1. Banker & Customer Relation
CHAPTER Three
Banker &
Customer Relation
Muhammad Ibrahim Sohel
BBA
Department of Business Administration
International Islamic University Ctg (Dhaka Campus)

2. Customer – Definition:
“To constitute a customer there must be some recognizable course or habit of dealing in the nature of regular banking business”
- John Paget
It is known as “Duration theory”

3. Features of Customer Have an account in a bank Dealing with a bank
Dealing must be in the nature of banking business
Dealing may be of short or long duration

4. Relationship between a banker and customer

5. General Relationship

6. Primary Relationship Debtors & creditors relationship:
Demand for payment
Demand at proper time
Demand in proper manner

7. Secondary Relationship
1. Trustee & Beneficiary relationship (at the time of keeping valuables):
Bankers does not get ownership
It does not compensate the creditors at the time of bank’s liquidation
Deposits carry any standing instruction – (trustee & beneficiary) and vice versa
cheque deposits for collection (trustee & beneficiary) and vice versa.

8. Obligation of the banker
1. Obligation to honour the Cheques:
Sufficiency of funds
Applicability of funds
Proper requirements for payment
No garnishee or attachment order

9. 2. Obligation to maintain secrecy of accounts:
a. Legal necessity – it will disclose if it is required by;
Income tax act
Companies act
RBI act
Banking regulation act
Gift tax act
Order to court
Foreign regulation act

10. Garnishee Order
The obligation of a banker to honour his customers cheque is extinguished on receipt of on order from the court known as trhe garnishee order
If a debtor fails to pay the debt due to his creditor, the creditor may apply to the debtors bank to issue this order so that the bank account is frozen.
4/16/2017

11. Parts of Garnishee Order
1.Order Nisi :Directs the banker to freeze the debtors account or seeks the banker to explain why the funds in the account should not be used for payment to the creditors.
2.Order Absolute: Directs the banker to pay either the whole or part of the funds lying in the account.
4/16/2017

12. Features of Customer Have an account in a bank Dealing with a bank
Dealing must be in the nature of banking business
Dealing may be of short or long duration
4/16/2017

13. b. Banking Practice: Disclosure with customer’s consent
- Express consent (customer can instruct)
- Implied consent (guarantor)
Disclosure for banker’s own interest
- To bankers lawyer (recovery of dues)
Disclosure of request by other banks
- Can furnish data except the actual figures
Disclosure for public interest
- When it helps to find a criminal
- Person involves in Illegal activities

14. Consequences of wrong disclosure:
Liability to the customer:
Banker should compensate the loss due to the wrong disclosure
Liability to the third party:
Banker should compensate the loss for the wrong disclosure

15. Rights of a banker 1. Right of lien:
Lien is a right of the person who can retain the goods of another in his position until a debt due to him is paid.
Particular lien – on particular property.
General lien – Any property can be retained.

16. Conditions to be satisfied in lien:
Banker must possess the property/security.
Property/security must be in the name of the customer alone.
The possession obtained by banker legally.

17. Exception to the right of lien:
Valuable accepted for safe custody.
Bill of exchange/other documents deposited for other purposes.
Money deposited for special purposes like purchase of securities
Documents/valuables left with the banker by mistake
Trust a/c operated by the customer against his personal a/c.
Securities lodged with a banker for getting a loan before sanctioning such loan

18. 2. Right of Set Off:
Banker can exercise the right by setting off a debit balance in one a/c with the credit balance in another a/c maintained by the same customer.

19. Right of set off subject to the following conditions:
No agreement contrary to this right.
Formal notice to the customer.
Capacity of the customer must be same in all the a/c’s.
Different branches of bank will constitute one entity.
Banker has the option (customer can’t compel the banker).
Banker can do this even after the receipt of garnishee order.

20. 3. Right of Appropriation:
Appropriation of amount will arise when a customer;
Owes several debts to a banker and
His payment is not sufficient to discharge all his debts.

21. 4. Right of charge interest, incidental charges etc:
Banker has the right to charge interest on due from customers
It has the right to charge incidental charges on customers a/c