se)

What ts a Bank?

• A bank is a financial institution liner td to receive asiris

and make loans.
Banker Custorstec Retatiocte -arm( & • A Bank is a financial intermediary, because it intern-ctioleN
Special Types & their LegallitnImS between surplus unit of the society Le. depossitots =Rt&e
deficit unit of the society i.e. borrowers.
• Banks are regulated by the central bank of the countq be.
Bangladesh Bank.
• just like any other busine , the goal of a bank tea tlan
a profit for its owners.
• Banks make a profit by charging more.inteatt
borrowers than they pay on savings and other &peewit's.

Banker
Banking
• Generally, a person who is doing the bantirig
business is called banker.
• Receiving deposits.
• A banker performs multifarious functions.
• Lending or investing these depeas.
• A banker essentially be a man of wisdom.
• Repaying these deposits en demand • l& deals with others money bat *WI his own
cheque orotheiwise. faculties.
• A banker is not only acting as a depositog, agent,
but also as a repository of financial adviw.s.
• To be a banker, company's main functions *Mt
have to be business of banking'.

4.
 S • &11,6/20.22

Customer

• Mere opening of an account will constitute a person Those who do not maintain any account relationship wth the
a customer of a bank. bank but frequently visit a branch of a bank to avail of banking
• The word "customer' signifies a relationship in which facilities such as for purchasing a draft, receiving payment of a
duration is not of essence. Even a single transaction cheque over the counter etc. Technically they ace not
may constitute him as a customer.
customers, as they do not maintain an account with the beg&
• Frequency of transactions is anticipated but not
branch.
insisted upon. „
Customer benefits can be considered on the safety of &mese&
• The dealings must be of a banking nature.
held at banks; interest received for them; that the money held in
• A person or entity that maintains an account and/or
bank accounts can be returned at any time upon oequest.;
has a business relationship with the bank may be
called as a customer. transfers of money to them, instead of wearing them law stem
of cash.

jielationship between Banker and

Customer
The relationship between a banker and a customer Relationship between banks and their clients is
comes into existence when the banker agrees to open fiduciary/trustee one.
an account in the name of the custgrner. Ing-Bari on trust and bank has to carry out their
The relationship between a banker and a customer duties to the customer in utmost good faith and
depends on the activities, products, or services provided due diligence.
by the bank to its ciraOmers Bank's supreme responsibility lies in protecting
_ oTgvailed by the customer. customers deposit and secrecy about customers.
• Bank's business depends much on the strong bondage
Banks shall be impartial and non-discriminatory in
with theLoyslomer--- their dealings with the customers.
• Trust plays an imeortent role in building a healthy Any favour or indulgence to any one client or
relationship between a banker and a customer. group of client will be considered violation of
fiduciary relationship.
 3/135/2022

enerai Relationship:
Principal and Agent:

ebtor and Creditor: When a banker receives

When the banker collects cheques. bills,
eposits from a customer, he is technically said
dividend warrants, Ras.jrlsurance premium,
to borrow money from the customer. So, he is
subscriptiorTsrifi behalf of his customer then
acting as a debtor who is bound to return the the agent — principal relationship exists between
money on demand to his creditor namely his a banker and his customer. Banker acts as an
customer. agent on behalf of their customer. So, customer
But in the cases of a loan, cash credit and is the principal and bank being the agent.
overdraft, that banker becomes a creditor and
the customer assumes the role of a debtor.

L Trustee and Beneficiary: Bailor and Bailee:

• When a person entrusts valuable items with an intention

that such items would be returned on demand to the This relationship arises cut of contract of beitmerU.. As per
Or customer/beneficiary the relationship becomes of a section 148 of contract act,1872 a 'bailment' is the delivery of
trustee and beneficiary. goods by one person to another for some purpose, upon a
A banker becomes a trustee only under certain
contract that they shall, when the purpose is accomplished,
circumstances, for example, when money is deposited
for a specific purpose, till that purpose is fulfilled; the be returned or otherwise disposed of according to the
banker is regarded as a trustee for that money. directions of the person delivering them.
Again, when a cheque is given for collection, till the
The person delivering the goods is called the 'trader. The
proceeds arecollected, he holds the cheque as a
trustee. person to whom they are delivered is called She 'bailee'. Such
relationship exists while lending against pledge trf goads.
 • • Et"
N
2022.

