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Debtor - Creditor Relationship between Banker and Customer

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HomeBrud.gifBanking LawBrud.gifDebtor - Creditor Relationship between Banker and Customer

A number of customers deposit their money in the accounts held and managed by the Bank. Hence the customers automatically becomes creditor to the bank. There is a difference between an ordinary debtor to that of a banking debtor. A banking debtor is a 'privileged debtor' and hence enjoys certain privileges over other forms of debtors such as a chit fund company or a finance company.

Similarly, the banker lends money and becomes a creditor. The customer hence becomes a debtor. The banker here is a 'privileged creditor'.

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