Banker Customer Relationship for JAIIB Exam 2022

Table of content

Banker Customer Relationship is an important topic included in the JAIIB module B Exam. Since getting the IIBF JAIIB certification requires high marks, every aspirant must understand each topic covered in the syllabus. This guide contains all relevant details about Banker Customer Relationship, such as the classification, banking, etc. We request our readers to go through this guide to understand the topic and practice using online mock test series to improve their knowledge of Banker Customer Relationship.

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Banker Customer Relationship: Overview

The Banker Customer Relationship is dependent upon the actions, products, and services offered by the bank or utilised by the customers. Therefore, the relationship between a banker and a customer is purely transactional. The success of a bank rests heavily on its relationship with the customer. Thus, the importance of faith in establishing a healthy relationship between a banker and a consumer cannot be overstated.

Banking

Let’s start with a definition of Banking. The Banking Regulation Act 1949 defines Banking as accepting money from the public for the purpose of lending or investment, which is repayable on demand or otherwise and withdrawable by cheque, draft, order or other means.

Important Aspects of Banking

The Act has prohibited individuals from acting as banks and using the phrase in commerce.
A bank, banker, or banking corporation can be a company with no more than ten members or a company formed under the Indian Companies Act, 1956.
As per the Banking Regulation Act, a Banking Company is an institution conducting banking activity in India.
The Act prevents non-banking companies from using the terms banker, banking, and banking company.
No individual, group of individuals or corporation may use these words for themselves.

Essentials of Banking

Acceptance of deposits for lending purposes
Acceptable from the general public (nidhis, cooperative societies, and multi-benefit societies are excluded from the scope of this provision)
Acceptance of monetary deposits
No control of depositors over the administration
Prioritise and emphasise the protection of depositor interests

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Important Functions of the Bank

Accepting public deposits and utilising the funds through loans and investments
Collecting cheques and bills
Conducting Government transactions (Central/State)
Discounting of invoices
Issuing credit letters and assurances
Performing foreign currency transactions
Remittances
Renting security deposit lockers
Safekeeping of objects

Banker: A banker is a person who conducts banking activities like accepting deposits, lending money, withdrawing services, and exchanging money. A banker oversees all banking operations and is either the owner or director of the bank.

Customer: A customer is a person who has a bank account and for whom the banker agrees to provide banking services.

To qualify as a customer, the following conditions must be met:

The bank account, savings, current, or fixed deposit, must be opened in his name with the required initial deposit.
The interactions between the banker and customer must be consistent with the banking industry’s nature.

Bank customers can be classified into four major categories:

Existing Customers: Customers who keep an account relationship with the bank.
Former Customers: Customers who previously had an account relationship with the bank.
Walking Customers: Individuals who do not have an account relationship with the bank but often visit a bank branch to avail of banking services, such as obtaining a draught or cashing a cheque. However, they cannot be considered customers because they do not have an account in the bank.
Prospective/Potential Customers: Customers who are interested in establishing an account relationship with the bank. A person is considered to be a “customer” if he has submitted a properly completed and signed account opening form to the bank and the bank has accepted it, even though it has not yet been established in the bank’s records.

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Classification of Banker Customer Relationship

Debtor and Creditor Relationship
Creditor and Debtor Relationship
Pledger and Pledgee Relationship
Licensor (Lessor)and Licensee (Lessee) Relationship
Bailee and Bailor Relationship
Hypothecator and Hypothecate Relationship
Trustee and Beneficiary Relationship
Agent and Principal Relationship
Indemnifier and Indemnified Relationship
Advisor and Client Relationship

Debtor and Creditor Relationship

When a customer opens an account with a certain amount of money, the bank/banker becomes a debtor. As long as his account has a credit balance, the depositor remains his banker’s creditor. The relationship with a customer is reversed the moment their account becomes overdrawn.

If the customer takes out a loan from the banker, he becomes a creditor of the banker and remains in that role until the debt is repaid. The customer must request funds in a proper manner, such as by draught, cheque, withdrawal form, pay order, or other means. Requests should also be made during business days and hours.

Creditor and Debtor Relationship

When a consumer loans money from a bank, the customer becomes the borrower, and the bank becomes the lender. Therefore, the banker and customer relationship are of the creditor and debtor. The banker may demand repayment of the loan or advance on the due date, and the consumer must refund the amount.

Pledger and Pledgee Relationship

In the scenario, when a customer takes out a loan by pledging certain assets or security to the bank, the customer becomes the Pledger, and the bank becomes the Pledgee.

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Conclusion

This article has covered Banker Customer Relationship in-depth to help the candidates prepare for their JAIIB exams. To perform well in this competitive exam, we advise them to study carefully and comprehensively, covering all exam topics. Also, practice online mock tests to brush up on their knowledge about the topics and score well in the JAIIB exam.

FAQs

Q. When a bank lends money to a company, what type of banker customer relations relationship is involved?

A. When a bank lends money to a company, the banker-customer relationship is of Creditor and Debtor, with the bank as the creditor and the customer (the corporation) as the debtor.

Q. Which sort of account is appropriate for customers who can save regularly and anticipate a reasonable return on their deposits over time?

A. A Recurring Deposit Account. To open this type of account, an individual must agree to deposit a predetermined sum once every month for a specified duration.

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