Lessor and lessee Pledgor-Pledgee

The banks provide safe deposit lockers to • A pledge occurs when goods are delivered by one
the customers who hire them on lease person to another to be held as a security for the
basis. The relationship, therefore, is that of payment of a debt OT the performance of some other
lessor and lessee. In such case a banker
obligations and upon the express or implied
becomes the lessor and the customer
understanding that the subject matter of the pledge is to
becomes the lessee.
be restored to the owner di1 the debt is discharged.
It is only the customer who has to pay rent for
the lockers. Under such circumstances the borrower becomes the
pledgor and the lending banker becomes the pledgee.

Mortgagor-Mortgagee Special Relationship:

A mortgage Is the transfer of an interest in specffic • Apart from general features of relationship, there
immovatile property for the purpose of securing the payment exist some special features that arise due to the
of money advanced or to be advanced by way of ban, an
following legal obligations.
existing or future debt or the pedal-name of an engagement
• Statutory obligation to honor cheque: when a
customer opens an account there arises a
which may give rise to a pecuniary liability.
contractual relationship between the banker and
The person transferring the interest is called the mortgagor, The customer by virtue of which the banker
and the person to whom the interest is transferred is c-tt undertakes an obligation to honor his customers'
the mortgagee. cheques. This obligation is a statutory obligation
under Sec. 31 of N. I. Act, 1831.
 3/16/2022

Garnishee Order

However, this statutory obligation Is not absolute. The statutory

obligation to
honor a cheque Is limited In the following ways: • When a debtor fails to repay his creditor, the latter (creditor)
a) Property drawing of the cheque may apply to the court for the issue of a Garnishee Order on
b) The availability of the money In the account of the
customer the banker of his debtor.
c) Proper application of the funds
d) Reasonable time for collection • By Garnishee Order, the debtor's account with the banker
e) Existence of legal bar (Garnishee Order) stands suspended and the debtor (customer) will not be
I) When the customer countermands payments allowed to draw, though he has a credit balance.
g) Receipt of notice of customers death.
h) Customer's insolvency. • The creditor at whose request, the order is issued is called
Overriding the obligation: When a banker overrides his /her statutory 'the judgement Creditor', the customer is called judgement
obligation
and dishonors a cheque on reasonable ground, the banker is justified In
doing so. debtor, and the banker (debtor of the judgement debtor) is
However, if dishonors a cheque by mistake, the bank is liable to
compensate the
customer for any loss or damage caused to him. called Garnishee'.

Obligation to maintain secrecy of accounts:

of Garnishee Order Se
44 1e
47 Garnishee Order issued by th court is of two types namely: Order Nisi or
• The banker is under obligation to take utmost
.ereliminary Order and Order Alas lute or Final Order, care in keeping secrecy about the accounts of its
Order Arist Order Nisi is a preliminary order issued to the banker to customers.
stop the payment
over the cuNomers account To give explanation, why, the judgement
debtors credit • If the banker fails to maintain the secrecy, it will
balance should not be used for the purpose of payment of the judgement
creditor and it Is
also a duty of the banker to inforrn the same to his customer. be liable for any damages or adverse effect of
Order Absolute: It is a final order Issued by the court to the banker to pay the
amount in the customer's reputation, credit worthiness and
the judgement debtors account to the judgement creditor (decree
dinaction given by the oourt.
holder) according to the business.
Erect of Garnishee Order • This obligation continues evenS after the
After receiving garnishee order, banker is not justified in honouring
thdcheques ofhis customer has closed his account with the bank
customer. and as such, customer cannot claim the damages for dishonour
of his cheque. and even after the death of the customer.
 • • 34E12022

The general rule about the secrecy of the customer's accounts 1:) Disclosure under compulsion of law
may be dispensed with the following circuntstances: By orrfar of the court The bank is bound to disclose

1) Where disclosure is under compulsion of taw. information relating to a customer's account In the oases,
where the bank is not party to the suit but is required to
2) Where such disclosure requires in the interest of the bank and
disclose information about customer's account
as per banking practice. Where there being inconvenience of producing ledgers and
3) Where such disclosure is in public interest. other records including vouchers, the bank may produce
4) Where the disclosure is made by the express or implied before the court onty certified copy of the entries made in the
consent of the customer. customers account as prima fade evidence in accordance
with the Bankers Book Evidence Act, 1891.

