Banks’s Customer

A customer is someone who pays for goods or services from a store. All the persons coming to your store are ‘visitors’. When they buy something and pay for the things they have bought, they become ‘customers’. Now, they have purchased these things for their own consumption or for someone else is not clear.

While on the other hand, the person who actually enjoys/consumes these things are not as ‘consumers’. In short the person who pay the bill is known as customer and the person who uses that thing is known as ‘consumer’ therefore, in the world of retailing, it has rightly been said ‘customers’ can be ‘consumers’ but all ‘consumers’ necessarily need not ‘customers’.

Managing the Customer and It’s Types

Managing the customers in stores has always been a difficult task. You as a floor staff cannot know what the intention of a customer is? Whether a visitor asking for a particular good, is really interested in buying the thing or just has come for time pass or grab knowledge.

But being the member of floor staff, you cannot say ‘No’ to the customer. Further, customers are from various backgrounds. They have different desires, different tastes, likings and dislikings. The selling behavior which you apply to one customer will not be applicable to all customers.

Some customers are from ‘different’ background and are interested in your products and have enough purchasing power. But the problem is that they’ve not visited any mall or are not aware about modern retail store buying. So, they can ask a lot of questions about quality, quantity or after sales services. Even after spending three-four hours, they change their mind of buying things.

Here you need not to lose your ‘patience’ considering ‘city’ buyers are quick in purchasing decisions. In retail business, the idea of not loosing patience comes under providing good customer service and should be an on-going opportunity.

There is no statutory definition of a customer, but banks appear to rely upon to recognize a customer:

1. For a person a person to be known as a customer of the bank there must be either a current account or any sort of deposit account like saving, term deposit, recurring deposit, a loan account or some similar relation.
2. The relationship of banker and customer begins as soon as money or cheque is paid in and the bank accepts it and is prepared to open account.
3. The word customer signifies a relationship in which duration is not of essence. A person whose money has been accepted by the banker on the footing that he undertakes to honour cheques unto the amount standing to his credit is a customer of the bank irrespective of whether his connection is short or long duration.

The question whether a person is a customer in the period between his first contact with the bank and the receipt of the final letter (a letter written to the introducer or at the address of the account opener to ascertain his personal verification) authenticating the reference/introduction is not free from doubt.

If the reference/introduction is satisfactory the person is a customer and probably always has been, if it is not, and no other satisfactory reference can be supplied, the banker will probably decide not to proceed. In this case the person is not a customer and never has been.

If in this interval a banker has collected a cheque for the person, he may be at risk, for he cannot claim the statutory protection under the Negotiable Instrument Act. In very simple words the different banks have their own methods to verify the details of information given by the customers.

If the verification by a bank is satisfactory the person who opened the account continues to be a customer but in case the verification done by a bank do not confirm the information provided by the person who has opened an account with a bank shall not be given the status of a customer even though bank has accepted money from him or has collected the amount of cheques submitted by him. (The prime factor is that a customer must identify him with all respects to get a status of a customer otherwise even after opening an account he will not be considered as a customer).

To be a customer of a bank it is must that a person must have an account with the bank whether in debit or credit is immaterial for this purpose.

Mind it merely because a person visits the office of a bank for some transactions; say for purchasing of a draft or encashing of cheque etc. he does not become a customer.

Although there is no statutory definition of a customer but recently a customer has been defined under SARFAESI ACT.

As per (SARFAESI) Securitization and Reconstruction of Financial Assets and Enforcement of security Interest Act 2002 a person has been defined as a person/entity as follows:

“A person who is maintaining an account in his own name or in whose name the deposits are maintained”.

The Securitisation and Reconstruction of Financial Assets and enforcement of Security Interest Act 2002 to regulate secured creditor’s interest came into force in 2002. It is primarily aimed at the enforcement of the security interests besides securitization and reconstruction of the financials assets. (Please note this is meant for those who have taken any type of loan from banks).

