Banker-Customer Relationship

1. Banker-Customer Relationship Module Five: Session One M5S1

2. Overall Training objective: • To review the relationship between Financing Institutions and the road contractors M5S1

3. Training outcome • By the end of the session trainees should: • Be able to appreciate the importance of the relationship between financial institutions and road construction firms. • Understand the need to enhance the relationship. • Be able to identify the various categories of relationships and to appreciate them. M5S1

4. WHAT IS A BANK? • A bank is any institution carrying on banking business. • Banking business is the business of accepting deposits, accepting money on current account and investing that money as the bank sees fit. M5S1

5. WHO IS A BANK CUSTOMER? • A bank customer is any account holder or: • Someone who seeks the bank's advice or other services. • There is no requirement on the number of transactions that must have passed through that account. • There is no requirement as to the duration for which the account should have existed. M5S1

6. WHEN DOES THE BANKER - CUSTOMER RELATIONSHIP START? • The banker-customer relationship commences at the point of opening the account. • Other relationship commences when a customer acquires a credit facility from a bank M5S1

7. NATURE OF THE BANKER - CUSTOMER RELATIONSHIP • The banker-customer relationship is primarily contractual. • Principally a principal-agent relationship. • Customer (principal) appoints the bank as his agent/ • Other aspects of this relationship include: M5S1

8. Contd. • Debtor - Borrower Relationship • Bailor-bailee Relationship • Trustee/Beneficiary Relationship • Mortgagor-Mortgagee Relationship M5S1

9. DUTIES OF A BANK • To receive the customer's money and cheques and other instruments of collection. • To repay the whole / part of the money upon presentation of the customer's written authority. M5S1

10. DUTIES OF THE BANK - • To abide by any express mandate from his / her customer such as a standing order. • To render statements of accounts to his customer periodically or upon request. • To maintain secrecy. M5S1

11. DUTIES OF THE BANK Exemptions • The law so compels (court order). . • Banker has duty to the public e.g. has knowledge of terrorist activity involving the customer. • It is in the interest of the banker e.g. where legal proceedings are required to enforce payments of an overdraft or CRB. • Banker has express or implied consent of customer e.g. (s)he is acting as a referee. M5S1

12. DUTIES OF THE BANK • To honour the customers' cheques that are presented to the bank;- • To effect stop Instructions (countermand). • To honour instruction to pay. • To abide by any express mandate from his / her customer such as a standing orders. • To render statements of accounts to his customer periodically or upon request. M5S1

13. Duties of the bank • Banker’s duty of care. • While giving advice • While posting transactions • Duty of confidentiality • Key considerations in establishing the relationship: • Choose a right bank • Get to know the bank inside procedures • Avoid multiple borrowing • Understand the contract terms and conditions • Read all documents before signing them. M5S1

14. Termination of Banker Customer Contract • The banker customer contract ends once the customer closes his account. • Termination by the bank. • Other ways of termination . • Express Notice by the customer • Death or mental incapacity of customer • Bankruptcy of a customer • Termination by Operation of Law M5S1

15. GROUP DISCUSSIONS • Discuss the possible services financial institutions can provide to the road contractors. • Discuss an ideal banker-customer relationship. • Describe why banker-customer relationship may be terminated and the likely consequences of termination. • Discuss the rights and obligations which flow from the banker – customer relationship. • Identify the key challenges to road contractors in enhancing the banker – customer relationship and suggest how they can be addressed. M5S1