1. What Is A Banker
 The Bill of Exchange Act, 1882 (U.K)
 “A banker includes any body of persons, whether
incorporated or not , who carry on the business of
banking”
 According to Heber L. Hart,
 A banker or bank is a person or company carrying
on the business of receiving moneys, and collecting
drafts, for customers subject to the obligation of
honoring cheques drawn upon them from time to
time by the customers to the extent of the
amounts available on their current accounts”
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2. What Is A Banker
 Sir John Paget maintains that no one
can be a banker who does not:
 Take money on deposit or current account
 Issue and pay cheques drawn upon himself
 Collect cheques, crossed and uncrossed,
for his customers.
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3. Functions of Banks
 Acceptance of deposits
 Lending and investment of deposits
 Discounting of bills
 Drawing, making, accepting, discounting,
buying, selling, collecting and dealing in bills
of exchange, hundies, promissory notes,
coupons, drafts, bills of lading, railway
receipt, warrants, debentures, certificates and
other instruments and securities.
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4. Functions of Banks
 Issuing of letter of credit, travellers cheques.
 Buying and selling of foreign exchange
 Purchasing, selling or underwriting shares,
stocks, debentures/TFCs, bonds and
investments of all kinds
 Buying and selling bullion.
 Receiving bonds, scripts and all kinds of
valuables on deposit or for safe custody or as
agent.
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5. Functions of Banks
 Collecting and transmitting money and
securities from one place to another
 Transacting guarantee and indemnity
business
 Undertaking and executing trusts
 Undertaking the administration of
estates as executors, trustees or
otherwise.
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6. Functions of Banks
 Rendering advice to customers in respect of
investments, financial matters etc
 Doing all such other things as are incidental
or conducive to the promotion of business of
banking company including management and
acquiring and holding and generally dealing
with any property or any right, title or interest
in such property which may form the security
for any loans or advances.
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7. What Constitutes A Customer
 According to Sir John Paget,
 “to constitute a customer there must be
some recognizable course or habit of
dealing in the nature of regular banking
business.”
Two things are important:
 Some recognizable course or habit of
dealing between him and the bank.
 That the transactions were to be in the
nature of regular banking business.
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8. What Constitutes A Customer
 According to Heber L. Hart,
 “A Customer is a person who has an
account with a banker”
 Bills of Exchange Act (U.K) 1882 S-82
 “A person is a customer of a bank if he
keeps either a deposit account with the
bank or it would seems, if the bank
systematically transacts with him, any kind
of banking business.”
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9. Rights of A Customer
 Draw cheques against his available bank
balance.
 Give stop payment mandate and removal
thereof.
 Terminate his deposit account and claim
payment of all sums lying in his account.
 Share in the profits/losses as earned and
determined by the bank in case of PLS based
deposits.
 Have a periodical bank statements of his
account.
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10. Rights of A Customer
 Get the errors rectified in the bank
statement , if any.
 Deposit cash and cheques for collection in his
account.
 Have new cheque book after utilizing the
previous one.
 Be informed about any direct operations in
his account by the bank.
 Sue the bank for wrongful dishonor of his
cheque along with damages.
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11. Rights of A Customer
 Cross, indorse or cancel cheques and
other instruments.
 Sue the bank for wrongful disclosure of
his bank account/balance.
 Ask for his balance within business
hours.
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12. Duties of A Customer
 Keep the cheque book under lock and key.
 Take reasonable care in drawing cheques.
 Disclose his banker about missing cheques.
 Draw the cheques on the cheque book
provided by his bank.
 Present cheques and other instruments for
encashment/collection within business hours.
 Notify the bank in case of any disagreement
in the bank statement.
 Abide by all rules and regulations of the bank.
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13. Rights Of A Banker
 Recover charges, if any
 Recover outstanding amount of finance and
markup due thereon.
 Sell securities upon default by the customer
after serving him reasonable notice.
 Stop operation of the account in the following
circumstances:
 Death of the customer
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14. Rights Of A Banker
 Insanity of Customer
 Under orders of the court
 Bankruptcy of customer
 Unsatisfactory operation
 Retain customer’s funds unless demand arises
for its repayment.
 Disclose information of his customer’s
account under special circumstances.
 Take pledge of hypothecated stocks in case
customer fails to adjust his loan account as
per agreed terms.
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15. Duties Of A Banker
 Honour cheques of the customers against his
available balance.
 Abide by standing instructions of the
customer.
 In case, deposit account is closed by the
customer, to pay the entire amount through
banker’s /P.O , after satisfying claims if any
 Provide periodical bank statements
 Collection of customer’s cheques.
 Maintain secrecy of his customer’s account.
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16. Duties Of A Banker
 Inform his customer about:
 Dishonor of cheques/bills along with reason
therof
 Closure of account
 Suspension/ stopping operations of his
account
 Bank’s intention to sell securities belonging
to the customer.
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17. Banker’s Duty of Secrecy
 A banker must not disclose the state of his
customer’s account or any information
concerning the customer or his affairs.
 Any disclosure of customer’s affairs by his
banker can affect the credit or reputation of
the customer and the banker may be held for
damages for breach of contract.
 The obligation of secrecy, however may not
be considered essential on the following
occasions:-
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18. Banker’s Duty of Secrecy
 Where there is a compulsion of law.
 Where there is duty to the public to disclose.
 Where the interest of the bank require
disclosure.
 Where there is an express or implied consent
of the customer.
 Where there is an established practice
amongst bankers to exchange information on
their customer’s account as a common
courtesy.
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