Banker - Customer Relationship

Section 5 (b) of the Banking Regulations Act 1949 defines the bank as a financial institution. According to the section, "The bank accepts, lending money or invest the money from the public repayable on demand or otherwise and withdraw through online, cheques, drafts or any other way." Relation of banker and customer depends upon the service given by the banker. In addition to his primary functions, a banker renders a number of services to his customer.

The relationship between them primarily is that of a creditor and debtor. A banker also acts as an agent or trustee of his customer if the latter entrusts the former with agency or trust work. In such cases, the banker acts as a debtor, an agent and a trustee simultaneously but in relation to the specified business. Having in view of functions of banks and services rendered by banks the relationship of banker and customer may be classified under following heads:

1. Debtor and Creditor:
   The opening of account with a banker and the banker's acceptance thereof, constitutes contractual relationship by implication and deposit of amount in it creates debtor and creditor relation. The general relationship between banker and a customer is that of a debtor and the creditor i.e., borrower and lender. Such deposit, therefore, creates a relationship of debtor and creditor, the banker being the debtor is bound to repay the deposit as and when the customer asks for it.
    
2. Trustee and Beneficiary:
   Banker as a trustee and customer as a beneficiary (cestui que trust). Ordinarily, a banker is a debtor of his customer in respect of the deposits made by the latter, but in certain circumstances he acts as a trustee also. A trustee holds money or assets and performs certain functions for the benefit of some other person called the beneficiary. For example, if the customer deposits securities or other valuables with the banker for safe custody, the latter acts as a trustee of his customer. The customer continues to be the owner of the valuables deposited with the banker.
    
3. Principal and Agent:
   One of the significant relationship between banker and customer is that of agent and principal. A banker acts as an agent of his customer and performs a number of agency functions for the convenience of his customers. For example, he buys or sells securities on behalf of his customer, collects cheques on his behalf and makes payment of various dues of his customers, e.g., insurance premium, etc.
    
4. Trader and Customer (Consumer):
   The Consumer Protection Act, 1986 is one of the social legislation intended to protect the consumers from exploitation. Banking Institution used to give banking services to its customers for consideration (commission).
    
5. Bailee and Bailor Relation:
   Where goods are entrusted to the bank for a specific purpose in terms of Section 148 of the Indian Contract Act, 1872, such delivery of goods amounts to bailment and it creates the relation of bailee and bailor between banker and customer respectively.
    
6. Guarantor and Beneficiary:
   Now-a-days bank guarantee has become very common. Guarantor is one who gives a promise to answer for the payment of some debt or the performance of some duty in the case of failure of another person, who, in the first instance, is liable to such payment or performance.
    
7. Mortgager and Mortgagee:
   "Mortgager" is one who transfers an interest in specific immovable property by creating a mortgage. Generally it is made for the purpose of securing the payment of money advanced or to be advanced by way of a loan, an existing or future debt or performance of an agreement which may give rise to pecuniary liability.
    
8. Pawnor and Pawnee:
   A customer of the bank takes loan from the bank by way of security of moveable property is called Pawnor (pledgee) and the relation between customer and banker stands Pawnor (pledgor) or Pawnee (pledgee). A pawn is a sort of bailment in which goods or chattels are delivered to another as a pawn, to be a security of money borrowed.
    
9. Lessor and Lessee:
   Sometimes relation of a banker and customer also arises as lessor and lessee. Where there is a transfer of interest relating to immovable property between the banker and its customer, the relationship between a banker and a customer is that of lessor and lessee. When a customer hires a locker, the relationship between the parties is that of a lessor and lessee.
   
   

Conclusion:
The relationship between a banker and a customer is a crucial one, as it involves the handling of important financial assets and the provision of financial services. The relationship can be understood as a principal-agent relationship, where the customer entrusts the bank or the banker with their money and other financial assets, and the bank or the banker acts on the customer's behalf to manage and invest those assets. The customer-banker relationship is built on trust and mutual understanding, and both parties have certain rights and obligations that they must adhere to.