The Income Tar AutlwrIffes by dint Of their power Disclosure under the Companies Act For any company

given under various sections of income Tax Act, matters it may require to be investigated under Companies
Act. In that case it is the duty of the concerned officers or
may ask the banker to furnish information about
employees and agents of the company including bankers to
their customers for assessment of tax purposes or present all the relevant books and papers before the
any other information in relation to such matters. inspecting author*.
As per section 36 of the Banking companies Ac 4 test
Disclosure to police: The police officers may
every banking company need to provide a statement
inspect the banker's books for conducting an regarding accounts that remained unclaimed for a period of
investigation. ten years or more.
 3/W2Q22

Under the Bangladesh Bank Order, 1972 Bangladesh 2) Disclosure of information as a banking practice
Bank collects credit information from the banking companies Disclosure in bank's own Interest: To legally protect bank's cA.In
under their control and also furnishes consolidate credit interest they may disclose the state of customer's account Far
information to the banking companies. However, the example, if the banker has to recover the dues from the cutl. orner Cr

Bangladesh bank order stipulates that the information shall the guarantor, It is quite justified to disclose the information to tiXE.
guarantor or the solicitor where necessary.
be kept confidential.
Banker's opinion: This is an established practice amongst ee
Under the Foreign Exchange 13egulation Act, 1947
bankers that as per Instruction of BB the commercial banks
Bangladesh bank may inspect the books of accounts and
exchange Information to each other about the defaulting aselernens
other documents of the Banking companies dealing in foreign
which is also justified.
exchange business having authorized dealership.

3)Disclonure in public interest With the express or Implied consent of the customer
• A banker may justifiably disclose any information relating to The customer may give instruction a banker to disclose lie
its customers account when it stands as a duty to the public state of the accounts to customer's employee or messenger
to disclose such information. As for example- or any other person acting as his /her agent. in such a case
a) When a bank considers that the customer is involved in there may have implied consent. However, Express =sent
activities prejudicial to the interest of the country. is required to disclose the state of a lady's account lc bet-
b) Where as per the records of the bank it reveals that the husband.
customer is contravening the provision of any law.

7
 3/1612022
S 1"1.

Other Obligation of banks

Banker to Maintain Proper Records. • Inform the customers whether the Interest rate is fixed or variable;
Banker to Follow Customers Instructions properly. Inform the basis and frequency on which interest payments or deductions are

Banker to give Notice before Closing the Account to be made;

• Explain the method used to caicidate interest of each product; .
Bank should exercise proper care and skill in carrying out any business it
Disclose- prominently the Iota/ amount of income that the costumers shall
has agreed to transact for its customer.
receive on the fixed deposits; and
Banks are to disclosure of Current Interest Rates Prior to signing the
. Disclose the total cost of credit with break tp, if any.
contract with the consumers for both interest-bearing deposits and loans
• Disclosure of latest Schedule of Charges. Fee Commission etc.
Banks & Fls shall inform the customers of the term of the fixed deposit or
• As financial service provider Banks/Fls shall, for at charges and tees to be
loan. levied at the time of service rendered or on request,
Inform the customers of the charges, If any, and consequences of . To know the customers with a schedule of charges, fees, commissions payable
premature termination of a fixed deposit or loan; for the products or services that the customers have chosen;

• Display prominently their Standard lees and charges at all branches, • Banks/Fls must take written consent from their customers for
• Inform the customers of any additional charges or expenses that the customers have any value added services, such as, inMmet banking, SMS
to pay, such as searching fees to retrieve available past records etc. of the
banking, ATM services etc. and inform the customers
• Notice of Changes to Terms and Conditions:
The terms and conditions provided by bar.ksIFIs shall highlight to a consumer the terms and conditions along with the charges, levied for that.

fees, charges, penalties, relevant Interest rates and any other consumer habit-Ciao ▪ Prior to a person acting as a guarantor, benks/Fls shall in writing
or obligadons In the use of the financial products or services. Bankeirts shall advise the person of the quantum and nature of his or her
ensure that a consumer is notified reasonably before implementing any changes
potential liabilities; and advise the person to seek independent
to the terms and conditions, foss or charges, discontinuation of service:a Of
relocation of premises of the financial services provider. legal advice before acting as a personal guarantor.

Immediately of any changes in interest rates regarding the productor service

f•
• 3/16/2022'

Right to claim incidental charges interest etc. Lien:

Another special relationship exists between Another special feature of the relationship between
banker and customer is that the banker may the banker and the customer is the banker's right
claim incidental charges including service of lien over such of his customer's securities as
charges, processing charges, appraisal charges, may come into his possession in the ordinary
penal charges, handling/collection charges, course of business.
interest on loan and so on.
A lien may be defined as the right to retain
property belonging to a debtor until he has
discharged a debt due to the retainer of the
property.

