Types of bank customer relationship

8 Banker Customer Relationship | Krishnaveni Reddy - catchsomeair.us

types of bank customer relationship

The relationship between banker and customer is mainly that of a debtor and creditor. However, they also share other relationships. Some of. There are various forms of Banker Customer relationship depending upon the services availed by the customer from bank. Like Debtor-Creditor. Banker and a Customer Relationship • The relationship between a banker and a customer depends on the type of transaction. • These.

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. A trustee hold holds money or asset and performs certain functions for the benefit of some other person called the beneficiary.

Relationship between Banker and Customer

For example; If the customer deposits securities or other values with the banker for the safe custody, the letter acts as a trustee of his customer. Banker as an Agent A banker acts as an agent of his customer and performs a number of agency functions for the conveniences of his customer.

Buying and selling securities on his behalf, Collection of cheques, dividends, bills or promissory notes on his behalf, and Acting as a trustee, attorney, executor, correspondent or representative of a customer.

Banker as an agent performs many other functions such as payment of insurance premium, electricity and gas bills, handling tax problems, etc. Relationship of Advisor and Client When a customer invests in securities, the banker acts as an advisor.

The advice can be given officially or unofficially. While giving advice the banker has to take maximum care and caution. Here, the banker is an Advisor, and the customer is a Client.

types of bank customer relationship

Other Relationships Other miscellaneous banker-customer relationships are as follows: Obligation to honour cheques: As long as there is sufficient balance in the account of the customer, the banker must honour all his cheques.

The cheques must be complete and in proper order. They must be presented within six months from the date of issue.


However, the banker can refuse to honour the cheques only in certain cases. Secrecy of customer's account: When a customer opens an account in a bank, the banker must not give information about the customer's account to others. Banker's right to claim incidental charges: A banker has a right to charge a commission, interest or other charges for the various services given by him to the customer.

Law of limitation on bank deposits: Under the law of limitation, generally, a customer gives up the right to recover the amount due at a banker if he has not operated his account since last 10 years. 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. 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.

types of bank customer relationship

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.

types of bank customer relationship

The resources mobilized by banks are utilized for lending operations.