Banking Theory Law And Practice E Gordon K Natarajan

Banking Theory Law And Practice E Gordon K Natarajan
Banking Theory Law And Practice E Gordon K Natarajan
Banking Theory Law And Practice E Gordon K Natarajan

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6. BANKING
THEORY, LAW AND PRACTICE
Prof. E. GORDON
M.Com., M.Phil.
Former Professor of Commerce,
A.N.l.A. College,
Sivakasi.
Dr. K. NATARAJAN
M.Com., M.Phil., Ph.D.
Former Principal
S. Y.N. College,
Madurai.
IIaI
GJiimalaya GpublishingGfiouse
MUMBAI • NEW DELHI· NAG PUR • BANGALORE • HYDERABAD • CHENNAI • PUNE • LUCKNOW • AHMEDABAD· ERNAKULAM

7. © Himalaya Publishing House, 2008
No part of this book shall be reproduced, reprinted or translated for any purpose whatsoever
without prior permission of the
author and the publisher in writing.
Published by
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Revised Edition
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2009
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8. CONTENTS
1. BANKER AND CUSTOMER 1 -25
Origin of Banking -Banker -Banking and Other Business -Customer -The
Relationship between a Banker and a Customer -General Relationship -
Special Relationship -Statutory Obligation to Honour Cheques -Banker's
Lien -Duty to Maintain Secrecy of Customer's Account -Right to Claim
Incidental Charges -Right to Charge Compound Interest.
2. DEPOSITS 26 -42
General Precautions for Opening Account -Current Deposit Account -Fixed
Deposit Account -Savings Deposit Account -Insurance Linked Savings
Bank Deposit -Recurring Deposit -Other Deposits.
3. PASS BOOK 43 -49
. Correct Entry -Wrong Entry -Entries Favourable to the Customer -Entries
Favourable to the Bankers.
4. BANK CUSTOMERS -SPECIAL TYPES 50 -68
Minor or Infant - A Married Woman -Drunkard - A Partnership Firm - A
Joint Stock Company -Non-trading Companies -Private Companies -Non-
trading Associations -Executors, Administrators and Trustees -Joint Account.
5. NEGOTIABLE INSTRUMENTS 69 -77
j)efinition -Characteristics of Negotiable Instruments -Types -Classification
-Special Parties to a Negotiable Instrument -Miscellaneous Terms -
Negotiation vs. Assignment.
6. CHEQUES 78 -91
Definition -Cheque and Bill of Exchange -Salient Features of a Cheque-
Specimen of a Cheque -Printed Forms -Special Printer Forms -Cheque
vs. Draft -Drawing up of a Cheque -Banker'S Cheque -Golden Cheque
Scheme -Bank Orders Scheme.
7. MATERIAL ALTERATION 92 -98
Meaning -Effect of Material Alteration -Example of Material Alteration -
Material Alteration and the Banker -Immaterial Alteration -Devices to Arrest
Material Alteration.
J
8. CROSSING 99 -107
General Crossing -Special Crossing -DOUlJ 3 Crossing -Who can Cross a
Cheque -Opening of Crossing.
9. ENDORSEMENT 108 -118
Definition -Significance of Endorsement -A~ signment vs. Endorsement-
Kinds of Endorsement -Regularity of Endorse nent -Liability of Endorser.

9. ..
10. MARKING 119 -124
Marking vs. Acceptance -Significance of Making -Making at the Request of
the Drawer -At the Request of the payee or any Holder -At the Request of
Another Banker -Forged Signature of the Payee or Endorsee -Cancellation
of Making -Making of Post-dated Cheque.
11. PAYING BANKER 125 -141
Precautions Before Honouring a Cheque -Circumstances Under which a
Cheque can be Dishonoured -Answers to Dishounoured Cheques -Statutory
Protection to a Paying Banker -Payment in Due Course -Holder in Due
Course -Recovery of Money Paid by Mistake -Money can be Recovered
-Money cannot be Recovered.
12. COLLECTING BANKER 142 -151
Banker as a Holder for Value -Banker as an Agent -Conversion -Statutory
Protection -Basis of Negligence -Duties of a Collecting Banker.
13. RIGHTS OF A BANKER 152 -159
Right to Set Off -Right to Close an Account -Right to Appropriate Payments
-Rule in Calayton's case.
14. LOANS AND ADVANCES 160 -167
Principles of Sound Lending -Secured and Unsecured Advances -Forms
of Advances.
15. MODES OF CHARGING SECURITY 168 -179
Lien -Pledge -Mortgage -Assignment -Hypothecation -Characteristics of
Hypothecation.
16. UNSECURED ADVANCES 180 -189
Guarantee -Essentials of Guarantee -Advantages and Disadvantages -
Indemnity -Distinction between Guarantee and Indemnity -Right and
Liabilities of Guarantor -Rights of Creditor Against Surety -Precautions to
be Observed in Taking Guarantee -Discounting vs. Pledge -Precautions.
17. SECURITIES FOR ADVANCES 190 -193
Canons of a Good Banking Security.
18. ADVANCES AGAINST GOODS 194 -197
Advantages -Disadvantages -Precautions to be Taken.
19. ADVANCES AGAINST DOCUMENTS OF TITLE TO GOODS 198 -203
Bill of Lading -Warehouse Receipt -Deliver Order -Railway Receipt -
Dock Warrant.
20. ADVANCES AGAINST STOCK EXCHANGE SECURITIES 204 -211
Merits of Stock Exchange Securities -Precautions -Debenture -Advantages
-Precautions to be Taken.

10. 21. MISCELLANEOUS SECURITIES 212 -224
Land and Building -Life Insurance Policy -Fixed Deposit Receipt -Book
Debts -Gold Ornaments -Supply Bills.
22. SUBSIDIARY SERVICES 225 -243
Agency Services: Payment and Collection -Purchase and Sale of Securities
-Executor, Administrator and Trustees -Attorney.
Miscellaneous Services: Safe Custody of Valuables -Letters of Credit -
Travellers' Cheques-Remittance of Funds-Electronic Remittances-Foreign
Inward Remittance Payment Scheme -Merchant Banking -Dealing in Foreign
Exchange Business -Lease Finance -Factoring -Housing Finance -
Underwriting of Securities -Tax Consultancy -Credit Cards -Gift Cheques
-Consultancy Service -Teller System.
23. CLASSIFICATION OF BANKS 244 -256
Commercial Banks -Investment Banks -Exchange Banks -Cooperative
Banks -Land Development Banks -Savings Bank -Central Banks.
Unit Banking and Branch Banking -Group Banking and Chain Banking -
Deposit Banking vs. Mixed Banking -Mixed Banking in India -Narrow
Banking -Universal Banking -Local Area Bank.
24. INVESTMENT POLICY AND
THE BALANCE SHEET OF A BANK 257 -263
Liquidity -Safety -Profitability -Proforma Balance Sheet -Liabilities Side-
Asset Side.
25. CREDIT CREATION 264 -271
Primary vs. Derivative Deposit -Multiple Creation of Credit -Technique of
Credit Creation -Limitations of Credit Creation.
26. BANK FAILURES AND DEPOSIT INSURANCE AND
CREDIT GUARANTEE CORPORATION 272 -280
Causes for Bank Failures -Deposit Insurance Corporation -Deposit
Insurance and Credit Guarantee Corporation -Credit Guarantee Scheme
Relating to Small-scale Industries -Export Credit Guarantee Corporation of
India.
27. MONEY MARKET 281 -290
Money Market and Capital Market -Components -Instrument -Developed
and Underdeveloped Money Market -Importance of the Money Market-
Indian Money Market -Recent Developments in Indian Money Market.

11. 28. THE BANKING SYSTEM IN INDIA 291 -320
Indigenous Bankers -Commercial Banks -Cooperative Banks -Regional
Rural Banks -Foreign Banks -Development Banks -Industrial Development
Banks -Industrial Finance Corporation -Industrial Development Banks of
India -Industrial Credit and Investment Corporation of India -Industrial
Reconstruction Bank of India -NABARD -National Housing Bank Banking
'Commission -Banking Sector Reforms -Income Recognition -Classification
of Assets -Provisioning Requirements -Capital Adequacy Norms -Post
Reform Position.
29. COMMERCIAL BANK AND ECONOMIC DEVELOPMENT 321 -332
Economic Development -Role of Banks -Economic Growth and Indian
Banks -Innovative Schemes -The Lead Bank Scheme -Village Adoption
Scheme -Service Area Approach -Self-employment Scheme for Educated
Unemployed Youth -Self-employment Programme for Urban Poor -IRDP-
Differential Interest Rate Scheme -MFA-SFDA-MFAL-Farmers' Service
Societies -Priority Sector -Micro Finance.
30. STATE BANK OF INDIA 333 -342
Origin -Functions -SBI and Agricultural Finance -SBI and Small Business
-SBI and Industrial Finance -SBI and Small-scale Industries -SBI and the
Cooperative Sector -Export Business -Capital Market Operations -SBI
Factors and Commercial Services Ltd. -SBI Cards and Payments Services
Ltd. -SBI Housing Finance Ltd. -Foreign Subsidiaries -SBI Life Insurance
Cos. -SBI Gilts Ltd.":' Credit Information Bureau (India) Ltd. -ATM Project.
31. THE BANKING REGULATIONS ACT, 1949 243 -356
I
Origin of the Act -Business of Banking Company -Capital Requirements-
Management -Maintenance of Liquid Assets -Licensing of Banking -Opening
of New Branches -New Licensing Policy -Loans and Advances -Inspection
of Banks -Powers of the RBI -Returns to be Submitted -Acquisition of
Business -Winding up and Amalgamation of Banking Companies -
Miscellaneous Provisions -Applications of the Act to Co-operative Banks.
32. CENTRAL BANKING (I) NATURE AND FUNCTIONS
(II) METHOD OF CREDIT CONTROL 357 -371
Nature of the Central Bank -Functions -Methods of Credit -Control.
33. RESERVE BANK OF INDIA 372 -392
Constitution -Functions -RBI and Agricultural Credit -RBI and Industrial
Finance -RBI and the Bill Market Scheme -Financial Inclusion.
34. NON·BANKING FINANCIAL INSTITUTIONS 393 -413
Meaning -Classification -Equipment Leasing Company -Hire Purchase
Finance Company -Housing Finance Company -Investment Company-
Loan Company -Mutual Benefit Financial Company -Miscellaneous Non-
banking Company -Residuary Non-banking Company -Non-banking

12. Financial companies (Reserve Bank) Directions, 1998 -Minimum Credit
Rating -Ceiling on Deposit -Guidelines on Prudential Norms -Services
Rendered by Non-banking Companies -Non-banking Companies and the
RBI.
35. FOREIGN EXCHANGE
Meaning and Definition -Foreign Exchange Market -Rate of Exchange­
Kinds of Exchange Rates -Determination of Exchange Rate -Purchasing
Power Parity Theory -Balance of Payments Theory -Exchange Control­
Objectives and Methods -RBI and the Foreign Exchange Control -New
Provisions of FEMA Exchange Arithmetic.
36. INTERNATIONAL MONETARY FUND
37.
38.
39.
40.
Membership -Objectives -Structure and Management -Resources -
Functions -Facilities -Facilities Extended -IMF and Conditionality -IMF
and International Liquidity -SDR Scheme and Its Operation -IMF and India
-Achievements -Failures.
THE BANKING OMBUDSMAN SCHEME
Object -Appointment of Ombudsman -Powers and Duties of Ombudsman -
Procedure for Redressal of Grievance -Settlement by Agreement -Settlement
by Recommendation -Settlement by Awarded -Revised Scheme 2006.
ELECTRONIC BANKING (E-BANKING)
Traditional Banking vs. E-Banking -Facets of E-Banking -Intranet
Procurement -E-Banking Transactions -Electronic Delivery Channels -
Truncated Cheque and Electronic Cheque -Models for E-Banking -
Complete Centralised Solution -Features -CCS -Cluster Approach -High
Tech. Bank within Bank -Advances of E-Banking -Constraints in E-Banking
-Security Measures -Electronic Delivery Channels -Truncated Cheque-
Mchq product -Electronic Cheque -Real Time Gross Settlement
MANAGEMENT OF NON PERFORMING ASSETS (NPAs)
Magnitude of NPAs -Factors Contributing to NPAs -Early Warning Signals
-Management of NPAs -Remedies Available -Recent Measures.
CREDIT APPRAISAL
Meaning -Importance -Procedure for Credit Appraisal.
414 -432
433
-447
448
-453
454 -469
470 -476
477 -486

13. j
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I

14. BANkER ANd CUSTOMER
II:
'" ...
Q.
0(
..:
U
Today banks have become a part and parcel of our life. There was a time
wher. the dwellers
of city alone could enjoy their services. Now banks offer access
to even a common man and their activities extend to areas hitherto untouched.
Apart from their traditional business oriented functions, they have
now come out
to fulfil national responsibilities. Banks cater to the needs of agriculturists,
industrialists, traders and to all the other sections
of the society. Thus, they
accelerate the economic growth
of a country and steer the wheels of the economy
towards its goal
of "self reliance in all fields."
It naturally arouses our interest in
knowing more about the
'bank' and the various men and activities connected
with it.
Origin of Banking
Since the banking activities were started in different periods in different
countries, there is no unanimous view regarding the origin of the word 'bank.'
The word, 'Bank' is said to have derived from the French word 'Banco', or 'Bancus'
or 'Banc' or 'Banque' which means, a 'bench.' In fact the early jews in Lombardly
transacted
their banking business by sitting on benches. When their business
failed, the benches were broken and hence the word 'bankrupt' came
into vogue.
But,
Macleod in his book, 'Theory and
Practice of Banking' has expressed a
different view. According to him, the money changers were never called 'Benchieri'
in the
Middle ages.
So, this derivation may be a mere conjecture.
Another
common-held view is that the word 'bank'
might be originated from
the German
word 'Back' which means a joint stock fund.
Of course, a bank
essentially deals
with funds.
In due course, it was Italianised into "banco",
Frenchised into 'bank' and finally Anglicised into 'bank.' This view is most
prevalent even today.
Banker
A person who is doing the banking business is called a banker. But, it is not at all easy to define the term 'banker' precisely because a banker performs
multifarious functions. First, a banker must be a man of wisdom.
He deals with others' money but with his own mental faculties. Secondly, a
banker
is not only acting as a depository, agent, but also as a repository of financial

15. 2 BQnking -Theory, LQW Qnd PrQctice
advices. The scope of activities of a banker is ever expanding. Thus, a banker is
dealing with the field of banking which is highly dynamic, complex and
sophisticated and
which must cater to the ever growing requirements of
millions
of people belonging to different strata of society. The banks have diversified their
activities on an accelerated pace to cater to the sophisticated needs of corporate
clients and other segments
of trade and industry. Hence, the banking
terminology
seems to be the most incomprehensible one.
Still, some attempts have been made to define the term 'banker.' This can be
studied under the following heads:
Earlier Views
The early definitions were not positive in the sense, they did not point out
any of the functions performed by a banker. For instance, The Bill of Exchange
Act
of 1882 defines the banker thus:
"Banker includes a body of persons whether
incorporated
or not who carryon the business of banking."
So also Sec. 3 of the
Negotiable Instruments Act states that "the term banker includes a person or a
corporation
or a company acting as a banker." These definitions are vague. They
amount to saying that a person who acts as a banker is a banker.
Experts' Views
Later on, some attempts were made by experts to define the term 'banker.'
Among them the most
important ones are the
following:
Macleod's view: According to Macleod "The essential business of a banker is
to buy money and debts by creating other debts. A banker is essentially a dealer
in debts or credit."
Dr. Hart's view: Dr. L. Hart states in his book 'Law of Banking' that "A banker
is one who in the ordinary course of his business honours cheques drawn upon
him by persons from and for whom he receives money on current accounts."
Sir John Paget's view: Sir John Paget in his book 'Law of Banking' defines the
term
'banker' as
follows "That no person or body corporate or otherwise can be a
banker
who does not (i) take deposit accounts, (ij) take current accounts, (iii)
issue and pay cheques and (iv)
collect cheques crossed and uncrossed for his
customers." He embellishes his definition by adding that one claiming to be a
banker must profess himself to be a full time banker and the public must accept
him as such and his main business must be that of banking from which, generally,
he should be able to earn his living.
All these experts have pointed out some aspects of a banker. They are the
following: receiving deposits of various kinds, lending money or creating credit,
issuing cheques,
honouring cheques and
collecting cheques. These are the
essential functions of a bank. However, these definitions do not include any agency
and general utility services rendered by modern bankers.
Indian View
The definition given in India in the Banking Regulation Act appears to be
more precise and acceptable. Thus Sec. 5(B) of the above -mentioned Act defines
the term 'Banking company'
as
"a company which transacts the business of banking
in India," and the term 'Banking' h'as been defined as "Accepting for the purpose

16. Banker and Customer 3
of lending and investment, of deposits of money from the public, repayable on
demand, order or otherwise and withdrawable by cheque, draft order or
otherwise." This definition also pinpoints the principal functions of a banker,
namely, receiving deposits, lending
or investing these deposits and repaying these
deposits on demand by cheque or otherwise.
Even this definition does not indicate
the subsidiary services rendered by the bankers. By now,
it is quite evident that
no
definition of the term 'banker' will be a complete one.
Banking and
Other Business
In this connection an interesting question may arise as to whether to call a
moneylender a banker
or not. Traditionally moneylenders and indigenous bankers
have been advancing loans. But they
don't receive deposits from the public. They
rely upon
their own resources.
In Samyukta Samajan Vs. Goli Kalyani, it was
held that the firm lending money
out of its own capital was not a bank. Moreover
their main business
is not banking. They used to combine banking with trading
business.
In Stafford Vs. Henry it was held that carrying on banking business as a
part
of any business would not entitle a man to be called a banker. Similarly
these moneylenders
do not issue cheques wh ich is one of the essential functions
of the bankers. Hence, moneylenders and indigenous bankers are not regarded
as bankers in the strict sense of the term.
Some financial institutions like I.F.C., S.F.C., I.D.B.I. Co-operative Land
Development Banks etc., are providing loans to industries and agriculturists. They
are not regarded
as banks since they do not accept deposits from the public
regularly.
Of late, many business houses and industries have begun to invite fixed
deposits from the
public by offering attractive rates of interest. They cannot be
strictly called banks because they
don't lend and they don't issue any cheques.
Customer
It is equally difficult to define the term 'customer.' Different views have been
expressed at different times.
Even under the law, the term 'customer' is not defined.
But
tf,is term 'customer' is of much significance to a collecting banker because
he can get protection under Sec. 131 of the Negotiable Instruments Act only if he
collects a crossed cheque for his customer in good faith and
without negligence.
Thus
to solve many of the disputes that may arise in banking transactions, a c1ear­
cut definition of the term customer is essential. Who is then a customer?
To have a proper understanding of this subject, a study of the term 'customer'
as they obtained at different stages can be made.
Early Stage -Some Sort of an Account
In early periods a man who held some sort of an account was considered to
be a customer. In Great Western Railway Co., Vs. London and County Bank it
was held that "there must be some sort of Account -either a deposit or current
account
or some similar relation - to make a man customer of a
bank." The
opening
of an account is the only qualification needed by a man to become a
customer. This argument appears
to be logical. However, in those days other
different opinions were also prevalent. For instance, Lord Brampton was
of the
view,
"It is not necessary to say that the keeping of an ordinary banking account
is essential to constitute a person customer of a bank." It is not prudent to call a

