In case of cash credit account having credit balance the banker customer relationship is that of
ACreditor-debtor
BDebtor- creditor
CPledgee- pledger
DNone of the above
Answer:
B. Debtor- creditor
Read Explanation:
- General Banking Relationship: In a standard bank account (Savings or Current), the customer is the creditor and the bank is the debtor because the customer deposits money that the bank is obligated to repay upon demand.
- Cash Credit (CC) Account Dynamics: A Cash Credit account is primarily a credit facility where the bank lends money to the customer. Under normal circumstances (debit balance), the relationship is that of Creditor (Bank) and Debtor (Customer).
- Credit Balance Exception: When a Cash Credit account shows a credit balance, it indicates that the customer has deposited more money than the amount utilized or has not utilized the facility, effectively making the bank a holder of the customer's surplus funds.
- Legal Precedent: As per established banking law and judicial interpretations, when a CC account has a credit balance, the bank is legally obligated to repay those funds to the customer on demand, reversing the standard CC relationship to Debtor (Bank) and Creditor (Customer).
- Important Distinction for PSC Exams: Candidates must distinguish between the general nature of a facility (usually Debtor-Creditor) and the specific state of the account balance. Even in a loan or CC account, a credit balance transforms the bank into a debtor to the customer.