BANKING AFFAIRS

Detailed explanation-1: -b) Trustee and Beneficiary: When a cheque or a bill of exchange is deposited with a bank for collection, the bank becomes a trustee for the cheque or bill till it is collected. Of course once the cheque is collected and the proceeds are credited to the customer’s account the banker becomes the debtor.

Detailed explanation-2: -On the other hand, the relationship between the customer and the banker can be that of principal and agent. Agent can be defined as a person employed to do any act for another or to represent another in dealings with third persons. The person for whom such act is done or who is so represented is called “the principal”.

Detailed explanation-3: -Debtor and Creditor Relationship-The relation of banker and customer is primarily that of debtor and creditor. But who is what at a particular moment depends on the balance of the account of the customer. If the account shows a credit balance, the banker will be a debtor and the customer a creditor.

Detailed explanation-4: -In the case of any loan/advances account, the banker is the creditor and the customer is the debtor. The relationship is the first case when a person deposits money with the bank reverses when he borrows money from the bank.