Banker :- Banker may also be termed as bank. Both terms are synonymous and may be used in place of other.
According to professor H.L.A.Hart, " 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."
The term banker holds the following features
1. The banker accepts deposit of money from anyone who offers his money for such purpose.
2. After accepting money they usually lend or invest such deposit.
3. The deposited money should be repayable to the depositor on demand or according to the agreement reached between depositor and banker.
4. Deposits are withdrawable by cheque, draft, order or otherwise
5. They maintain the current account or other records of similar nature in which names of the customer and deposits are entered.
So it obvious that receiving money from customers and repaying it by honouring their cheques as and when required is one function which distinguishes banking business from money lending.
Example :- Sahara Company is a para banking institution and is not a banker
5 major differences between banker and money lender
1. Acceptance of deposit :- Banks accepts deposit from the public.
Money lenders cannot accept deposit from the public except from their relatives.
2. Lending of Money :- Banks lend money out of the deposits which it has accepted from their customers.
Money lenders lends money from their own resources.
3. Monetary help :- Scheduled banks can get loan on securities from the Central Bank in times of crisis.
Money lenders cannot get loans from the Central Bank.
4. Chequable deposits :- Banks provides the facility of cheques by customers are allowed to withdraw money at any time.
A money lender if in any case accepts deposits, they are not chequable.
5. Application of the Act :- All the banks in India are subject to the provision of Reserve Bank of India Act 1934 and The Banking Regulation Act 1949.
These Acts do not apply to money lenders.
References:-
The Law of Banking,Volume 1 (1993)
R.N.Chaudhury, Banking Laws
