Understanding the Banker Customer Relationship is crucial for aspirants preparing for the JAIIB Module B exam. Since achieving high marks in the exam requires a thorough grasp of all topics, it is essential to study each area carefully. In this blog, we have provided a complete guide to Banker Customer Relationship, including definitions, classifications, banking essentials, and the various types of relationships that exist between a banker and a customer.
Download the JAIIB PPB Banker Customer Relationship PDF
The direct link to download the “Banker-Customer Relationship” eBook is provided below. Professionals can download it through the link.
What is banker customer relationship and why is it important?
The Banker Customer Relationship depends on the services, actions, and products offered by a bank or used by the customer. This relationship is transactional in nature, where trust and faith play a critical role. A bank’s success heavily relies on maintaining a strong relationship with its customers. For the JAIIB PPB exam, understanding this relationship is vital as it forms a core part of Module B.
| Aspect | Details |
| Relationship Type | Transactional between banker and customer |
| Importance | Strong customer trust and faith ensures bank’s success |
| Exam relevance | Critical topic for JAIIB Module B |
In which JAIIB module is the “Banker Customer Relationship” topic covered?
The topic “Banker Customer Relationship” is part of the JAIIB PPB Paper, Module B, which focuses on core banking operations and customer service practices. This section explains the nature of the banker-customer relationship, classifications, various legal relationships, rights, duties, and obligations, making it essential for exam preparation and practical banking knowledge.
| Field | Details |
| Paper / Module | Principles & Practices of Banking (PPB) – Module B |
| Focus Areas | Core banking operations, customer relationships, and legal aspects |
| Topics Covered | – Banker-customer relationship overview – Banking definitions and essentials – Important functions of the bank – Customer classifications – Types of banker-customer relationships (debtor-creditor, creditor-debtor, pledger-pledgee, etc.) – Rights and duties of bankers and customers |
| Exam Dates 2026 | May Cycle: 9th May 2026 November Cycle: 22nd Nov 2026 |
What is banking?
Banking, as defined under the Banking Regulation Act 1949, is the acceptance of money from the public for lending or investment purposes, which is repayable on demand or otherwise and withdrawable by cheque, draft, order, or other means.
Important aspects of banking:
- Individuals are prohibited from acting as banks or using the phrase in commerce.
- A bank, banker, or banking corporation may be a company with no more than ten members or a company formed under the Indian Companies Act, 1956.
- A Banking Company is an institution conducting banking activity in India.
- Non-banking companies cannot use the terms banker, banking, or banking company.
- No individual, group of individuals, or corporation may use these terms for themselves.
Essentials of Banking:
- Acceptance of deposits for lending purposes
- Acceptable from the general public (excluding nidhis, cooperative societies, multi-benefit societies)
- Acceptance of monetary deposits
- No control of depositors over administration
- Prioritise and emphasise depositor interests
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Important functions of the bank:
- Accepting public deposits and utilising the funds through loans and investments
- Collecting cheques and bills
- Conducting government transactions (central/state)
- Discounting of invoices
- Issuing credit letters and assurances
- Performing foreign currency transactions
- Remittances
- Renting security deposit lockers
- Safekeeping of objects
Who is a banker and who is a customer?
Banker: A banker is a person who conducts banking activities such as accepting deposits, lending money, providing withdrawal services, and exchanging money. The banker oversees all operations and is either the owner or director of the bank.
Customer: A customer is a person with a bank account for whom the banker agrees to provide banking services.
Conditions to qualify as a customer:
- The bank account (savings, current, or fixed deposit) must be opened in their name with the required initial deposit.
- Interactions between banker and customer must follow the banking industry’s nature.
Bank customer classifications:
- Existing Customers: Customers maintaining an account relationship with the bank.
- Former Customers: Customers who previously had an account relationship with the bank.
- Walking Customers: Individuals without an account but frequently visit the bank for services (e.g., draughts, cheque cashing). Not considered actual customers.
- Prospective/Potential Customers: Individuals interested in opening an account. Considered customers once the bank accepts their completed and signed account opening form.
How is the banker customer relationship classified?
Banker Customer Relationship can take several forms depending on the nature of transactions and agreements. The main classifications include:
- Debtor and Creditor Relationship
- Creditor and Debtor Relationship
- Pledger and Pledgee Relationship
- Licensor (Lessor) and Licensee (Lessee) Relationship
- Bailee and Bailor Relationship
- Hypothecator and Hypothecate Relationship
- Trustee and Beneficiary Relationship
- Agent and Principal Relationship
- Indemnifier and Indemnified Relationship
- Advisor and Client Relationship
What is a debtor and creditor relationship?
When a customer deposits money in a bank, the bank becomes a debtor, while the depositor is the creditor. This relationship reverses if the account becomes overdrawn.
- If the customer takes a loan, the customer becomes the creditor until the loan is repaid.
- Loan requests must be made properly (draught, cheque, withdrawal form, pay order) and during business hours.
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What is a creditor and debtor relationship?
When a customer borrows money from a bank, the customer is the borrower (debtor), and the bank is the lender (creditor).
- The banker can demand repayment on the due date.
- The customer must repay the borrowed amount as agreed.
What is a pledger and pledgee relationship?
When a customer pledges assets or security to the bank for a loan:
- The customer becomes the Pledger
- The bank becomes the Pledgee
This relationship ensures that the bank has a legal claim over the pledged assets until the loan is repaid.
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FAQs
A. When a bank lends money to a company, the banker-customer relationship is of Creditor and Debtor, with the bank as the creditor and the customer (the corporation) as the debtor.
A. A Recurring Deposit Account. To open this type of account, an individual must agree to deposit a predetermined sum once every month for a specified duration.
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