A particular lien confers a right to retain the goods in

respect of a particular debt involved in connection with A banker's lien: It must be noted that a banker's
a particular transaction. lien is generally described as an implied pledge. It
A general lien confers a right to retain goods not only means that a lien not only gives a right to retain
in respect,of debts incurred in connection with a
particular transaction but also in respect of any the goods but also gives a right to sell the
general balance arising out of the general dealing securities and goods of the customer after giving a
between the two parties. reasonable notice to him.
As per Contract Act a banker has a general lien on
cash, cheques, bill of exchange and securities This right of sale is normally available only in the
deposited with him in his character of a banker for any case of pledge. That is why a banker's lien is
money due to him as banker. Since it extends to all regarded as an implied pledge.
transactions and thus it is more extensive than that of
a particular lien.
 • • 3/16/2022

j Set-off:

A banker, like other creditors, possesses the right Automatic Right of Set-off arises In the following cases:
of set-off, which enables him to combine two Death, insanity or insolvency of the customer,
accounts in the name of the same customer and On the Insolvency of a partner or a firm or on the winding up cf
adjust the debit balance in one account with the
a company
credit balance in the other.
On receiving notice of assignment of a customer's credit
This right to combine two accounts is known as the
balance,
right of set-off:
On receiving notice of second mortgage over the security
charged to the bank.

Relationship banking
• Bankers of Bangladesb have started recognizing
the importance of relationship banking in
• Relationship banking emphasizes on managing management of earnings.
relations among depositors, borrowers, and • Now, our banks are providing greater care to
manage their depositors and customers. Banks
regulatory bodies with an ultimate object to earn are also spending a significant amount of money
sustainable growth in banking business. It for selecting a good location for their branch,
acquiring latesf teghnologie, designing new
enables banks to provide a cost-effective, win- products and services, offering good package for
win service to the valued customers. their employees and designing friendly interiors
for their clients.
• As competitions are growing in the banking
system of Bangladests customers are being well
treated by the bank officials, as they fear that
customers now have enough opportunities to
change their banks.

10
 3/16/2022

Relationship Marketing

• Financial services marketing in which a bank's Marketing activities that are aimed at developing
customer service representative (also called and managing trusting and long-term relationships
account officer, customer relationship with larger customers.
representative, personal banking officer, etc.) In relationship marketing, customer profile, buying
attempts to meet a customer's needs with a
complete package of facilities. patterns, and history of contacts are maintained in
• The package may include most or all of services a sales database, and an account executive is
such as cash management, credit cards, assigned to one or more major customers to fulfill
deposits, loans, money market investments, etc., their needs and maintain the relationship.
that may be summarized on a single bank
statement.

A Banker to remember

1. A customer is one because of whom we gg, 5. A customer brings us his wants to be attended
our salaries and all allowances etc. to by us for mutual benefit.
2. A customer is the most important person in 6. A customer is nOt a person to argue with- you
the bank, whether they serve him in person, by may win over argument but you will then lose
mail or by telephone. time.
3. A customer is not dependent on us- we are 7. A customer does us a favour by qivinq us his
dependent on him. business.
4. A customer is not an interruption in our 8. A customer is not an outsider- he is a part and
work- he is the purpose of it. parcel of our business.

11
 • • 3/16/2022

Customer service- A few fundamental

relations:
Customer service and human
principles: Customer service, which includes
service over
bank is a satisfied telephone and through
• The best asset of a the counter, over the
customer. correspondence, is a question of human
invited and stays should be
• Business goes where it is relations. Our motto therefore
where it is treated well. 'Service with a smile.'
the one who gives a
• The one who progresses is better service
little more service, a little
serves best
• He profits most who

Bank's Customer

courteous an • Regular Customers

The customer deserves the most
attentive treatment we can give him. • Casual Customers
than you
Listen more than you speak; smile more
• Cross Country Customers
frown.
• Ta m' is luxury and a costly too; it
never pays. • Corporate Customers
please', etc. come
• Let the words 'Thank you, ' If you
only from your mouth. • Internet Customers
from your heart and not
personalized service is
Let courtesy, efficiency and
ever your watchwords.
up to the
Always remember and endeavor to live
Bank with a Personal Touch'.
bank's ideal: 'The
Be a LEADER not a BOSS.

12
Strategy to meet customers' expectation

e) Deepen the relationship through regular contact, over

a) Simple and quick delivery of services though modern phone, fax, internet and other sale services. Customers
Explain
means; Branch points, booth, ATM internet-computer total need should be found out and accommodated.
Banking. carefully and faithfully if bank is unable to accommodate a
best
regularly client's request of any kind and advise him/ her the
b) Providing up to-date information to the clients thing he/ she can do in these circumstances.
about the full range of facilities available from the bank and
provide
the ways to get it. For example, various deposit
schemes, f) Special booth by highly skilled persons to
consulting.
loan schemes, consumer credit facilities should be sent
to consulting on various matters! Investment
the clients home and or through Internet. g) The nearer the client the better.
bank and independent
c) Keep the clients informed about the rating of the h) Branches should be made smaller but made
position for assurance of safety security. agency.
credit and
d) Promptly give decision on prayers for loans and
offer the best rates.