17. Banking - Theory, Law and Pradice
person having no account a customer and so it is totally unacceptable. Thus, we
can say that some sort of an account is necessary for a person to be called a
customer.
Second Stage -Frequency of Transactions
At this stage, some refinements were made to the early definitions. Since the
word customer itself implies a custom, Sir John Paget puts forth a different view.
According to him, "to constitute a customer there must be some recognisable
course
or habit of dealing in the nature of regular banking business." Hence, a
person cannot become a customer on mere opening
of an account and so there
must be frequent transactions
so as to establish a recognisable course between a
banker and his customer. Thus,
Sir John Paget gives importance to the time element
and therefore his theory
is popularly known as the 'duration theory.' The same
view was expressed in the case of Mathews Vs. Williams Brown & Co. His view
regarding the dealing of banking nature has been
universally accepted. But his
view about "duration' is subject to several criticisms. It is very difficult to say
how many transactions will make a person a customer or how much time should
elapse between
two successive transactions to qualify a person as a customer.
THE MODERN VIEW
Single Transaction
The eminent jurists in recent times have completely exploded the view
expressed by Sir John Paget. According to them even a single transaction can
constitute a person a customer. They have gone to the extent
of saying that the
moment a banker has agreed to collect a cheque for a person, the latter becomes
a customer.
It means that a person becomes a customer the moment his banker
agrees to
admit him as a customer. Thus, in Ladbroke Vs. Todd, Justice Bailhache
rightly observed:
"the relation of banker and customer begins as soon as the first
cheque is
paid in and accepted for
collection not merely when it is paid."
Commenting upon the case Lord Chorely observed: "By accepting a request to
open an account, the banker enters into a contract with the offeror in which it is
considered that such a continuous relationship is implicit." Again, the same view
was expressed in Commissioner of Taxation Vs. English Scottish and Australian
Bank
wherein it was confirmed by Lord Dunedin that
"the word customer signifies
a relationship
in which duration is not of the essence."
It is now beyond doubt
that neither the number of transactions nor the period is material in deciding
whether or not a person is a customer. In Savory & Co vs. Lloyds Bank Ltd. Mr.
Smith had instructed the Lloyds Banker to collect the cheques stolen by him and
credit them to his wife's
account at the Red
Hill Branch. His wife didn't have any
account at all. BUl, it was held that Mrs. Smith became a customer from the
moment the banker had accepted those cheques for collection.
Moreover a person does not become a customer by virtue of the bank
performing a casual service like accepting valuables for safe custody or giving
change for a hundred rupee currency note for him. Hence the dealing must be of
a banking nature.
To sum up, the following are the prerequisites to constitute a person as a
customer:

18. •
Banker and Customer
(a) He must have some sort of an account.
(b) Even a single transaction may constitute him as a customer.
(c) Frequency of transactions is anticipated but not insisted upon~
(d) The dealings must be of a banking nature.
The Relationship between A Banker and A Customer
5
Any dispute between two parties can
be settled
only on the basis of the nature
of the existing relationship between the two. Hence, it is imperative that
one should know the exact relationship between the banker and the customer. This
relationships falls under two broad categories, namely: (j) general relationship
and (ij) special relationship.
General Relationship
Is there a Depository Relationshipl When a person opens an account with a
banker there arises a contractual relationship by implication. Once, the banker
was thought of a depository. This was the case during the period of Goldsmiths of
London. A depository
is one who receives some
valuables and returns the same
on demand. But at present, a banker is not bound to return the same coins and
currency notes deposited by a customer. Instead, he is required to give the same
amount. So,
he is not a depository.
If a cusotmer insists upon the return of the
same coins
and currency notes, then a banker cannot run his main business, namely, lending. Moreover, if a banker is acting as u depository, he cannot make
use of the money
to his best advantage. A banker has to make use of the money in
deposit with him for earning the maximum profit and the
whole income is not
returned to the customer. Only a part of it is returned to the customer. That is why
Lord Cottenham rightly observed in Foley Vs. Hill "the money paid into a bank
ceases altogether to
be the money of the principal; it is then the money of the
banker. He
is known to
deal with it as his own ........ He is bound to return an
equivalent by paying a similar sum that deposited with him when he is asked for
it. "
A banker as a bailee: A banker becomes a bailee when he receives gold
ornaments and important documents for safe custody. In that case he cannot make
use of them
to his best advantage because he is bound to return the
identical
articles on demand. Moreover, a banker cannot acquire any title in respect of
stolen articles. A banker does not allow any interest on these articles. It is only
the customer who has to pay rent for the lockers. So, a banker acts as a bailee
only when he receives articles for safe custody and not when he receives money
on deposit account.
Is there a Trustee Relation~hipl Prof. Keeton defines a trust as 'a relationship
which arises wherever a person called trustee is compelled in equity to hold
property, whether real or personal by legal or equitable title for the benefit of
some person.' If a banker is regarded as a trustee, he cannot make use of the
money deposited by a customer to his best advantage. He will be bound by the
trust
deed and he
will have to render an account for everything he does with the
money.
For this reason he is not a trustee when he opens an account for a customer.
A
banker as a trustee: A banker becomes a trustee
only under certain
circumstances. For instance, when mon«rY is deposited for a specific purpose, till

19. 6 Banking -Theory, Law and Practice
that purpose is fulfilled the banker is regarded as a trustee for that money. In
Official Assignee of Madras Vs. J. w. Irwin a certain sum of money was deposited
with
the bank with the specific instruction to buy shares. When that bank
failed,
it was held that the banker was a trustee for that part of the amount which was
earmarked for the specific purpose. So also, when a cheque is given for collection,
till the proceeds are collected, he holds the cheque as a trustee. But the proceeds
are not to
be
held in trust. That is why Lord Justice Atkin has rightly observed in
Joachinson Vs. Swiss Banking Corporation, "The bank undertakes to receive money
and to. collect bills for its customer's account. The proceeds so received are not
to
be
held in trust for the customers' but the bank borrows the proceeds and
undertakes to repay them."
Is there an Agent Relationship? Section 182 of the Indian Contract Act defines
an
agent as one
employed to do any act for another or to represent another in
dealing with third person.
When a banker receives deposits from the customers, he is not regarded as
an
agent of his customers.
If he acts as an agent, he should use the deposit money
according to the instructions of his principal (customer) in return for a remuneration
for this agency service. But this
is not the case. The agent is
also accountable to
the principal and as such the banker should give a detailed list of how he used
the deposit money,
the income earned thereon and so on. The
whole income
should go to the customer.
A banker as an agent: The agent -principal relationship is said to exist between
a
banker and his customer, when the banker buys and
sells shares, collects
cheques, bills, dividend warrants, coupons and pays insurance premia,
subscriptions etc., on beha'if of his customer. The banker is acting as an agent of
his
customer under such circumstances.
So also when he executes the will of a
customer,
he is acting as an Executor; when he administers the estate of a customer
he
is regarded as an Administrator. This kind of relationship doesn't exist when
he receives deposits from a customer.
What then is the
Relationship? At this stage we are curious to know the exact
nature of the relationship that exists between a banker and his customer. When a
banker receives deposits from a customer, he
is
technically said to borrow money
from the customer. So, he is acting as a debtor who is bound to return the money
on demand to his creditor, namely, his customer.
Debtor-creditor relationship: According to Sir John Paget, "The relation of a
banker and a customer
is primarily that of a debtor and a creditor, the respective
position being determined by
the existing state of the account.
Instead of the
money being set apart in a saferoom it is replaced by a debt due from the banker.
The money deposited by a customer with the banker
becomes the
latter's property
and
is
absolutely at his disposaL" Hence, there exists a relationship of debtor and
creditor; the banker, being the debtor, is bound to repay the deposit as and when
the customer asks for it. '
The banker as a privileged debtor: A banker, as a debtor is not the 'same as an
ordin.ary commercial debtor. An ordinary commercial debtor's duty is to seek out
the creditor and pay the money. But a banker as a debtor enjoys many privileges
and
hence he is
called a privileged debtor. The privileges enjoyed by a banker
have been I isted below:

20. Banker and Customer 7
(1) The creditor, i.e., the customer must come to the banker and make an
express demand in writing for repayment of the money. According to the decision
given in
Joachinson Vs. Swiss Banking Corporation an express demand by a
custcmer in
writing is
essential to get back the deposit money. But for this
privilege, the banker will have to go to the very doors of thousands of his
customers and find
out whether or not they are in need of money. This
will be
detrimental to the very business
of banking.
(2)
In the case of an ordinary commercial debt the debtor can pay the money
to the creditor at any place. But, in the case of a banking debt, the demand by
the creditor must be made only at the particular branch where the account is
kept. It was held in Clare & Co. Vs. Oresdner Bank, that locality is an essential
element in a banking debt and the banker should pay the money only when the
demand
is made at the branch where the account is kept.
(3) Time is not an
essential element in the case of an ordinary commercial
debt whereas the demand
for repayment of a banking debt
should be made only
during the specified banking hours of business which are statutorily laid down.
In Arab Banks Vs. Barclays Bank it was held that a banker is liable to honour a
cheque provided
it is presented during the banking hours.
(4) The banker is
able to get the deposit money without giving any security
to the customer while it is not possible in the case of an ordinary debtor. Thus
the customer is acting only as an unsecured creditor. It is really an enviable
privilege given to the banker.
(5) The Law of Limitation which is applicable to all debts lays down that a
debt will become a bad one after the expiry of three years from the date of the
loan. But this Law is not applicable to a banking debt. According to Article 22 of
the Law of Limitation Act, the period of 3 years will be calculated from the date
of demand for repayment of the banking debt and not from the date of the deposit.
Practically, when the demand is made, the banker will return the money
immediately and so this Law does not apply to a banking debt. Otherwise, the
customers will be deprived of their deposits on the ground that they have become
bad debts by being
not withdrawn within 3 years from the date of the deposit.
This
will not be conducive to the smooth running of the banking business. Thus,
a banker
is a
highly privileged debtor who is not bound to repay the debt unless
an express demand by the customer in writing is made at the branch where the
account is kept and
during the banking hours.
(6) A banker as a debtor has the right to combine the accounts of a customer
provided
he has two or more accounts in his name and in the same capacity.
This
is another of his privilege.
In early days, a banker was allowed to combine
the accounts of a customer even without obtaining the permission of the customer
as was decided in the case of Garnett Vs. Mckervan. However, prudence demands
the banker getting the consent beforehand for exercising his right
to Combine
the accounts.
Now it has been
clearly established in Greenhalgh Vs. Union Bank
of Manchester that a banker can combine the accounts of a customer only after
getting the consent
of his customer.
It is advisable on the part of a banker to get
a letter of set-off duly signed by a customer at the time of his opening two or
more accounts. This will avert many complications. This letter of set-off permits
the banker to exercise the right to set-off even
without giving any prior notice to
his customer.

21. 8 Banking - Theory, Law and Practice
(7) Similarly, an ordinary debtor can close the account of his creditor at any
time. But a banker
cannot close the account of his creditor at any time without
getting his prior approval.
A banker
as a creditor: The debtor-creditor relationship holds good in the
case
of a deposit account. But in the cases of loan, cash credit and overdraft, the
banker becomes a
creditor and the customer assumes the role of a debtor. Here
again, the banker
is a privileged person because he is acting as a secured creditor.
He insists upon the submission of adequate securities by the customer to avail of
the
loan or cash credit facilities. Moreover, the Law of Limitation will operate in
such cases from the date
of the loan unless it is renewed.
SPECIAL RELATIONSHIP
Apartfrom these general featu'res of the relationship, there exists some special
features
which are discussed hereunder:
Statutory
Obligation to Honour Cheques
When a customer opens an account there arises a contractual relationship
between the banker and the customer
by virtue of which the banker undertakes
an obligation to honour his customer's cheques. This obligation is a statutory obligation since Sec. 31 of the Negotiable Instruments Act compels a banker to
do so. Sec. 31 runs as follows:
liThe drawee of a cheque having sufficient funds of the drawer in his hands,
properly applicable to the payment of such cheque, must pay the cheque when
duly required so to do, and in default of such payment, must compensate the
drawer for any loss or damage caused by such default. II
Limited Obligation
Eventhough law compels a banker to honour all cheques, he cannot blindly
honour all. cheques. Thus this obligation is not an absolute but only a qualified
one. The statutory obligation to honour cheque is limited in the following ways:
(aJ The availability of money in the account of the Customer: A banker's
obligation to pay a cheque is subject to the amount available in the deposit
account. If there is no sufficient balance, the banker is justified in overriding his
obligation.
At times, this obligation may be extended to the extent of the overdraft
or cash credit sanctioned by the banker.
If there is a prior arrangement for 0.0.,
the banker is bound to honour the cheque as was decided in the case of Rayner &
Co.
Vs. Hambros Bank.
If a banker, by mistake, honours a cheque in the absence
of sufficient balances, it will be taken as a precedent and he will be expected to
pay cheques in future also in the absence
of sufficient balance.
(bJ The correctness of the cheque: The obligation to pay a cheque depends
upon the correctness
of the cheque.
All the required particulars like the date,
name
of the payee, amount in words and figures and the signature of the drawer
ought to have been correctly filled in.
(c) Proper
drawing of the cheque: The cheque will be honoured only when it
is drawn according to the requirements of law.
It must be drawn on a printed form
supp!ied by the banker and
it should not contain any 'request' to pay the amount.

22. Banker and Customer 9
(d) Proper application of the Funds: The banker will honour a cheque only
when the funds are meant for its payment. For instance, if trust funds are
withdrawn by a cheque for private use, the banker will not honour it.
(e) Proper presentation: The banker will undertake to honour cheques
provided they are presented at the branch where the account is kept and during
'the banking hours. If the cheques are presented after six months from the
ostensible date of issue, they will be regarded as Stale cheques and they will not
be honoured. So this obligation of the banker to honour cheques is conditioned
by tne proper presentation of cheques.
(f) Reasonable lime for collection: A customer cannot impose on the banker
a condition that the latter should pay his cheques blindly even when they are
drawn against cheques sent for collection before they are collected. In Underwood
Vs. BarcJays Bank, it was held that in the absence of an express or implied
agreement giving the customer a right to draw cheques against uncleared items,
a
banker is entitled to return such cheques with the remarks "Effects not
Cleared."
(g) Existence of legal bar: A banker is relieved from his statutory duty of
honouring his customers' cheques if there is any legal bar like Garnishee Order
attaching the customer's account. -
Overriding the Obligation
When a banker overrides his statutory obligation and dishonours a cheque on
reasonable grounds discussed above, the banker is justified in doing so. However,
if he dishonours a cheque by mistake, it amounts to a wrongful dishonour. In such
a case, the banker is violating the provisions of law and hence he should be
penalised for his offence. Thus a banker may fail to honour a cheque by oversight.
It am.:>unts to saying that the banker is negligent in his duty of paying cheques and
there is a breach of contract between the banker and the customer. To err is human
and so inspite of all his careful observation of the procedures laid down, a banker
may, by chance, dishonour a cheque even though it is good for payment. When a
banker
does so, he brings injury to his customer's credit for which he is
liable to
compensate the customer for any loss or damage caused to him.
In Marzetti Vs. Williams,
Lord Teterden rightly observed "It is discredit to a person and therefore
injurious, fact, to have payment refused of a cheque/draft .... it is an act particularly
injurious
to a person in
trade."
Liability to the Customer Only
When a cheque is wrongfully dishonoured, a banker is liable only to his
customer who happens to be the drawer of the cheque in question and he is not
at all liable to any other parties.
In Jagjivan Manji Vs. Ranchhod das Meghji, it was held that the liability of
the banker for wrongful dishonour is only towards the drawer or the customer
and root towards the payee or the holder of the cheque.
Assessment of Damages
As per Sec. 31 of the Negotiable Instruments Act, if a banker wrongfully
dishonours a cheque, he has to compensate for any loss or damage suffered by
the customer. The word 'loss' or 'damage' as mentioned in Sec. 31 of the N. I.

23. 10 Banking -Theory, Law and Pradice
Act does not depend upon the actual amount of the cheque but upon the loss to
one's credit or reputation. That is why "the smaller the amount of the cheque,
the greater the damage" principle is adopted. In fact, the customer suffers more
loss of credit when a cheque for a small amount is dishonoured.
Ordinary Damage Vs. Special Damage
A banker is always liable to pay damages for wrongful dishonour of cheques.
The damage may be
of two kinds: (j) ordinary damage or
nominal damage and
(ij) special damage or substantial damage. As a general rule, a customer must
always prove and plead for his loss. He will get only nominal damages. But there
are
two exceptions to this. Under the
following two circumstances, a special
damage can be claimed:
(i) an action brought forth for breach of marriage.
(ij)
an action brought forth by a businessm'an having sufficient funds for the wrongful dishonouring of his cheque.
A banker
is
primarily concerned with the second case and he has nothing to
do with the first one. In assessing damages, the loss to one's credit or reputation
is mainly taken into account. A trader-customer is supposed to suffer more in
credit if his cheque is dishonoured. Non-traders are generally allowed only
ordinary damages for wrongful dishonour, because, it will not affect their credit
much, If the dishonour of the cheque is wilful, the banker is liable to pay vindictive
damages. Thus, a customer can proceed against the banker for wrongful dishonour
on the following grounds:
(i) Breach of contract. (ij) Negligence, and (iij) Libel.
Hence, the words 'loss or damage' as appearing in Sec. 31 imply the following:
(a) damage for the breach of the contract to pay cheques,
(b) damage
to the drawer's
general business,
(c) damage to his general reputation and credit, and
(d) damage for the negligence of the banker.
Case Law Illustration
In New Central Hall Vs. United Commercial Bank Ltd., it was h~ld that a
trader could get special damage as the dishonour of a cheque would affect his
major asset, namely, his credit and a non-trader could claim only nominal
damages. In Gibbons Vs. Westminster Bank, Mrs. Gibbons, a non-trader, had
issued a cheque
for a sum of £ 9 16sh in favour of her
landlord towards the rent.
Owing to a mistake, it was dishonoured. The court awarded only a nominal
damage of sh 40 since, she happened to be a non-trader. In Sterling Vs. Barclays
Bank Ltd.,
the banker had
wrongfully dishonoured Mrs. Sterling's cheque. Though
Mrs. Sterling was a trader, the court awarded only nominal damages since she
had
two cheques dishonoured
previously and also people of that trade did not
worry about their cheques being dishonoured as they led a hand-to-mouth
existence. In Davidson Vs. Barclays Bank Ltd., the banker of a bookmaker had
dishonoured a cheque for a small sum of £ 2-15sh by mistake. Taking into account
his business and the amount of the cheque, he was awarded a special damage of
£ 250. Hence, in assessing damages, the Courts of law give due weight to factors
like the financial position, business reputation and the custom of trade.

24. Banker and Customer 11
In Canara Bank Vs. I. V. Rajagopal, the banker had dishonoured by mistake
a cheque for
Rs.
294.40 drawn by a non-trader customer Mr. I. V. Rajagopal. It
was proved in the court that this erroneous dishonour led to the termination of
his employment. The court found that the customer had suffered much damage
and
so a
special damage of Rs. 14,000/-was awarded to the customer.
Thus, generally a non-trader customer is not entitled to recover substantial
damages. However, the damages which he has suffered is alleged and proved, he
can
claim
special damages.
It is evident from the above case law illustrations that the damage will be
assessed on the basis of the loss to one's credit or reputation, irrespective of the
fact
whether he is a trader or non-trader, though non-traders are not
generally
entitled to claim special damages.
Is there any obligation to pay bills? Eventhough there is no statutory obligation
on the part
of a banker to honour the
bill of a customer, modern bankers undertake
the
duty of paying the
bills on behalf of their customers. When a customer accepts
a bill and makes it payable at his bank, it is called domiciliation of a bill. If a bill
is so domiciled, the banker should pay it on the due date.
Prior Arrangement
Bankers generally do not render this service unless they are appointed to do
so by their customers. A customer should have made prior arrangements with his
banker to
honour such domiciled
bills. Otherwise, it will be taken as a precedent
and he will be expected to do so in future also.
Indemnity Bonds
In the absence of any compulsion from outside, a banker voluntarily takes up
the duty of honouring a bill just to please his customer and thus to render him
some service. But he should keep in mind that the statutory protection extended
to cheques under
Sec. 85 of the
Negotiable Instruments Act is not extended to the
payrr.ent
of
bills. So, in his own interest, he should demand an indemnity bond
from his customer for whom he renders this service. This bond safeguards the
banker against possible losses that may arise on account of the payment of a bill.
Precautions
In spite of the above - mentioned safeguards, a banker should observe the
following additional precautions. He must see:
(a) whether all the particulars in the bill are correctly filled in.
(b)
whether it is adequately stamped.
(c) whether it is due for payment.
(d) whether the signature of his customer on the
bill is genuine.
BANKER'S LIEN
Another special feature of the relationship existing between a banker and his'
customer is that a banker can exercise the right of lien on all goods and securities
entrusted
to him as a banker.

