Banker Customer Relationship in Banking
Banker Customer Relationship - The relation of Banker and Customer is primarily that of debtor and creditor, you can get the details of the Banker Customer Relationship in the article.
Priyanka Dahima10 Jan, 2024
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Banker Customer Relationship: Banking is an integral part of our economic life, and bankers' customer relationships are the foundation of the banking system. This relationship is based on trust, mutual understanding, and contractual agreement. This comprehensive article explores various aspects of a bank-customer relationship, including its definition, classification, termination, and special aspects.
Banker Customer Relationship
The banker-customer relationship is a legal relationship that begins after the contract is made. When a person opens a bank account at a bank and the banker approves the account, it binds the banker and the customer into a contractual relationship. A bank customer is a person who has a bank account in a bank and uses its services. A contractual relationship between the Bank and the Customer creates more bank-customer relationships. Bank Customer Relationships are two different terms related to the bank. A person engaged in banking is called a banker, and a person associated with a bank who either deposits his money or takes a loan from the bank is called a bank customer. The relationship between banker and customer can be of different types because it is completely dependent on the activities, products, and services provided by the banker to the customer. Although the relationship is based entirely on contact, trust is an important part of the relationship between bankers and customers.Debtor-Creditor Relationship
When a customer opens an account in a bank, he has a debtor-creditor relationship. By lending money to his account, the customer becomes a lender when he lends his money to the bank. In turn, the bank becomes a debtor and owes the customer the deposited amount. The bank can use the deposited money as it sees fit, and the customer can withdraw the money on demand. On the other hand, when a customer borrows money from a bank, he becomes a debtor and the bank becomes a creditor. In this scenario, the bank lends money to the customer and the customer is obliged to repay the loan according to the agreed terms.Trustee-Beneficiary Relationship
In certain situations, the bank acts as a trustee for its customers. When a customer deposits valuables or assets in the bank's custody, the bank takes on the role of trustee and the customer becomes the beneficiary. This relationship is based on trust, and the bank is responsible for securing the entrusted goods and returning them to the customer on demand.Principal and Agency Relationship
Banks often act as agents for their clients and conduct various financial transactions on their behalf. In this principal-agent relationship, the customer is the principal and the bank is the intermediary. The bank executes invoices, money transfers, and other financial transactions according to the customer's instructions. The bank pays a fee for these services, and the customer trusts the bank's competence and reliability.Relationship Between Lessor and Lessee
When a bank provides safe deposit boxes to its customers, it assumes the role of lessee and the customer becomes the lessor. The bank rents its property, ie. the safe, to the customer for a fixed period. The customer pays the rent for the locker, the bank is responsible for the security and integrity of the locker.The Relationship Between the Pledger and the Pledgee
In situations where the customer pledges property or securities as collateral for the loan, the bank acts as the guarantor and the customer becomes the promisor. The customer pledges their property as collateral for the loan, and the bank keeps the money as collateral. If the customer defaults on the loan, the bank has the right to take over the collateral and sell the loan to recover it.Bailor and Bailee
In certain cases, the bank acts as a guarantor and the customer becomes a guarantor. This relationship arises when the customer deposits his goods or valuables with the bank. The bank must be reasonably diligent in protecting and storing the goods, and the customer retains ownership of the entrusted goods.Advisor and Client Relationship
Banks often provide their customers with consulting services related to investments, financial planning, and other related matters. In this advisor-client relationship, the bank acts as an advisor who provides advice and recommendations based on the client's financial goals and risk tolerance. The customer relies on the bank's expertise to make informed decisions about their finances.Mortgagor And Mortgagee Relationship
When a customer borrows money from a bank and provides real estate as collateral, the bank takes on the role of a mortgage holder and the customer becomes the mortgagee. The customer pledges their property as collateral for the loan, and the bank has a legal interest in the property until the loan is repaid.Hypothecator And Hypothecatee Relationship
In certain financing arrangements, the customer hypothecates movable or immovable property as security for a loan. The bank becomes the hypothecator, and the customer becomes the hypothecator. The bank has a right to possess and sell the hypothecated property in case of default by the customer.Banker and Customer Relationship FAQs
Q1. What is a Customer?
Ans. A customer is a person who has an account with a bank or who has a relationship with a banker even though he does not have an account with the bank.
Q2. Who is a Banker?
Ans. A person employed by a bank, especially as an executive or other official is known as a Banker.
Q3. What is the Banker Customer Relationship?
Ans. We have provided the complete details of the Banker Customer Relationship in the blog section.
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