BANKER'S SPECIAL RELATIONSHIP
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Small Finance Bank — Small Finance Bank.
One-liners from this chapter
Free sample — 8 of 66 rapid-fire Q&A cards.
What is the meaning of 'special relationship' between a banker and customer?
It refers to the unique fiduciary and contractual duties a bank owes to its customer beyond a simple debtor-creditor relationship, including confidentiality, duty of care, and good faith.
What is the nature of the relationship between a bank and a customer who deposits money?
Bank becomes debtor; customer becomes creditor of the bank.
When does the relationship of debtor and creditor arise between a bank and its customer?
When a customer deposits money, the bank becomes the debtor and the customer becomes the creditor; when a loan is granted, the roles reverse with the customer as debtor and the bank as creditor.
What is a 'general lien' that a banker exercises over customer securities?
Right to retain all securities until all dues are paid.
What is the duty of secrecy owed by a banker to its customer?
A banker is under an implied legal duty not to disclose a customer's account details or transactions to any third party without the customer's consent, legal compulsion, or public duty.
Under which Act is a bank legally obligated to disclose customer information to authorities?
Income Tax Act, FEMA, and Prevention of Money Laundering Act.
Under which landmark case was the banker's duty of secrecy first established?
The duty of secrecy was established in Tournier v. National Provincial and Union Bank of England (1924), which identified four exceptions to this duty.
What is the rule regarding appropriation when a debtor pays money without specifying its application?
Bank may apply payment to any lawful debt, even a time-barred one.
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