My assingment, Lecture notes of Banking and Finance

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Relationship between Customer and Banker

Submittided to:

Respected Mam Rida

Submitted by:

Sarwat Zeeshan

BBA Semester 2

1 Banker and Customer.

2 Debtor and Creditor.

3 Pledger and Pledgee.

4 Licensor and Licensee.

5 Bailor and Bailee.

6 Hypothecator and Hypothecatee.

7 Trustee and Beneficiary.

8 Agent and Principal

9 Advisor and Client.

10 Bank as a custodian.

11 Bank as a Guarantor.

12 Other Miscellaneous Relationship.

Banker-Customer Relationship

▲ Banker:

a. A banker is the one who gets into debts and creates debts. b. (^) The banker is one who receives money, collets cheques and drafts, for customer, with an obligation to honor the cheques drawn by customers from time to time subject to availability of amounts in the account.

▲ Customer:

a. A person who buys goods or services from a shop or business entity.

b. A customer is one who has an account with the bank and to whom the banks undertakes to extend business of banking.

▲ The banker-customer relationship is that of a:

pledgee.Under this agreement, the assets or security will remain with bank until a customer repays the loan.

Relationship of Licensor and licensee:

The relationship between banker and customer can be that of licensor and licensee. This happens when the banker gives a sale deposit locker to the customer. So, the banker will become the licensor, and the

customer will become the licensee.

Relationship of Bailor and Bailee:

The relationship between banker and customer can be that of Bailor and Bailee.

Bailment is a contract for delivering goods by one party to another to b held in

trust for a specific period and returned when the purpose is ended

Bailor is the party that delivering property to another.

Bailee is the party to whom the property is delivered.

Relationship of Hypothecator and Hypothecatee:

The relationship between customer and banker can be that of hypothecator and hypothecate. This will happens when the customer hypothecates (pledges) certain movable or non-movable property or assets with the banker in order to get loan. In case, the customer becomes the hypothecator, and the banker became the hypothecatee.

Relationship of Trustee and Beneficiary:

A trustee hold property for the beneficiary, and the profit earned from this property belongs to the beneficiary. If the customer deposits securities or valuables with the banker for safe custody, banker

becomes a trustee of his customer. The customer is the beneficiary so the ownership remains with the customer.

Relationship of Agent and Principal:

The banker acts as an agent of the customer (principal) by providing the following agency services: Buying and selling securities on his behalf. Collection of cheques, dividends, bills or promissory notes on his behalf and Acting as a trustee, attorney, executor, correspondent or representative of a customer.

Relationship of Advisor and client:

When a customer invests in securities, the banker acts as an advisor. The advice can be given officially or unofficially. While giving advice the banker has to take can maximum care and caution. Here, the banker is an Advisor, and the customer is a Client.

Relationship as a Custodian:

A custodian is a person who acts as a caretaker of something. Banks take legal responsibility for a customer’ securities.

Relation as a Guarantor:

Bank gives guarantee on behalf of their customer and enter in to their shoes. Guarantee is a contingent (conditional) contract.

Other Relationships:

Other misc. relationships of banker –customer are as follows:

Obligation to honour cheques:

As long as there is sufficient balance in the account of the customer, the banker honour all his cheques, the cheques must be complete and in proper order.

Secrecy of customer’s account: