Basically, the relationship between banker and customer is contractual in nature. Since bank offers the variety of services to the customer, the relationship between the bank and the customer vary according to the type of service rendered by the bank.
Relationship of Debtor and Creditor
Banker accepts deposits of money from his customers for the purpose of lending and investment and repays it on demand as per the terms of the contract of deposit. In fact, deposit accepted by the bank is technically money loaned out to the bank from the depositors. Therefore, the general relationship between a depositor and the banker is a relation of the debtor and the creditor. The depositors are creditors and the bank is the debtor. However, the relationship between the banker and customer is directly opposite when the bank lends money to its customer. The bank becomes the creditor and the customer becomes the debtor.
Relationship of Trustee and Beneficiary
When a banker accepts items like securities or documents for safe custody or maintains escrow accounts of the customers, the relation between the banker and customer is a Trustee and the Beneficiary (Trustier). The bank is the Trustee and the customer is the beneficiary.
(Escrow is a separate type of bank account generally opened for various business deals like acquisition, transfer of shares and debentures of a company, where money deposited in banks will be released only under fulfillment of certain conditions of a contract).
Relationship of Lessor and Lessee
Similarly, when a customer hires a safe deposit locker from the bank, the relation between the bank and the customer is lessor and lessee. The bank is the lessor (licensor) and the hirer of safe deposit locker is the lessee (licensee/tenant).
Relationship of Principal and Agent
When a bank collects cheques, bills and other instruments for customers, the relation between the bank and customer is that of Principal and Agent. The bank also makes regular payments of insurance premium rent etc. as per standing instruction received from the customer. In the above cases also the relation between the bank and the customer is of Principal and agent. The bank act as the agent and customer the principal.
Relationship of Assigner and Assignee
An assignor is a person who transfers his security rights to a lender as collateral to the money borrowed by him. The transfer of Life Insurance Policies, National Saving Certificates, Supply bills etc. in the name of the bank is examples of assignment. The bank on whose name security rights are transferred by the assignor is called as assignee. On full payment of dues to the assignee, the assignor can get the security re-assigned in his name.
Relationship of Bailor and Bailee
Bailment refers to delivery of goods by one person to another for some purpose under a condition that the goods to be returned to depositor when the purpose is accomplished or otherwise disposed of according to the directions of the person while delivering the goods (Sec 148 of contract act). The person delivering the goods is known as bailor and the person to whom goods are delivered is called bailee
Some examples of bailment are;
- A car parked in a parking area where parking charge is collected. The car owner is the bailor and the contractor who collected the charge is the bailee. As a bailee, the contractor has to take care of the car parked at his parking area.
- The articles, valuables, securities deposited in the safe deposit vault of the bank are also an example of bailment. In this case, the customer and banker relationship is bailor and bailee, besides their relationship as trustee and beneficiary. The bailor is still the rightful owner of the item though the item is in bailee’s possession. As a bailee, the bank has to take care of the goods bailed.
- Relationship of Pledger and pledgee is also a type of bailment in which goods are delivered by one person to another as a security for payment of a debt or performance of a promise (Sec 172, Contract Act, 1872). For example, the borrower delivers the gold jewel to the bank as a security for the loan granted by the bank. In this case, the borrower who pledged the gold to the bank is the bailor (pledger) and the bank is the bailee (pledgee).