3. Bailee and Bailor Relationship: A bank does not accept money from customer on the condition that it will not utilise the money and that the identical money (the same currency notes or coins deposited by customer) will be returned. A banker provides for safe and deposit vaults and accepts documents and valuables for safe custody.Here, the bank is acting as a bailee and the relationship is that of bailee and bailor. 4. Trustee Beneficiary Relationship: Banks also act as trustee and executors of will of customers. A trustee is required to old property and money and uses the trust money in accordance with the trust deed and uses it for the benefit of some other person known as beneficiary.
The legal position of a banker as a trustee is different from that of a debtor to the customer. When a bank receives a cheque from the customer for collection from another bank, the bank becomes a trustee till the amount of cheque is realised.Once, the amount is credited to the customer’s account, the banker assumes the position of a debtor. 5. Principal-Agent Relationship: Banks perform many agency functions such as collection of cheques or drafts or bills, collection of interest and dividends on securities, arranging for remittances and payment of insurance premiums, etc. , as per the instructions of the customers. In all such cases, the bank is acting as an agent of the customer.
In these cases, the position of a customer is that of the principal and the position of the banker is that of the agent.