25. 12 Banking -Theory, Law and Practice
Right to Retain the Goods
A lien is the right of a person to retain the goods in his possession until the
debt due to him
has been settled. For instance, a creditor who has in his possession,
goods
of his debtor, may have a lien over the goods in respect of the money due
by
th~ debtor. This right to retain goods as security is known as lien. According to
Sec.71 of the Indian Contract Act "Bankers •••• may in the absence of a contract
to the contrary, retain
as security for a general balance of account, any goods
bailed
to them ....
"
Kinds of Lien
Lien is of two kinds -particular lien and general lien. A particular lien is so
called because it confers a right to retain the goods in connection with which a
particular debt arose. In other words, a particular lien applies to one transaction
or certain transactions only. For example, a watchmaker has a lien over the watch
till the repair charges due from the owner of the watch are paid to him. General
lien, on the other hand, gives a right to a banker
to retain the goods not only in
respect
of a particular debt but also in respect of the general balance due from
the
owner of the goods to the person exercising the right of lien.
It extends to all
transactions and thus it is more extensive than that of a particular lien.
A Banker's Lien
A Banker's lien is always a general lien. A banker has a right to exercise both
kind:; of lien. His general lien confers upon him the right to retain the securities
in respect
of the general balance due from the customer.
In Brandao Vs. Barnett
it was held, "Bankers most undoubtedly have a general lien on all securities
deposited
with them as bankers by a customer unless there is an express contract
or circumstances that show an implied contract inconsistent with
lien."
Circumstances for Exercising Lien
If the following conditions are fulfilled, a banker can exercise his right of
lien:
(a) There must not be any agreement inconsistent with the right of lien.
(b) The property must come into the hands of a banker in his capacity as a
banker
(qua banker).
(c) The possession should be
lawfully obtained in his capacity as a banker.
(d) The property should not be entrusted to the banker for a specific purpose.
These are the
four vital factors of a banker's lien.
Lien cannot go Beyond the Agreement
In C.R. Narasimha Setty Vs. Canara Bank (1990) the plaintiff Mr. C. R.
Narasimha Setty had purchased a vehicle under a hire purchase finance by
executing a hypothecation deed. Subsequently, the banker exercised a lien on
the vehicle by seizing
it for the amount
still due Rs. 3694.90 (ground rent charges,
seizure charges etc.) and also for the open cash
credit limit of Rs. 50,000/­
sanctioned to a firm in which he was a partner and for which the vehicle was
offered
as a collateral security only. The plaintiff contended that no right of lien
was available
to the banker in respect of the debt due by the firm.

26. Banker and Customer 13
Decision
It was held that the banker could not exercise his lien on the vehicle in
respect of the cash credit dues of the firm since the hypothecation deed did not
give any right to the bank to seize the vehicle for the dues of the firm. The bank
was directed to return the vehicle subject to the recovery of Rs. 3694.90 only.
Thus, it is evident that a lien cannot go beyond the terms of the loan agreement.
Again, in
K. Jagdishwar Reddy Vs. Andhra Bank (1988) it was
held that the
banker has no right of lien on the gold ornaments deposited for a loan in respect
of another debt due by him as a guarantor, since, there is no contract by the
customer offering the gold ornaments as a pledge for the debt due by him as a
guarantor. In another case, Vysya Bank Ltd., Vs. Akkem Mallikarjuna Reddy, the
customer had obtained two gold loans and one crop loan. When the gold loans
were repaid, the b'anker refused to give the jewels, exercising lien on them for
the amount due under the crop loan. But, the customer pleaded that the banker
couldn't exercise his general lien on the jewels, since, the crop loan, loan had
been already waived under the waiver scheme of the Government. Moreover,
the jewels were deposited specifically for the gold loans only. It was held that the
bank can exercise his general lien on the jewels because:
(j) the waiver scheme is not applicable to private banks, and (ij) there is an
agreement /Ito retain the gold ornaments for all the monies now owing, or which
shall, at any time thereafter he owing, to the bank is any capacity whatsoever./I
Again,
in Syndicate Bank Vs. Vijayakumar (1992), it was
held that'the bank
has a general lien on the FORs which were given along with a special agreement
giving power to the bank the liberty of adjusting the proceeds to any loan or 0.0.
A Banker's Lien as an Implied Pledge
It must be noted that a banker's lien is generally described as an implied
pledge. It means that a lien not only gives a right to retain the goods but also
gives a right to sell the securities and goods of the customer after giving a
reasonable notice to him, when the customer does not take any steps to clear his
arrears. In Deverges Vs. Sandeman, a month's notice was considered as a
reasonable one. That
is why
Sir John Paget rightly says in his book 'Lawof Banking'
that /lIt has been generally understood that the banker's lien conferred rights more
extensive than ordinary liens .... /1 This right of sale is normally available only in
the case of pledge. That is why lien is regarded as an implied pledge. This right of
sale is available only in exceptional circumstances in the case of lien.
Lien on Negotiable and Quasi Negotiable Securities
A banker has a lien on all securities entrusted to him in the capacity of a
banker. In Miia Vs. Currie, it was ruled that a banker's general lien applies to
bills, cheques and money paid to bankers in the capacity of bankers. A banker's
lien over negotiable securities applies even to instruments which are not the
property of the customer. It is so because the banker becomes a holder in due
course provided he has acted in good faith. Hence, his title will be superior to
that of his customer.
The lien
also extends to quasi negotiable securities like a
policy of insurance, share certificates,
documents of
title to goods, deposit receipts
etc.

27. 14 Banking -Theory, Law and Practice
No General Lien on Safe Custody Deposits
Bankers have no general lien on safe custody deposits. The bankers receive
valuables such
as sealed boxes, parcels, documents and jewellery fbr safe custody. Such articles are left with the bankers for a specific purpose. ,In Pollock Vs. Mulla,
it was held that the general lien of a banker does not extend to securities deposited
for safe custody or for special purpose. Moreover, the banker becomes a bailee in
such cases and
as such he cannot acquire a better title than that of his customer
from
whom he got them. Hence, a banker's lien does not cover safe custody
deposits.
To quote
Sir John Paget again "a banker's lien only attaches to such
securities
as a banker ordinarily deals with for his customer otherwise than for
safe custody, when there is no question or contemplation of indebtedness on the
part
of the customer./I But, Heber Harot in the Gilbert Lectures has expressed a
different
view which does not hold good. However, the banker can exercise his
particular lien on them for the locker charges due.
No Lien on Documents Entrusted for a Specific Purpose
In Greenhalgh Vs. Union Bank of Manchester it has been clearly established
that
if a bill of exchange or any other document or money is entrusted for a
special purpose, a banker's lien cannot be extended to them.
It is so because
when they are entrusted fora specific purpose, the banker becomes a trustee till
that purpose i-s fulfilled. Hence, he cannot avail of his right of lien. In
K. lagadeshwar Reddy Vs. Andhra Bank, Nizamabad(1988) it was held that in the
absence
of any agreement to the contrary, the bank has no general lien in respect
of those securities which were given
spes;ifically for a particular loan.
No Lien on Articles Left by Mistake
A banker cannot exercise any lien in respect of the property which comes
into his hands by mistake. It amounts to unlawful possession. In Lucas Vs. Dorrien,
the banker had refused to grant an advance against certain securities. The customer
by mistake forgot to take back the securities
while leaving the bank premises.
It
was held that the banker could not exercise his right of lien over those securities
because they came
into his possession in an unlawful manner.
Lien on Securities Not Taken Back After the Repayment of the
Loan
The banker can exercise the right of lien on securities which are allowed to
remain with him even after the repayment of the loan. This is so because the
securities are supposed to be redeposited
with him. This view was held in Re­
London
and Globe Finance Corporation.
Lien on Bonds and Coupons
Lien applies to bonds and coupons that are deposited for the purpose of
collection. The reason is that the banker is acting merely as a collecting agent.
But Lord Chorley
has questioned the validity of this view. However, if the coupons
and bonds are left
in safe custody, a banker's lien cannot cover them. The court
will therefore apply "Collection/Safe Custody Test./I If bonds are deposited with
the condition that the banker can cut off the interest coupons for collection, then

28. Banker and Customer 15
lien would attach both to coupons and bonds. On the other hand, if the customer
himself cuts off the coupons, then, lien does not apply to coupons since the
customer's intention
is to provide for the 'safety' of the coupons.
In the case of
bonds, however, lien applies.
No Lien Until the Due Date of a Loan
When a specific amount is given as loan for a definite period, no lien arises
until the due date. The reason is that no debt arises till that date. In the same way,
a
banker cannot retain any money
belonging to the customer against the
discounted bills which have not yet been matured. The reason is that no liability
arises till the date of maturity. Moreover, even on the date of maturity, this liability
mayor may not arise.
No Lien on Deposits
Generally speaking a banker has no lien upon the deposit account of a
customer
in respect of a
loan account due from the same customer. However, he
has a right to set off one account against the other. Set off is an accounting situation
which
is
always available to the banker and it should not be confused with lien.
Sec. 171 gives a right of lien only in respect of goods bailed as security. Under
bailment, the same goods should be returned to the borrower. But, in the case of
a deposit, the money deposited into any
account ceases to be the property of the
customer and it need not
be repaid in
identical coins and currency notes. Hence,
a deposit does not
come within the meaning of
bailment and hence a bal'1ker's
general lien is not available in respect of a deposit account. In Official Liquidator,
Hanuman Bank Ltd.,
Vs. K.P. T. Nadar & others, it was
held that when moneys are
deposited into a bank, the ownership of the money passes
on to the bank. So, the
right of the bank over the money deposited with
it cannot be a
lien at all. In the
same way, a banker
cannot exercise the right of
lien on the deposit account of a
partner
in respect of a debt due from the partnership firm.
Also, no lien arises on
trust account
in respect of the debt due from the person operating that trust account.
A banker has no
lien on a stolen bond given for sale ifthe true owner claims
it before the sale is effected.
A Banker's lien is not barred by the Law of Limitation Act.
A banker has
no
lien on the security of fixed deposit receipt which has not
been endorsed and discharged on maturity. In Union Bank of India Vs.
Venugopalan, it was held that the banker cannot exercise his lien on the fixed
deposit
account of the defendent's brother
(Venugopalan's brother) unless the
F.D.R.
is
duly discharged and given to the bank as a collateral cover to the loan
given to the defendant.
When a Bill of Exchange is handed over to the banker for the purpose of
safety till maturity and thereafter for collection, then the banker's lien does not
extend to that bill till maturity since that bill has been entrusted to him for a
specific purpose. On the date of maturity there is no objection to the exercising
of the right of lien on that bill since it is given for collection which is a routine
business of a banker.
Negative Lien:
It is otherwise called non-possessory lien. In the case of a
negative lien, the securities are not in the possession of the creditor. But, the
•

29. 16 Banking -Theory, Law and Practice
debtor gives an undertaking that he will not create any charge on those securities
in question
without the prior written permission of the creditor.
Such a letter of
undertaking must be duly stamped. Thus, in the case of a negative lien, the
possession
of the security is with the debtor himself, who promises not to create
any charge over them
until the loan is repaid.
A BANKER'S DUTY
TO MAINTAIN SECRECY OF CUSTOMER'S
ACCOUNTS
A banker is expected to maintain secrecy of his customer's account. The
word 'Secrecy' is like a Damocle's Sword hanging on the head of the banker and
every employee of a bank has to take an oath of secrecy regarding the customer's
accounts. The banker should not disclose his customer's financial position and
the nature and the details of his account. Even though this practice came into
vogue
as early as in 1868 in Hardy Vs. Veasey, it was firmly rooted only in 1924
in a leading case,
popularly known as Tournier's case. (Tournier Vs. National
Provincial
and Union Bank of England Ltd.).
In the above case the banker had
disclosed
to a third party the customer's connection with book-makers.
It resulted
in the loss of employment to the customer. It was held by Justice Bankes that
there
is a
qualified contractual duty which has been acquired by the bank in the
character
of banker not to disclose information concerning the depositor.
In this
case,
it was not done and hence, the bank was held
liable to compensate for the
loss suffered by the customer.
Of course, the duty of secrecy is not a statutory one. Only the nationalised
banks in India are compelled, under Sec. 13 of the Banking Companies (Acquisition
and transfer
of undertakings) Act, 1970, to maintain secrecy of their customers'
accounts. However,
professional etiquette demands that a banker should not reveal
the nature of his customer's account to third person.
Sir John Paget goes to the extent of saying that this secrecy should be
maintained even after the
account is
closed and even after the death of the
customer. It is immaterial whether the account is in debit or credit. This duty of
secrecy goes beyond the state of the account. It extends to a" transactions that go
through the account.
The disclosure
of the financial position of a customer may affect his reputation
and bring considerable
loss. If a customer suffers any loss on account of the
unwanted disclosure
of his account, the banker
wi" be compelled to compensate
for the loss suffered
by his customer.
At the same time, a banker must remember that he cannot maintain cent per
cent secrecy at all times. There may be certain
reasonable grounds under which
he can justifiably disclose his customer's account. In the words of Judge Banks
" ... the duty is a legal one arising out of contract, and the duty is not absolute but
qualified ... on principle. I think that the qualifications can be classified under
four heads:
(a) Where disclosure is under compulsion by
law; (b) Where there is
a duty to the public to disclose; (c) Where the interests of the bank require
disclosure;
(d) Where the disclosure is made by the express or implied consent of
the customer."

30. Banker and Customer 11
(A) Disclosure Under the Compulsion of Law
When law requires the disclosure of the state of a customer's account, he
cannot override it. His
duty to his customer is subject to his duty to the law of the
country. The
following are the examples of this category:
(j) Under Sec. 4 of the Bankers Book Evidence Act, 1891, a banker may be
.
asked to produce a certified copy of his customer's account in his ledger.
(ij) Under Sec. 285 of the Indian Income Tax Act, 1961, a banker is asked
to advise the Income Tax Officer the names of those who have earned
Rs. 10,000 or over as interest on deposits during any financial year.
Moreover, the officials have free access to the books
of accounts kept
by bankers. In Sankarlal Agarwalla Vs. State Bank of India and Another, it was held
that the banker cannot be made liable for having disclosed the deposit
of high denomination Notes as per law to the
Income Tax Department.
(iii) Under Sec. 45B of the Reserve Bank of India Act, the Reserve Bank is
empowered
to collect credit information from banking companies
relating to
their customers.
(iv)
Under
Sec. 26 of the Banking Regulation Act, 1949, every bank is
compelled to submit an annual return of deposits which remain
unclaimed for 10 years.
(v) Under Sec. 36 of the Gift Tax Act, the Gift Tax Officer can examine a
banker on oath and compel
him to produce the books of account. (vi) Und~r the Exchange Control Act, 1947, the government has the power
to gather information about the financial position of a customer who is
suspected
of violating the provisions of the above-mentioned Act.
(vii) When a Garnishee order nisi
is received, the banker must disclose the
nature
of the account of a customer to the court.
In Kattabomman Transport Corporation Ltd. Vs. State Bank of Travancore
(1992) it was held that banks are justified in disclosing the account of a
customer
without his consent under the compUlsion of law.
(8) Disclosure in the Interest of the
Public
As between individual interest and public interest, public interest is more
important and
so the individual interest should be sacrificed for the sake of public
interest. Hence, a banker is justified in disclosing the state of his customer's account
in the interest
of the public.
It is not easy to give an example of this type. The
follOWing grounds generally fall under this category: .
(j) Disclosure of the account where money is kept for extreme p'olitical
purposes.
'(ji) Disclosure
of the account of an
unlawful asso~iation.
(iii) Disclosure of the account of a revolutionary body to avert danger to the
state.
(iv) Disclosure
of the account of an enemy in times of
war.

31. 18 Banking - Theory, Law and Practice
(C) Disclosure in the Interest of the Bank
When his own position is at stake, a banker may be compelled to ignore his
oath of secrecy. Any prudent banker will safeguard his position before fuHilling
his obligations. The following are the instances of this kind:
(i) Disclosure of the account of the customer who has failed to repay the
loan to the guarantor.
(ii) Disclosure to a fellow banker: Bankers amongst themselves have the
practice of exchanging information about customers for the sake of
common courtesy. When an enquiry of this type comes to a banker, he
should in his own interest answer the enquiry because later on he may
also be in need of such information for which he has to approach his
fellow banker. Usually, when a piece of information about a customer
who happens to be an acceptor of a bill under discount is required, the
banker will make a courtesy calion his fellow banker. This is called
common courtesy.
(iii) As a defence of past action disclosure can be made: In Sunderland Vs.
Barclays Bank the banker had dishonoured the cheque of Mrs.
Sunderland drawn in favour of a tailor. In fact, she had asked the banker
to give proper reasons for the dishonour of that cheque to her husband.
To defend his past action (Le., dishonour) the banker had to reveal the
fact of her having drawn cheques in favour of bookmakers without the
knowledge of her husband. After having honoured the last cheque drawn
in favour of a bookmaker, the banker had to dishonour the cheque in
question for want of funds. Mrs. Sunderland could not tolerate this
disclosure
to her husband and so she sued the banker for unwarranted
disclosure.
It was held that the banker was not liable because the banker
had to disclose the fact in his own interest. Besides, there were supposed
to be no secrets between a husband and a wife. Moreover, she had
permitted the banker to give proper reason for the dishonour of her
cheque to her husband.
(D) Disclosure Under the Express or Implied Consent of
Customer
it is implied in the contract between a banker and his customer that the banker
would not reveal anything about the state of the bank balance without the
customer's express or implied consent.
(j) If a customer has given the name of his banker for trade reference, then
the banker would be justified in answering the same.
(ij) So also when a proposed guarantor puts questions to tile banker regarding
the account of the customer, the banker is expected to reveal the exact
position. This is so because any guarantor who has assumed great
responsibility would be anxious to know about the monetary position
of the person whose position is being guaranteed. In all cases, it would
be advisable to get the consent of the customer in writing.
General Precautions
In disclosing the state of the account to it customer, great care should be
exercised. If the banker is careless, he is liable to pay damages:

32. Banker and Customer 19
(j) to his customer who suffers damage because of unreasonable disclosure,
(ii) to a third party who incurs loss relying upon the information which is
untrue and misleading.
Hence a banker should have certain norms about disclosing the state of his
customer's account. They are:
(j) The banker should not be negligent in giving information. .
(ii) He should strictly give bare facts. That is, only a general information
must
be given. He should not disclose the actual state of the account.
(iii)
Information should be given only after getting the express consent of
his customer.
(iv) He should not speak too favourably or too unfavourably of a customer.
Such misleading informations may put
the parties in difficulties and the
banker will have to compensate for the consequent loss.
(v) The information should be given in such a way that he may avoid any
liability in future. That is why, while supplying credit information,
bankers
add a clause stating,
"This information has been given in strict
confidence and without any liability on our part." In Banbury Vs. Bank
of Montreal it was established that the bank "was not liable for the
statement made by the manager and the manager himself was not liable
if
he did not sign the letter. Further it was expressly stated that the
information was given
"without prejudice" and in "strict confidence."
(vi) As far as possible the banker should supply the information only to a
fellow banker.
(vii) On no account should he disclose to the holder of a cheque the exact
balance in a customer's account.
RIGHT TO CLAIM INCIDENTAL CHARGES
Another special feature of the relationship that exists between a banker and a
customer is that the banker may claim incidental charges on unremunerative
accounts. This practice is much more in vogue in England. In India, in order to
encourage people to open more accounts, such charges are not levied. However,
of late, banks in India resort to this practice of claiming incidental charges on an
increasing scale. Perhaps, it is due to the fact that their profitability has been very
much affected in recent times.
These incidental charges take the form of 'service charges', 'processing
charges,' ledger folio charges,' 'appraisal charges,' 'penal charges,' 'handling!
collection charges' and so on.
The charges which have come into effect from 1 st April, 2002 onwards in
public sector banks have been listed below:*
(j) Ledger folio charges of Rs. 500/-p.a. in computerised branches. Other
branches Rs. 200 p.a.
(ii) Collection charges for cheques:
Upto Rs. 1,000 -Rs. 30
Above Rs. 1,001-10,000 -Rs. 40
* State Bank of India, C&I, SIB & AGL segments.

