BANKER CUSTOMER RELATIONSHIP - As you may have guessed from all the fine print, you have a contractual relationship with your bank.

to,Mr. Gautam Shah.

by,Mitika Patel.93.Augest,2012.

PREFACE:

ACKNOWLEGEMENT :

First and foremost, we would like to thank to our supervisor of this project, mr. Gautam shah for the valuable guidance and advice. He inspired us greatly to work in this project. Her willingness to motivate us contributed tremendously to our project. We also would like to thank her for showing us some example that related to the topic of our project. Besides, we would like to thank the authority of m.s. university (msu) for providing us with a good environment and facilities to complete this project.it gave us an opportunity to participate and learn about the operation of flights ticket reservation. Finally, an honorable mention goes to our families and friends for their understandings and supports on us in completing this project. Without helps of the particular that mentioned above, we would face many difficulties while doing this.

Mitika patel.

CONTENTS:

1. Cover Page.2. Preface.3. Acknowledgement4. Content 5. Introduction6. Banker7. Customer8. Relationship between banker and

customer9. Debtor-Creditor 10. Creditor- Debtor11. Agent- principal relationship12. Different types of agent- principal

relationship13. Bibliography

*Introduction: Today, many businesses such as banks, insurance companies, and other service providers realize the importance of Customer Relationship Management (CRM) and its potential

to help them acquire new customers, retain existing ones and maximize

their lifetime value.

*Banker:

A banker is a dealer in capital or more properly a dealer in money. He is an intermediate party between the borrower and the lender. He borrows from one party and lends to another.

Banking has been defined as “Accepting for the purpose of lending or investment of deposits of money from the public, repayable on demand or otherwise and withdrawals by check, draft, order or otherwise.

A banker is the one who gets into debts and creates debts.

According to H.L. HART –

the banker is one who receives money, collects cheques and drafts, for customers, with an obligation to honour the cheques drawn by customers from time to time subject to availability of amounts in the account.

*CUSTOMER:

A person who buys goods or services from a shop or a business entity. A person you deal with as a business entity. There is no statutory definition.

A person/ company/entity who has an account with a bank is a customer. There is no unanimity as regards to the time period of the dealings. A casual transaction like encashment of a cheque does not entail a person to be customer.

The duration of association of the customer with the bank is of no essence.

*Banker and Customer Relationship:

• The relationship between the banker and customer is very important. Both serve the society to grow and the economy to expand.

*CREDITOR-DEBTOR:

Relationship between the customer having a deposit account and the banker.

Depositor is the lender and the banker is the borrower.

Depositor is the creditor and the banker is the debtor.

The money handed over to the bank is a debt.

The money once deposited in the bank becomes the money of the bank and it is prerogative of the bank to use that money as it deems fit. The depositor remains a creditor that too an unsecured creditor.

*DEBTOR-CREDITOR:

When the customer avails a loan or an advance then his relationship with the banker undergoes a change to what it is when he is a deposit holder.

Since the funds are lent to the customer , he becomes the borrower and the banker becomes the lender.

The relation is the debtor- creditor relation, the customer being a debtor and the banker a creditor.

*PRINCIPAL-AGENT:

The special relationship between the customer and the banker is that of principal and agent.

The customer (principal) deposits checks, drafts, dividends for collection with the bank.

He also gives written instructions to the bank to purchase securities, pay insurance premium, installments of loans etc on his behalf. When the bank performs such agency services, he becomes an agent of his customer.

 Sec.182 of ‘The Indian Contract Act, 1872’ defines “an agent” as a person employed to do any act for another or to represent another in dealings with third persons. The person for whom such act is done or who is so represented is called “the Principal”.

     One of the important relationships between a banker and customer is that of an agent and principal. The banker performs various services of the customer, where he acts as the agent.

1. Buying and selling securities of customer2. Collection of cheques, bills of exchange, promissory notes on

behalf of customer3. Acting a trustee, executor or representative of a customer4. Payment of insurance premium, telephone bills etc.

DIFFERENT AGENT AND PRINCIPAL Relationship:

*BENEFICIARY-TRUSTEE:

The bank act as a trustee for his customer in those cases where he accept securities and other valuables for safe custody.

In such cases the customer continues to be the owner of the valuables deposited with the bank.

Section 3 of the Trusts Act defines a trustee as one to whom property is entrusted to be administered for the benefit of another called the beneficiary. A banker becomes a trustee under special circumstances. When a customer deposits securities or other valuables with the banker for safe custody, the banker acts as trustee of customer.

*Bailer and Bailment:

A bailment is the delivery of goods in trust. A bank may accept the valuables of his customer such as jewellary, documents, securities for safe custody.

In such a case the customer is the Bailer and the bank is bailee.

The bank (bailee) charges a very small amount as service charges for safe custody of the valuables from his customer (bailer).

This relationship between the bank and the customer as

bailee and bailer started from the days of earlier goldsmiths. A bailment is the delivery of goods in trust. A bank may accept the valuables of his customer such as jewellary, documents, securities for safe custody.

In such a case the customer is the Bailer and the bank is bailee.

The bank (bailee) charges a very small amount as service charges for safe custody of the valuables from his customer (bailer).

This relationship between the bank and the customer as bailee and bailer started from the days of earlier goldsmiths.

*Pawner and Pawnee:

When a customer Pledge goods and documents as security for an advance he then become Pawner (Pledger) and the bank becomes the pawnee (pledgee).

The pledged goods are to be returned intact to the pawner after the debt is repaid by him.

Pawn is a sort of bailment in which the goods are delivered to another as a pawn, to be a security for money borrowed. Thus a banker acts as a pawnee where a customer delivers, he goods to him to be kept as security till the debt is discharged. The banker can retain the goods pledged till the debt is paid.

*Mortgager and Mortgagee relationship:

Mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan.

When a customer pledges a specific immovable property with the bank as security for advance, the customer becomes mortgager and banker is the mortagee.

 The relation between a banker as mortgagee and his customer as mortgagor arises when the latter executes a mortgage deed in respect of his immovable property in favour of the bank or deposits the title deeds of his property with the bank to create an equitable mortgage as security for an advance.

*Lessee and lessor:

when a customer hires a locker in the bank’s safe deposit vault, the bank undertakes to take necessary precaution for the safety of the articles in the locker. The relation between the parties is that of a lessor and lessee.

* Guarantor and guarantee:

a bank as guarantor gives guarantee to its customer by issuing a ‘letter of credit’. It is a kind of credit facility to its customer to facilitate international trade. A bank guarantee contains an undertaking to pay the amount without any demur on mere demand of the principal amount on the ground for non-performance or breach of contract.

* Fiduciary relationship:

every relation of trust and confidence is a fiduciary relation. A banker who receives a customer’s money is under a duty not to part with it which is inconsistent with the customer’s fiduciary character and duty. It was held that banks old money for a specific purpose of sending it somebody the money is impressed with trust.

BIBLIOGRAPHY:

http://www.hanumant.com

www.google.com

www.wikipedia.com

www.slideshare.com

www.ask.com