Banker Customer Relationship: Types of Bankers Customer Relationship

The term customer has not been defined by law. Generally, the term customer is used to mean a person, company, or other entity which buys goods and services produced by another person, company, or other entity. In the context of banking, a customer is a person or entity who maintains an account with a bank. As soon as the account opening formalities are completed and an initial deposit is made by a depositor, a contractual relationship arises between the bank and the customer. Banks also entertain non-customers during the course of business.

The relationship between a customer/non-customer and a banker is purely depend on the nature or the type of dealings between them. Following are the relationships that are commonly found between banks and customer:

Types of Transaction Bank Customer
Deposit accounts, CC (with credit balance) Debtor Creditor
OD, CC, Loan A/C (with debit balance) Creditor Debtor
Collection of Cheque Agent Principal
Cheques deposited pending instructions for disposal thereof Trustee Beneficiary
Sale or purchase of Securities Agent Principal
Issue / purchase or draft by purchaser Debtor Creditor
Payee of drafts at paying branch Trustee Beneficiary
Mail transfer, Telegraphic transfers Agent Principal
Complying with standing instruction Agent Principal
providing various services to non account holder Agent Principal
Safe Custody of Articles Bailee Bailor
Leasing of locker Lessor, Landlord, Licensor Lessee, Tenant, Licensee
Mortgage of Immovable Property Mortgagee Mortgagor
Pledge of securities/ shares Pledgee Pledgor
Hypothication of Shares etc. Hypothecatee Hypothicator
Sale / Purchase of shares etc Agent Principal
Maintaining currency chest (RBI’s Property) Agent Principal
A wrong credit given by the bank where the amount has not so far been recovered. Beneficiary Trustee
FD has matured but the customer has not taken the payment Debtor Creditor
Giving indemnity for issuance of duplicate draft/FDR. Indemnified Indemnifier

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