UNIT : I Banker and customer – meaning and definitions – Relationship between Banker and customer – General and special obligations ; (i) 70 honour customer is cheque ii) To right to set off – Garnishee order.

 

 

UNIT : II Operations of Bank accounts – Opening of different types of deposit accounts in a Bank – Special types of Banker is customers – New deposit saving schemes introduced by banks – cash certificate – amity, deposit, Reinvestment plants, Perennial plan an non-Resident (General) accounts scheme.

 

 

UNIT : III Law reading to Negotiable instruments – meaning and features of cheques, bill of exchange and promissory note – Holder in the course – privilege of holder in due course – Requisites of cheque crossing – different forms of cheque crossing and their significance – Endorsement – essentials of a valid endorsement – different innovative financial services offered by commercial banks – new types of credit cards – scraps, LOC, IBPS, any where banking etc.,

 

 

UNIT – IV Paying Banker – meaning – duties and responsibilities – statutory protection – payment in due coulee – refusal of payment – consequences of wrongly dishonor – collecting banker – Banker as a holder for value – banker as agent statutory protection duties and responsibilities.

 

 

UNIT : V Loan advances – landing polices – from of advances – loans over doubt and cash credits secured Advances – General principles – carious methods of creating charge – lien, pledge, hypothecation & montage – Advances against goods, documents, bill of loading, Grail ways receipts stock exchange securities.

 

 

UNIT – I DEFINITION OF BANKING : The Banking Regulation Act 1949 section 5(b) defines Banking a ―accepting for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdraw able by cheque, draft, order or otherwise‖.

 

 

 

A person who is dong the banking business is called a banker.

 

 

1. ― Banker includes a body of persons whether in corporate or not who carry on the business of banking‖.

 

 

2. The Bill of exchange Act 1882 ― A banker is one who in the ordinary couple of his business honours cheques drawn upon him by persons from and for whom he occupies money on current accounts‖. … Dr.L.Hart

 

3. The Banking Regulation Act 1949 section defines banker as ―a company which transacts the business of banking in India.

 

 

CUSTOMER :- A person who has an account in a bank is considered its customers.

 

 

1. ― To constitute a customer there must be some recognizable course or habit of dealing in the nature of regular banking business‖. …… Sir Tohn paged

 

 

2. ― a customer is one who has an account with a banker or for whom a banker habitually undertakes to act as such ―. …….. Dr.L.Hart.

 

 

 

Any dispute between the Banker and customer can be settled only on the hasps of the nature of the existing relationship between the hanker and customer. The relationship between a banker and his customer depends upon the nature of service provided by a banker. The relationship between banker and customer falls under two broad categories viz.

 

 

i) General relationship and

ii) Special relationship i) General relationship :

 

 

a) Relationship as debtor and creditor :- The relationship between a banker and his customer is mainly that of debtor and creditor, the respective position is determined by the state of the account, this means when a banker receive deposit from a customer, the banker becomes a debtor and the customer creditor. Ordinarily in all saving accounts shows that customer‘s account is in credit balance. So, that banker is the debtor and the customer is a creditor in some times, the banker considered as a creditor when the customer borrows from the bank or when a customers enjoys over draft or cash credit facility.

 

 

 

a) Relationship as Bailor and Bailee: A banker becomes a bailee when he receives gold ornaments and important documents for safe custody. In that case he cannot make use to them to his best advantages because he is hound o return the identical articles on demand. The banker does not get the ownership of there articles. The ownership remains with the customer. A banker does not allow any interest on there articles it is only the customer who has to pay rent or the lockers.

 

 

b) Relationship as principal and Agent :- Section 182 of the Indian contract Act depends an agent as one employed to do any dealing with third person. When a banker act as an agent of his customer and performs a number of a agency functions for the convenience of his customer. When banks undertake to purchase (or) sell securities, collect, cheques, bills, interest, dividends, etc., and pay insurance premium, subscriptions, etc., on behalf of his customer.

 

 

c) Relationship as foresee and Beneficiary : – A Banker becomes a trustee only under certain circumstances for instance, when money is deposited for a specific purpose , till that purpose is fulfilled the banker is regarded as a trustee for that money. The banker is a trustee whenever he undertakes to collect cheques gives for collection. Once the cheques are realized, the banker is a trustee and the customer is a beneficiary. But when the amount is credited to the account is creditor to the account of the customer. The relationship changes when in the banker becomes a debtor and the customer creditor. It is also an deposit on money and safe custody of valuable securities.

 

 

d) Relationship as assignor and Assignee :- Whenever a bank gives loan against life banker is the assignee and the customer the assignor under assignment, the actionable claim of the customer is transported to the bank as security for loan. Thus, assignment is done by customers whenever they taken loan against insurance policy or book debts.