33. 20
Rs. 10,001-1,00,000
Above Rs. 1,00,000
Banking - Theory, Law and Pradice
-Rs. 4 per thousand
or part thereof
-
Rs.
3.50 per thousand
subject
to a minimum of Rs.450.
(iii) Remittance charges for drafts, M.T. and T.T. are as follows:
Upto Rs. 1,000 -Rs. 20
1,001 to 10,000 -Rs. 25
10,001 to 1,00,000 -Rs. 3 per thousand or part thereof
1,00,001 to 10,00,000 -Rs. 2 per 1,000 subject to a minimum of
Rs.300.
Issue of duplicate DD -Rs. 30 per instrument
(jv) Handling charges for cheques dishonoured of 50% the collection charges
subject
to a minimum of Rs.
20/-per cheque for outstation cheques and
Rs. 50/-for each bill.
(v) Processing charges for all types of loans above Rs. 2 lakhs at the rate of
Rs. 75 per lakh subject to a maximum of Rs. 7,500/-.
(vi) Standing instructions charges of Rs. 20/-per instruction involving credit
to other than customers' own accounts within the branch and if it involves
an upcountry centre, Rs. 3 plus postal charges.
(vii) A charge of Rs. 2/-per cheque leaf to be levied at the time of issue of
cheque books in the four metropolitan cities where MICR cheques are
processed.
(viii) A penal charge of Rs. 50/-if that operation has the effect of bringing
down the balance in the current account below the minimum balance.
(jx) Stop payment instructiollS charge Rs. 25 per cheque.
However, in practice, the above service charge regulations are
not strictly followed by all banks. They have a tendency to manipulate the service charge
regulations
so as to attract more and more customers. Customers do not hesitate . to shift from one bank to another depending upon the personalised services
available in a particular bank and also at the cost at which they are available.
Thus, there is a shift from 'relationship banking' (opening an account in a bank
and patronising
it for ever) to 'transaction banking.'
It is not a healthy trend.
THE RIGHT TO CHARGE COMPOUND INTEREST
As per general law, levying of compound interest is strictly prohibited. But a
banker
is given a
special privilege of charging compound interest. Usually bankers
charge interest on the money lent at the end of every quarter. The same practice
of crediting the customer's account with interest at the end of every half year is
followed.
In National Bank of Greece Vs. Pinios Shipping Co., (1990) the house Lords
has categorically established the banker's right to capitalise interest, if unpaid,
by the borrower on yearly or half-yearly basis, irrespective of the fact, whether it
is a secured or unsecured loan. This judgement is vert useful in Indian context
where the existence
of this right has been doubted in D.S. Gowda Vs. Corporation
Bank.
However, in Syndicate Bank Vs. Mis West Bengal Cement Ltd. (1989), the

34. RELATIONSHIP IN A NUTSHELL
Chart Showing the Relationship Between a Banker and a Customer
General Relationship
I
I I
Not a Not a
Depo!:itory Trustee
Not
an Agent
Privileged Debtor
I
(1) Express demand by
the creditor necessary
(2) Demand only at a
particular branch
(3)
Only during banking hours.
(4) Get money from customers
without security.
(5) Law of Limitation does
not apply.
(6) Can combine accounts with
the consent of the customer.
I
Debtor and
Creditor
Obligation
to honour
cheque
Banker's
lien
I
I
Privileged Creditor
I
When the customer acts
as a creditor he acts
as an unsecured creditor.
But the banker acts
as
a secured creditor.
Special Relationship
I I I
Duty to
maintain
secrecy
of his
customers'
account
Right
to
claim
incidental
charges
Right
to
charge
compound
interest
Exemption
from the
Law
of
Limitation
Act

35. 22 Banking - Theory, Law and Practice
method of dealing with loan accounts in bank transactions by adding interest
unpaid when due, to the amount advanced and treating the merged
amount as
the
principal loan has been recognised. In re:Bank of India case, the Supreme
Court has very recently ruled that banks cannot charge compound interest with
periodic rests, for agricultural loans. It is so because, agriculturists do not have
any regular sources of income other than the sale of crops, which normally takes
place only once in a year.
Again,
in Mis. Kharvela Industries
Private Ltd. Vs. Orissa State Financial
Corporation
&
Others, it was held that the payments made by a debtor is in the
first instance to
be
applied towards interest and thereafter towards the principal
unless there is an agreement to the contrary.
EXEMPTION FROM THE LAW OF LIMITATION ACT
Another distinguishing feature is that the banker is exempted from the Law of
Limitation Act.
As per the provisions of this
law, a debt will become a bad one
after' the expiry of 3 years from the date of the debt. But, according to Article 22
of the Law of Limitation Act, 1963, for a banking debt, the period of 3 years will
be calculated from the date on which an express demand is made for the repayment
of the debt. It follows that a banker's debt cannot be made time barred. However,
in practice, a reasonable period has been fixed for the banker's debt also. Sec. 26
of the Banking Regulation Act prescribes a period of 10 years to consider a banking
debt as a bad one. In the case of fixed deposit, this period of 3 years/1 0 years will
be calculated from the date on which the F.D.R. is surrendered. In the case of a
safe custody deposit, this period.
commences from the date of demand.
In the
case of an overdraft, the period of these years will be counted from the date on
which it
is made use of.
In the actual banking practice no banker would wait for the expiry of 10
years. If there is no operation in an account for one year, it will be marked as a
'dormant-account.' After two years of marking,
it
will be transferred to an account
called 'Inoperative account' and it will be thereafter transferred to the Central
Office after 5 years.
How long the relationship would continue?
As long as there is some sort of an account either a deposit or a loan account,
the relationship would continue. The relationship would be terminated on the
happening of events like death, insolvency or insanity of a customer or closing of
the
account either on the initiative of the customer or banker. This
relationship
would not come to an end just beca.use the banker has demanded the repayment
of the loan outstanding as was decided in the case of National Bank of Greece
Vs. Pinios Shipping Co., (1990).
Since banking
is a service industry, it is
all, the more essential that good
relationship is not only created but also maintained by means of offering excellent
personalised services.

36. Banker and Customer 23
TEST YOUR KNOWLEDGE
Objective Type:
I. fill up the blanks with suitable word/words:
(a) A banker is a ....... debtor.
(b) A banker's lien is always a ..... lien.
(c) Accepting a bill and making it payable at the bank is called ..... .
(d) For wilful dishonour of a cheque ..... damage is payable by the banker.
(e) To claim a banking debt. ............... in writing is necessary.
(f) Honouring of a cheque is a ....... obligation, whereas maintenance of secrecy
is a ..... obligation.
(g) ............ is necessary to exercise a lien.
(h) The word customer signifies a relationship in which ......... is of no essence.
(a) Privileged (b) General (c) Domiciliation of a B/E (d) Vindictive (e) An express
demand
(f) Statutory, contractual (g) No agreement (h) Duration
II. Match the following:
(a) Deposit accounts
(b) Advances
(c) Safecustody deposit
(d) Collection of a cheque
(e) Safedeposit locker
(1) Agent and principal
(2) Bailee and bailor
(3) Debtor and creditor
(4) Creditor and debtor
(5) Mortgagee and mortgagor
(6) Lessor and lessee
(a -3, b -4, c -2, d -1, e -6)
III. State whether the following statements are true or false:
(a)' Maintenance of secrecy is an absolute obligation.
. ,
(b) The damage payable in the case of wrongful dishonour of a cheque depends
upon the amount
of a cheque.
(c) A negative lien does not give any right of possession to the creditor.
(d)
A banker can exercise his particular lien on the safe custody articles.
(e) When the funds are deposited for a specific purpose, the banker becomes a
trustee.
(f) The law of Limitation runs from the date of the deposit.
(a -false; b -false; c -true; d -true; e -true; f-false)
,v. Choose the best answer from the following:
(j) The relationship between a banker and a customer is:
(a) That of a debtor and creditor,
(b) That of a creditor and a debtor,
(c)
Primarily that of a debtor and a creditor,
(d) (a) and (b) together.

37. 24
(ij) The banker has a lien on:
(a) Bonds given for collection,
(b) Bonds given for safecustody,
(c) Bonds left by mistake,
(d)
(a) and (b) together.
Banking - Theory, Law and
Practice
(iii) In executing the standing instructions, there exists a relationship of:
(a) Debtor and creditor,
(b) Trustee and beneficiary,
(c) Bailee and bailor,
(d) Agent and
principal.
(iv) To constitute a person as a customer:
(a) There must be frequency of transactions,
(b) There must be a
dealing of a banking nature,
(c) There must be some sort
of an account,
(d) There must be a single transaction
of any nature.
(v) The banker
has a statutory obligation to:
(a) Honour customers' cheques,
(b) Exercise lien,
(c)
Maintain secrecy of his customers' accounts,
(d)
Honour customers' bills.
(i -c; i i-a; iii -d; iv -c; v - a)
Short Answer Type: .
(a) What do you understand by the term 'banker'?
(b)
What is the duration theory?
(c) What is meant by 'Common Courtesy'?
(d)
What is Banker's lien?
Is there any negative lien?
(e) What do you know about 'Bank charges'?
(f) What do you mean by 'lien as an implied pledge'?
(g) What do you understand by ledger folio charges?
(h)
How will you assess damages in the case of a wrongful dishonour of a cheque?
(j) What is the period of limitation for a banking debt?
(j) Can a money lender be called a banker?
Essay Type:
(a) Define the terms 'banker' and 'customer' and bring out the relationship that
exists between
them.
(b) What is Banker's lien? When can he exercise such a lien?
(c) :s a banker obliged to maintain the secrecy of his customer's account? Under
what circumstances can he disclose the account and what precautions should

38. Banker and Customer 25
he take in such cases?
(d) State and explain the banker's obligation to honour cheques. What risks he
has to face in the case of wrongful dishonour of a cheque?
Higher Abilities:
(a) Distinguish between 'general lien,' 'particular lien' and 'negative lien.' Can a
banker claim lien on the following:
(a) A gold bar deposited for safecustody,
(b) A Hundi deposited for safecustody till maturity and then for collection,
(c) A cheque given for collection,
(d) A stolen bond given for sale (no lien since a customer's title is defective).
(b) A customer's account shows a credit balance of Rs.
950/-and the following
cheques are presented at the same time:
(a) A cheque for Rs. 900/-,
(b) A cheque for Rs. 2000/-,
(c) A cheque for Rs. 300/-.
which of the above cheque/cheques will you honour and why?
(c) Can a football club claim special damages for the wrongful dishonour of a
cheque?
(d) Can a banker disclose the account of his customer to the following persons
when they demand for such a disclosure:
(a) Wife of his customer,
(b)
Payee of a cheque,
(c) An Income Tax Officer.
(e) "The relationship between a banker and a customer is primarily that of a
debtor and creditor" -Discuss.
(f) Distinguish between:
(j) A banking debt and a commercial debt,
(ij) Dormant account and inoperative account,
(iii) Handling charges and processing charges,
(iv) Relationship banking and transaction banking.

39. DEposiTS
This is an era of keen competition among banks. Most of the commercial
banks vie with one another in tapping the savings of the public by means of
different kinds of deposits. It is not an exaggeration to say that almost every day
a
new kind of deposit is being introduced. At the same time,
a banker should be
very careful in opening deposit accounts. Some of the deposit accounts are
operated very often. He should safeguard his position in such a way that he may
not be victimised by unscrupuldus persons. When a banker accepts deposits,
technically speaking, he is said to 'borrow money. As a borrower, he should
safeguard his position so as to avoid untoward happenings. As such, before opening
a deposit account, the banker should observe certain general precautions.
GENERAL PRECAUTIONS
(1) Application Form
The prospective customer is first of all asked to sign an application form
prescribed
for that purpose after furnishing
all particulars. Different bankers have
different printed application forms. They also vary with classes of customers and
for kinds of deposits. These application forms contain the rules and regulations of
the bank along with the terms and conditions of the deposit.
SPECIMEN OF AN APPLICATION FORM FOR OPENING AN
ACCOUNT'
To
The Manager,
Modern Bank of
India
Madurai
Dea,r Sir,
Please open Savings Deposit Account in my/our name(s)
(Name and Address in Block Letters)
..... 2008

40. Deposits 21
I/W€ agree to comply with and to be bound by 'the bank's rules for the time
being for the conduct of such accounts.
The account be operated upon*
_____
~ ___________ _
**Date of birth _______________________ ,20
Introduced by
If in joint names, State [1] either or survivor,
[2] both
or survivor,
Yours
faithfully,
[3] anyone of us or anyone of the survivors of
us or the last survivors.
** In the case of minors.
On the back of the applicatiop form itself there is a provision for giving
specimen signatures.
BACK PORTION OF THE APPLICATION FORM
Name of
Account
Specimen Signature Card for Savings Account
Date
Nc No.
NAME (IN BLOCK LETTERS) SIGNATURE
1. ___________ __
2. _________________ ___
3. _________________ ___
4. _____________________ __
5.
VERIFIED BY
However, the application form for opening a current account contains many
conditions
which are not
normally found in other cases.
(2) Specimen Signature
Every new customer is expected to give three or more ~pecimen signatures.
Usually they are obtained on cards which are filed alphabetically for ready
reference.
Each bank maintains a Signature Book for this purpose. Nowadays,
banks obtain specimen signatures right on the
application forms.
(3) Letter of Introduction
It is always advisable on the part of the banker to allow the prospective
customer to open
an account
only with a proper introduction. The usual practice
for the banker
is to demand a
letter of introduction from a responsible person
known to both the parties. Failure to get a letter of introduction may land him in

41. 28 Banking - Theory, Law and Practice
trouble and affect his credit. For instance, as soon as a new party opens a current
account, he should be supplied with a cheque book which may be misused to his
best advantage,
if he happens to be an unscrupulous person. The
responsible
person who issues the letter must also be cautious because if he supplies any
false information about a party, he would be held liable to compensate for the
loss, if any, suffered by the banker: (Bloodnok & Sons Vs. United Kingdom Bank).
If the introduction turns out to be a forged one, the account is treated as having
not been introduced at all.
A letter of introduction or a letter of reference always protects a banker in the
following ways:
(a) Protection against fraud: A letter of introduction serves as a precaution
agair.st fraud. It protects a banker against issuing a cheque book to an undesirable
and dishonest person. But for such a letter, he could have given a cheque book to
an undesirable person who might have made use of those cheque leaves to his
best advantage even
in the absence of sufficient funds.
In such a case, the goodwill
of the bank would suffer. If the customer is a man of good character, he will not
do such things. The banker can find out the character of a new party only through
this letter. Thus, the purpose of introduction is to identify the depositor and to
find out whether he is a genuine party or an impersonator or a fraudulent person
as was decided in the case of Union of India Vs. National Overseas & Grindlays
Bank Ltd. (1978).
(b) Protection against inadvertant overdraft:
It may so happen that a bank
clerk may misread the balance of a customer and pay a cheque. The result will
be the emergence of an overdraft. The banker can recover the money only if the
customer
is a man of good character.
(c) Protection against an undischarged bankrupt:
If a new party happens to
be
an undischarged bankrupt, the fact of which is not known to the banker and if
the properties deposited by him are not acquired by him, the banker is
answerable
to the Official Assignee for the transactions. A letter of introduction prevents the
occurence
of such events. Moreover, it is the duty of a banker to inform the
existence
of an account in the name of an undischarged bankrupt and get his
consent
for the operation of such an account.
(d) Protection against negligence Under Sec. 131 of the Negotiable Instruments
Act:
If a banker fails to obtain a letter of introduction at the time of opening a new
account, it constitutes a negligence on the part of the collecting banker under
Sec. 131 of the Negotiable Instruments Act and so he will lose the statutory
protection
(Ladbroke Vs. Todd, Commissioner of Taxation Vs. English Scottish
and Australian Bank).
(e) Protection against giving incorrect information to fellow bankers:
It is a
courtesy among bankers
to give reference about the
financial position of their
customers to fellow bankers. In the absence of a reference letter, a banker may
not be able to supply correct informations.

42. Deposits 29
( 4) Interview
At the time of opening of new accounts, it is always advisable to have an
interview invariably with the prospective customer so as to obviate the chances
of perpetration of any fraud at a later stage.
(5) Account in Cash
It is a common practice among bankers to allow a new party to open an
account only in cash. In the absence of an express notice, a banker need to worry
about neither the source of money, nor the customer's title over the money. On
the other hand, if the account is opened by depositing a cheque, the risks are
greater. For instance, if the customer's title to the cheque is defective, the banker
is answerable for it (Ladbroke Vs. Todd).
(6) Mandate in Writing
If a new party wants its account to be operated by somebody else, the banker
should demand a mandate from his customer in writing. The mandate contains
the agreement between the two regarding the operation of the account, the
specimen signatures of the authorised person and the powers delegated to the
authorised person.
(7) Verification of Documents
If the new party happens to be a corporate body, it is essential that the banker
should verify some of the important documents like Memorandum of Association,
Articles
of Associations, Bye-law copy etc.
In other cases, the verification of certain
other documents like Trust Deed, Probate, Letter of Administration etc., may be
necessary.
In Lumsden & Co., Vs. London Trusty Saving Bank, one of the grounds for
banker's negligence was the failure to verify the passport of the customer who
had recently arrived from Australia.
(8) Conversant with the Provisions of Special Acts
Since a banker has to deal with different classes of customers, he has to be
thoroughly conversant with certain laws like Indian Companies Act, Indian
Partnership Act, Insolvency Act, the various Trust Acts, the Cooperative Societies
Act etc.
(9)
Pay-in-Slip Book, Cheque Book and Pass Book
Then, the customer is supplied with a pay-in-slip book. The pay-in-slip is a
document which is used for depositing cash or cheque or bill into the account. It
has a counterfoil which is returned to the customer for making necessary entries
in his books.
The
customer is also supplied with a cheque book which normally contains
10 to 20 blank forms. A cheque leaf is used for the purpose of withdrawing money.
If the customer does not like to have a cheque book, he can make use of the
withdrawal form for withdrawing money. The first cheque book is usually branded
with the rubber stamp 'N.'

43. 30
C.O.S.14X
ledger Folio ........ .
Notes
Rupees
Smaller Coin
Copper
Total
Teller ................... .
Banking - Theory, Law and Practice
SPECIMEN COpy OF A PAY·IN·SLlP
Modern Bank of India
Current Account Pay-in-Slip
For Notes and Coins Only
Particulars
Rs. P.
CASH
. .......... 2008
Paid in to the Credit
of ............................... .
Rupees ...................... .
Head Cashier ................... . by .............. .
Scroll Cash No ............... Entd. by ...................... .
SPECIMEN COpy OF A WITHDRAWAL ORDER FORM
Care: This Savings Bank Withdrawal Order is NOT a cheque. The Pass Book
must accompany this Order Form: Otherwise payment will be refused.
To
III
iii
:-e
c:
Modern Bank of India
Savings Bank
Madurai
Scroll Cash No ............... Entd.
Pay self
or bearer
Rupees ............................ .
and debit the amount to my/our
Savings Bank Account No ............. .
by ..................... .
Rs ......... .
Depositor(s)
.
A withdrawal form should be accompanied by the pass book. Every cheque
book contains a' 'Requisition slip' attached to it at the end. When the cheque
book is· nearing completion, he can fill up the Requisition Slip and obtain a fresh
cheque book.
In addition to the above, a customer is also given a pass book which reflects
the customer's
account in the banker's ledger.
It usually contains the rules and
regulations of the bank and the terms and conditions of the deposit. Every customer

44. Deposits 31
is supposed to have read and understood the conditions. He should comply
with them under all circumstances.
10. Passport Size Photograph
Nowadays banks insist upon the prospective customers to affix their passport
size photographs on the
application forms at the time of opening accounts. This
is
to prevent impersonation and for easy identification.
Other Important Points
(1) Every deposit becomes the property of the bank.
(2) Generally the bank is responsible for the safety of the deposit.
(3) If the deposit of a customer is the property of another, say a trust, then
that deposit does
not become the property of the bank.
(4) A banker may use his discretion in allowing or not allowing a person to
deposit money and it cannot be questioned. (Faselli Vs. Liggs National
Bank).
(5)
If money or cheque is entrusted to an employee of the bank for being
credited to the customer's account and if that money/cheque is
misappropriated and false entries are made in the
pass book, the bank is
not liable to make good the loss caused to the customer unless the fraud
was
committed by the employee in the course of his employment as was
decided in the case
of State Bank of India Vs. Shyama Devi
(J 978).
Current Deposit Account (Current or Running Account)
A current account is an a,ccount which is generally opened by business people
for their convenience.
Money can be deposited and withdrawn at any time. Money
can be withdrawn only by means of cheques. Usually, a banker does not allow
any interest on this account. Even then, people come forward to deposit money
on current account because of two important privileges which they can enjoy in
a current account, namely: (1) Overdraft facility, and (2)
Other facilities like
collection of cheques, transfer of money and rendering agency and general utility
services.
That
is why current account holders do not mind a banker charging some
commission for services rendered and incidental charges
for maintaining the
account -whether it is in debit or in credit. Even though a banker does not
allow any interest, he charges interest on overdraft on a day-to-day basis.
In Bank
of Maharashtra Vs. United Constructions Co. & Others, it was held that when a
customer overdraws the
account with or without express consent, it amounts to a
loan and the customer
is around to make good the payment with a reasonable
interest. Current account holders should keep a
minimum balance of Rs.
500/-to
keep the
account running.
In a mechanised branch, a minimum balance of
Rs. 5,000 has to be maintained. If this minimum is not kept, a minimum charge of
Re. 1/-per operation will be debited to the account. The bank sends a 'Statement
of Account' to the customers every month. As these deposits are repayable on'
demand, the banker should keep a large cash reserve. This may be one of the
reasons
why a banker does not pay any interest on current deposit.
In addition to
the above, a banker should observe all the general precautions in opening the
account as listed earlier in this chapter.

