Obligations of a Banker

Bankers obligations
To honor customers cheques
Secrecy of customers accounts
Garnishee order (order by the court)
Duty to provide proper services
Duty to submit periodical statements
Articles/items kept should not be released to a
third party without due authorization by the
customer
 Bankers obligations-honor cheques

The banker is supposed to honor the

cheques of a customer provided the
cheques are:
i. Properly drawn
ii. The customer has a balance to his credit
iii. There is no legal bar or restriction attached to the
customers account
iv. Bankers obligation in wrongful dishonor of
cheques
 Bankers obligations-honor cheques

Conditions where a banker may refuse a

payment of a cheque:
i. Funds insufficient
ii. Not properly drawn
iii. Cheque is post dated
iv. The amount is not free from lien
v. A crossed cheque
vi. Cheque is received after-receipt of information of
death, insolvency or lunacy of the drawer
vii. Receipt of instructions from the drawer to stop the
payment
viii. Drawers signature differs
 Bankers obligations-secrecy of
accounts
Obligation continues even after the customers
account is closed.
Banks obligation of keeping the secrecy of the
status of the customers account is qualified and
not absolute.
There are certain circumstances under which, the
obligation may be relinquished.
 Bankers obligations-secrecy of
accounts
The conditions under which a banker is
justified in making disclosures:-
i. Under law
ii. Under express or implied consent of the
customer
iii. Under the practices/usages in the banking
system
iv. Disclosure in the banks interest
v. Disclosure in public/national interest
Why bank secrecy is desirable?
Adversely affect the reputation of the
customer.
Customer becomes known to the business
competitor.
Financial position of the customer may be
known to a creditor of the customer.

2017/10/5
Bankers obligations-to provide services
Duty to pay bills etc., as per standing instructions of the
customer.
Duty to provide proper services.
Duty to act as per the directions given by the customer. If
directions are not given, the banker has to act according to
how he is expected to act.
Duty to submit periodical statements i.e. informing
customers of the state of the account.
Articles/items kept should not be released to a third party
without due authorization by the customer.
Thank You