Banker customer relationship
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Principles and Practices of Banking — JAIIB.
One-liners from this chapter
Free sample — 8 of 66 rapid-fire Q&A cards.
What is the legal nature of the relationship between a banker and a customer when a deposit is made?
When a customer deposits money, the relationship is that of debtor and creditor — the bank becomes the debtor and the customer becomes the creditor, as the bank borrows the money and is obligated to repay it on demand.
What is the fiduciary relationship between a bank and its customer when managing investments?
Bank acts as trustee with duty of loyalty and care.
Who is defined as a 'customer' of a bank under general banking law?
A customer is a person who has some sort of account with the bank or who habitually uses the banking services; even a single transaction can establish the relationship if there is an intention to continue dealing with the bank.
What is the legal position of a bank when it accepts valuables for safe custody?
Bank acts as bailee and is responsible for safekeeping.
What landmark case established that the banker-customer relationship is primarily one of debtor and creditor?
The case of Foley v. Hill (1848) established that when a customer deposits money, the bank becomes the debtor and the customer the creditor, and the bank is not a trustee of the deposited funds.
What is the relationship between a bank and customer in the context of a power of attorney?
Bank acts as agent under the authority granted by customer.
In what capacity does a bank act when it collects cheques on behalf of its customer?
When a bank collects cheques on behalf of a customer, it acts as an agent of the customer, and the principal-agent relationship exists between the customer and the bank for that transaction.
What right does a bank have to combine multiple accounts of the same customer?
Right of combination allows merging accounts to recover dues.
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