There are various forms of Banker Customer relationship depending upon the services availed by the customer from bank. Like Debtor-Creditor, Agent-Principal, Licensor(Lessor)-Licensee (Lessee), Bailor-Bailee, Trustee-Beneficiary, Pledger-Pledgee, Assignor-Assignee, Hypothecation-Hypothecatee are various forms of relationships between banker and customer.
Relationship between banker and customer is mainly of a debtor and creditor. However they share some other forms of relationships also discussed in detail below.
Banker Customer Relationship in Banking
Relationship of Debtor and Creditor
In case of Saving Account / Current Account/ Fixed Deposit – Customer deposit their surplus amount of money with bank. In other words, depositor lend money to bank and bank repay it on demand as per contract of deposit. In this case, Customer is creditor of bank and bank is debtor.
In Case of Loan Account – Bank not only accept deposit but also lend money further at an agreed rate of interest to their customer for various business purpose, education, housing, vehicle purchase etc. and customer repay it on due date. In this case, Banker Customer Relationship is of creditor and debtor because the customer owes money to the banker.
Relationship of Agent and Principal
Banker becomes agent of the customer (Principal) by rendering following services to customer –
- Bank Collects cheque, bills or promissory note, dividends etc on behalf of customer
- Make Insurance Premium Payments, Phone Bill, Gas Bills, Tax Payments as per mandate or SI received from customer
- Buy or sell securities on behalf of customer
In such cases, relation between bank acts as an agent and customer is principal.
Relationship of Licensor (Lessor) and Licensee (Lessee)
When customer avail safe deposit locker facility from bank, relation between banker and customer is Licensor and Licensee | Lessor-Lessee. Bank is Licensor (Lessor) and Customer who hirer the locker is Licensee (Lessee).
Relationship of Bailor and Bailee
When Customer deliver goods to bank for purpose of safekeeping under a condition that goods will be returned to depositor when purpose is completed. In this case, Customer becomes bailor and bank becomes bailee. The process is known as Bailment. Example of Bailment is – Articles, Securities and valuables kept in safe deposit locker. In this case, relationship between banker and customer is Bailee and Bailor.
Relationship of Pledger and Pledgee
Sometimes, bank pledges certain assets or security to secure the loan for payment of debt in case of default by customer. In this case, customer becomes the pledger and bank becomes pledgee. Under this agreement, asset or security will remain with the bank until a customer repays the debt.
Relationship of Hypothecation and Hypothecatee
When banker hypothecates certain movables or immovable assets or property of a customer for securing the loan amount extended to customer. In this case, customer becomes the Hypothcator and Banker becomes Hypothecatee.
Relationship of Trustee and Beneficiary
A trustee hold the assets, property for the beneficiary and profit so earned belongs to beneficiary. Suppose, customer deposits securities or valuables with the bank for safe custody, banker becomes a trustee of his customer. The customer is the beneficiary so the ownership remains with the customer.
Relationship of Assignor and Assignee
An Assignor is a customer who transfers his property or security rights to the bank (lender) as collateral of the loan availed from bank. Example are transfer of LI Policies, NSC, Shares etc in the name of lender bank to secure the loan. The bank on whose name security or property rights are transferred is called assignee. After full payment of debt or loan, assignor can get the security reassigned in his name. Here, Banker Customer Relation ship becomes Assignee and Assignor.