Multi channel Core Banking

Multi Distribution Services VS.
Services.
service provided by a group of
• Core banking is a banking
may be used to where customers may access
a) Multiple Services point (Branch) networked bank branches
transactions from any of
terminal basic
deliver complete service. This point is to be their bank account and perform
shall not be needed. the member branch offices.
point. Referee at higher level
would go the is networking of branches,
Each client according to their needs • Core Banking Solution (CBS)
the request finally. customers to operate their accounts, and
required channel can dispose off which enables
branch of
distribute services. Example: ATMs avail banking services from any where he maintains
b) Multiple channel to the Bank on CBS network, regardless of
for basic services, customer of a
with wide arrange and networks his account. The customer is no more the
corporation under Customer.
Corporate Service offers to serve Branch. He becomes the Bank's
designated officers. network technology allows a bank to
• Banking software and
channels used. and allow access from any
c) Cost of services shall depend on the centralize its record keeping
location.

14
 • • 3/16/2022

CRM Introduction

• The system essentially includes deposit, loan and credit • CRM in its simplest form it is an attitude, a
processing. Among the integral core banking services are
opening new accounts, servicing loans, calculating interests, mindset, a value you place on your banking
processing deposits and withdrawals, and customer business and its relationship with its customers.
relationship management activities.
• Core banking systems are aimed at empowering existing and • It is a methodology, a way of creating and
probable customers to have a greater freedom of their evolving your banking institution in the
account transactions.
• With technological evolutions, transactions are now safer, marketplace and at the same time in the mind of
faster and less cumbersome. The fact that these transactions each individual customer.
can be executed remotely, from any part of the world has
made core banking systems a significant aspect of banking
these days.
• Core banking always brings down operational costs
considerably, ensuring lesser manpower requirement for
execution. It also enables greater accountability of the
customers.

Customer satisfaction

• CRM recognizes that each customer is an • In banking, Customer satisfaction is the

individual and has a choice. customers perception that a banker has met his
expectation fully, efficiently and promptly.
• It looks at ways to treat customers more as
individuals and to exercise their choice positively • The customer ultimately chooses a bank who
towards your bank. provides him more value for his money and with
whose product & services he is comfortable and
• It also embraces many current marketing and
management methods, such as customer satisfied.
satisfaction, customer loyalty and customer
contact technology with a view to foster
personalized value.

15
 • S 3/16/,2022

Factors affecting customer satisfaction

Banker
• Response from
satisfaction level, the better is
the meet commitments
• Higher the attachment to that • Banker's ability to
emotional and sentimental relationship • Customer service
the
brand and more intense is • Complaint handling
between the customer and the bank. products
that when he makes a • Deposit and Credit
• The customer expects listened to and features
request for assistance, it will be • customer friendly
as quickly as free operation
the issues will be resolved • Smooth and trouble
Relationship
possible. • Maintaining

Customer behavior
develop new customer
• It is also important to programs as a
ways in which they strategies and focus on loyalty
• Banks need to consider customer base,
might enhance trust among their messages and enhanced
long-run source of income
perhaps by better communicating relationships.
changes in
around ethical practices and vary significantly across
behavior. • Satisfaction drivers should be
banking financial institutions
differences
mindful of these often marked
products and new
when developing new
service.
ways of providing customer

16
 relationship with
Strategies to develop
4 customers.
interaction count
Make every customer claims about
look at their Follow-through on commitments and
Banks must now take a good customers want, products or services. responds to the
customer base, examine what to retain. Offer benefits and product value that
would like customer's desires.
which customers they individuals who are respected and
in terms of Treat customers as
Focusing on the profitable bothgain a valued.
customers and products could the banks.
competitive advantage amongst • Listen to customers. identity.
interested in specific • Build a strong brand
customers with valuable
information
Certain customers are this opportunity • Surround your have a website.
products, so banks should take
and services to truly • Business should
products customers.
to re-examine their competition. • Reward loyal
differentiate themselves from the

—Customer
ermination of Banker
Relationship:
Customer a Special
How to make every
Customer? Request
1. Customer'sDeposit Account
• S peed 2. Unclaimed customer
3. Death of
• P ersonalise 4. Insanity of the customer
exceptions the customer
5. Insolvency ofcustomer
• E xceed
6. Undesirableorder issued by the income Tax
• C ompetence 7. Attachment
• I nformation authorities
Garnishee Order
'Can do' 8. On receipt of
• A ttitude —
relationship
• L ong-term

17