- Banker’s obligation to award the cheques,
- Banker’s lien
- Banker’s duty to hold secrecy of customer’s accounts and
- His correct inwards honor of combining accounts
- Banker’s Right to Set-off
Now let’s accept a detailed hold back at them
1. Obligation to award cheques : According to Sec. 31 of the Negotiable Instruments Act, 1881, every banker must award the cheques drawn on it past times a customer, provided :
- the client has sufficient total of repose to his trouble organisation human relationship amongst the banker;
- the funds are properly applicable to the payment of such cheque;
- the banker has been duly required to pay;
- the depository fiscal establishment represent has been presented to the banker inside a reasonable fourth dimension (i.e., inside half dozen months) afterwards the apparent appointment in addition to of its issue;
- no prohibition lodge of the courtroom or whatever other competent authorization (e.g., income tax) is standing against the trouble organisation human relationship of the customer.
2. Banker’s Lien : A lien may last defined equally the correct to retain holding belonging to a debtor until he is discharged of his debt due to the servant (creator) of the property. The banker’s lien refers to the correct of banker over such of his customer’s securities equally may come upwards into his possession inwards the ordinary course of report of business. According to Sec.171 of the Contract Act, a banker has a full general lien on cash, cheques, bills of telephone commutation in addition to securities deposited amongst him.
Conditions required for the banker to job full general lien
- The securities in addition to goods must come upwards to his hands inwards his capacity equally a banker.
- The banker should accept obtained the possession of the securities in addition to goods lawfully.
- The goods or securities should non accept been entrusted to the depository fiscal establishment for a specific or special purpose.
- The goods in addition to securities, held past times the depository fiscal establishment shall stand upwards inwards the advert of borrower solely in addition to non jointly amongst others.
- There must last no organisation either limited or implied that is inconsistent amongst the banker’s correct to lien.
3. Secrecy of Customer’s Accounts : It is an obligation on the role of a banker to hold secrecy nigh the customer’s accounts. The banker must non divulge whatever data pertaining to the client to whatever one. But at that topographic point are sure as shooting exceptions. They are,
- Where such disclosure is required past times law
- Where such disclosure is inwards world involvement to disclose
- Where the involvement of the depository fiscal establishment necessitate such disclosure
- Where disclosure is made past times the limited or implied consent of the customer; and
- Where such disclosure is permissible on trouble organisation human relationship of banking practices.
4. Banker’s Right to Combine Accounts : The banker has a correct to combine several accounts kept past times the client at the same branch or dissimilar branches of the depository fiscal establishment (Garnet V. Mc Kervan). The banker however, cannot combine the personal trouble organisation human relationship of a client amongst a articulation trouble organisation human relationship of a client in addition to another person. Customer has no correct to process 2 accounts equally one.
5. Banker’s Right to Set-Off : The banker tin adapt a debit repose to a customer’s trouble organisation human relationship amongst whatever repose standing to the customer’s credit. While doing so, the banker gives due discovery to the customer. To job the correct of set-off the next weather condition should last fulfilled;
- The debts are sure as shooting in addition to are due. The correct cannot last exercised against hereafter debt / or contingent debts.
- The debit in addition to credit balances are of the same mortal inwards the same capacity.
- There should non last whatever limited or implied understanding to the contrary.
6. Banker’s Right of Appropriation : As a role of ordinary banking business, the banker receives deposits of coin from his customer. The client has the correct to dictate equally to which trouble organisation human relationship a exceptional total is to last credited where he has to a greater extent than than ane trouble organisation human relationship in addition to / or loan account. In illustration the client has non appropriated, i.e., non indicated his trouble organisation human relationship to which the said total is to last credited, the creditor is at freedom to utilise the payment to whatever debt owed past times the debtor including to a debt barred past times limitation.
7. Banker has a correct to claim incidental charges : Every banker has a correct to claim incidental charges on unremunerative accounts of a customer, e.g., collection charges, remittance charges for drafts, etc.
Termination of Relationship betwixt a Customer in addition to a Banker
As a rule, equally long equally an trouble organisation human relationship (either deposit or loan) exists, the human relationship betwixt a banker in addition to a client would continue. The human relationship would come upwards to an terminate nether the next circumstances or conditions.
- If the client dies;
- If the client becomes an insolvent;
- If the client becomes an insane;
- If the client closes his account;
- If the banker closes the customer’s account
- If the courtroom orders the depository fiscal establishment to unopen the customer’s ccount