Banky’s Understanding: Section 5(b) of Banking Regulation Act, 1949: ‘Banking’ means accepting of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise for the purpose of lending or investment. Section 7: No entity can use the words ‘bank’, ‘banker’, or ‘banking’ unless it is actually doing banking business. Banks also do activities under Section 6 of BR Act (ancillary services).

Banky’s Understanding: ‘Customer’ is not defined by law. Generally: person who has an account with the bank. For KYC: person maintaining an account and/or having business relationship. Explanation to Sec 45-Z of BR Act: ‘customer’ includes government department and corporation incorporated by/under any law. Can be individual, firm, company, society, or any separate legal entity. Must be competent to contract (sound mind, not minor — except minor’s account with guardian).

Banky’s Understanding: When customer deposits money: bank becomes debtor (borrower), customer becomes creditor (lender). Key features: (a) Bank is free to use money as it wishes. (b) Customer must DEMAND payment (bank doesn’t pay voluntarily). (c) Demand must be in writing (cheque/draft/withdrawal form) during working hours. (d) Customer has NO security from the bank. (e) Limitation doesn’t begin until demand is made (both demand and fixed deposits).

Banky’s Understanding: When bank lends money to customer: bank is creditor, customer is debtor. Lending = most important bank activity. Customer executes loan documents and offers security BEFORE using the facility. This relationship is the REVERSE of deposits. Both relationships can exist simultaneously with the same customer (deposit + loan). Resources mobilised from deposits are used for lending.

Banky’s Understanding: Trustee = person holding assets for benefit of another (beneficiary). When customer deposits money for a specific purpose (e.g., to buy shares, as guarantee money), bank becomes trustee. Case law: Subramanyan Pillai vs Palai Central Bank — customers deposited ₹32,000 as guarantee for cars, bank failed → court held bank was trustee, money refunded as preferential debt. Trustee has fiduciary responsibility — must act in beneficiary’s best interest.

Banky’s Understanding: Section 148 of Indian Contract Act, 1872: When customer deposits valuables, bonds, securities for safe custody → bank becomes bailee, customer becomes bailor. Bank is liable for any loss due to negligence. Section 164: finder must take care as an ordinary prudent man. Bank as bailee must protect the customer’s goods. Bailment = delivery of goods for some purpose, to be returned when purpose is accomplished.

Banky’s Understanding: Section 182 of Indian Contract Act, 1872: Principal delegates authority to agent. Bank acts as agent when collecting cheques, bills, paying electricity/phone bills, insurance premiums, club fees on customer’s behalf. Agency terminates on death, insolvency, or lunacy of customer, or completion of work. Case: Traders Bank vs Kalyan Singh — for remittances, relationship held as debtor-creditor (not agency).

Banky’s Understanding: When bank hires out safe deposit lockers to customers, the relationship is lessor (bank) and lessee (customer). Bank provides the locker space; customer pays rent. Nomination facility available. Bank also acts as indemnifier in some cases (guarantees, letters of credit — bank indemnifies the customer). Additionally: Indemnifier-Indemnified relationship when bank issues guarantees.