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Sunday, 22 October 2017

Legal Viewpoint: Some Aspects on Banking Business

The banking sector, no doubt, plays an important active role in trade promotion and likewise, the national economy of each country

. This prime basic role is particularly envisaged and clearly shown in financing and supporting most of the financial activities and development projects in all sectors.
There are other ways and means to support the national economy of the country by promoting the saving culture among the business sectors and other communities. The saving attitude will help in getting liquidity, as we can see in many places, to support the needy or future activities.
Banking business as a rule is governed and based on banking laws and banking customary practices going –on and followed for long time. As we have said the banking business plays an important economic and social role, whoever, during the normal process of banking business some differences could occur for different reasons between banks and their customers?
In this context we have to mention that we have noticed that  the issue of undue influence, among other things,  has been raised by some of the customers who, or some of them, could try all available alternatives to escape from their commitments with banks.
From my experience, I could say that, any banking transaction could end up in disagreement or even hectic endless litigation. Within this context, bankers are advised to make sure that their documentation is in order and safeguards their interest. I am saying this because some of the customers are trouble-seekers and they look for everything to drag the bank into legal problems. This could help in delaying scheduled payments.
 They, customers, could claim many issues including undue influence. For more explanation, we could say, the undue influence is basically a legal issue emerging from the contractual relation between the two contracting parties. What is the legal meaning of undue influence and what is the extent of this influence? This, I guess, needs some clarification.
Most banks, generally speaking, contend that the defense of undue influence could only be raised when a customer had entered into a transaction with the bank and this transaction was manifestly disadvantageous to him, for any reason whatsoever.
Apart from the above, the undue influence is a transaction in which an unfair advantage was obtained by one party over the other. Furthermore, the charge of undue influence should positively show a clear benefit to one party over the other.
The bank personnel should be clear with his customer and should enable him to be aware of all related circumstances particularly in relation to securities needed by the bank. The securitization, the mortgage deals, the interest calculation, the guarantees, trustee or fiduciary relations, syndication limits, etc. are among the issues that could be claimed under undue influence or subject to other disagreement between the parties.
The bank personnel, to escape such claims he should prove that he has never crossed the line to make the transaction unfair to the customer. He should, moreover, prove that he has been following banking codes and business ethics while performing his banking duties.
The bank, by all means, is under no duty to ensure that the customer had an independent advice in relation to ordinary banking transactions taking place every day between the bank and his customers. However, according to prudent banking practices, it is expected that the bank in certain dealings draws the attention of his customer to seek an independent advice to safeguard his interests.
That is to say that, the bank manager may in certain instances go-the-extra mile and ask the customer or draw his attention to seek an independent and appropriate legal advice. However, by all means, it is the prime duty of the customer to take care of his own interest and to make sure that he is aware of each circumstances related to his banking business and transactions.
Banks, in many cases explain necessary details to his customer because there is joint interest for both parties to close fruitful deal, however, at certain cross the customer needs to look for an independent supportive advice. There is joint interest but each needs to walk the right direction to achieve his end goal..