So far as SARFAESI is concerned it is a matter of law while most of the banks do function as per their prevalent practice that also tantamount to be a law. Now you have, supposed, opened a Saving Account with a Bank and have legally become a customer of the bank. But there are many types of customers for a bank. Not to be specific but most of the customers of a bank are of different kinds.

Different Kinds of Customers:

Individual Customer (Single Person Account):

It is an account opened by one person in his/her own and individual capacity. Such type of accounts are maintained and operated upon only by the single person who has opened the account. This sole and single person is the customer of the bank.

There are many type of individuals like an educated person, illiterate person, an insane, an intoxicated an insolvent, a minor etc.

Since there are so many types of individuals these can be classified as follows:

A) Literate:

Literate person is an educated one and can well understand the pros and cons of all laws and acts to protect himself. He can therefore open all types of accounts in a bank. He being a literate person may be engaged in some important works and may not find time to transact banking business He can therefore authorize some other person to operate upon his accounts.

B) Illiterate Person:

Now an illiterate person cannot read and write. It is a general condition of all the banks that they must fill in a form required to open an account with a bank. Usually such forms are meant to collect necessary information as per the KYC norms. In addition to this information most of the Account Opening forms do contain certain terms and conditions to be followed by the customers.

Besides the customers are also required some sort of obligations to take care of while operating their respective account (An illiterate person must bring with him the pass book issued by the bank to confirm his credentials because in case of illiterate persons most of the bank paste a photograph of the account holder on the passbook. It facilitates any banker to recognize his customer.).

Do you think these are possible for an illiterate person to understand? No An illiterate person cannot read and understand all these things written on account opening forms of different banks. What is a possible solution to this problem? A simple way is that all these terms and conditions are read allowed and the meaning thereof is explained to the illiterate persons.

In case they understand all these terms and conditions and also the meaning thereof his account can be opened with a bank. But before opening the account of an illiterate person the Manager or some other official of the bank has to give a certificate to this effect that all the terms and conditions have been explained to the illiterate person and he after having understood these is willing to open an account with the bank. Such a certificate is recorded on the account opening form and is also witnessed by some other person in whose presence these conditions were understood by an illiterate person.

Now an illiterate person cannot sign. A very significant, important and vital aspect of banking is THE SIGNATURES of the customers. All banking transactions are based on the signatures. If signatures do not tally with the one provided on the banks records the bank is not bound to honour the instructions of the customers.

While a literate person can well understand this problem and will provide appropriate signatures but what about an illiterate person. In case of illiterate persons banks obtains clear impression of the thumps of illiterate persons in place of signatures. In case of male customer left hand thump impression is obtained and in case of female customers right hand thump impression is obtained.

While withdrawing the money by illiterate persons their photo is matched with the one pasted on the Passbook and than his/her thump impression is verified by a bank official not below the rank of a manager AN ILLETERATE CUSTOMER OF A BANK IS NEVERVER ISSUED ANY CHEQUE BOOK. HE HAS ALWAYS TO TRANSACT BANKING BUSINESS BEING PERSONALY PRESENT IN THE BANK.

A REFRENCE HAD BEEN MADE THAT WHILE TRANSACTING BANKING BUSINESS THE SIGNATURES OF A CUSTOMER IS MUST. WE SHOULD NOW DISCUSS ABOUT SIGNATURES OF A CUSTOMER.

Although no correct definitions of signatures have been provided in specific terms anywhere but signatures can be taken, as a sign, stamp or mark impressed, a person’s name written by him, the act of writing it. In simple words we can understand that whatsoever (words, initials, name, numbers pictures, any sign and even dot) is used by a customer while signing his bank instruments or otherwise is taken to be the signatures of the customer.

Even a simple impression of any kind/any type in any form/figure or otherwise can be considered as signatures. Whatever mode of signatures may be but the signature in whatsoever form is always a mandate for his banker.

The signatures of a customer on an instruction to his banker are the banker’s authority to comply with the instructions and to debit the customer’s account with the cost.

In case of illiterate person no signatures are available; in this condition some photographs of the illiterate persons are obtained and affixed on the account opening forms, Specimen signatures slip and on the passbook. The Specimen signature slip is mainly meant for literate persons who can provide the specimen of their signature to be used as their authority for the bank.

