Banker–Customer Relationship and Accounts
What this domain tests
This domain tests whether you can name the legal relationship in a given situation and apply account-opening, nomination and secrecy rules. Case-style questions usually hinge on who is entitled to the money.
Core rules
- Primary relationship: debtor and creditor. When the customer deposits, the banker is the debtor; when the customer borrows through an overdraft, the position reverses.
- Special relationships: trustee (collecting cheques, holding securities), bailee and lessor (safe custody and lockers), agent (standing instructions), and executor in some estate matters.
- Rights of the banker: banker's lien (retain goods and securities in possession until the debt is paid), right of set-off (combine accounts of the same customer), and garnishee orders.
- Obligation to honour cheques: a banker must pay a cheque that is properly drawn, not stale or post-dated, with sufficient funds in a properly operated account.
- Secrecy: the duty of secrecy is qualified by statutory disclosure, court orders, RBI directions, customer consent and public interest.
- Accounts: savings (withdrawal limits, interest), current (no interest, for business), fixed and recurring deposits, BSBDA small accounts, and NRE, NRO and FCNR accounts for non-residents.
- KYC: identity, address and PAN or Aadhaar verification with periodic updation. A minor up to 10 years is operated by a guardian; above 10 the minor may operate and sign, but no overdraft is allowed.
Worked example
A joint savings account marked 'either or survivor' holds ₹5 lakh. One holder dies. The bank pays the survivor after a death certificate and claim form; it does not demand a succession certificate, because the survivorship clause governs. If instead the single account had a nominee, the nominee receives the money as a trustee for the legal heirs, not as the owner.
Traps that cost marks
- Treating a nominee as the legal heir.
- Claiming bank secrecy is absolute.
- Confusing the right of set-off with banker's lien, or confusing 'stop payment' with closing the account.