Banker and Customer Relationship Types Under Law

Hi Friends, today we are discussing different Types of Relationships that Banks manage with their Customers. In this we explained some relations on how banker and customer act in different conditions.

1) If a customer is a depositor, the relationship with the bank is,
  • Banker will become Debtor
  • Customer will become Creditor
All deposits of the bank are shown as liability by the bank & RBI calling Total deposits in the bank as Demand Time Liabilities.

2) If a customer is a Borrower, the relationship under law
  • Banker will become Creditor
  • Customer will become Debtor
3) If a person has taken a locker from the bank, the relationship is
  • The bank will become Licensor
  • Customer will become Licensee
4) If a customer has a box containing valuables in a bank separately under safe deposit, the relationship is
  • Customer will become Bailor (Bailment means delivery of the article)
  • Banker will become Bailee
5) If a customer has taken a loan on Gold ornament which is called “pledge of gold”. The relationship is.
  • The customers will become Pledger (pledge – giving loan by the bank on movable items like gold ornaments by keeping them under bank custody)
  • The bank will become pledgee (Pledgee is given in Indian contract Act section(171) & (172).
6) Gold Biscuits are called Gold Bullion on which banks cannot give loan as per RBI rules. Because bullion will help for smuggling activity and so RBI do not permit.

7) In case of customer taking loan on immovable, the relationship is
  • Customer will become Mortgager
  • Bank will become Mortgagee ( Mortgage is given in transfer of property Act sect 58(A) to 58 (F)
8) If a customer has taken a loan on vehicle which is movable, bank cannot give “pledge loan” but it can give “Hypothecation loan”. (Hypothecation means bank is having a right on the vehicle but no owner ship (or) no possession). When a bank has financed a vehicle under hypothecation, borrower will have the vehicle for running bailee but banker will have the right to take the vehicle anytime by giving notice for non-payment of the loan. Hypothecation is given in SARFAESI ACT 2002

9) In case of Hypothecation
  • Customer will become Hypothecair
  • Banker will become Hypothecate
Know more about SARFAESI Act 2002

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