45. 32 Banking -Theory, Law and Practice
Fixed Deposit Account
A fixed deposit is one which is repayable after the expiry of a predetermined
period fixed by the customer himself. The period varies from 7 days to 10 years.
A deposit
account can be opened for a period of more than 3 years and in that
case the rate
of interest remains the same
level. In England, these deposits are not
repayable on demand but they are withdrawable subject to a period of notice.
Hence,
it is
popularly known as 'Time Deposit' or 'Time Liabilities.' In India also,
the banks have begun to call it 'Term Deposit.' Normally the money on a fixed
deposit
is not
repayable before the expiry of a fixed period.
Opening the Account
As usual, the prospective fixed depositholder is expected to fill up an
application form prescribed for the purpose, stating the amount and the period of
deposit. The application itself contains the rules and regulations of the deposit in
addition to the space for specimen signature. Unlike as in opening a current
account, a banker does
not insist upon a
letter of introduction or reference for
opening a fixed deposit account because of the absence of frequent transactions
on this account. After all, this account will never show any debit balance and put
the banker in trouble.
Interest
The interest rate offered on the fixed deposit is so attractive that it has resulted
in a change in the composition of bank deposits. Till recently, most of the deposits
of commercial banks had been demand-deposits and now fixed deposit occupies
more than 70% of the bank deposits. The rate of interest varies according to the
period
of deposit.
In Indian banking history, the first ever highest interest rate of
15% was offered on term deposits from 1.2.97 onwards.
However, in recent times, the R.B.1. has deregulated the interest rates on fixed
deposit. The banks are given the freedom to fix their
own rates for different periods.
Consequent
upon the reduction of bank rate to the
lowest level in the history
of Indian Banking, most of the banks have reduced the interest rates on fixed
deposit considerably. However, special rates have been fixed for deposits of senior
citi2!ens C?!}9-years of age or above giving them some incentives .
.. The' present rates applicable to fixed deposits in most of the nationalised
banks are
as
follows:
I Serial Term of the Deposit Interest
No. Per
Annum
I-
1. 7 days to 14 days 4.50
2. 15 days and upto 45 days 4.50
3. 46 days and upto 179 days 5.75
4. 180 days to less than 1 year 8.00
5. 1 year to less than 2 years 9.50
6. 2 years to less than 3 years 9.75
7. 3 years and above 10.00

46. Deposits 33
For deposits of Senior Citizens
Serial Term of the Deposit Interest
No. Per Annum
1. 1 year to less than 2 years 10.25
2. 2 years to less than 3 years 10.25
3. 3 years and above 10.75
Tax Deduction Scheme (T.D.S.) Extended to Fixed Deposit
Though the interest rates on fixed deposit are attractive, the system of tax.
deduction at source was extended in 1991-92 to cover interest payment made by
banks
on fixed deposits, where the interest payment exceeds Rs.
2,000/-per
financial year. Since it acted as a deterrent factor in the welfare and development·
of a sound and healthy banking system, it was completely withdrawn by the
Governor subsequently. However, it has been re-introduced from the financial
year
1995-96. This T.D.S. is applicable to interest payments exceeding Rs.
10,000
per flnancial year.
Period of the Deposit
The minimum period has been fixed as low as 7 days. As per the guidelines
of the Indian Banks Association, banks should not accept deposits for a period
longer than 10 years. If the maturity date of a fixed deposit falls on a holiday, it
should be paid only on the succeeding working day, since, a fixed deposit cannot
be claimed before the maturity date as per the terms of the original contract.
Fixed Deposit Receipt
At the time of opening the deposit account, the banker issues a receipt
acknowledging the receipt of money on deposit account. It is popularly known
as F.D.R. (Fixed Deposit Receipt). It contains the amount of deposit, the name of
the holder of the deposit, the rate of interest, due date etc. On the reverse side of
the F.D.R. separate columns are provided for making entries regarding interest.
PARTICULARS OF A F.D.R.
1.
No. 2. Name of the bank and place
3. Due Date
4. Date
5.
Name of the Depositor
6. Amount
7.
Period
8. Interest Rate
9. Signature of
the Manager

47. 34 Banking - Theory, Law and Pradice
No.: 145678
FIXED DEPOSIT RECEIPT
(FACE VIEW)
Royal Bank Ltd.
Nazareth Branch
Due on
Date ......... 2008
Received from ___________________________________________ _
Rupees _______________________ as a fixed deposit repayable
in months after date with interest at the rate of % per annum.
Rs. Accountant Manager
P.T.O.
BACK VIEW OF F.D.R.
MEMORANDUM PA YMENT OF INTEREST
1. This F.D.R. duly discharged should be Half Signature of
surrendered at the time of payment or Date year Amount authorised.
renewal of deposit. To prevent loss of ended person
interest, the receipt intended
for
renewal should be sent on due date.
2.The F.D.R.
is not transferable by
endorsement.
In the absence of special
instructions, the
amount of F.D.R. can
be
~aid only to the depositor in person.
3. Rate
of interest overleaf is subject
to Reserve Bank's
directive issued from
time-to-time.
Received payment/Please renew ........ month/years.
SIGNATURE OF THE DEPOSITOR
Debtor and Creditor Relationship
The legal position of a banker in respect of a fixed deposit is that of debtor
who is bound to repay the money only after the expiry of a fixed period. The
banker continues to be a debtor
even after the period is over, though he does not
pay any interest after the date of maturity.
In the case Hindustan Commercial
Bank Ltd.,
Vs. jagtar Singh, it was
held that the fixed deposit, after the expiry of
the said period, becomes a "demand deposit" payable without interest and it
does not become a loan and as such Article 60 of the Limitation Act relating to
deposit
is
applicable.
Cheques not Permitted
The customer has no right to draw cheques on this deposit account, Hence,
the a;nount cannot be withdrawn by means of cheques after the period is over.
Alternatively, the customer can request the banker to transfer the amount with
interest either to a current or savings account and thereafter he can withdraw the
amount by means of a cheque.

48. Deposits 35
Surrender of F.D.R.
Every bank makes it obligatory on the part of the depositor to surrender the
F.D.R. before
claiming the money on maturity. Therefore, it is essential to get the
receipt
duly discharged at the time of maturity. When such a receipt is so
surrendered by the owner, the banker cannot put forth any excuse and refuse to
repay the
amount. (United Commercial Bank Ltd. Vs.
Okara Grain Buyers
Syndicate Ltd.).
Loss of F.D.R.
Where a deposit receipt is lost, generally a banker demands the customer to
sign
an indemnity bond with a guarantee.
It will protect the banker against losses
in future. In extraordinary cases, the customer may be asked to go to the court
and seek its authorisation. Hence,
to avoid troubles the customer is well advised
to preserve the receipt very
c~efully till he gets the payment.
Exemption from Stamp Duty
A fixed deposit receipt, though an important document, is exempted from
stamp
duty under the
Indian Stamp Act. This is just to popularise the deposit
account. Otherwise any receipt exceeding
Rs.
20/-requires to be stamped.
F.D.R. -Not a Negotiable Instrument
A deposit receipt is not a Negotiable Instrument. The transferee, therefore,
cannot get a better
title than that of the transferor himself. That is why the receipt
has been specifically marked 'Not transferable.' However, money in deposit
account becomes a debt from the bank and like any other debt this can be assigned.
To be effective, prior notice of assignment should have been served on the banker.
The assignee
should also give a notice to the banker informing him of his right to
the deposit. -
In Abdul Rehiman Vs. Central Bank of India, it was held that the F.D.R. was
not a negotiable instrument and therefore
it
could not be transferred by a mere
endorsement in blank. Hence
to be on the safer side, the banker
should pay it
only to the original depositor.
Fixed Deposit -Subject to Garnishee Order
A Garnishee Order is one of a court order attaching a customer's account in
the hands
of the banker. This order can attach
only a present debt and not a
future debt. Since the fixed deposit
is a present debt payable as a future debt, it
can very well attach this account. A Garnishee
Order issued in joint names cannot
attach
an individual account.
Fixed Deposit -Subject to Income Tax Act
The Officers of the
Income Tax bave been vested with wide powers to attach
the account (Current
or Savings or Fixed) of a customer in the hands of a banker
for non-payment
of income tax under
Sec. 226 of the Income Tax Act 1961. In
recent times the income tax officers have been increasingly using this right to
collect income tax arrears from the assessees. In such cases a banker is bound to
comply with their orders. Again, the I.T.O. may call for information regarding
fixed deposits
of Rs.
50,000/-or above.

49. 36 Banking -Theory, Law and Pradice
F.D.R. -Subject to Donatio Mortis Causa
A fixed deposit receipt may contain a clause namely Donatio Mortis Causa
Clause. It means a gift made in contemplation of death. Hence, a holder of a
Fixed Deposit Receipt can give
it as a gift to any person in anticipation of his
death. This
gift
will be valid and the donee will get a good title only when the
donor di~s. The donee's title is subject to the title of the donor.
F.D.R. -Subject to Conversion
Conversion means dealing with the goods of another inconsistent with his
right. For instance,
if a banker
collects an uncrossed cheque for a person who is
not a real owner of the cheque, then the ban ker wi II be held I iable for conversion.
So also, the collection of a Fixed Deposit Receipt amounts to conversion because
it acknowledges only the receipt of money and it is not an order to pay money to
somebody. In Pearce Vs. Creswick, the banker was held liable for having paid the
money to another banker
as
usual against Fixed Deposit Receipt.
Fixed Deposit Claimed before Maturity
Normally a customer is not allowed to withdraw money before the expiry of
the fixed period. But banks in England allow their customers to withdraw the
fixed deposit amount at any
time after giving a short notice. This is not considered
to be a good practice because the very purpose of this deposit
will be defeated.
Moreover, bankers will find themselves in a tight corner during depression when
the
money market
will be tight.
In India, many banks allow their customers to borrow money by offering
F.D.R.
as security. The F.D.R.
should be returned after having it duly discharged.
Generally a banker allows upto 90'% of the deposit as loan. The interest charged
on this loan is 2% higher than the interest allowed on deposit. Besides, it is subject
to a tax on interest
which works out to
approximately '12% (i.e., Interest allowed
+ 2%·x 0.3% tax).
In recent times, a provision has been made for a pre-mature withdrawal of
fixed deposit. If a customer wants to withdraw a fixed deposit before maturity, he
shoufd forego 1 % less than the rate applicable to the period for which the deposit
has remained in the bank. Example: A person opens a fixed deposit for 3 years.
The rate
of interest
allowable is 6%. But at the end of the first year he wants to
withdraw money. The rate applicable for one year is 5.5%. Now the banker will
allow 4.5% interest (5.5% -1 %) and not (6% -1 %) on the deposit and allow the
customer
to withdraw money.
Simultaneous 0.0. Facility to Fixed Depositholders
A new scheme has been introduced by the State Bank of India called 'CASH KEY'
scheme. As per this scheme, simultaneous O.D. facility in a current account equal to
75%
of the amount of deposit made under the 'CASH
KEY' scheme are automatically
available to term depositholders
who have a minimum initial deposit of Rs.
5000/-.
This scheme is available at all branches of the State Bank of India.
Lien on Fixed Deposit Receipt
As stated earlier, no lien is available on the fixed deposit account. The banker
• has only a right of set-off. However, a banker can exercise his lien on the fixed

50. Deposits 37
deposit receipt which can be offered as security provided it is duly stamped and
signed,by the customer. In Union Bank of India Vs. Venugopalan (1990) it was
clearly established that the banker
could exercise lien on the F.D.R. only when it
is duly discharged and given to the banker as a
collateral security.
Payment of Interest
Interest on fixed deposit is payable only for the fixed period of deposit. Interest
will be payable by the bankers on the deposit for the overdue period only when
the deposit
is renewed.
Interest is paid for each calendar half year. Of late, some
banks have begun to make even
monthly payment of interest on the standing
instruction
of their customers. But it has been banned. However, quarterly payment
of interest on fixed deposit is permitted.
Nomination Facility
The nomination facility has been extended to deposits of
all kinds and safety
lockers
with effect from
29.03.1985 on the recommendations of the Talwar
Committee. The said
nomination can be made in favour of only one individual.
Where the nominee happens to be a minor, another individual can be appointed
to receive the amount on behalf
of the minor. This nomination can be
cancelled
or varied at any time during which the deposit is held by the bank in the name of
the depositor. Separate nomination forms are available for nomination,
cancellation and variation of nomination.
Fixed Deposit in Joint Names
A fixed account may be opened in the names of two or more individuals.
Whil2 opening such a joint account, a banker should get clear instruction as to
whom the amount should be paid on the due date. In the absence of such clear
instruction, a banker should pay
only when the Fixed Deposit Receipt is duly
discharged by
all of them. Difficulties may arise in the event of the death of one
of the parties. There was a time when a banker was justified in paying the amount
to
anyone of joint depositholders as was decided in the case of Wallace Vs.
Kelsall.
It does not hold good any more. A banker cannot presume that the survivor
is entitled to claim the amount especially when there is a dispute between the
survivor and the legal representative
of the deceased depositor.
In McEvoy Vs.
Belfast Banking Company, it was held that the rule of survivorship was not
applicable in the absence of clear instructions. To avoid difficulties, it is advisable
that the
joint accountholders, at the time of opening the account, declare in writing
that it is
"with benefit to the survivor." The usual clause in such cases is "Either or
Survivor," "Former or Survivor" which invariably finds its plac~ in the Account
Opening Form itself.
Fixed Deposit and the Law of Limitation Act
The Law of Limitation does not cover a fixed deposit. The F.D.R. invariably
contdins a condition for its return to claim the fixed deposit amount. Hence, the
period
of three years
will be calculated from the date on which the F.D.R. is
surrendered. Otherwise the period of three years will have to be calculated from
the date
of expiry of the fixed deposit account.

51. 38 Banking - Theory, Law and Pradice
Sav~ngs Deposit
This deposit is intended primarily for small-scale savers. The main object of
this account is promotion of thrift. Hence, there is restriction on withdrawals in a
month.
Heavy withdrawals are permitted only against prior notice. Generally,
the
number of withdrawals permitted is
50 per half year.
This a~count can be opened with a minimum amount which differs from
bank to bank. The smallest amount that can be deposited or withdrawn is
Re.1/-. A
minimum balance of should be maintained and if cheque book facility
is allowed, the minimum balance should be Rs.
250/-. In the case of a mechanised
branch, this
minimum balance has been fixed at Rs.
1,000/-. The minimum
balance iss Rs. 5,000 in modern private sector banks. If the minimum balance is
not maintained, incidental charges is levied by the bank.
It carries an interest rate of 4% from April 2000 per annum. Interest is allowed
on minimum monthly balances in steps of Rs. 10/-and multiples thereof between
the 10th and the last day of each calendar month.
Generally, overdraft
facility is not available in the
Savings Bank Account.
However, instant
credit facility upto Rs.
2,500/-only is available to Savings Bank
customers for
their outstation cheques provided such cheques do not arise out of
trade transactions.
It is indeed a privilege given to savings bank accountholders
who are non-traders. Again, occasional overdrawings upto Rs. 2,500/-are
permitted
only to those who have satisfactory dealings.
The depositor
is supplied with a pass book. Generally, no withdrawals are
allowed without the presentation of the pass book along with the withdrawal
slip. Nowadays savings accountholders are given cheque facilities and money
can be withdrawn by means of cheques also. Cheques are also collected on this
Account. The
nomination facility is also available in
Savings Bank Accounts.
Now, bankers demand a letter
of introduction for opening a savings deposit
account also because cheque
book facility has been extended to this account.
In
India, Post Offices also offer savings bank facility. Since they combine two
conveniences, namely, postal and savings bank, they have registered a
phenomenal growth.
A savings bank
account can be closed after one year.
If closed earlier, a
nominal service charge would be levied.
Insllrance-Linked Savings Bank Deposit
In recent times, some of the banks have been offering the additional benefit
of life insurance protection along with the usual benefits of a savings deposit
account. This insurance benefit
is a free service and entails no formalities like
medical examination. The depositor has to maintain a balance of Rs.
500/-if the
branch
is in a rural area or Rs.
1,000/-if it is situated in other centres. In case the
depositholder dies, he
is entitled to get an insurance benefit of double the average
balance
in the account if he is between 18 and 40 years. It is subject to a maximum
of Rs. 10,000/-. If he is between 41 and 49 years, the amount of insurance benefit
is the same as the average balance subject to a maximum of Rs. 5,000/-. Therefore
the insurance benefit ceases. This type
of deposit is a real boon to a person who
dies prematurely.

52. Deposits 39
Recurring Deposit
It is one form of savings deposits. Depositors save and deposit regularly every
month a fixed instalment
so that they are assured of the sizeable amount at a later
period. This
will
enable the depositors to meet contingent expenses. Banks have
found these deposits popular.
Many
people would not have saved if these deposits
had not been introduced. This deposit works on the maxim 'little drops of water
make a big ocean.'
Any person can open this deposit account.
He can even have more than one
account at a time. This account can be opened in
joint names
also.
It may be opened for monthly instalments in sums of Rs. 5/-or in multiples of
Rs. 5/-with a maximum of Rs. 1,000/-. The number of monthly instalments may
vary from 12 months to 72. The total amount is repayable 30 days after the last
instalment
has been paid.
For deposits
of higher instalments, the maturity amounts can be
calculated as
multiples of the maturity amount for an instalment of Rs. 5.
Every depositor should pay the monthly instalment within 30 days from the
due date.
If he fails to do so, interest
will be charged on the instalments in arrears
at the rate
of 4 paise for every Rs. 5/-per month.
A recurring deposit holder can get a
loan on the security of a recurring deposit.
The banker may grant 75%
of the
total amount paid as loan and the interest of
2% over the recurring deposit rate is charged. These accounts are transferable
from one branch
to another. A recurring deposit holder is given the recurring
deposit
pass book for his verification. The rate of interest is similar to the rate
offered on fixed deposit
but it is compounded.
Other deposits: In addition to the above, a mushroom growth of deposits has
come into practice. In fact, for most of the above deposits, Recurring Deposit
Scheme forms the basis.
By identifying a package of scheme suitable to different target group of customers, the banks have come forward to really cater to the
requirements
of different customers. To be successful in the ever increasing
competitive market,
all efforts should be taken to increase the number of 'satisfied'
customers
by offering them attractive and innovative deposit schemes so as to
meet their requirements.
New Deposit Scheme for NRls (1992)
With a view to mobilise substantial deposits and attract foreign exchange on
a non-repatriable basis, a
new Non-Resident
(Ordinary Non-Repatriable) Rupee
Deposit Scheme
has been recently introduced by the Government of India. The
transfer
of foreign exchange, from non-residents and overseas corporate bodies,
to this account
would be converted into rupees at the prevailing exchange rate.
Deposits
with a maturity of 6 months to 3 years can be accepted and they are free
from
·any reserve requirements and net bank credit regulations. Above all, the
banks are free
to determine the deposit and lending rates under this scheme.
Banking Cash Transaction Tax (BCTT)
The Banking
Cash Transaction Tax (BCTT) was introduced from June 1, 2005
onwc:rds by the Finance Act, 2005. The salient features of the BCTT are:

53. 40 Banking -Theory, Law and Practice
(j) The main objective is to prevent generation and laundering of black
money through banking channels.
(ii) The BCTT is payable at the rate of 0.10 per cent.
(iii) The BCTT levy is as follows:
Nature of Transaction BeTT Payable
1.
2.
by whom
Cash withdrawals on a single day from an
account (other than saving bank account)
with any scheduled bank exceeding Account Holder
• Rs. 25,000 in the case of individuals and
Hindu Undivided Family
• Rs. 1,00,000 in the case of others
Receipt
of cash from any
scheduled bank
on a single day on the maturity or otherwise
of any term deposit exceeding Recipient of Cash
• Rs. 25,000 in the case of individuals and
Hindu Undivided Family
• Rs. 1,00,000 in the case of others
(iv)
Cash withdrawals from different branches of the same bank on a
single
day will not be aggregated for the purposes of levy of BCTT.
(v) Cash withdrawals through credit cards will not be subject to tax.
However,
withdrawals by using a debt card is subject to tax.
(vi) Th
is tax is to be
collected at the time of the transaction itself.
TEST YOUR KNOWLEDGE
Objective Type:
I. Fill up the blanks with suitable word/words:
(a) .................. must be obtained from a responsible person before opening an
account.
(b) If there are no withdrawals for a period of 12 months in a Savings Bank
Account, the account is said to be ............ .
(c) The minimum period for which a fixed deposit can be accepted is .................... .
(d) ................ is a document used to deposit money into the bank account.
(e) In case of loss of F.D.R. duplicate can be issued against the production.
(f) The TDS scheme is applicable to a fixed deposit, where the interest payment
exceeds
Rs .................. per annum.
~
(g) ................. clause protects a banker from unwanted disputes in the case of a
Joint Account.
(h)
Money can be withdrawn any number of times in ............... .
(j)
If the FDR is subject to donatio mortis causa, the donee's title is subject to the
...............
of the donor.
(a) A
letter of introduction (b) Dormant (c) 45 days (d) Pay-in-slip (e) An
indemnity bond (f) Rs. 2,500 (g) Either or survivor (h) Current alc (j) Death.

