Banker–Customer Relationship and Types of Accounts
Banker–Customer Relationship and Types of Accounts
This domain tests the legal relationship created by deposits, loans, safe custody and agency services, and the account types available. Questions often ask who is debtor and who is creditor, or which account suits a given customer.
Relationships
- Deposit: the customer is the creditor and the bank is the debtor. The bank owes the customer the balance.
- Loan or overdraft: the relationship reverses; the customer is the debtor and the bank is the creditor.
- Agency: the bank collects cheques, pays standing instructions and buys securities for the customer.
- Safe custody and locker: the bank provides a facility; RBI locker rules require an agreement, a compensation policy, and a clear procedure for accessing the locker. The bank is not automatically liable for loss caused by fire, theft or burglary unless negligence is proved.
- Trustee and bailee relationships arise in specific mandates; they are not the default deposit relationship.
Account types
- Savings account: for individuals and eligible entities; interest-bearing; transaction restrictions.
- Current account: for businesses and others needing frequent transactions; no interest.
- Fixed and recurring deposits: term products.
- BSBDA: basic savings bank deposit account with no minimum balance and limited free transactions.
- Joint accounts: either or survivor, former or survivor, latter or survivor, or jointly.
- Nomination: the nominee receives the money as a trustee of the legal heirs, not as owner.
Worked example
A customer deposits ₹50,000. On the bank's balance sheet this is a liability, and in the customer's passbook it is a credit. If the bank fails, the customer ranks as an unsecured creditor, but DICGC insurance covers up to ₹5 lakh per depositor per bank. If the same customer borrows ₹2 lakh, the bank becomes the creditor. The direction of the relationship is the key.
Traps
- Bank secrecy is not absolute; statute, court orders, RBI and consent create exceptions.
- Nomination does not override succession law.
- A current account earns no interest.
- Locker liability is fault-based, not automatic.