Bank/Customer Relationship In Nigeria As A Developing Economy

BANK/CUSTOMER RELATIONSHIP IN NIGERIA AS A DEVELOPING ECONOMY (A CASE STUDY OF UNION BANK OF NIGERIA PLC OKPARA AVENUE ENUGU BRANCH)

REVIEW OF RELATED LITERATURE ON BANK AND CUSTOMER RELATIONSHIP

In examining the related literature, the researcher looked into various text and journal that dealt with bank / customer relationship.  The researcher examined their view on their relationship, the possible causes of problem emanating from the parties and possible remedies.  The researcher also aired her own views.

According to pratice of banking 1 (CIB) 1993.  The bank and financial institution decree 1991 section 61 defines a banking business as a business of receiving deposit on current account or other similar accounts, paying or collecting cheque drawn by or paid by customers, provisions of finance or such other business as the governor of the central bank may give order, public in the gazette, designated as banking business.

 

2.1     DEFINITION OF BANKS

Banks wee further categorized and defined commercial bank was defined as any bank in Nigeria whose business includes the acceptance of deposits with draw-able by cheque.

MERCHANT BANK:- A bank whose business includes receiving deposit on deposit account, provision of finance, consultancy and advisory services relating to corporate and investment matters, making or managing investments on behalf of any person.

COMMUNITY BANK:         A Bank whose business is restricted to a specific geographical areas in Nigeria Adekanye (1986) stated that in great western railways company vs London count banking company limited (1701).  It was held that what it constitate for a person to be a customer, there must be some account, either a deposit or current account or some similar relation, that a person who had been casting cheques from the defendant bank over several years was not a customer of the bank by merely casting cheques.  There must be more than mere cashing of a cheque to make one a customer.  Chartered institute of bankers 91993) quoted section 77 @ of Bul of Exchange Act 1990. “A person is a customer if he has an account”.

  • BANK / CUSTOMER RELATIONSHIP

According to chartered institute of Bankers (1993:3) Bank – customer relationship is based on a contract under which the bank agrees to hold the customers money or to lend him its own and to render various services, particularly in connection with cheque transaction.  The basis of the relationship between a bank and its customers is a contract made between destors and creditors.  If the customers account is in credit the bank is a destor to him.  If however, the customer over draws then he is a debtor to the bank.  The customer and to deal with his money or the money which the bank has agreed to lend in accordance with his instructions.

In a case between TSB Central Board V Vincent 1986, it was heed that customer of a bank have no interest in its (banks) assets other than the rights to receive back their deposit together with interest.  The Bank is liable for its customers money when it has been received and checked.

Other forms of bank:- customer relationship can also be a relationship between

I    A bailor and bailee in safe custody arrangement

Ii   A principal and agent in many securities transactions and in cheque payment and collection

Iii  A trustee and beneficiary, where the trustee department take on administration of a deceased’s estate.

Iv. Quasi trust where a bank as mortgage has custody of title deeds.

  1. Duky of care owed in tort, particularly when the bank gives investment advice.

Adekanye (1986) said that the basis relationship of bank and customer is that of debtor and creditor respectively.  A bank is not a trustee for money deposited by a customer and is free accepting deposits from the customer, the bank is not acting as an agent.  He is free to act as if the money is his own.  However, he must always be in a position to repay the amount in part or in full on demand.  Money deposited with the bank is not for safe custody.  Hence, customer can not demand to be repaid with the exact note paid in while performing other banking functions.  The relationship can become that of agent and principal.  For example as collecting banker for cheques paid in by customers or an investment adviser insurance agents.  When a banker reviews items for safe custody, he is called a bailee and when he acts as executor of a will or administrator of a trust, he becomes a trustee.

The relationship of bank, customer is one of confract, when the customer deposits money in to his account, the transaction meets the offer and acceptance condition of a contract. The contract is however not restricted to the relationship of debtor and creditor alone but extends to a number of functions and services which banks provides.  Banks in their day to day functions do not act as agents.  A relationship of principal and agent exists when the bank is acting as collecting banker for cheque paid in by customers when a customer keeps valuables with his bank for safe-custody. The bailor –bailee relationship is established.

 

  • DUTIES OF THE BANKER TO THE CUSTOMER

The relationship between a bank and a customer is contractual, therefore both, parties have obligation to each other.

Adekanye (1986) is of the opinion that the principal duties of bank to customers are to receive money cheques and other instruments for collection and subsequent credit to the customers current or deposit account.  The bank also pay cheques and other withdrawal authorities properly drawn by th customer, during, banking hours at the branch where the account is kept or else bank runs onerous risks.  The bank must ensure that the cheques bears the genuine signature of the customers and that it was placed on the cheque with his authority.  If the cheque bears a forged signature, the bank will have no mandate and can not debit the customers account, except where the custoemer adopts the signature as genuine or if by his conduct leads the bank to believe the cheques to be in order, or fail to report when the forgery is discoursed.  The bank also maintains secrecy concerning the customers account and other affairs.  The bank is entitled to disclose information about his customers affair where disclosure is under compulsion of law (e.g where he is required to give evidence in legal proceedings), where there is a duty to the public to disclose and where the interests of the bank require disclose and where the disclosure is made by the express or implied consent of the customer (for example he supplies a reference for his customers).

The bank is also under obligation to give reasonable notice to a customer before closing the account, especially a credit account. The bank pay agreed interest on deposit and to ensure that customers money is safe, avoid wrongful dishonour of his customers cheques, render statement of accounts to the customer periodically or upon request and exercise proper care and skill in carrying out any business he has agreed to transact for his customer.

The customer on the other hand owes reciprocal duty to his bank by drawing his cash and other instrument so as not to facilitate fraud he also pay reasonable fees for services render by the bank, exercise due care not to facilitate forgery or conversion by keeping his cheques book under strict control to avoid unauthorized use.

Jawando (1990) “states that commercial bank is in the business of buying money (savings and deposits) and seeking money (loans and overdraft) for profit and in so doing it performs the economics function ventures and projects.  The main services of fered by typical commercial banks are:-

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2 Comments on “Bank/Customer Relationship In Nigeria As A Developing Economy”

  1. Chinedu Okonkwo says:

    Please i want to know: is there any organization that handles Bank/customer relationships in Nigeria ((like the way we have Nigerian communication commission — in telecommunication sector).

    This is because several banks have been frustrating my life both secretly and openly. I am tired of reporting to their customer care which are not even helping matters.

    They frustrate me from one bank to another, and all my complaint to them are given deaf ears.

    Please, is there any organization where i can report what Nigerian banks have collectively been doing to my life?

    1. Rukayat Salaudeen says:

      There’s a customer protection desk at the CBN where such complaints could be lodged. Check the CBN website for details.

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