THE RIGHT AND RESPONSIBILITIES OF A BANK TO THEIR CUSTOMERS
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THE RIGHT AND RESPONSIBILITIES OF A BANK TO THEIR CUSTOMERS
ABSTRACT
This is a study of banks’ rights and responsibilities to their clients.The research was conducted to learn about the bank’s rights and obligations to their customers, which have been present in banking operations and have been felt by the people, and to what degree their objectives have been met.
The researcher used oral interviews, questionnaires, and a library to conduct this research, and the findings were rights and obligations of banks to their clients, which were felt in many areas of their promotional operations, such as loan advancement.
It has been discovered that banks charge commission to their clients, take money from their customers, and provide irregular instruments to their consumers, all of which have been considerably facilitated by the interaction between banks and customers.
As a result of this foundation, the researcher came to the conclusion that banking operations were well received by the public and that customers’ goals were met to a large extent.
CHAPTER ONE
BACKGROUND OF THE STUDY
Within the last decade, the banking industry in Nigeria has undergone major transformations. The bank has outperformed all expectations. Over the period, the number of banks more than fivefold rose, as did the diversity of banks. Banking operations were significantly deregulated, competition intensified, and banks were compelled to be more innovative and service oriented.
This prompted the researcher to investigate the topic of banks’ rights and responsibilities to their consumers. The banks’ rights to their customers include charging commission for services rendered to them, returning irregular instruments such as unpaid cheques that were not properly drawn,
and returning cheques exceeding authorised overdrafts, which are customers who want to make overdraft facilities but did not come with the duration, and so banks will return the cheque exceeding the overdraft.
And some of the banks’ responsibilities to its consumers include: paying cheques to their customers, receiving money from their customers, and providing sufficient notice before cancelling a customer’s credit account.
All of this has resulted in a well-structured and service-oriented baking operation. When a bank has a large amount of money, its rights and obligations are fully realised.
According to the study done by the C.B.N. of Nigeria, a total of 22 banks were registered by Nigeria between 1947 and 1952, but within four years because they could not meet their rights and responsibilities, they were all out of duties (Distress).
STATEMENT OF THE PROBLEM
A bank is a financial institution that provides basic banking services and has been licenced as a bank by the federal government of Nigeria. This banks are legally required to have rights and responsibilities to their customers, yet there are some long-standing issues that plague the banking industry, including:
When a customer’s or a bank’s balance or overdraft is insufficient to cover his cheques, the bank is not obligated to pay the customer’s cheques.
Customers’ Death: When a client dies, all mandates and authority pertaining to his account are cancelled. The banker may receive express or constructive notice of his customer’s death, and in any case, no future cheques must be honoured.
Cheques should not be cashed in cases where the banker has received notice of the presentation of a bankruptcy petition against the customer.
falsified signature: Banks have had problems with customers who falsified signatures in order to get money from the bank; when the signature is not connected to or similar to the drawer’s signature, the cheque is rejected.
Irregularities in cheque drawing demand during non-banking hours-banks have encountered a difficulty with consumers who make demand during non-banking hours.
OBJECTIVES OF THE STUDY
The goals that prompted the researcher to investigate this topic.
A bank’s rights and responsibilities to its customers are as follows:
Banks’ obligations to their consumers
i) Charge a reasonable fee for services.
ii) The right to return illegal equipment
ii) The right to return cheques in excess of the authorised overdraft.
The researcher is interested in learning how banks charge commission to their clients.
To discover why banks reject irregular instruments.
To learn why banks return cheques that exceed the authorised overdraft limit.
Banks’ obligations to their consumers are as follows:
i) To cash checks
ii) Banks get money from customers
iii) Before cancelling a customer’s credit account, banks provide appropriate warning.
iv) Banks are responsible for keeping the customer’s affairs private (duty of secrecy).
The researcher is interested in learning about a bank’s responsibilities to its consumers. They are as follows:
1. To learn how banks pay their customers’ checks
2. Determine whether banks get consumer funds
3. Determine if banks provide adequate notice before closing a customer’s credit account.
4. What to look for or how banks care for their consumers.
5. Determine if banks maintain their customers’ affairs private, as required by the duty of confidentiality.
RESEARCH QUESTIONS
The researcher is supposed to use or ask the following research question in order to achieve the following objectives:
v How do banks receive money from their customers?
v What is an unusual commission charged by banks to their customers?
v What factors force banks to shut consumers’ credit accounts?
v Why do banks keep their customer relationships private?
SIGNIFICANCE OF THE STUDY
Willy Nnamani defines research as “the process of solving problems, peculiarities, or puzzles about phenomena or the question of giving meaning to them.”
There are numerous reasons for the study of banks’ rights and obligations to their customers, from which both banks, consumers, and the country as a whole (community, individuals) have benefited. These reasons are as follows:
The study will be used to address the issue of a lack of funds in banking operations, and a percentage of money or fund will be held in the bank to assure the daily operation of banking services to their customers.
Furthermore, this study has enlightened clients on how to make a bank loan even on overdraft bases or facilities, as well as how customers can show their collateral to the bank they wish to borrow from.
Furthermore, this study will assist banks in evaluating their clients rather than driving them by low interest rates.
Finally, the researcher limited the bank’s study rights and responsibilities to their customers by rediscounting facilities for stabilisation securities, holding will be beneficial to bank for discovering purpose, subject to conditions specified by the bank (CBN) from time to time.
DEFINITION OF TERMS
What is a bank? A bank is an association of people or a financial entity established by the federal republic of Nigeria that accepts deposits and makes loans to customers with the goal of profiting from the interest rates they charge.
Banking Institution: This is a group of people, whether incorporated or not, who carry on the business of banking, as stated in Section 2 of the United Kingdom Bill of Exchange Act of 1882.
A banker is someone who receives money on current or deposit accounts, collects cheque proceeds, and settles cheques made by customers.
Banking is the business of taking money from the public on current account to be repaid on demand by cheques and offering advances to consumers.
Customer: A individual who makes an offer and the organisation accepts it. The individual becomes a customer of the organisation, an offer is presented, and acceptance is granted.
What exactly is a bank customer? This is a tough topic to answer because there is no regulatory definition of who a bank’s customer is. However, using the dictionary definition or the word customer, it can remark the relationship that exists between one person(s) and another as a result of continuous dealing.
BANK AND CUSTOMER RELATIONSHIP: When a person (s), firm, company, or society, etc. makes an offer to become a customer, which the bank accepts, the element of offer acceptance (which is the cardinal issue in contract law) enters into play in the banker customer relationship.
BANK RIGHTS: These are the duties and obligations that the bank has the authority to operate or perform without seeking permission, failure, or going against the bank’s obligations, such as commission charging, duty of secrecy, duty of care, and so on.
WHAT IS RIGHT: This is what an individual firm or organisation does without necessarily seeking permission first.
RESPONSIBILITIES: These are the dry activities that one is expected to perform or a bank to perform.
BANK RESPONSIBILITIES: This is what banks do on a daily basis, i.e. the day-to-day operation of the financial system.
FINANCIAL INSTITUTION: As defined in Section 61 of the BOFID 1991, a financial institution is any individual body, association, or corporation that carries on the business of money brokerage and whose principal objects include factoring, project financing, equipment leasing, and so on.
NON-BANKING INSTITUTION: These are financial institutions that are not banks, insurance companies, or stock brokerage firms, but are authorised by the C.B.N. to conduct business as financial intermediaries.
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