Modern commercial bank beside performing the main functions that are accepting deposit and lending money cover a wild range of financial and non-financial services to the customers and the general public.
The services are as follows:
- Agency service,
- Banker as a trustee,
- Banker as an executor,
- Banker as administrator.
Banker as an Agent
The banker act as the agent of his customer in performing the following functions:
- Payment and collection of subscription, dividends, salaries, pensions etc.
Bankers make payments and receive money on behalf of their customer in the following ways:
- Payment of insurance premium.
- Payment of membership subscription to club, library, and professional association
- Payment of rents and salaries.
- Collections of dividends on behalf of customers.
- A collection of pension, rents etc.
- Transfers of tunas from one account to another.
The banker charges a nominal amount for this service. For doing this service the banker should get clear instructions in writing from customers.
The instructions of the customer should be clear and not be end uncertain loans which give rise to controversial meaning. The banker may not accept the instructions which are difficult to comply with but once accepted it is the duty of the banker to carry out the instructions.
- Purchases and sales of securities:
Banker undertake to purchase and sell shares and debentures of joint stock Company on behalf of his customer only.
Whenever the customer delegates the work to the bank the banker should get clear and precise instructions in special forms used for this purpose.The form should contain the following things:
- The particulars of securities to be sold or purchased.
- The minimum and maximum price at which the securities are to be sold or purchased.
- The period within which they are to be sold or purchased.
- The names, addresses of the persons in whose name they are to be registered.
- In executing this services the banker act as an agent of his customer. Only members of the stock exchange can sell or purchase of securities.
As the bank is not the members of stock exchange they appoint brokers who act as sub-agents of the bank to carry out the instructions.
- Acting as an attorney:
Power of attorney may be given by a customer to the Tanker. By granting power of attorney, the customer authorized the banker to receive dividends and interest on securities belonging to him and give a valid discharge, therefore.
Banker as a Trustee
A person may desire that after his death, a part or whole of his property be held in a trust for the benefit of various beneficiaries named in the will.
In such a case he may create a trust under his will directing a certain person to hold the property to such persons after a specified time. When the bankers take the liability to administrate of this type property he will be called trustee.
Banker as an Executor
A person may make will expressing his intention regarding disposal of his property after his death. A will has to be in writing, signed by the person making the will which called trusted and attested by two witnesses.
A will becomes effective only after it is approved by the court as a private. A private is a copy of the will duly certify under the seal of the court together with a grant administrator.
The person appointed as an administrator of the deceased is known as executor. The bank may appoint as an executor for such service.
Banker as an Administrator
In case a person dies without making a valid will, the property of the deceased may be administrative according to law. The bank may be appointed for the administration of this property and then the banker will be called the administrator.