Banker as certain obligation to be fulfilled towards the customer1.Obligation to honour the customers cheque2.Obligation to maintain secrecy ofcustomer’sAccount3.Obligation to give reasonable notice before closing thecustomer’saccounts.4.Obligation of Banker to Maintain Proper Records:The banker is under an obligation tomaintain accurate record of all the transactions(credits and debits) of the customers madewith the bank.5.Obligation of Banker to FollowCustomer’sInstructions:The banker is under a legalobligation to follow the instructions of the customer. This is so because there is thecontractual relationship between the bank and the customer.
OBLIGATIONS OF THE BANK1.Obligation to honour the cheque: Under section 31 of NI Act 1881, the banker is obliged to make payment of the cheque ,with mandate, properly presented, provided there is balance in the account. ▪However, when a garneshee order is served on the banker, thebanker may seek refuse under order 21 of code of civil procedure1908 and the banker may not pay the cheque when such order isserved.▪If a debtor fails to pay the debt to the creditor, the latter may approacha court of law to issue a garneshee order on the banker of his debtor.
Banker Obligation to honour the customers cheque:The bank has the obligation to honourcustomer’scheque asand when they are presented. A banker must honour thecustomer’scheque drawn on him provideda.Sufficient fundsb.Correctness of the chequec.Proper drawing of the chequed.Proper presentatione.Reasonable time for collection
A cheque is said to be dishonoured when the payment is not made. Circumstance fordishonour of cheque are:1.Insufficiency of funds2.Notice of thecustomer’sdeath3.Notice of thecustomer’sInsolvency4.Trust accounts5.Suspicion about the title over the cheque6.Presentation of a post-dated cheque7.Joint account8.Material alterations9.Drawer’ssignature10.Proper form of the cheque11.Drawn on another branch
▪A cheque may be dishonoured by a banker by mistake or bynegligence on the part of any of the employees, even thoughthere is sufficient balance and cheque has been drawn in aproper manner.▪Thebankerwillbeheldresponsibleforthewrongfuldishonour of a cheque because of loss or damage to thecustomer.
OBLIGATIONS OF THE BANK 2.Obligation to maintain secrecy:▪Section 13 of Banking Companies Act 1970stipulatesthebankstomaintainsecrecyoftheircustomers'accounts and dealings with them.▪ThisobligationoftheBanktomaintainsecrecycontinues evenafter thecustomer’saccount is closed.▪If the banker makes an unwarranted disclosure of thestatus of account of thebank’scustomer, the bankerbecomes liable tocompensate the customer.
OBLIGATIONS OF THE BANKHowever there are exceptions. The exceptions are :▪When law requires.