Bank & Customer is the relationship of Debtor & Creditor-Explain

On the opening of an account the banker assumes the position of a debtor. He is not a depository or trustee of the customer's money because the money over to the banker becomes a debt due from him to the customer. A banker does not accept the depositors' money on such condition. The money deposited by the customer with the banker is, in legal terms, lent by the customer to the banker, who makes use of the same according to his discretion. The creditor has the right to demand back his money from the banker, and the banker is under and obligation to repay the debt as and when he is required to do so. But it is not necessary that the repayment is made in terms of the same currency notes and coins. The payment, of course, must be made in terms of legal tender currency of the country.

A depositor remains a creditor of his banker so long as his account carries a credit balance. But he does not get any charge over the assets of his debtor/banker and remains an unsecured creditor of the banker. Since the introduction of deposit insurance in India in 1962, the element of risk to the depositor is minimized as the Deposit Insurance and Credit Guarantee Corporation undertakes to insure the deposits up to a specified amount.

Banker's relationship with the customer is reversed as soon as the customer's account is overdrawn. Banker becomes creditor of the customer who has taken a loan from the banker and continues in that capacity till the loan is repaid. As the loans and advances granted by a banker are usually secured by the tangible assets of the borrower, the banker becomes a secured creditor of his customer.