Banking Awareness for IBPS PO IV and Clerks IV - Definition of Banker

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Friends, the Relationship between Banker and Customer is an important aspect of Banking, on which every Banker should focus on. So obviously it will be one of the important topics in the Banking Awareness section of upcoming IBPS PO IV and Clerks IV online Exams. Today we shall discuss about various definitions of Bankers. In our next post we shall discuss the meaning of customer followed by the general and special relationships between banker and customers. Happy Reading :)

Definition of Banker

The definition of banker is evolutionary and there is no universally acceptable definition. The following are some important definitions given by various authorities.

According to Dr. H. L. Hart, "A banker or bank is a person or company carrying on the business of receiving moneys, and collecting drafts for customers subject to the obligation of honoring cheques drawn upon them from time to time by the customers to the extent of the amounts available on their current accounts.

The essence of Hart's definition is that a banker accepts deposits on current accounts which are withdrawable on demand. But a banker performs many more functions. He accepts not only deposits on current accounts but also on a fixed deposit accounts. This definition has covered only deposit function and ignored the lending function. Hence this definition cannot be called as a valid definition of a bank.

According to Sir John Paget, 'a bank or banker is a corporation or a person (or a group of persons) who accept money on current accounts, pay cheques drawn upon such account, on demand and collect cheques for customers; that if such minimum services are afforded to all and sundry without restriction of any kind, the business is a banking business whether or not, other business undertaken at the same time'. Paget also did not include the lending function and hence cannot be considered as a valid definition.

According to Sec. 5 (b) of the Banking Regulation Act, 1949, 'banking' means the accepting for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft order or otherwise. Sec. 5 (c) defines banking company as any company which transacts the business of banking. This definition covers the two basic functions (such as accepting deposits and lending money), and hence, can be considered as an appropriate definition of banker. 

  Read complete Banking Awareness study material for RBI Grade B Exam from here

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