[FREE EPDF] PPB JAIIB | CHAPTER 18 | PART 1 | MODULE A

Ever wondered what your rights & responsibilities are as a banker? Or why banks sometimes disclose customer details? 🤔

Understanding the rights and duties of bankers is a crucial part of the JAIIB syllabus. Whether you’re preparing for the JAIIB exam, working in banking, or simply curious about financial laws, this session will clear all your doubts.

In this video, we’ll cover:

• Bankers’ duties – Secrecy, disclosure & compliance
• Legal obligations – When banks must reveal account info
• Bankers’ rights – Lien, set-off, and appropriation
• Garnishee & attachment orders – What they mean & how they work

By the end, you’ll be crystal clear on these key banking concepts, making your JAIIB prep much easier!

🔹 Bankers’ Duty of Secrecy – When is disclosure allowed?

Banks handle sensitive customer data, but they can’t always keep it secret. Disclosure is allowed in these cases:

• If required by law – Court summons, tax authorities, fraud cases
• For public interest – Money laundering, terrorist financing cases
• To protect the bank – Defaults affecting the bank’s interests
• With customer consent

🔹 Legal Compulsion to Disclose – What Laws Apply?

Banks must disclose information under various laws, such as:

• Bankers’ Book Evidence Act – Provides records for legal cases
• Income Tax Act – Requires submission of financial statements
• SARFAESI Act & RBI Guidelines – Allows disclosures for loan recoveries

🔹 Real-Life Examples of Disclosure

To better understand disclosure, let’s look at some real-life scenarios:

• Scenario 1: A bank receives a summons from a court demanding a customer’s account details in a fraud investigation. The bank must comply.
• Scenario 2: A customer defaults on a loan, and the bank shares their credit details with the Credit Information Bureau. This prevents future fraudulent borrowing.
• Scenario 3: A customer gives written consent to share their account information with a third-party financial advisor.

🔹 Bankers’ Rights – What Can Banks Do?

📌 Right of Lien – Holding Customer’s Assets

Banks can retain assets if a customer owes money. However, they cannot sell them unless explicitly allowed.

📌 Right of Set-Off – Adjusting Balances Across Accounts

If a customer owes money but has deposits, the bank can adjust dues automatically after giving notice.

[FREE EPDF] Principles and Practices of Banking | Chapter 17 Part 2

📌 Right to Charge Interest & Commission

Banks can charge:

• Interest on loans – Based on market rates
• Service charges – Drafts, cheque clearing, transfers

🔹 Case Studies of Bankers’ Rights in Action

To illustrate how these rights are exercised, consider the following examples:

• Case Study 1: A customer has an overdue personal loan and a savings account in the same bank. The bank uses its right of set-off to deduct the overdue amount from the savings balance.
• Case Study 2: A company secures a loan by pledging stocks. When the company fails to repay, the bank exercises its right of lien and sells the stocks to recover the debt.
• Case Study 3: A bank charges interest on a home loan based on the agreed market rate, ensuring compliance with banking regulations.

📥 Download PDF Notes for This Session

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