Legal Aspects of Banker-Customer Relationship: Loans and Advances

Abstract

The relationship between a banker and a customer arises from a contract. Fundamentally speaking, it is the relationship of debtor and creditor, the respective positions being determined by the state of the account. However, in relation to other services rendered by banker, he is sometimes an agent of the customer, for example, collection of cheques, sale of securities, etc., bailee in relation to the safe custody of valuables; and trustee when he is entrusted with property to be administered for the benefit of a named beneficiary. This article will deal with the legal aspects of the banker and customer relationship in respect of loans and advances, in short, debtor-creditor relationship and vice-versa.

Keywords: Banker, Customer, Creditor, Debtor, Loans and Advances,Term Loans, Demand Loans, Overdraft