In case of illiterate persons the same specimen signature slip is used to obtain the impression of their thumbs. In case of male customer the impression of their left hand thumb is taken whereas in case of female customer the impression of their right hand is taken.

The impression of right/left hand is a practice not a law. The bankers also try to obtain certain addition information about the identity of illiterate persons like a mole are or scare visible on the person of the customer can be recorded as additional information. Since illiterate persons cannot sign they are not issued cheque books. Such customers are required to come to the bank personally every time they wish to use the services of their bankers.

Some of the customers like Insane and intoxicated or insolvent are not normal customers and are therefore not being discussed in view of the subject matter of this book.

C) Blind Customer:

A blind person can be literate and also illiterate but there is no bar for these persons to open an account with any bank. The Banks take some extra precautions while opening the accounts of blind persons as they cannot see.

In case of blind persons all the terms and conditions of KYC norms are adhered to very strictly. Besides obtaining thump impression or signatures of such persons in the account opening form and on the specimen signature slips the words BLIND PERSON are written very boldly.

In case of issue of cheque books only crossed cheques are issued to them. The receipts and payments of such persons are made in the presence of some independent witness whose signatures are also obtained on the mandate of such customers. Normally before issuing cheque books to such customers the words “bearer” are replaced with “order” so that payees can be easily searched.

D) Minor Customers:

Section 3 of Indian Majority Act 1875 states that Minor is a person who has not completed the age of 18 years.

Section 11 of Indian Contact Act 1872 says that a minor cannot enter into a valid contract. It further says that contract with a minor is not only void but also void-ab-intio i.e., from the very beginning.

Money lent to a minor cannot be recovered, even if he gives security. All contracts entered into by a minor for the repayment of money lent shall be absolutely void.

Section 26 of Negotiable Instrument Act 1881 provides that MINOR can draw, endorse, deliver and negotiate a promissory note, bill of exchange or Cheque so as to bind all the parties EXCEPT HIMSELF.

However, a contact on behalf of a minor can be, entered into by his guardian.

The Guardian to a minor can be:

1. Natural Guardian.
2. Legal Guardian.
3. Testamentary Guardian.

Hindu Minor:

The word GUARDIAN has been defined in several Acts. Accordingly a Natural Guardian in case of Hindus is mentioned under section 6 of Minority and Guardianship Act 1956 which provides that in case of a minor boy or unmarried girl, the father and after his death, the mother shall be the guardian of both person and property of the minor.

Step father/step mother cannot act as natural guardian. After the death of both the father and the mother, a minor can be represented only through a legal guardian.

Muslim Customers (Minors):

In case of Muslim minor, father is the natural guardian.

After death of father the guardianship goes to:

1. Executor appointed by father’s will. In the absence of such will it then goes to,
2. Father’s father and then executor appointed by the will made by father’s father, and
3. In the absence of all it goes to legal guardian. Mother can only act as guardian if appointed by- court or by will.

Christians and Persons of Other Religions:

The father is treated as natural guardian and after his death the mother becomes natural guardian. In case both are dead, a person appointed by the court can act as a guardian.

Legal Guardian:

1. A legal guardian is appointed as per provisions of Guardian and Wards Act 1890. When there is no natural guardian or testamentary guardian, the court can appoint guardian, which is known as Legal Guardian.
2. As such a legal guardian of a child is someone the law has given all the duties, rights, responsibilities and powers that a parent has in bringing up the child.

Testamentary Guardian:

1. A parent who is a guardian of a child can appoint someone to become a guardian of the child when that parent dies. The parent can do this either in their will or in a special type of legal document called a deed. A testamentary guardian must be at least 20 when the parent dies.
2. In view of above a guardian appointed by the will of minor’s father is called testamentary guardian. Such guardian can act only after the death of the father and mother of the minor child.
3. To sum up we may say that ‘Guardian’ means a person having the care of the person of a minor or of his property or of both his person and property.