Nature of Bank-Client Relation
Nature of Bank-Client Relation
A person, institution, or company involved in the banking business is called a “Banker”. In such a way client means a person who is involved with the bank through his account or any of the services of the bank. On the basis of the functions and services provided by the bank to its clients Bank – Client relationships can be considered as:
1. Debtor-Creditor Relationship: When the client deposits money in the bank then the bank is a debtor and the opposite other party is a creditor. Thus this relationship grows through depositing money to the client.
2. Contractual Relationship: This relationship establishes through the opening a bank account by the client. This relationship creates rights and responsibilities for both parties. Under this contract, the bank remains liable to return back the client’s deposited money.
3. Client’s trustee: Most of the time banks give protection to the client’s valuables, documents, etc. through providing locker services. This relationship can be considered a legal relationship.
4. Mortgage provider and receiver relationship: Bank provides loans against the client’s property. This relationship is the outcome of the client's long-term relationship and belief in the bank and the bank’s long-term services delivered to the clients.
5. Agency relationship: Payment dues and collection receivables on behalf of the clients are the responsibilities of the bank.
The nature of the relationship between a bank and its clients is a fiduciary one, meaning that the bank has a legal and ethical obligation to act in the best interests of its clients. Banks are expected to provide their clients with impartial advice and to use their clients' funds in a responsible manner. In exchange for this trust, banks are also obligated to maintain the confidentiality of their client's financial information.
In practice, the bank-client relationship involves the bank providing a range of financial services to its clients, including accepting deposits, lending money, facilitating payment transactions, and offering investment products. The bank may also provide clients with advice on financial matters, such as managing their money, planning for retirement, or investing their savings. The nature of the relationship between a bank and its clients is shaped by the terms of the contracts between them and by relevant laws and regulations.
