Let Us Sum Up

1. Relationship between the Bank and the Customer
(a) In a deposit account, the relationship between the bank and the customer is that of debtor and creditor (Bank-debtor, Customer-creditor)
(b) In case of loan accountadvance, the bank is the creditor and the customer is debtor.
(c) In the case of deposit of safe custody of valuables, the bank is the bailee and the customer is the bailor.
(d) In the case of remittance, foreign exchange business collection of bills cheque the relation is Agent (Bank)-Principal (Customer)
(e) In the case of safe deposit locker, the bank is the lessor and the customer is lessee.
(f) Bank also functions as Executor and Trustee for and on behalf of the beneficiary-customer.

2. Obligations
Banker-Customer relationship creates
1. Certain obligations on the part of the banks
2. Certain rights available to banks

Keywords
Bank, Debtor, Creditor, Bailor, Bailee, Applicable funds, Secrecy, Opinion.

Check your progress
1. The term Customer has been defined in
(a) Negotiable Instruments Act
(b) RBI Act
(c) Banking Regulation Act
(d) Not defined anywhere

2. When a banker allows overdraft to his customer, the relationship between banker and customer is that of
(a) Bailor and Bailee
(b) Lessor and lessee
(c) Debtor and Creditor
(d) Creditor and Debtor

3. When a customer takes a locker in the bank, what is the relationship between the bank and the Customer(a) Lessor and lessee
(b) Pledgor and pledgee
(c) Principal and Agent
(d) Trustee-Beneficiary

4. A bank received the payment of an outstation bill on behalf of his customer, But before the money could be credited to the customer’s account the bank failed. What is the relationship between the bank and the Customer.
(a) Creditor and Debtor
(b) Principal and Agent(c) Bailor and Bailee
(d) Trustee & Beneficiary

5. When the Banker-Customer relationship is terminated.
(a) On the death of the customer.
(b) On customer becoming lunatic.
(c) On customer being declared insolvent.
(d) On closure of the account