BANKER AND CUSTOMER

The Banking Regulation Act, 1949, section 5(b) defines the word banking as, accepting for the purpose of lending or investing, of deposit of money only from the public, repayable on demand or otherwise, and withdrawal by cheque, draft, order or otherwise.

The features of this definition are

a. A banking company must perform both of the essential functions. 1. Accepting of deposits 2. Lending or investing the same. b. Deposit of money from the public is significant. c. The definition also specifies the time and mode of withdrawal of the deposits.

Sir John Pagets Definition. No person or body, corporate or otherwise,

can be a banker who does not (i) take deposit accounts (ii) take current accounts (iii) issue and pay cheques (iv) Collect cheques, crossed and uncrossed for his customers.

Definition of a customer
According to Dr. Hart. a customer is one who has an account with a banker or for whom a banker habitually undertakes to act as such.

Thus, to constitute a customer the following essential requisites must be fulfilled: a. A bank account-savings, current or fixed deposit must be opened in his name by making necessary deposit of money b. The dealing between the banker and the customer must be of the nature of banking business.

General relationship
1. Relationship as Debtor and Creditor. Relationship b/w a banker and customer is mainly that of a debtor and Creditor. a. The creditor must Demand Payment. b. Proper place and Time of Demand c. Demand must be made in Proper Manner.

2. Banker as a trustee. 3. Banker as a Agent

Special Relationship
1. Obligation to Honour the Cheques. Section 31 of the NI Act of 1881

The Banker is bound to honour his customer cheques provided the following conditons are fulfilled. There must be Sufficient Funds of the drawer in the hands of drawee. The Funds must be Properly Applicable to the Payment of the Cheque. The Banker must be duly required to pay.