotiable Instruments Act. Commencement of relation of from first transaction: As soon as the banker accepts money from any person on the footing that he will honor his cheques upto the amount standing to his credit, the person becomes his customer. The money accepted can even be by way of cheque. The relation of banker and customer begins as soon as the first cheque is paid in and accepted for collection and not merely the it is paid.

It is regulated by: The general rules of contract The rules of agency where applicable Banking practice. Demand for Payment: A bank is not an ordinary debtor in the sense that it is under no obligation to refund the customers deposits unless demand is made 2. Proper place and time: The obligation to repay the amount deposited is limited to the branches where the account is kept.

The customer can issue cheques only on the branch of the bank where the account is kept. Demand in proper manner: The demand for payment should be made in proper manner as allowed by the law or custom. The demand should not be made verbally or through a telephonic message. No time bar: The depositor with a bank does not become time barred on the expiry of three years as in the case of other commercial debts.

The articles deposited with the bank for safe custody continue to be owned by the customer. The banker is to deal with the articles as per the instructions of the customer. The banker is a trustee of the customer in respect of cheques and bills deposited buy the customer for collection till they are collected. He becomes the debtor once it is collected and credited to the account of the customer. If the bank is liquidated before the cheques is realized the bank remains a trustee of the customer.

The customer can claim back the cheque or the proceeds of the cheque in full. For example: some banks have established tax service departments to take up the tax problems of their customers. The bank functions as bailee when it keeps valuable articles, diamond, gold, securities and other documents of its customers. The bank works, as the custodian of these things and it is implied responsibility of the bank to return these things safely.

Thus the bank is a bailee and the customer is a bailor or beneficiary. The banker has to maintain the secrecy of his customers account.

The banker can charge interest all compound rates for defaults in payments of loan by the customer or for overdrawn amounts. Banker is allowed to produce certified copies of the entries made in the original books of account as proof of transaction in legal proceedings under certain circumstances and cases in accordance with the provisions of bankers book evidence act, A banker is under the obligation of law to suspend the.

Time and Place of Payment: The demand of payment by the creditor must be made to the debtor at the proper palace and in proper time. Demand made in proper order: The statutory definition of banking system explains that deposits are withdrawal by cheque, drafts, order or otherwise. When the balance to the credit of the customer not sufficient to meet the cheque.

When money deposited by the customer cannot be withdrawn on demand e. When the cheque is state i. When the account is in joint names and all the persons have not signed the cheque.

When the banker is served with garnishee order or a prohibitory order by any court. When the bank comes to know of the defect in the title of the person presenting the cheque before the bank. When the holder of the cheque gives a notice of its loss to the bank.

When the cheque is post-dated and is presented for payment before its ostensible date. Such order prohibits a banker from making payments from a particular a particular account named therein. When a debtor does not repay the debt owed by him to his creditor, the latter may apply to the court for the issue of a Garnishee Order on the banker of his debtor.

Such order attaches the debts not secured by a negotiable instrument. The important features of a garnishee order are as under the order attaches either the entire deposit or a specified sum. Bankers General Lien: The banker has a right of general lien against the customer; the right to retain as security for a general balances of accounts any goods and securities bailee to him.

Law of Limitation: Under article 22 of part 2 of the schedule to the limitation act the period of limitation for the refund of bank deposits is there years from the date the customer demand repayment. The balance at the credit of the customer will have to be paid off and the overdraft, if any cleared. Notice to Terminate: In case of a current account, no such notice appears necessary. But if its a deposit account, the banker could insist on the notice period specified on the fixed deposit.

Death of Customer: This is an obvious method of terminating the relationship. But it is the notice of death, which. Lunacy of Customer: The lunacy of a customer automatically terminates relationships though here again the bankers authority to pay cheques is revoked by notice of insanity. Bankruptcy: Bankruptcy or winding up is a sufficient ground for terminating the relationship. For smooth and speedy progress of the Indian Financial System, it has to perform some important tasks. Among others it includes maintaining monetary and financial stability, to develop and maintain stable payment system, to promote and develop financial infrastructure and to regulate or control the financial institutions.

For simplification, the functions of the Reserve Bank are classified into the traditional. These currency notes are legal tender issued by the RBI. Currently it is in denominations of Rs. The RBI has powers not only to issue and withdraw but even to exchange these currency notes for other denominations.

It issues these notes against the security of gold bullion, foreign securities, rupee coins, exchange bills and promissory notes and government of. The RBI can control the volumes of banks reserves and allow other banks to create credit in that proportion.

Every commercial bank has to maintain a part of their reserves with its parent's viz. Similarly in need or in urgency these banks approach the RBI for fund. Thus it is called as the lender of the last resort. It performs various banking function such as to accept deposits, taxes and make payments on behalf of the government. It works as a representative of the government even at the international level. It maintains government accounts, provides financial advice to the government.

It manages government public debts and maintains foreign exchange reserves on behalf of the government. It provides overdraft facility to the government when it faces financial crunch. In order to maintain stability in the external value of rupee, it has to prepare domestic policies in that direction. Also it needs to prepare and implement the foreign exchange rate policy which will help in attaining the exchange rate stability.

In order to maintain the exchange rate stability it has to bring demand and supply of the foreign currency U. S Dollar close to each other. Credit Control Function : Commercial bank in the country creates credit according to the demand in the economy. But if this credit creation is unchecked or unregulated then it leads the economy into inflationary cycles. On the other credit creation is below the required limit then it harms the growth of the economy. As a central bank of the nation the RBI has to look for growth with price stability.

Supervisory Function : The RBI has been endowed with vast powers for supervising the banking system in the country. It has powers to issue license for setting up new banks, to open new braches, to decide minimum reserves, to inspect functioning of commercial banks in India and abroad, and to guide and direct the commercial banks in India.

It can have periodical inspections an. Development Functions of RBI Development of the Financial System: The financial system comprises the financial institutions, financial markets and financial instruments. The sound and efficient financial system is a precondition of the rapid economic development of the nation. The RBI has encouraged establishment of main banking and nonbanking institutions to cater to the credit requirements of diverse sectors of the economy. Development of Agriculture: In an agrarian economy like ours, the RBI has to provide special attention for the credit need of agriculture and allied activities.

It has successfully rendered service in this direction by increasing the flow of credit to this sector. In this regard, the adequate and timely availability of credit to small, medium and large industry is very significant. Provisions of Training : The RBI has always tried to provide essential training to the staff of the banking industry.

Banker-Customer Relationships

This article is written by Abhinav Anand , a student pursuing B. LLB Hons. This article deals with the relationship between the banker and the customer. The relationship between a Banker and a Customer is based on trust. It is an effective banking system that paves the way for the proper growth of the economy. Customers avail different kinds of services from the bank.

Banker Customer Relationship

The relationship between a banker and a customer depends on the type of transaction. 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. 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. On the opening of an account, the banker assumes the position of a debtor. A depositor remains a creditor of his banker so long as his account carries a credit balance.

Banker Customer Relationship

Relationship between a banker and customer comes into existence when the banker agrees to open an account in the name of customer. The relationship between a banker and a customer depends on the activities, products or services provided by bank to its customers or availed by the customer. Thus the relationship between a banker and customer is the transaction relationship. Trust plays an important role in building healthy relationship between a banker and customer. Since a banker or a banking company undertakes banking related activities we can derive the meaning of banker or a banking company from Sec 5 b as a body corporate that:. Unless a person has an account with the bank, it does not accept deposit. For depositing or borrowing money there has to be an account relationship with the bank.

Banking is defined as 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[Sec. A person becomes a customer and a contract is created when an account is opened Contractual relationship. Definition of Customer: A customer is not defined by law, but is defined by practice evolved by bankers and decided cases. Bankers also perform number of agency functions and provide various Public utility services, apart from essential services e. Though relationship between banker and customer is that of Debtor and Creditor, yet it differs from ordinary commercial contracts in following respects: i Creditor must demand payment unlike other commercial contracts where debtor is required to extend payment as per contract on its own. Banker Customer Relationship Implied Terms The bank will receive the customers deposits and collect cheques The bank will comply with written orders i.

Banker-Customer Relationships

Features of Banking

Banks are becoming increasingly complex organizations. Investors are finding it harder to understand the quality of financial performance and risk exposures of banks. Conscious efforts are made towards increasing the quality and quantity of disclosures in banks balance sheets. The technology-intensive new private and foreign banks are positioning themselves as one-stopshop financial services and providing customers greater convenience and high quality services backed by appropriate investments in technology and other infrastructure The future profitability of public sector banks would depend on their ability to generate greater non-interest income and control operating expenses. Apart from the applicability of capital adequacy standards being in force New methods of measuring market risk such as valueat-risk and pre-commitment approaches are expected to provide a more standardized but tighter framework for the banking sector. Banking industry is undergoing a change driven by technological advancements Banks FIs are in the process of adjusting business relationship with their customer.

Banks are becoming increasingly complex organizations. Investors are finding it harder to understand the quality of financial performance and risk exposures of banks. Conscious efforts are made towards increasing the quality and quantity of disclosures in banks balance sheets. The technology-intensive new private and foreign banks are positioning themselves as one-stopshop financial services and providing customers greater convenience and high quality services backed by appropriate investments in technology and other infrastructure The future profitability of public sector banks would depend on their ability to generate greater non-interest income and control operating expenses. Apart from the applicability of capital adequacy standards being in force New methods of measuring market risk such as valueat-risk and pre-commitment approaches are expected to provide a more standardized but tighter framework for the banking sector.

This article is written by Abhinav Anand , a student pursuing B. LLB Hons. This article deals with the relationship between the banker and the customer. The relationship between a Banker and a Customer is based on trust. It is an effective banking system that paves the way for the proper growth of the economy.

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Banker and Customer Relationship

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Relationship between Banker and Customer

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Relationship between Banker and Customer

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