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WHO IS A BANKER

Who is a banker?

Section 3 of the Negotiable instruments Act, 1881 states that the term "banker includes
"any person acting as a banker".

Dr. Herbert Hart defines banker in his celebrated treatise, "Law of Banking as, "A
banker is one who in the ordinary course of his business, honours cheques drawn upon
him by persons from and for whom he receives money on current account This
definition is based on a number of decisions beginning with Foley v Hill (1848).
According to the ruling in this case, the function required to enable a person, firm or
institution to be regarded as a banker or a bank is that of receiving current deposits
against which cheques may be drawn. This view is supported by J. Buckley's judgement
in Birkbeck Permanent Benefit Building Society which states, "It opened current and
deposit accounts and in every essential particular, may more, I think, I may say in every
particular it did that which the banker does in the ordinary course of banking business
and offered to its customers all such facilities as a bank usually offers."

Halsbury in his "Laws of England defines a banker as "An individual, partnership or
corporation whose sole pre-dominating business is banking that is the receipt of money
on current or deposit account and the payment of cheques drawn by and the collection
of cheques paid in by a customer."

Sir John Paget states in his book "Law of Banking" that "there are four functions which
persons desirous of being called bankers must perform". He says, "No person or body
corporate or otherwise can be called a banker who does not (1) take deposit accounts,
(2) take current accounts, (3) issue and pay cheques, sand (4) collect cheques crossed
and uncrossed, for his customers....one claiming to be a banker must profess
himself too be one, and the public must accept him as such; his main business must be
that of banking, from which, generally, he should be able to earn his living. "

n ndia, till the passing of the Banking Companies Act 1949, no restrictions were
imposed on moneylenders using the word "bank or "banker . The Act stipulated that
within two years from the enforcement of the Act, all companies carrying on banking
business are required to use as part of their names "bank, banker or "banking. t was
also ruled in Bank of Commerce v. Kunj Behari Kar, A..R. 1945 that mere money-
lending does not constitute banking business and therefore a money-lender is not a
banker.