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RELATIONSHIP BETWEEN BANKER AND CUSTOMER - Coggle Diagram
RELATIONSHIP BETWEEN BANKER AND CUSTOMER
Definition of banks according to
Section 2, Financial Services Act 2013
A person which carrying out banking business of
Paying or collecting cheques
Providing loans and advances to customers
Receiving deposits
Any provisions allowed by Ministry of Finance
Case: United Dominions Trust Ltd vs Kirkwood
Accepting money and collecting cheques
Accepting cheques and make payments
Keeping some form of current or running accounts in their books
Definition of customer according to
Section 2,FSA and IFSA 2013
"depositors" means a person entitled to repayment of deposit, whether make by him or any other person
Common law
A person who has and account with the bank
5 types of Bank-Customer relationship
Contractual
controlled according to 4 factors
Rules of agency of which may applied
Generally banking practices
Rules of general contract
Different relationships based on transactions
Special
Relationship that bank and customer may enter during the course of their dealing such as becoming financial adviser for foreign transactions
Undue influence is influence that prevents someone from exercising an independent judgment with respect to any transactions
Trustee and beneficiary
Bank may become as constructive trustee
Requires good faith to exist
Independent of the contractual relationship between bank and customer
Customer may not have account with bank
Debtor and creditor
Customer borrows money from bank, customer become debtor, bank becomes creditor
Bank will use whatever money that customer deposits to give out loans
Principal and agent
Customer instruct his bank to perform certain transactions, customer become principal and bank is agent or act as broker
Customer is advised to open saving or current account with the bank to enable them to make transactions into or out the customer's account
Banks normally charge commissions for the service rendered for that particular transaction
Duties of a banker
Secrecy of customer account must be strictly observed
Exercise care and skill when dealing with customers
Give notice of closure of credit account
Send regular statement of accounts usually monthly basis
Pay on demand all cheques and written orders during banking hours
Duty with regard to Garnishee Order
Collect money and cheques
Rights of customer
Right to repaid the balance standing to the credit of the customer's account
Right to interest on his deposit accounts but not on current account
Right to be supplied with a statements or passbook and to maintain a high degree of accuracy in their book keeping
If customer has more than one borrowing accounts, he has right to appropriate payments made to any of the accounts he likes
Duties of customer
Should only use the cheques forms supplied by the bank for issuing cheques
Should maintain proper records of all cheques issued
Duty to notify bank promptly of any forgeries
Customer undertakes not to issue any cheques unless he has sufficient funds in his account to cover or pay the cheque issued
Must exercise reasonable care in drawing his cheque as not to mislead his banker or to facilitate forgery
Termination of Bank-Customer Relationship
Contract between a banker and customer can be terminated under the following 3 conditions
Uniterally
Termination by bank
Termination by the customer
Mutual agreement
Closure by operation of law
Interference by third parties on banker-customer relationship
Mareva Injunction
Garnishee Order