54. Deposits 41
II. Match the following:
(a) Current account
(b) Savings account
(1) Monthly deposit of instalments
(2)
No withdrawal till maturity
(e) Fixed deposit account
(d) Recurring deposit
(e) Joint deposit
(a -5; b -3; c -2; d -1; e -6)
(3) Restriction on withdrawals
(4) Daily deposit
(5) No interest
(6) Either
or survivor
III. State whether the following statements are true or false:
(a) A fixed deposit is not a negotiable instrument and hence it cannot be assigned
to
third parties.
(b) Simultaneous
0.0. facility can be enjoyed by fixed deposit holders also.
(e) In the case of a fixed deposit, the relationship between a banker and a customer
i!' that of a trustee and beneficiary till the maturity of the deposit.
(d) Savings deposit is more suitable to business people.
(e) A fixed deposit maturing on Sunday can be paid on the preceding Saturday.
(f) A new account cannot be opened with a cheque.
(a -false; b -true; c -false; d -false; e -false; f-true)
IV. Choose the best answer from the following:
(i) The rate of interest payable on various deposits is determined by the:
(a) Head office of each bank,
(b) Central Government,
ee) Reserve Bank of India,
(d) Indian Banks Association.
(ij) A Savings Bank Alc in the sole name of a minor can be opened provided he
completes:
(a)
10 years of age,
(b) 12 years of age,
(e) 18 years of age,
(d) 21 years of age.
(iii) The best suited deposit for a trading community is:
(a) Savings Deposit, (b) Fixed Deposit,
(e) Current Deposit, (d) Recurring Deposit.
(iv) According to IBA, the maximum period for which a fixed deposit can be
obtained is:
(a) No limit, (b) 5 years, (e) 7 years, (d)
10 years.
(i -c; ii -a; iii -d; iv -c; v -d)

55. Random documents with unrelated
content Scribd suggests to you:

56. ordinary term for one who had a special licence to purchase corn
from farmers at the provincial markets and fairs, and then dispose of
it again elsewhere without the penalties of engrossing. It is generally
said the sobriquet arose from the habits of the four-legged animal of
that name in stealing and storing up the grain. The more probable
solution, however, is that it is but a corruption of ‘baggager,’ from his
method of carriage.
But we must not forget in our list of early English strolling
merchants that the wandering friars themselves were oftentimes to
be met with bearing treasure wherewith to tempt the housewife, and
no bad bargainers, if we may accept the statement made against
them by an old political song:—
There is no pedler that pak can bere,
That half so dere can selle his gere,
Than a frere can do;
For if he give a wyfe a knyfe
That cost but penys two,
Worthe ten knyves, so may I thrive,
He wyl have ere he go.
[291]
Our ‘Tinklers’ and ‘Tinkers,’ like our more northern ‘Cairds,’ seem to
have been scarcely removed in degree from the strolling gipsies.
They acquired their name from the plan they adopted of heralding
their coming by striking a kettle, a plan of attracting attention more
euphoniously practised by our bellmen, with whom we are still
familiar. Such names as ‘Alice Tynkeller’ in the fourteenth century, or
‘Peter le Teneker’ found in the thirteenth century, show how early
had this method been adopted and the sobriquet given.
[292]
Last, but
not least, come our ‘Chapman’ or ‘Copeman’
[293]
and ‘Packman.’
[294]
The former is sometimes met with as ‘Walter’ or ‘John le Chepman,’
which at once reminds us of his origin, that of the ‘cheap-man,’ or
‘cheap-jack,’ as we should now style him. The old ‘cheaping,’ or
‘chipping,’ a market-place, still lingers locally in such place-names as
‘Chipping-Norton,’ or ‘Chipping-Camden,’ or the local surname
‘Chippendale;’ and the verb ‘to chop’—i.e., to purchase, I believe, is

57. not yet extinct amongst us. The once common phrase for selling and
exchanging was ‘chopping and changing.’ Coverdale uses it.
Speaking of Christ driving out the money-changers from the Temple,
he says, ‘The Temple was ordained for general prayer, thanksgiving,
and preaching, and not for chopping and changing, or other such
like things’ (The Old Faith). Thus the term ‘chapman’ would be no
unmeaning one to our forefathers. But we must give him a
paragraph to himself.
The chapman, you must know, was a great man. According to
more modern usage, he had a fixed residence, but we may still see
him at times, after the olden fashion, travelling about in a large
booth-like conveyance or rumble. This vehicular mode of transit set
him far above the rank of ordinary footpads. He was a sort of pedlar
in high life, in fact, and if his position was lofty, his abilities were
generally equal to a performance of its duties. O the sensation his
arrival caused! The village green was instantly instinct with life. From
impossible nooks and crannies surged forth a small army of all ages.
Hoarded pennies or twopennies were drawn forth from cherished
hiding-places, and flinty maternal pockets were for the nonce
assailed with comparative success. To the young folks it was the
next best thing to Punchinello, the chapman was so funny. Besides,
he had so many things wherewith to tempt their juvenile fancy.
What was there he had not? Everything that could under any lax
code of fancy possibly or impossibly come under the all-expansive
term of hardware was crowded within the magic recesses of that
chapman’s van. Dolls and dishes, scissors and hats, cornplasters and
cosmetics, lollipops in the shape of soldiers, and lollipops in the
shape of windmills issued forth in a succession as insinuating to the
purse as it was tempting to the imagination. And what a man was
Jack himself; he had a joke for everyone, a frown for none. His face
was an ever-changing picture, bluffed by the wind and burnt by the
sun; still it was ever cheery withal, now demure, half waggish, half
impudent, anon all benevolence as he details the merits of his latest
painless corn-suppressing plaster, and assures the gaping swains
that his sole object in life, since the happy moment when he first

58. became acquainted with its virtues, has been to carry through the
world the blissful tidings to suffering man. All this, he adds, with
reckless impudence, has been done at a great personal pecuniary
sacrifice; but an approving conscience, and the blessings showered
upon his head by the recipients of his generosity, have been his
ample reward. Of course they sell like wildfire, and the profits are
enormous.
[295]
Our ‘Packmans,’ ‘Paxmans,’ and perhaps ‘Packers,’ were, as a rule,
the village commissioners.
[296]
What a simple and homely state of life
do their names suggest. No half-hourly omnibus, or still more
frequent train, whisked off the bustling housewife to the big town—
now some sleepy old place with grass-grown streets, and half a
century behind the times, where ‘news much older than the ale goes
round’—but then the thrifty emporium of cheese and butter and
such like stores, and great in the eyes of country bumpkins. No; if
you visited the town in those days you must make a day of it. And
the mistress knew better than do this. Leave her dairy, forsooth—
what would become of the cream if she left Malkin to forget her
work, and talk with Giles the cowboy behind the stable door all
morning? She leave, indeed! Of course she could not, so there was
the pack-horseman, who for a trifling commission went to and from
the market for her and her neighbours. As he returned in the cool of
the evening, when the sun was low and work over, you might see
him pausing awhile at the door of the farmsteads, long after he has
given the mistress her store, and, more slily, Malkin her ribbon. He is
in no hurry now, for he is telling the country folk all the news; how
the great world is wagging, and how there has been a great battle
with the Frenchers some six or eight weeks ago (news, good or bad,
did not travel fast in those days). The Frenchmen are looked upon
by the simple rustics as the very impersonification of iniquity, they
being under a sort of impression that a Frenchman is a being who
defies God and man alike, and would think no bones of eating you
up. At once the packman is plied for a full, true, and particular
account of the battle, and he, there being none to gainsay his
description, and with an eye probably to the good wife’s best ale,

59. which, as he well knows from experience, will be brought forth with
a freedom of hospitality proportionate to the horror of the details,
fills up a bloody tale with sundry touches of a most tragic character,
while the country folk gape in wide-mouthed terror, and the old
grandmother cries ‘Lord, ha’ mercy on us!’ His face is lost to sight
once more in the ale jug, and then he passes on to other steads,
where a similar scene and a similar reward await his thirsty soul.
Another name in evident use for the packman was that of ‘Sumpter,’
‘Martin le Someter’ or ‘William le Sumeter’ being common entries at
this time. We are still familiar with the term as applied to the mule or
horse that carried the baggage, but in a personal sense it has long
been extinct,
[297]
saving in our directories, where as ‘Sumpter’ and
‘Sumter’ it is by no means seldom met with. How large a load these
animals were required to bear we may picture to ourselves from a
verse found in ‘Percy’s Reliques’—
But, for you have not furniture
Beseeming such a guest,
I bring his owne, and come myselfe,
To see his lodging drest.
With that two sumpters were discharged,
In which were hangings brave,
Silke coverings, curteins, carpets, plate,
And all such turn should have.
But useful as were all these various itinerants, it was at the great
yearly wakes or fairs, held in commemoration of the church
dedication, that the housekeepers round laid in their greatest store.
The term ‘wake’ denotes ‘a watching,’ because of the vigil observed
during the night preceding the festival itself. Indeed ‘wake’ and
‘watch’ were for centuries synonymous words.
[298]
Wicklyffe
translates Mark xii. 37—‘Forsooth, that that I say to you, I say to all,
Wake ye.’
[299]
Thus it is that our ‘Wakemans’ are but memorials of
the old village guardian or night watchman, while our ‘Wakes’ can
boast a title dating so far back as the time when ‘Hereward the
Wake,’ or Watchful, was fighting the last battle of the down-trodden

60. and oppressed Saxon.
[300]
These fairs were by no means for mere
pleasure-seekers, as we might imagine from such a term as ‘church-
ale,’ or judging by the aspect of such festivals in the present day.
They had an end to answer, and an important end, and in early
times they fulfilled it. It was here the farmers round brought their
produce, ready to sell their wool for good sound money, or to
exchange it for commodities of which they stood in need. It was
here the foreign trader came to purchase sheep-fells and other
skins, soon, by transmission abroad, to be worked up by Flemish
hands into good broadcloth, and retransmitted again to London or
provincial marts. Edward the Confessor obtained a sum of 70l., an
immense amount at such a time as this, from the tollage at a fair
held in Bedfordshire. Of many celebrated fairs, those of Smithfield
on St. Bartholomew’s Day (which still exists as a kind of perpetual
one), York, Winchester, and Ely seem to have been the most
frequented. That in the Isle of Ely was kept up on and for some days
after the feast of St. Awdrey, or Audrey, the corrupted name of St.
Etheldreda, which as a surname our ‘Awdreys’ still preserve. This
seems to have become specially noted for its sale of trinkets, toys,
and cheap and gay laces—so much so that in course of time ‘tawdry,’
or St.-Awdry, ware became the colloquial and general term for such.
Drayton we even find using the word substantively when he says:—
Of which the Naiads and blue Nereids make
Them tawdries for their neck.
[301]
Of the still greater one held at Winchester, we find Piers the
Plowman speaking:—

61. To Wye and to Winchester
I went to the fair,
With many manner merchandise,
As my master me hight:
But it had been unsold
These seven years,
So God me help,
Had there not gone
The grace of guile
Among my chaffer.
The ‘Wife of Bath,’ too, has a word to say upon this subject. Says
she:—
I governed them so wel after my lawe,
That eche of them ful blissful was and fawe
To bringen me gay thinges fro the feyre.
What a picture does all this present to our eye. We can see the
circular stand of booths belting the rails of the quaint belfried edifice,
sometimes, I am afraid, the sacred precincts within.
[302]
Behind these
we may note how busy are our ‘le Stallers’ and ‘le Stallmans,’ now
found also as ‘Stalman;’ not to say our ‘Stallards,’ that is, stall-wards,
and obsolete ‘le Vendours.’ No infliction too severe can be made
upon their readiness to please. Elbowing and chaffering and good-
humoured haggling are the order of the day. Here the stupid, happy
swain, with his be-ribboned sweetheart tucked under his arm, is
buying their little stock wherewith to start life; here the child is made
blissful with a trumpet, and the hoary-headed rustic gets a warmer
cap for his crown. Here, too, it is that the chapman and other of his
confrères, as I have already hinted, are buying in their varied
commodities. All alike are well catered for. When we talk of ‘packing
up our duds,’ few of us, I imagine, are aware that we are using a
word of most familiar import in long generations gone by. A ‘dud’
then was a coarse, patched linen gown, gaudy in colour, made up in
fact of variegated pieces of this material. Hence he who sold such
cheap, flashy goods at a fair, any old fripperer in truth, was styled a

62. ‘dudder’ up to comparatively recent times, and the booth itself a
‘duddery.’ ‘Duderman’ and ‘Dudder’ (now obsolete), ‘Dudman’ and
‘Dodman,’ are all, I doubt not, but interesting memorials of this once
flourishing lower class trade. Such names as ‘Thomas Dudman’ or
‘Ralph Deuderman’ greet us occasionally in the olden rolls. ‘William
Fairman,’
[303]
found in the Parliamentary Writs, would be, I suppose,
a more general vendor. He has not a few descendants.
But while bartering and the purchase and sale of these varied
household commodities occupied no small amount of attention, such
a sober mode of passing the fairtide was very far from being the
intention of the younger and gayer portion of the assemblage; nor
was there, indeed, any lack of that which could feed or give zest to
their relish for amusement, though it was not always of the most
innocent nature. Our ‘Champions’ and ‘Campions’ are but relics of
the old ‘William le Champion,’
[304]
or ‘Katerine le Chaumpion,’ a
sobriquet which would easily affix itself to some sturdy and swarthy
rustic who had thrown his adversary in the wrestling ground. This
has ever been a popular sport amid our more rural communities.
The Miller, Chaucer says:—
Was a stout carl for the nones,
Ful bigge he was of braun, and eke of bones,
That proved wel, for over all ther he came,
At wrestling he would bear away the ram.
In an old poem I have already quoted, the mother warns her
daughter:—
Go not to the wrestling, nor shooting the cock,
As it were a strumpet or a giglot.
[305]
Doubtless such a sobriquet as ‘Richard le Fytur,’ that is ‘Fighter,’
would be but representative of the same. The country folks were not
slow, too, to copy their masters, and in the friendly joust the former,
‘Thomas le Justere’ or ‘Robert le Justure,’ would brace himself amid

63. the excited ring to unseat his fellow-swain, affording much sport to
the on-looking wags.
By the maypole you may see the conjuror, or ‘Wiseman,’ as he was
generally termed, battening himself upon the superstitious minds of
the assembled hinds. In the Hundred Rolls he figures as ‘Wysman’
and ‘Wyseman.’ A little further on our ‘Players’ would be enacting
their mummery. The great crowd there in the corner are watching
the showman with his dancing bear, a yearly treat the younger
holiday-seekers always appreciated. What a change has come over
our English habits with regard to this animal. Dancing was the least
cruel of the sports connected with it. Time was when every noble of
position had his bears and his bearward, when even royalty could
boast a master of the king’s bears, and when as a pastime the bear-
baiting took an easy pre-eminence in the eyes of all holiday folk. A
skit on the Earl of Warwick, banished to the Isle of Man, written
1399, says:—
A bereward found a rag:
Of this rag he made a bag:
He dude in gode entent.
Thorwe the bag the bereward is taken;
All his beres have hym forsaken.
Thus is the berewarde schent.
[306]
In one of our earlier rolls I find several names that bear relation to
this familiar sport. Of such are ‘Geoffrey Bearbaste’ and ‘Alexander
Bearbait.’ More common to us in the present day, however, are the
descendants of the more simple ‘Berward’ (‘Michael le Berward,’
H.R.) and ‘Bearman,’ or ‘Berman’ (‘Ralph Bareman,’ H.R.). In ‘Cocke
Lorelle’s Bote’ mention is made of—
Jenkyne Berwarde of Barwyche.
Whether ‘Jenkyne’ was a mythic personage, or whether any of our
present ‘Berwards’ are his lineal issue, I cannot pretend to say.
[307]
Any way, however, the name would be common enough then. Bull as

64. well as bear baiting, I need not say, was a popular pastime with our
forefathers. We still talk of bulldogs. Probably our ‘Bullards’ could
formerly have told us something about this. Fit rival to these latter,
you may see the ‘Cockman,’ or, as he was more generally termed,
the ‘Cocker,’ matching his birds in the adjacent pit. The author of the
‘Townley Mysteries’ does not give the cocker a good character—at
least he places him in very bad company—
These dysars, and these hullars,
These cokkers, and these bullars,
And alle purse cuttars,
Be welle ware of these men.
Among other instances the Hundred Rolls furnish us with ‘Simon le
Cockere’ and ‘William le Koker.’
Professional dancers, I need scarcely say, were seldom absent
from the mediæval festival. Tripping it lightly to some Moorish round,
we may see such folk as ‘Harvey le Danser’ or ‘Geoffrey le Hoppere,’
inciting the younger villagers to follow their example. The latter
name, which occurs frequently at this time, reminds us that our
modern slang term ‘hop’ has but restored the ancient use of this
word. Our Prayer-Book version of the Psalms still employs the verb
in the verse, ‘Why hop ye so, ye high hills?’
[308]
—and Chaucer, in
picturing the merry ’prentice, says—
At every bridale would he sing and hoppe;
He loved bet the taverne than the shoppe.
The feminine ‘hoppestere,’ which he also uses, does not sound quite
so euphonious. In the ‘Pardoner’s Tale,’ among other of the dissolute
folk in Flanders, are mentioned ‘tombesteres’—
And right anon in comen tombesteres
Fetis and smale, and yonge fruitesteres.

