Lesson 20 Banker Customer Relationship -Banking and Finance-Handout, Exercises of Banking and Finance

Download Lesson 20 Banker Customer Relationship -Banking and Finance-Handout and more Exercises Banking and Finance in PDF only on Docsity! LESSON 20 BANKER-CUSTOMER RELATIONSHIP Types: There are amongst others the following important type of relationships between a banker and his customer:  Debtor and Creditor  Creditor and Debtor  Principal and Agent  Bailer and Baillie  Mortgagor and Mortgagee  Pledger and Pledgee Before we move on to discuss the above relationships we need to understand certain terms/concepts including banker, customer, banking and banking company. The same are explained in the following paragraphs. Banker: Words Banker/Bank/Banking are interchangeably used. Banker not specifically defined. Meanings inferences and definitions are derived from in- depth study of various statutes relating to banking and writings of renowned economists and jurists. However, in different statutes including banking company's ordinance, 1962, concepts such as business of banking/functions of banks and business transacted by banks are contained. Some of the Definitions of Banker: According to J.W. Gilbert “A banker is a dealer in capital, or, more properly, a dealer in money. He is an intermediate party between the borrower and the lender. He borrows from one party and lends to another” According to Dr. Herbert L. Hart “A person carrying on a business of receiving money, and collecting drafts for customers subject to the obligation of honoring cheques drawn upon him from time to time by the customers to the extent of the amounts available on their current accounts According to Sir John Paged: (considered as an authority on banking law) “that no person or body corporate or otherwise, can be a banker, who does not (i) take deposit accounts, (ii) take current accounts, (iii) issue and pay cheques and (iv) collects cheques crossed and uncrossed for his customers” Sir John Paget further adds that one claiming to be a banker must profess himself to be one, and the public must accept him as such, hi main business must be that of banking, from which generally he should be able to earn his living. This definition is fairly exhaustive, although it makes no mention of many other important functions of the present day banker, which may be put under two heads (a) agency services, comprising of the collection of bills, promissory notes, coupons, dividends, payment of subscription and insurance premiums, and (b) general utility services, e.g., issue of credit instruments, the transaction of foreign exchange business, the safeguarding of valuables and documents against fire, theft, etc. there seems to be no doubt that according to English Law; a person claiming to be treated as a banker, should perform the functions as given by Sir John Paget. American Version: “by “banking” we mean the business of dealing in credits, and by a “bank” we include every person, firm or company having a place of business where credits are opened by deposits or collection of money or currency, subject to be paid or remitted on cheque or order, or money is advanced or loaned on stocks, bonds, bullion, bills of exchange or promissory notes or where these are received for discount or sale” docsity.com United Kingdom’s Version: (According to bills of exchange Act, 1882) “A banker is any person who carries on the business of banking” According to Finance Act, 1915: “Any person carrying on a bonafide banking business in the United Kingdom is a banker” According to Negotiable Instruments Act, 1881 (according to Sec 3 (b) of Negotiable Instrument Act) and BCO, 1962 “ Banker means a person transacting the business of accepting for the purpose of lending or investment, of deposit of money form the public, repayable on demand, or otherwise or withdraw able by cheque or otherwise, and includes any post office savings bank. ” In Halsbury’s Laws of England: Banker is defined as an individual, partnership or corporation, whose sole or predominating business is banking, that is, the receipt of money on current or deposit account, and the payment of cheques drawn by and the collection of cheques paid in by the customer. Conclusion: We can say that banker is what banker does. It takes us to the business of banking or functions performed by banks Definition of Banking, Banking Company & Forms of Business-- BCO, 1962 Re-visited “Banking means the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdraw able by cheque, draft, payable to order or otherwise; “Banking Company” means any company which transacts the business of banking in Pakistan; Forms of business carried out by the banking company under section 7 BCO, 1962: In addition to the business of banking, a banking company may engage in any one or more of the following forms of business, namely:- a) Borrowing, raising, or taking up of money; the lending or advancing of money either upon or without security; the drawing, making, accepting, discounting, buying, selling, collecting and dealing in bills of exchange, hundies, promissory notes, coupons, drafts, bills of lading, railway receipts, warrants, debentures, certificates, scripts Dealing in (participation term certificates, term finance certificates, musharika certificates, modaraba certificates and such other instruments as may be approved by the State Bank) and other instruments, the granting and issuing of letters of credit, issuing of traveler's cheques and circular notes; (aa) the providing of finance as defined in the Banking Tribunals. b) Acting agents for any Government or local authority or any other person or persons; the carrying on of agency business of any description including the clearing and forwarding of goods, giving of receipts and discharges and otherwise acting as an attorney on behalf of customers, but excluding the business of a managing agent or treasurer of a company; (bb) acting as “modaraba company” under the provision of the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980 (XXXI of 1980); c) Contracting for public and private loans and negotiation and issuing the same; d) The effecting, insuring, guaranteeing, underwriting, participating in managing and carrying out of any issue public or private, Government, municipal or other loans or of shares, stock debentures, (debenture stock or other securities)* of any company, corporation or association and the lending of money for the purpose of any such issue e) Carrying on and transacting every kind of guarantee and indemnity business; (ee) purchase or acquisition in the normal course of its banking business of any property, including commodities, patents, designs, trade-marks and copyrights with or without buy-back arrangements by the docsity.com