General Relationship: Debtor-Creditor 🔄

The relationship between a banker and customer is complex and changes based on the transaction.

1. Debtor and Creditor (Primary Relationship) 💰

When you deposit money in a bank, who is the owner of that money? Surprise: The BANK becomes the owner!

• Customer = Creditor (Lender).
• Banker = Debtor (Borrower).

Why?

• When you deposit cash, bank doesn't keep your specific notes in a separate box.
• It mixes your money with others' money and uses it (lends it).
• Bank promises to repay an equivalent amount when you ask.

Reverse Case (Loan):

• If you take a loan from the bank (or have Overdraft).
• Customer = Debtor (Borrower).
• Banker = Creditor (Lender).

2. Principal and Agent 🕴️

When bank performs agency services for customer:

• Customer = Principal.
• Banker = Agent.

Examples:

• Collecting cheques/bills.
• Paying electricity bills/insurance premiums (Standing Instructions).
• Buying/selling shares.

Rule: As an agent, banker must act according to the instructions of the principal (customer).

3. Trustee and Beneficiary 🛡️

When customer entrusts money/assets for a specific purpose:

• Customer = Beneficiary.
• Banker = Trustee.

Examples:

• Safe Custody: You give sealed box of jewelry to bank for safe keeping. Bank cannot use it. Bank is trustee.
• Escrow Account: Money kept for specific deal.

Difference from Debtor-Creditor:

• Debtor: Bank can use your money (deposits).
• Trustee: Bank CANNOT use your asset (jewelry in locker). Must return the same article.

4. Bailee and Bailor 📦

When you leave valuables (Safe Deposit Locker):

• Customer = Bailor (Giver).
• Banker = Bailee (Receiver).

Duty: Bank must take reasonable care of your goods (like a man of ordinary prudence).

5. Lessor and Lessee (Locker) 🔐

Strictly speaking, for Safe Deposit Lockers:

• Banker = Lessor (Landlord).
• Customer = Lessee (Tenant).

Why? Bank rents out the space (locker). Bank doesn't know what's inside.

Summary Table 📊

Quiz Time! 🎯

💡 Final Wisdom: "The relationship changes with every transaction. Know your role to know your rights!" 🎭

Next up: Special Relationship - Rights and Obligations of a Banker! ⚖️