65. These, I doubt not, were female dancers, and performers of such
bodily gyrations and flexions as mountebanks are still skilled in. The
masculine form is found in such an entry as ‘William le Tumbere,’
whom we should now, so far as his professional tricks were
concerned, term a tumbler.
All this time the mirth of music is at its loudest, though it is
somewhat hard to separate the tones of the various rival minstrels.
There is a trio in one corner by the tavern door there, discoursing
sounds which are certainly equal, if not superior, to the Teutonic
bands of more modern days. Indeed, with regard to the latter, I am
beginning to suspect the conjecture of a friend of mine to be
perfectly true—that they are German convicts shipped off, with
cracked and second-hand trumpets, by the Commissioners of Police
to save their keep. It is, however, right perhaps that the country
which sends us the best should also have the option of sending us
the worst music in the world. The trio we may see here, at any rate,
have one advantage—that of their poetic mediæval costume. The
first we may notice is the ‘Fiddler,’ represented by such men as
‘Robert Fyffudlere,’ or ‘John le Fythelere,’ or the Latinized ‘Rulard
Vidulator.’ This last reminds us that it is now also written ‘Vidler.’ He
of course played on the violin, for I must not say ‘fiddle,’ it is far too
Saxon, for modern cultivated days. The Clerk of Oxenforde seems to
have been superior to the generality of later university men, for he
had—
Liefer have at his beddes head
A twenty bokes, clothed in black or red,
Of Aristotle and his philosophie,
Than robes riche, or fidel, or sautrie.
Certainly time effects wonderful changes. But I doubt whether even
he would have found much profit, not to say pleasure, in the study
of Aristotle, or any other philosopher, had he been subjected to the
daily practice of a well-scraped viol in an adjacent dormitory,
[309]
the
author of which could boast but one tune in his repertoire, and was
determined that every one should know it. After the Fiddler—Saxon

66. or no Saxon, I’ll stick to it for the nonce—comes the ‘Piper’ with his
reedy stop, and next to him the ‘Taborer’ beating his drum with such
rare effect as to make him the very idol of the youngsters. Spenser
calls him the ‘tabrere,’ which form, as well as ‘Tabrar,’ Tabberer,’
‘Tabor,’ and ‘Taber,’ still exists in our nomenclature.
I saw a shole of shepherds out go,
Before them yode a lusty tabrere,
That to the merry hornpipe plaid,
Whereto they danced.
Such entries as ‘Arnold le Pyper,’ or ‘Robert le Pipere,’ or ‘William le
Tabourer,’ or ‘John le Taburer,’ are of frequent occurrence in
mediæval rolls.
The pipe, the tabor, and the trembling crowd,
is the order of the gentle author of the ‘Faerie Queen;’ so having
disposed of the two former, the ‘Crowder’ with his six-stringed viol
duly engages our attention next, though he ought more correctly to
have been yoked with the ‘Fiddler.’ ‘Crouth’ was but another form of
the same word. An old Saxon Psalter thus renders Psalm cl. 4—
Loves him in crouth and timpane,
Loves him in stringes and organe.
Wicklyffe, too, translates Luke xv. 25 as follows:—‘But his eldre sone
was in the feeld, and whaune he cam and neighede to the hous he
herde a symfonye and a crowde.’
[310]
Like our ‘Harpers’ and more
northern ‘Bairds,’ the ‘Crowder’ or ‘Crowther’ (for as surnames both
forms exist) was oftentimes blind, and thus gained the ear of an
audience, if not appreciative, at least sympathetic. Seldom, indeed,
did he leave cottage, or hall festival, or fair, without a guerdon, and
a kind word to boot; for while customs fade out and die, pity, thank
God, knows neither change of season nor chance of time. Mediæval
forms of the above may be found in ‘Richard le Cruder’ or ‘Thomas le

67. Crowder.’ But we have yet several more surnames to mention which
prove the once great popularity of this latter class of instrument.
‘German le Lutrere’ and ‘John le Leuter’ have left no descendants, I
think.
[311]
The more common term was lutanist, but of this I have
found no instance. While the lute had generally ten strings, and was
struck by the hand, the viele or viol had six, was of stronger make,
and was played with a bow. It seems to have been a favourite
instrument in the thirteenth and fourteenth centuries, for such
registrations as ‘Benedict le Viler,’ ‘Nicholas le Vylour,’ ‘Wyot le Vilur,’
or ‘Jacob le Vielur,’ occur with tolerable frequency at that period.
Another Norman-introduced word was that of ‘gigue,’ or ‘gig.’ This,
however, seems to have differed from the others in being of the very
roughest manufacture, and made specially for professional dancers.
These ‘giguers’ were extremely popular at rural festivals of any kind.
At one and the same instant they would be tripping it round on the
‘light fantastic toe,’ singing some not too select verses,
accompanying themselves on their sturdy instrument, and yet would
have a hand to spare for a trifle if you should offer it. If you doubted
it you had but to try them. It is thus we have got our ‘jig,’ our ‘gigot,’
or leg of mutton, too, being so called from its resemblance thereto.
The surnominal form is found in such entries as ‘Walter le Gigur,’ or
‘Alexander le Gygur,’ but I doubt whether either is represented now.
The last of this class of instrumentalists we may mention is ‘William
le Sautreour,’ he who struck the ‘gay sawtrye,’ as Chaucer terms it.
The more correct form of the word was ‘psaltery.’ It was specially
used as an accompaniment for the voice, hence it is freely used in
this sense in the Authorized Version. I do not doubt myself that
some of our ‘Salters’ are but a change rung on the mediæval
‘Sawtrer.’ The ‘Fluter,’ I believe, has left no descendants, but in
‘Nicholas le Floutere’ he was to be met with at this date, and, I need
not say, would be as familiar as he would be acceptable on such an
occasion as this. The lusty young Squire was so musical that—
Singing he was, or floyting alle the day,
He was as freshe as is the month of May.

68. There is one name I must mention here, that of ‘Peter le
Organer,’
[312]
perhaps connected with ‘Orger’ of the same date. The
owner of this more modern-looking term may either have been
organist at some monastery or abbey-church, or he may have played
upon the portable regal, in which latter case he too might possibly
have been seen here. But ‘organ’ was a very general term. In the old
psalters it seems to have been used for nearly every species of
instrument. We should scarcely speak now of ‘hanging up our
“organs” upon the willows,’ but so an old version of the Psalms has
it. Did we not know they were a modern invention we might have
been inclined to suspect ‘le Organer’ to have been but a strolling
performer upon the ‘hurdy-gurdy.’ That, however, was an infliction
mercifully spared to our forefathers. In concluding this brief survey
of mediæval music, I cannot, I think, do better than quote, as I have
done partially once before, Robert de Brunne’s account of the
coronation of King Arthur, wherein we shall find many, if not most, of
the professional characters I have been mentioning familiarly spoken
of. He says—
Jogelours weren there enow
That their quaintise forthe drew:
Minstrels many with divers glew (glee)
Sounds of bemes (trumps) that men blew,
Harpes, pipes, and tabours,
Fithols (fiddles), citolles (cymbals), sautreours,
Belles, chimès and synfan
Other enow and some I cannot name.
Songsters that merry sung,
Sound of glee over all rung;
Disours enow telled fables:
And some played with dice at tables.
But we are not without traces of the troubadour. The simple
vocalist, a strolling professionalist, too, in many instances, remains
hale and hearty in our ‘Glemans,’ ‘Gleemans,’ and ‘Glemmans,’ not to
mention our ‘Sangsters.’ Amid such lulls as might intervene, we
should hear them at the popular festivals bidding for favour with

69. their old-fashioned stories of ‘hawk and hound,’ and ‘my ladyes
bower,’ set, no doubt, to airs equally à la mode. A contemporary
poet tells us their song
Hath been sung at festivals
On ember eves, and holy-ales.
The recitation of these stories seems to have been a peculiarly
popular profession. Our ‘Rhymers’ oftentimes showed their skill in
the art of rhythmical narration by weaving the exploits they
described into extempore verse.
[313]
The ‘Juggler’ or ‘Joculator,’
originally a minstrel or ‘jester,’ something akin to the clown of later
days, became by-and-by more celebrated for his skill in legerdemain
than loquacity, and now little else is understood by the word. Almost
every baron, and even the king himself, had his favourite jester; but
it was an art put to the most corrupt purposes, and ‘Jagge the
Jogelour’ is set in very low company by Piers Plowman. Certainly his
jokes were of the lewdest description, even for the rough times in
which he lived. His voice, too, was sufficiently elevated, if we may
trust the account given in the ‘Romance of Alexander,’ for—
No scholde mon have herd the thondur,
For the noise of the taboures,
And the trumpours, and the jangelours.
The ‘Dissour,’ the old Norman ‘diseur,’ similar in character to the
rhymer and the juggler, seems to have left no memorial, saving it be
in our ‘Dissers;’
[314]
neither can I trace ‘le Tregetour’ later than the
fifteenth century. Every footprint of his professional existence,
indeed, is now faded from our view. And yet there was the day when
none could be more familiar than he. The Hundred Rolls record not
merely ‘Symon le Tregetor,’ but ‘William le Tregetur’ also, while
‘Maister John Rykele’ is spoken of by Lydgate as ‘sometime Tregitour
of noble Henrie, King of Engleland.’ Chaucer, too, mentions sciences

70. By which men maken divers apparences,
Such as these subtil tregetoures play.
For oft at feasts have I wel heard say
That tragetoures, within an halle large
Have made come in a water and a barge
And in the halle rowen up and down:
while in another place he speaks of seeing
Coll Tragetour
Upon a table of sicamour
Play an uncouth thing to tell;
I saw him carry a wind-mill
Under a walnut-shell;
with other equally marvellous feats. Thus we see that the art of
legerdemain was not neglected at this time.
I doubt whether any relics we possess so completely convey to
our minds the radical changes which have swept across the face of
our English Commonwealth as do these lingering surnames. They
remind us of the invention of printing, of the spread of literature,
and of the slow decay thereby of the professions they represented.
They tell us of a changed society, they tell us of a day of rougher
cast and looser trammels; they tell us of a life around which the
lapse of intervening years has thrown a halo of so quaint aspect that
we all but long, in our more sentimental moods, to be thrown back
upon it again. Placing these tell-tale names by the life of the
present, we see what a change has passed over all. Let us hope this
change denotes progress. In some respects it assuredly does:
progress in the settlement of our common rights and duties,
progress in civilization and order, progress in mental culture,
progress in decorum. Still we may yet ask, with all this has there
been any true progress? The juggler, ’tis true, with his licentious
story, and the dissolute tragetour, both are gone—they would be
handcuffed now, and put in gaol. This speaks something for a higher
cultivation. But, after all, may not this be a mere outside refinement

71. —a refinement to meet the requirements of an age in which the
head is educated more than the heart—a refinement which may be
had in our shops—the refinement, in fact, of the lowest of God’s
endowed creatures, that of the exquisite? This is, indeed, an artificial
age, and it warns us to see to it whether we are hypocrites or no;
whether our life is entirely external or the reverse; whether it is all
shell and no kernel, all the outside cup and platter, and within
naught save extortion and excess. That mortal shall have attained
the highest wisdom who, in the light of the world to come, shall
have seen to the cleansing of that which is within, and if that, if the
heart be cleansed, then the external life will as naturally, as it will of
necessity, be pure.

73. CHAPTER V.
 
SURNAMES OF OCCUPATION. (TOWN).
We have already said enough to show that our early English pursuits
were mainly pastoral. Even to this day, as we are whisked across the
midland counties or driven across the Yorkshire wolds, we see what
advantages we must have enjoyed in this respect. Our one chief
staple was wool, and to export this in a raw unmanufactured state
was the early practice. So general was this occupation that even
subsidies to the crown were given in wool. In 1340, 30,000 sacks of
wool were granted to Edward III. while engaged in the French War.
This would be a most valuable contribution, for at this time it was
held in the highest repute by foreign buyers. ‘The ribs of all nations
throughout the world,’ wrote Matthew Paris, ‘are kept warm by the
fleeces of English wool’ (Smiles). So early as 1056 we find the Count
of Cleves obtaining a certain jurisdiction over the burghers of
Nimeguen upon condition of presenting to the Emperor every year
‘three pieces of scarlet cloth of English wool’ (Macullum). With the
incoming of the Flemish refugees and other settlers already
mentioned this state of things was changed. The Conqueror himself
had settled one band near Carlisle, but his son Henry soon after
coming into possession removed them into Herefordshire, and the
Southern Marches of the Principality. Doubtless the object of both
was that of setting up a barrier against hostile encroachments on the
part of the Scotch and Welsh; but the result was the spread of a

74. peaceful and useful industry in two widely separated districts. Two
other settlements, in Norfolk and Suffolk, one by Henry I., the other
under the direction of Edward III., made East Anglia for centuries
the Yorkshire of England. When we talk so familiarly of ‘worsted,’ or
‘lindsey-wolsey,’ or ‘kerseymere,’ or ‘bocking,’ we are but insensibly
upholding a reputation which centuries ago the several villages that
went by these names had obtained through Flemish aid. Thus was it
then that at length our country was enabled to produce a cloth
which could afford a comparison with that of the Flemish cities
themselves. Of this incoming many surnames of this date remind us,
the most important of which I have already mentioned in my chapter
upon local names, ‘Fleming,’ as a general name for all these settlers,
being the commonest.
When, however, we turn to the occupations themselves connected
with the industry, we cannot but be struck by the wonderful impress
it has made upon our nomenclature. The child’s ancient rhyme—
Black sheep, black sheep,
Have you any wool?
Yes, sir; yes, sir;
Three bags full—
carries us to the first stage, and to the first dealer. In our ‘Woolers’
and ‘Woolmans,’ in our obsolete ‘Woolmongers’ and ‘Woolbuyers,’
[315]
in our ‘Packers’
[316]
and once flourishing ‘Woolpackers,’ and in our
‘Lanyers’ and ‘Laners,’ relics of the old and more Norman
‘Bartholomew le Laner’ or ‘John le Lanier,’ we can see once more the
train of laden mules bearing their fleecy treasure to the larger towns
or distant coast. No wonder that Piers Plowman and others should
make familiar mention of the ‘pack-needle,’ when we reflect upon
the enormous number of sacks that would be in constant use for this
purpose; and no wonder ‘Adam le Sakkere’ (i.e. ‘Sacker’), and ‘Henry
le Canevaser’ are to be met with as busied in their provision.
[317]
Another proof of the engrossing importance of this one English
article of commerce is left us in our ‘Staplers.’ The ‘stapleware’ of a
town was, and is still, that which is the chief commodity dealt in by

75. that particular market. A ‘stapler,’ however, has for centuries been a
generally accepted title for a woolmerchant, and has therefore
absorbed the more general meaning the word ought to have
conveyed.
The first stage towards manufacture would be the process of
carding the raw and tangled material, and numberless are the
‘Carders,’ ‘Combers,’ and ‘Kempsters,’
[318]
or ‘Kemsters,’ who remind
us of this. In these latter sobriquets we have but varied forms of the
same root ‘cemb,’ to comb. We still talk poetically of ‘unkempt locks,’
and we are told of Emelie in the ‘Knight’s Tale’ that—
Her bright hair kembed was, untressed all.
The Norman corresponding name is found in ‘Robert le Peinnur’ or
‘William le Puigneur,’ but unless in our ‘Pinners’ (a supposition not
unnatural) it has left no descendants. But even these are not all. It is
with them we must associate our ‘Towzers’ and ‘Tozers,’ from the old
‘touse’ allied to ‘tease’—they who cleared the fibre from all
entanglements. Spenser talks of curs ‘tousing’ the poor bear at the
baiting, and I need not remind the reader that in our somewhat
limited canine nomenclature, ‘Towzer,’ as a name for a dog of more
pugnacious propensities, occupies a by no means mean place. As
applicable to the trade in question, Gower uses the word when he
says, in his ‘Confessio Amantis’:—
What schepe that is full of wulle
Upon his backe they tose and pulle.
[319]
It is here, therefore, we must place our one or two solitary relics of
the rough machinery then in use. In ‘Cardmaker’ we have the
manufacturer of the ‘comb’ or ‘card’ thus usefully employed; in
‘Spindler’ the maker of the pin round which the thread was wound;
while our ‘Slaymakers,’
[320]
‘Slaymans,’ and obsolete ‘Slaywrights’
[321]
preserve the once so familiar ‘slay’—that moveable part of the loom
which the webbe with his fingers plied nimbly and deftly along the

76. threads. A petition to Parliament in 1467 from the worsted
manufacturers complains that in the county of Norfolk there are
‘divers persones that make untrue ware of all manner of worstedes,
not being of the assises in length nor brede, nor of good, true stuffe
and makyng, and the slayes and yern thereto belonging untruly
made and wrought, etc.’ (Rot. Parl. Ed. IV.) I believe the word is not
yet obsolete as a term of the craft.
I have mentioned ‘Webbe.’
My wife was a webbe
And woolen cloth made,
says Piers in his ‘Vision.’ This appears, judging at least from our
directories, to have been the more general term, and after it its
longer forms, the masculine ‘Webber’ and the originally feminine
‘Webster.’ A poem written in the beginning of the sixteenth century
refers to
Curriers, cordwayners, and cobelers,
Gyrdelers, forborers, and webbers.
Such entries as ‘Elyas le Webbe,’ or ‘Clarice le Webbere,’ or ‘John le
Webestre,’ are of common occurrence in our mediæval and still
earlier records. But the processes are anything but at an end. The
cloth must be dyed and fulled. Of the first our ‘Listers,’ once enrolled
as ‘Hugh le Litster’ or ‘Henry le Littester,’
[322]
speak, and ‘Dyer’ or
‘Dister,’ still harder of recognition in such a guise as ‘Geoffrey le
Deghere’ or ‘Robert le Dighestere,’ forms found at the period we are
writing about. It was John Littester, a dyer, who in 1381 headed the
rebellion in Norwich. Here the surname was evidently taken from the
occupation followed. Halliwell gives the obsolete verb ‘to lit’ or dye,
and quotes an old manuscript in which the following sentence
occurs: ‘We use na clathis that are littede of dyverse coloures.’ Such
names as ‘Gilbert le Teinturer,’ or ‘Richard le Teynterer,’ or ‘Philip le
Tentier,’ which I have come across in three separate records,

77. represent the old French title for the same occupation, but I believe
they have failed to come down to us—at least I have not met with
any after instance. The old English forms of ‘tincture’ and ‘tint’ are
generally found to be ‘teinture’ and ‘teint.’ The teinturer is not
without relics. We still speak when harassed of ‘being on the stretch,’
or when in a state of suspense of ‘being upon tenter-hooks,’ both of
which proverbial expressions must have arisen in the common
converse of cloth-workers. The tenter itself was the stretcher upon
which the cloth was laid while in the dyer’s hands. On account of
various deceits that had become notorious in the craft, such, for
instance, as the over-stretching of the material, a law was passed in
the first year of Richard III. that ‘tentering’ or ‘teyntering’ should
only be done in an open place, and for this purpose public tenters
were to be set up. (‘Stat. Realm,’ Rich. III.) We find many references
to this important instrument in old testaments. Thus an inventory of
goods, dated 1562, belonging to a man resident in the parish of
Kendall, speaks of ‘Tenture posts and woodde, 6d.—ii tentures 20s.’
(‘Richmondshire Wills,’ p. 156.) The dyes themselves used in the
process of colouring are not without existing memorials. In the York
Pageant, already referred to, we find, walking in procession with the
woolpackers, the ‘Wadmen,’ that is, the sellers of woad, unless
indeed, they were the dyers themselves. The more common spelling
was ‘wode,’ and when not local, ‘Thomas le Wodere’ or ‘Alan le
Wodeman,’ with their modern ‘Wooder’ and ‘Woodman,’ will be
found, I doubt not, to be the representative of this calling. ‘John
Maderman,’ and ‘Lawrence Maderer’ remind us of the more reddish
and popular hues. Great quantities of this were yearly imported from
Holland, especially Middleburgh. The old ‘Libel on English Policy’
speaks of—
The marchaundy of Braban and Selande,
as being
The madre and woode (woad) that dyers take on hande.

78. The thickening mill, however, has left us several words of much
more familiar import than these—viz., ‘Tucker,’ ‘Fuller,’ (or
‘Fulman’
[323]
) and ‘Walker.’
[324]
Among other older forms we find
‘Roger le Tukere,’ ‘Percival le Toukare,’ ‘Walter le Fullere,’ ‘Ralph le
Walkere,’ and ‘Peter le Walkar.’ Of the first Piers in his ‘Vision’ makes
mention, where he speaks of
Wollene websteris,
And weveris of lynen,
Taillours, tanneris,
And Tokkeris bothe.
‘Cocke Lorelle’ also refers to—
Multiplyers and clothe thyckers,
Called fullers everychone.
‘Walker,’ claiming as it does an almost unrivalled position in the rolls
of our nomenclature, reminds us of the early fashion of treading out
the cloth before the adaptations of machinery were brought to bear
on this phase of the craft. In Wicklyffe’s version of the story of
Christ’s transfiguration he speaks of his clothes shining so as no
‘fullere or walkere of cloth’ may make white upon earth.
[325]
Reference is made to the same practice by Langland also when,
using this whole process of cloth-making as an illustration, he says:
—
Cloth that cometh fro the wevyng
Is nought comely to wear
Til it be fulled under foot,
Or in fullying stokkes,
Washen wel with water,
And with taseles cracched
Y-touked, and y-teynted,
And under taillours hande.

