BANKER AND CUSTOMER RELATIONSHIP

MEANING OF BANKER

Over the years it has been a very difficult task to find an acceptable definition of a banker. Several
attempts have been made to offer a comprehensive and acceptable definition of the term "Banker"

. J.W. Gilbert defined a banker as "A dealer in capital, or more properly a dealer in money. He is an
intermediate party between the borrow and the lender. He borrows from one party and lends to
another". This definition places emphasis on the traditional functions of banks i.e mobilisation of
deposits and granting of loans and advances.

MEANING OF CUSTOMER:

There is no statutory definition of a customer. A person(s), society, firm or company may be termed a
customer when he makes an offer to become a customer, which the bank duly accepts. Acceptance may
be made on the following conditions:

RELATIONSIHP BETWEEN BANKER AND CUSTOMER

The relationship between Banker and Customer is governed by the following :

(1) Debtor-Creditor Relationship;

The relationship between a Banker and Customer can be described as debtor/creditor relationship.
Where a customer has a credit balance in his account, the bank is the debtor and the customer is the
creditor. Where a customer overdraws his account, the roles are reversed, the banker becomes the
creditor while the customer becomes the debtor. It is important to note that the money which the
customer deposits for the credit of his account is not held on trust for him, but borrowed from him with
a promise to repay it or any part of it.

(2) Agency Relationship:

An agent is a person who brings the principal and a third party into contractual relationship.

The banker is an agent of the customer when it renders the following services:

a. Makes a payment on behalf of the customer.

b. Carries out instruction by the customer to invest a given amount in his account on a specified
security.

c. Collects proceeds of cheques on behalf of the customer.

d. Transacts foreign exchange services for his customer.

(3) Bailor/Bailee Relationship

The relationship is established when a banker takes charge of his customer's property for safe-keeping.
Under this arrangement a bank is bound to take reasonable care of articles deposited with it.

The standard expected of the bank is always very high since the bank is a bailee for reward. Safe
custody items lost by banks are paid for. In this relationship, the customer is referred to as the bailor
while the banker is the bailee

(4) Mortgagor/Mortgage Relationship

When granting an advance or loan secured by real estate or other tangible asset, such assets are
mortgaged to the bank. Immediately a bank takes such mortgage, the relationship or
mortgagor/mortgagee is established. The bank is the mortgagee and the customer is the mortgagor

(5) Contractual Relationship

The total relationship between the banker and the customer is essentially contractual.
It is contractual in the sense that there is a mutual agreement between the customer and the
banker to refrain from doing certain things that can be enforced by law. This relationship
commences when a prospective customer makes an offer to the banker to open and operate an
account and the bank accepts such offer.

(6) General Relationship

These are rules of banking practice which evolved over several years.

These are largely recognised and enforced by the law courts. These general rules are clearly illustrated
in account keeping services and other banking operations.

The guiding principles in such relationships include;

(a) What a prudent banker or customer would have done in a given situation which is not governed by
a statute or agreement.

(b) The possible effects of such action on the relationship bearing in mind the interests of both parties.