Beruflich Dokumente
Kultur Dokumente
Term Deposits
Retail Loans
Cheques
Drafts
LENDING
Securities
Collateral securities
CUSTOMER
BORROWING
Loans (others)
BANKER
CUSTOMER
Demand Deposits
Thebanker
No specific definition for banker but
banking is defined [Sec. 5(b)]
banking means the accepting for the
purpose of lending or investment, of deposits
of money from the public, repayable on
demand or otherwise, and withdrawable by
cheque, draft, cash or otherwise
Banking company means any company
which transacts business of banking in India
[Sec. 5(d)]
Hence, banker is one who involves in the
business of banking
US Federal Law
any bank, banking association, trust
company, savings bank (other than
mutual savings bank) or other banking
institution which is engaged in the
business of receiving deposits and which is
incorporated under the laws of any state
Italy
The acceptance of deposits from the
public in any form and the granting of
credit are activities of public interest
governed by Banking Law of 1936
In Japan
Banks are institutions conducting commercial
banking business under Banking Law of 1927
The banks in Japan are classified as
Ordinary banks;
Long term credit banks; and
Trust banks
The law of 1927 defines banks as institutions
which carry on operations of giving as well as
receiving credit
Switzerland
The Swiss law defines banks as institutions,
which appeal to the public for deposit
The Banking Law of 1934
Regards banks in the strict sense
Private banks organized as
individuals; firms or industrial
partnerships, savings banks and
finance companies similar to bank
which publicly solicit deposits
Customer defined
No legal definition available
In both English and Indian law
Hence, Sir John Paget relied upon the time
factor to determine the customer of a bank
By this analogy a person who had just
opened an account is not a customer of
the bank
introduction
It is essentially the contract that exists
between banker and customer
But this is regulated further by
Specific banking related laws; and
Customary practices as developed (and
crystallized) over a period of time
SERVICES
LOAN TRANSACTIONS
DEPOSIT TRANSACTIONS
Deposit transaction
Banks have been used by the general
public as a repository to keep their surplus
funds
P Segment accounts are those which
are personal segment deposits
Others are accounts maintained
Proprietary concerns,
Partnerships
Limited companies
Trusts etc.,
P segment accounts
Generally SB Accounts
They are of two types viz.
bank account from which money can be
withdrawn by cheque (This is called checking
or cheque book facility account)
These accounts can be operated in single names
or in joint names.
In the case of joint accounts
there can again be either or survivor or former
or survivor
Again these accounts can be operated either
jointly or individually.
Further
There are some restrictions like
a minimum balance of certain sum of money to
be maintained in the account and
there shall not be more than 50 withdrawals in
the account in a calendar year
There will be interest paid at some minimal rate of
interest
about 4 to 5% on the minimum balance standing
on the credit of the account between 10th and
30th of the calendar month
Current account
Can be stated as non P segment account
Are generally opened and operated by
individuals or organizations
Who issue cheques in larger numbers
Examples are firms, traders,
manufacturers, limited companies, trusts
etc.,
Salient features
Stipulation of minimum balance to be
maintained
Rs.500 to 5000 generally
Exercise of option to close the account if
there is non-maintenance of minimum
balance
Cheque book/s facilities
Other procedures
Specimen signatures of authorized
signatories (or those who are authorized
to operate the account ) are taken
Periodically a statement of accounts
are sent to the customers for their
verification
Introduction
There is no legal requirement to obtain any
introductory reference
But the banking custom and practice insist
that introductory reference is essential
during opening of a new account
Many internal rules of banking practice
stipulate for it
The objective
to identify the prospective customers of the
bank
Also to ensure that, the new customer will
not use his account for fraudulent purposes
It is established law that the introducer will
not run into any legal problems only for
having introduced an account holder
introduction
The primary relationship between a banker and
customer is that of a debtor and creditor
But banker is a privileged debtor
One of the terms implied in that contract is that,
money lent to the banker is not payable except
on demand
Of course in accordance with other formalities
Finally
The banker customer contract is an
exception to the rule that a debtor should
find his creditor
In Delhi Cloth General Mills Co. Ltd., v
Harnam Singh [AIR 1955 SC 590]
Agency Relation
The following are the agency functions
Collection of customers cheques
Collection of bills & other instruments
Dividend warrants
Interest warrants
Pension bills etc.,
Other services
Special customers
Special customers
Limited companies
Different format of account opening form
Certified copy of Memorandum of Association
and Articles of Association
A Certificate of incorporation or certificate of
commencement of business (in case a public
limited company)
A certified copy of the resolution to open the
bank account from the board (with other related
information)
Partnership firms
Certified copy of the partnership deed
Authorized signatory for operating account
Accounts by HUFs
A proper letter of introduction
The opening form is signed by the Karta and all
adult coparceners
If there are minors the other adult coparceners
should sign for self and as guardian of the
minor/minors
The karta is given the authority to operate the
account by all the coparceners
Minors
Minor can open and operate a bank account
The bank should not permit the minor to
overdraw his account
Should exercise caution while credit for large
sums and debits for large sums are transacted in
the minors account
The age of majority of a non-domiciled minor is
decided by the law of the minors country where
the minor is domiciled
Duty of secrecy
introduction
banker is a privileged creditor in some special
sense the customer is also privileged in some sense
The banker is obligated to maintain the secrecy of
the customers accounts
the duty to maintain secrecy is an added
obligation or an exception to the general rule that
the relationship between a banker and the
customer is that of a debtor and creditor
The origin
May be it has woven in to the banking
tradition from time immemorial
All employees and officers of the bank have
to sign and submit a declaration of fidelity
and secrecy at the time of their joining
service
Grounds of disclosure
1. Where the disclosure is under compulsion of law;
2. Where there is a duty to the public to disclose;
3. Where the interests of the bank require disclosure;
and
4. Where the disclosure is made with the express or
implied consent of the customer.
Compulsion of law
Where evidence has to be given by the banker in a
court of law
Bankers Book of Evidence Act, 1891 allows
certified copies of the entries of the books to be
produced
Banker is not supposed to disclose to
investigating authority without the order of the
court (or the authority must have power under
some special law)
Furnishing the information to RBI
i.
Pass book
Introduction
Pass book is issued to banks customer, who
generally keeps savings account
In case of current accounts it is issued only upon
demand by the customer
Pass book is replica of the ledger at the bank
branch
In case of current accounts statement of their
accounts are given to them periodically (daily,
weekly, fortnightly etc.)
the plaintiff from time to time received from the bank his
passbook, with entries debiting the payments made, for
which the bank sent bills as vouchers, which were retained by
the plaintiff when he returned without objection, the
passbook. It was contended that this was a settlement of
account between him and the bank, and that he had been
guilty of such negligence with respect to the examination of
the vouchers as would have prevented him from being
relieved from the settlement of account. But there was no
evidence to show that, as between a customer and his
banker, is an implied contract as to the settlement of the
account by such a dealing between the banker and his
customer, the plaintiff had done anything which can be
considered a neglect of his duty to the bank or negligence
on his part