79. We are here not merely furnished with the entire process itself, but
the terms themselves employed harmonize well with the names I
have mentioned. ‘Walker’ and ‘Tucker’ or ‘Towkare’ or ‘Toker,’ as it
was variously spelt, together with ‘Tuckerman,’ have, however,
disappeared as terms of this trade; and it is in our directories alone
we can find them declaring these forgotten mysteries of a more
uncouth manufacture.
The ‘taseles’ mentioned in the poem quoted above were the
common ‘teasel’ or ‘tassel,’ a rough prickly plant allied to the thistle,
which when dried was used for scratching the cloth, and thus raising
a nap thereupon. Thus in Willsford’s ‘Nature’s Secrets’ it is said,
‘Tezils, or Fuller’s Thistle, being gathered or hanged up in the house,
where the air may come freely to it, upon the alteration of cold and
windy weather will grow smoother, and against rain will close up his
prickles.’ (Brand’s ‘Pop. Ant.,’ vol. iii. p. 133.) In an inventory of the
property of Edward Kyrkelands, of Kendall, dated 1578, we find the
following articles mentioned:—iiii syckles, a pair wyes and iii stafs,
tazills, 5s. 8d.—more in tazills, 2s.—iiii tentors, 40s. (‘Richmondshire
Wills,’ p. 274.) The occupation itself is referred to in an old statute of
Edward IV.—‘Item, that every fuller, from the said feast of St. Peter,
in his craft and occupation of fuller, rower, or tayseler of cloth, shall
exercise and use taysels and no cards, deceitfully impairing the same
cloth’—‘en sa arte et occupacion de fuller et scalpier ou tezeiler de
drap, exercise et use teizels, &c.’ (4 Ed. IV. c. 1.) It is probable that
our ‘Taylors’ have engrossed this name. We find it lingering in
Westmoreland, about Kendal, till the middle of the sixteenth century,
in a form which required but little further change to make it the
same. In the will of Walter Strykland, dated 1568, there is
mentioned among other legatees a certain ‘Edward Taylzer,’ a
manifest corruption of ‘Teazeler.’ (‘Richmondshire Wills,’ p. 224.) A
century earlier than this, however, such names as ‘Gilbert le Tasseler’
or ‘Matilda le Tasselere’ were entered in our more formal registers.
Our ‘Baters’ and ‘Beaters,’ relics of the old ‘Avery le Batour’ or
‘John Betere,’ were all but invariably cloth-beaters, although, like the
fuller ‘wollebeter,’
[326]
they may have been busied at an earlier stage

80. of the manufacture. Capgrave, in his ‘Chronicles,’ under date 30 A.D.,
says, ‘Jacobus, the son of Joseph first bishop of Jerusalem, was
throwe there fro the pinacle of the temple and after smet with a
fuller’s bat.’
[327]
With the mention of our ‘Shearers’ (‘Richard le
Sherere,’ M.) and endless ‘Shearmans,’ ‘Sharmans,’ or ‘Shermans’
(‘Robert le Sherman,’ ‘John le Shereman,’ M.), who represent the
shearing of the manufactured fabric, rather than that of the sheep
itself, we have the process complete. The cloth is at length ready to
be transmitted into the care of our ‘Drapers’ and ‘Clothiers,’ and from
them again through the skilled and nimble fingers of our numberless
‘Tailors.’ From all this we may readily see what an important
influence has England’s one great staple of earlier days had upon the
nomenclature of our countrymen.
Such a name as ‘Ralph le Flexman,’ with its many descendants,
reminds us of the manufacture of linen, which, if not so popular as
that of wool, was nevertheless anything but unfamiliar to the early
craftsman. Our ‘Spinners’ carry us to the primary task of thread-
making, an employment, however, all but entirely in the hands of the
women. The distaff and the weaker sex have been ever associated,
whether in sacred or profane narrative. Thus it is that ‘spinster’ has
become stereotyped even as a legal term. Chaucer, four hundred
years ago, somewhat uncourteously said:—
Deceite, weping, spinning, God hath given
To women kindly, while that they may liven.
Our modern ‘linen’ is formed from ‘lin’ or ‘line’—flax—as ‘woolen’ is
from ‘wool.’ Hence we still speak of the seed of that plant as
‘linseed.’ That this was the common form of the word we might
prove by many quotations.
He drank never cidre nor wyn
Nor never wered cloth of lyn,

81. says an old poem. Even Spenser speaks of ‘garment of line,’ and in
‘Cocke Lorelle’s Bote’ allusion is made to ‘lyne-webbers’ and ‘lyne-
drapers.’
[328]
We need not be surprised, therefore, to meet with such
names as ‘Elias Lyndraper,’ or ‘Henry le Lindraper,’ or ‘John le Lyner.’
Only this last, however, has survived the changes of intervening
centuries, and still holds a precarious existence as ‘Liner.’ ‘Weaver’
was more common. A more Norman equivalent is found in such a
sobriquet as ‘John le Teler,’ or ‘Henry le Telere,’ or ‘Ida la Teleress,’ a
name which is not necessarily of modern French refugee origin, as
Mr. Lower would lead us to suppose. Indeed, a special part of the
ladies’ head-dress had early obtained the name of a ‘teler,’ from the
fine texture of the linen of which it was composed.
[329]
It is but too
probable that this name has become lost, like ‘Taylzer,’ in the more
common ‘Taylor.’ This process of absorption we shall find to be not
unfrequent. Nor are we without a memorial of the bleaching of linen.
‘Whiter,’ if not ‘Whitster,’ still lives in our directories. It seems strange
that our ‘Blackers’ should denote but the same occupation; but so it
is—they, like our old ‘Walter le Blakesters’ or ‘Richard le Bleckesters,’
being but the harder and more antique form of our present
‘bleacher.’
[330]
Our term ‘bleak,’ preserving as it does the earlier
pronunciation, is but the same word, being formerly used to denote
pallor, or wanness, or absence of colour. From this, by a natural
change, it came to signify anything cheerless or desolate. With
perfect honesty in this case, at any rate, we may ‘swear that black is
white.’
With regard to silk, we had but little to do. The manufacture of
this important cloth was barely carried on in Western Europe during
the period of the establishment of surnames. It was nigh the close of
the fifteenth century before it appeared in France. All our silks were
imported from the East by Venetian and Genoese merchants. Of the
latter an old poem says, they come—
Into this londe wyth dyverse merchaundysses,
In grete karrekis arrayde wythouten lack,
Wyth clothes of golde, silke, and pepir black.

82. Still we find a company of silkwomen settled in London at an early
period. In the records of this city occur such names as ‘Johanna
Taylour, Silkwyfe,’ in 1348, and ‘Agatha Fowere, Silkewoman,’ in
1417.
[331]
In 1455 a complaint was raised by ‘the women of the
mystery and trade of silk and threadworkers in London, that divers
Lombards and other foreigners enriched themselves by ruining the
said mystery.’ I think, however, we shall find that all these were
engaged less in the manufacture of fabrics than of threads for the
embroiderers to use. Thus, as connected with the throwing or
winding of these silken tissues, we come across such names as
‘Thrower’ and ‘Throwster,’ the former having been further corrupted
into ‘Trower.’
[332]
Next to wool, perhaps leather formed the most important item of
early manufacture. We can hardly now conceive the infinite use to
which it was put at this period. In military dress it had an especial
place, and in the ordinary costume it was far from being confined to
the extremities, as we have it now. Jerkins, chausses, girdles,
pouches, gipsire—all came under the leather-dresser’s hands. In
1378 we find a jury, called together to decide upon a case of alleged
bad tanning, to have been composed of ‘saddlers, pouchmakes,
girdlers, botel-makers, tanners, curriers, and cordwainers.’ Of the
more general manufacture of hides we have numerous relics;
indeed, we are at once introduced into the midst of a throng of
tradesmen, the very list of which proves the then important
character of the article on which they spent their energies. Such
names as ‘Jordan le Tannur,’ or ‘Loretta le Tannur,’ ‘Richard le
Skynnere,’ or ‘Hamo le Skynnere,’ are still numerous both in the
tanyard and the directory, and need little explanation. Our ‘Curriers’
are also self-evident; but I have not met with any instance as yet in
mediæval times. Our more rare ‘Fellmongers’ were once occupied
more directly with the larger hides, or fells, as they were called, of
the farmyard stock. Less connected with them, therefore, than with
the others, we may mention such men as ‘William le Barcur,’ or
‘Nicholas le Barkere,’ or ‘Robert Barcarius,’ the ancestors of our
modern ‘Barkers,’
[333]
who, by the very frequency with which they are

83. met, show how important was the preparation of bark in the
tanners’ yard. In the conversation between Edward the Fourth and
the Tanner of Tamworth, as given by Percy, it is said—
‘What craftsman art thou?’ said the king;
‘I pray thee telle me trowe,’
‘I am a Barker, Sir, by my trade;
Now tell me, what art thou?’
Such names as ‘John le Tawyere’ or ‘Geoffrey le Whitetawier’ (now
found as ‘Whittear,’ ‘Whittier,’ and ‘Whityer’), not to mention such an
entry as that of ‘Richard le Megucer,’ throw us back upon the time
when the terms these men severally bore as surnames would be of
the most familiar import. Their owners spent their energies in
preparing the lighter goat and kid skins, which they whitened, and
made ready for the glovers’ use.
[334]
The verb ‘to taw,’ however, was
also used of dressing flax, and we may have to place ‘Tawyer’ in
some instances in this category.
And whilst that they did nimbly spin
The hemp he needs must taw,
we are told in ‘Robin Goodfellow.’ Our ‘Towers,’ while apparently
local, may be in some instances but a corruption of this same term.
So early as the 14th century we find a certain ‘Eustace le Wittowere’
occurring in the Hundred Rolls, and that the simpler form should
similarly be corrupted would be natural enough.
[335]
Thus we see
that leather, too, is not without its memorials. The more furry skins,
as used in a somewhat more specific form as articles of dress, or to
attach thereto, we will allude to by-and-by. As we traverse in some
semblance of order the more definite wants and requirements of
early social life, the importance of these several crafts will be more
clearly brought out. We must not forget that there were the same
needs then as now, though of a different mould. Man in all time has
had to be fed, and clothed, and housed; and if in all these respects
he has in these modern days become more civilized and polished, it

84. has been the result of a gradual process by which he has slowly, and
not without many a struggle, thrown off, one by one, this custom
and that, which belonged to a ruder era and a rougher cast of
society. Our surnames of occupation are a wonderful guide in this
respect. A tolerable picture of early life may be easily set before us
by their aid; for in them are preserved its more definite lineaments,
and all we need is to fill up the shading for ourselves. Forgotten
wants, needs now no longer felt, requirements of which a
progressive civilization slowly slipped the tether, necessities of dress,
of habit, of routine, all, while the reality has long faded from view,
have left their abiding memorial in the nomenclature of those who
directly supplied them. Let us, however, observe, as in our other
chapters, some kind of order—clothing, food, and general needs,
this seems the proper course of procedure. And yet one more
observation ere we do so. We have already spoken of the early
system of signs as advertising the character of the articles to be
sold. The early shop was far more prominent as a rule than the
modern one. The counter, instead of being within the walls of the
house, projected forward upon the pathway, so much so that we can
only compare them to those tables we may often see at night,
where under the lee of the walls costermongers offer shellfish, or
tripe, or coffee to the passers-by. This was objectionable enough;
but it was not all. Each dealer loudly proclaimed to the wayfarer the
merits of his goods, vying with his neighbour in his endeavours to
attract attention to himself or distract it from the other, especially if,
as was often the case, a number of traders trafficked in the same
class of merchandise. Others, and their name was legion, had no
shop at all, not even the street table or counter, but passing up and
down with wooden platters or deep baskets, made the very air
discordant with their loudly reiterated cries of ‘Hot sheep’s feet,’ or
‘Mackerel,’ or ‘Fresh-herring,’
[336]
or ‘Hot peascods,’ or ‘Coloppes.’ It is
in reference to this we find Langland saying—

85. Cokes and their knaves,
Cryden, ‘Hote pies, hote!
Goode gees and grys!
Gowe, dyne, gowe!’
Lydgate has a still fuller and more detailed description of this in his
‘London Lackpenny,’ and as it is tolerably humorous I will quote it
somewhat largely, using Mr. Bowen’s modernization of it—

86. Within this hall neither rich nor yet poor
Would do for me aught, although I should die:
Which seeing, I got me out of the door,
When Flemings began on me for to cry:
‘Master, what will you copen or buy?
Fine felt hats, or spectacles to read?
Lay down your silver, and here you may speed.’
Then into London I did me hie—
Of all the land it beareth the prize.
‘Hot peascods!’ one began to cry;
‘Strawberries ripe, and cherries in the rise!’
One bade me come near and buy some spice:
Pepper and saffron they gan me bede,
But, for lack of money, I might not speed.
Then to the Chepe I gan me drawen,
Where much people I saw for to stand.
One offered me velvet, silk, and lawn:
Another he taketh me by the hand:
‘Here is Paris thread, the finest in the land!’
I never was used to such things indeed,
And, wanting money, I might not speed.
Then went I forth by London Stone,
And throughout all Candlewick Street:
Drapers much cloth me offered anon;
Then comes me one crying, ‘Hot sheep’s feet!’
One cried ‘Mackerel!’ ‘Ryster green!’ another gan me greet.
One bade me buy a hood to cover my head:
But, for lack of money, I might not speed.
Then into Cornhill anon I rode,
Where there was much stolen gear among.
I saw where hong mine owne hood
That I had lost among the throng—
To buy my own hood, I thought it wrong—
I knew it as I did my Creed,
But, for lack of money, I could not speed.
If we pass on from shop to shop in a more quiet and undisturbed
fashion than poor ‘London Lackpenny,’ we must not forget that we

87. are, at least so far, enjoying that which our forefathers could not.
With regard to the head-dress, and to begin with this, we have
many memorials. ‘Tire,’ once a familiar word enough, is still
preserved from decay by our Authorized Version of the Scriptures.
Thus, for example, it is said in Ezekiel, ‘make no mourning for the
dead, bind the tire of thine head upon thee.’
[337]
I do not know how
comprehensive are the duties belonging to our present ‘tirewoman’
or lady’s-maid, but in the day when the tragic story of Jezebel was
first translated, the sense of the word was entirely confined to the
arrangement of her mistress’s ‘tiara,’ which is but another form of
the same term. In the ‘Paradise Lost’ it is found as ‘tiar’—
Of beaming sunny rays, a golden tiar circled his head.
When we remember their former size, their horned and peaked
character, and the variety of the material used, arguing as they do
the then importance of the fact, we need not be surprised at
meeting with comparative frequency such a surname as ‘Tyrer,’
‘Tyerman,’ or ‘Tireman.’ It is somewhat hard to say whether our
‘Coffers’ are relics of the old ‘Coffrer’ or ‘Coifer,’ but as the latter
business was all but entirely in the hands of females, perhaps it will
be safer to refer them to the other. Such names, however, as ‘Emma
la Coyfere’ or ‘Dionysia la Coyfere,’ found in the thirteenth century,
may serve to remind us of the peculiar style of the head-gear which
the ladies affected in these earlier times. The more special
occupation of preparing feathers or plumes has left its mark in our
‘Plumer’ and ‘Plummer,’ memorials of the old ‘Mariot le Plumer’ or
‘Peter le Plomer.’ The old ‘caul’ or ‘call’ still lives in our ‘Calmans’ and
‘Callers.’ ‘Elias le Callere’ occurs in the Parliamentary Writs, and
‘Robert le Callerere’ in the ‘Munimenta Gildhallæ.’ Judging from the
‘Wife of Bath’s Tale,’ we should imagine this also to have been a
female head-dress. There the old witch appeals to the Queen and
her court of lady attendants as to them who wear ‘kercheif or
calle’—

88. Let see, which is the proudest of them alle,
That weareth on a kercheif or a calle.
Another form of the surname is found in ‘Alicia la Kellere,’ now
simple ‘Keller,’ the article itself being also met with in a similar dress.
In the ‘Townley Mysteries’ a fallen angel is represented as saying
that a girl—
If she be never so foul a dowde
With her kelles and her pynnes,
The shrew herself can shroud
Both her chekys, and her chynnes.
In its several more general uses it has always maintained its strict
meaning of a covering.
[338]
Hoshea, we may recollect, speaks
figuratively of God’s ‘rending the caul of Israel’s heart.’ Probably the
word is connected with the ‘cowl’ of other monkish days, and thus
may be associated with our ‘Coulmans’ and ‘Cowlers.’ ‘Richard le
Couhelere,’ an entry of the fifteenth century, may belong to the
same group.
[339]
A once familiar sobriquet for a hood was that of
‘chapelle,’
[340]
whence our edifice of that name and the diminutive
‘chaplet.’ The Parliamentary Writs give us an ‘Edmund le Chapeler;’
the Hundred Rolls furnish us, among other instances, with a ‘Robert
le Chapeler.’ ‘Theobald le Hatter,’ ‘Robert le Hattare,’ ‘Thomas le
Capiere,’ ‘Symon le Cappere,’ or ‘John Capman’ need no explanation.
The articles they sold, whether of beaver, or felt, or mere woollen
cloth, were largely imported from Flanders. Thus it is that Lydgate,
as I have but recently shown, picturing the streets of London,
mentions spots in his progress therethrough where—
Flemings began on me for to cry,
‘Master, what will you copen or buy?
Fine felt hats, or spectacles to read?’
That many of these wares, however, were of home manufacture is
equally undoubted, and of this we are reminded by our ‘Blockers,’

89. representatives of the old ‘Deodatus le Blokkere.’ The ‘block’ was the
wooden mould upon which the hat was shaped and crowned. In
‘Much Ado About Nothing’ Beatrice is made to say: ‘He wears his
faith but as the fashion of his hat; it ever changes with the next
block.’ The ‘blocker,’ I doubt not, was but a hat-maker; we still call a
stupid man a blockhead. Our ‘Hurrers’ (‘Alan le Hurer,’ H.R., ‘Geoffrey
le Hurwere,’ H.R.), once so important as to form a special company
with articles and overseers, as representative of an old general term,
are not so familiar as we might have expected them. Bonnets, caps,
hoods, hats, all came under their hands. Strictly speaking, however,
a ‘hure’ or ‘howre,’ as Chaucer spells it, was a shaggy cap of fur, or
coarse jagged cloth. In an old political song of Edward the First’s
time it is said—
Furst there sit an old cherle in a blake hure,
Of all that there sitteth seemeth best sure.
That the word itself should have dropped from our vocabulary is to
me a mystery.
[341]
Even in our nomenclature the rarity of our ‘Hurers’
and ‘Hurrers’ is to me inexplicable, bearing as it does no possible
proportion to the former importance of the occupation. But this, as I
have said before, is one of the peculiarities of personal
nomenclature, depending entirely as it does on the uncertainties of
descent. The head, we see, was not neglected.
The sale of woollen cloth by our ‘clothiers’ and ‘drapers’ we have
already mentioned. The tailor then, as now, made it up into the
garments which the age required. Few names went through so many
metamorphoses as this. ‘Mainwaring,’ it is said, can be found in over
a hundred and thirty different spellings. The exact number with
regard to ‘Taylor’ I cannot state, as I have not dared hitherto to
encounter the task of collecting them. The forms recorded in one
register alone give us such varieties as ‘le Tayllur,’ ‘le Tayllour,’ ‘le
Tayller,’ ‘le Taylir,’ ‘le Taylour,’ ‘le Taylur,’ ‘le Taillur,’ and ‘le Talur.’ We
have also the feminine ‘la Taylurese’ in the same roll.
[342]
A name
obsolete now in a colloquial sense, but common enough in our

90. directories, is ‘Parminter,’ ‘Parmenter,’ or ‘Parmitar,’ a relic of the old
Norman-French ‘Parmentier,’ a term a few hundred years ago
familiarly used also for the snip. Among other mediæval forms are
‘Geoffrey le Parmunter,’ ‘Saher le Parmentier,’ ‘William le Parmeter,’
and ‘Richard le Parmuter.’ The Hundred Rolls give us the same
sobriquet in a Latin dress as ‘William Parmuntarius.’
[343]
As associated
with the tailor, we may here set down our ‘Sempsters,’ that is,
‘Seamster,’ the once feminine of ‘Seamer,’ one who seamed or
sewed. Mr. Lower hints that our ‘Seymours’ may in some instances
be a corruption of this latter form, but I must confess I discover no
traces of it.
The sobriquet of ‘William le Burreller’ introduces us to a cloth of a
cheap mixture, brown in colour, of well-nigh everlasting wear, and
worn by all the poorer classes of society at this period. So universal
was it that they came to be known by the general term of ‘borel-
folk,’ a phrase familiar enough to deeper students of antiquarian
lore. The Franklin premises his story by saying—
But, sires, because I am a borel man,
At my beginning first I you beseech
Have me excused of my rude speech.
Our ‘Burrells’ are still sufficiently common to preserve a
remembrance of this now decayed branch of trade. They may derive
their name either from the term ‘borel’ or ‘burel’ pure and simple, or
from ‘Burreller,’ and thus represent the trade from which the other,
as a sobriquet, owed its rise. The manufacturer is referred to by
‘Cocke Lorelle,’ in the line—
Borlers, tapestry-work-makers, dyers.
Special articles of costume now wholly disused, or confined or
altered in sense, crop out abundantly in this class of surnames. At
this period a common outdoor covering for the neck was the wimple,
or folded vail, worn by women. To this day, I need not say, it is part

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