Duties
1. To receive his customer’s money and cheques and other instruments for collection
2. To repay the customer’s deposit on the presentation of customer’s mandate known as the
cheque
3. To maintain secrecy in respect of customer’s account and affairs
4. To give a reasonable notice before closing a customer’s account.
OBLIGATIONS OF A BANKER
Though the primary relationship between a banker and his customer is that of a debtor and a
creditor or vice versa, the special features of this relationship, impose the following additional
obligations on the banker.
1. Obligation to honour the cheques:
The deposits accepted by banker are his liabilities
repayable on demand or otherwise. The banker is therefore, under a statutory obligation to
honour his customer’s cheques in the usual course.
If the drawee of a cheque having sufficient funds of the drawer in his hands, properly applicable
to the payment of such cheque must pay the cheque when duly required to do so and in default of
such payments must compensate the drawer for any loss or damage caused by such default.
Thus, the banker is bound to honour his customer’s cheques provided the following conditions
are fulfilled:
i)
There must be sufficient funds of the drawer in the hands of the drawee. By sufficient funds is
meant funds at least equal to the amount of the cheque presented. The funds must be sufficient in
the hands of the banker.
Generally, the cheques sent for collection by the customer are not related as cash in the hands of
the banker until the same are realized. The banker credits the amount of such cheques to the
account of the customer on their realization.
A banker should therefore, be given sufficient time to realize the amount of the cheque sent for
collection before the said amount is drawn upon by the customer.
Further, the credit balances in other accounts of the customer at other branches or head office of
the bank need not be taken into account in computing the sufficiency of funds for this purpose.
Cheques are generally payable at the branch where the account of the customer is kept and each
branch of a bank is treated as a distinct entity for this purpose.
It is to be noted that the funds in the hands of drawee banker must be equal to or more than the
amount of the cheque presented for payment. The banker is directed by the drawer to pay a
specified sum of money to the payee and if such sum is not in the hands of the banker at the time
of presentation of the cheque, the latter is under no obligation to make part payment of the
cheque. He would, therefore, be justified in refusing payment of the cheque.
If the payee of the cheque makes a deposit in the account of the drawer to make up such
deficiency and then presents the cheque for payment, the banker will be justified in making such
payment. But the banker should not disclose to the payee the amount by which the credit balance
in the drawer’s account fall short of the amount of the cheque, otherwise he will be liable for
damage for disclosing information about his customer’s account to a third party.
