Definition of Banker & Customer 🤝

To understand the relationship, we first need to define who is a banker and who is a customer legally.

Definition of Banker 🏦

Banking Regulation Act, 1949 (Section 5b) defines Banking as: "Accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise."

So, a Banker is one who:

1. Accepts deposits from the public.
2. Lends or invests that money.
3. Allows money to be withdrawn by cheque/draft.

Essential Features:

• Acceptance of deposits is mandatory.
• Deposits must be withdrawable.
• Business must be with the public (not just members/friends).

Definition of Customer 👤

There is no statutory definition of "Customer" in any Indian banking law. However, based on legal judgments (Case Laws), a customer is defined by:

1. Duration Theory (Old View)

• To be a customer, one must have a habitual dealing with the bank for some time.
• A single transaction did not make one a customer.
• This view is now rejected.

2. Transaction Theory (Modern View)

• Even a single transaction makes a person a customer.
• Condition: The transaction must be of a banking nature (e.g., opening an account).
• Frequency doesn't matter. If you open an account today, you are a customer today.

Key Requirements to be a Customer:

1. Bank Account: Must have an account (Savings, Current, FD) with the bank.
2. Dealing: Must have dealings of banking nature.

KYC (Know Your Customer) Connection 🆔

Today, a person becomes a customer only after complying with KYC norms (RBI mandate).

• Identity Proof (Aadhaar, PAN).
• Address Proof.
• Photograph.

Without KYC, no banking relationship can start!

Quiz Time! 🎯

💡 Final Wisdom: "A banker deals in other people's money. A customer trusts the banker with their money. It's a relationship built on trust and law!" 🤝⚖️

Next up: General Relationship - Are you the master or the servant? (Spoiler: Neither!) 🔄