Commercial Banking

Banker &
Customer
Relationship
 Who is Banker?
 A Banker is a dealer in capital or
more properly a dealer in
money.
 Banker is an intermediate party
between the borrower and the
lender.
 He borrow from a party and
lend to another party.
 Dr. Herber Hart
 A banker or a bank is a person
carrying on the business of receiving
money and collecting drafts for
customers subject to the obligating of
honoring cheques drawn upon them
from time to time by the customers to
the extent of the amounts available on
their current account.
 Banking Company Ordinance
 Banking has been define as
accepting for the purpose of lending
or investment of deposits of money
from the public repayable on
demand or otherwise and
withdrawals by cheques, draft,
order or otherwise.
 Customer
 Person who maintain a regular account with the
bank without taking into consideration the
duration and frequency of operation of his
account.
 One should have an account.
 One should deal with the bank in its nature of
regular banking business.
 One should deal with the bank without
consideration of the duration and frequency of
operation of his account.
General Relationship between
Banker and Customer
 Customer brings the bread and
butter of the banker.
 No banking is without a
customer.
 Customer act in various status
and categories whereas the
banker provide financial
services in different ways.
 Debtor & Creditor
 Customer deposit money with the bank then
bank become debtor and creditor is the
customer.
 The customer expect from the banker that the
money deposited, remain safe at the bank and
with the banker.
 The money placed at the bank should have
increase.
 The position is reversed if the customer is
advanced then the banker become the creditor
and customer is the debtor
 Principal & Agent
 The customer is Principal when it deposit
cash, cheques or draft for collection with
the bank.
 The bank act as an agent and get the funds
credited to customers account by getting
the proceeds against the instrument.
 The bank as an agent of the customer
purchase securities, paying insurance
premium, installment of loans etc.
 Bailer & Bailee
 Bailment is delivery of goods by one
person to another for some purpose
on contract.
 The banker provides safe custody
facilities to their customer.
 Bank accept valuables such as bonds
documents or securities for safe
custody on behalf of customer.
 In all cases banks act as Bailee to
customer on charging nominal fee
for providing safe custody facilities
 Mortgager & Mortgagee
Mortgage is the transfer of an interest in specific
immovable property for the purpose of securing
the payment of money advance or to be advance
by way of loan.

When customer offer his property for mortgage to

avail financial assistance the customer become
the mortgager and banker act as mortgagee.
 Banker is the Trustee
 Banker keep the customers valuable including
the documents and other items without
physically seeing and in trust between the two.

 The banker act as the trustee and the customer

remain the owner to the valuables.
Executor- Attorney- Guarantor

The bank acts as an executor,

attorney for its customer.
The bank executes the standing
instruction of its customers
for making for making various
periodic payments.
 Customer Right & Duties
 Customer can deposit and withdrew funds
without any restrictions.
 Customer avail financing facilities to the
satisfaction of the banker.
 Customer has the right to receive all the
documents pertain to the activities of his
account.
 Customer has the right to sue the bank for
compensation for a wrongful dishonor of his
cheques
 Customer has a right to sue and demand
compensation if the bank fails to maintain
the secrecy of his account.
 Customer has the right to check his
documents pertain to conduct of the
account and all those document that
signed for facilities.
 Customer has the right to withdraw his
amount during the banking hours and can
see his banker during the time of banking