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The common law contributed the crucial element in determining whether or not an institution was a bank in the landmark case of United Dominions Trust Ltd v Kirkwood, in which the Court of Appeal held three usual characteristics of banking business, as (1) accepting money from and collecting or paying cheques for customers or to their credit; (2) honoring cheques or orders drawn on them by customers when presented for payment and debiting their customers’ accounts accordingly; and (3) keeping current accounts, or something of that nature, in their books in which the credits and debits are entered. While a number of cases of common law continued to stress an institution or a bank’s reputation, the Chinese legislature had to recognize the existence of credit cooperatives taking banking business. Through the long time influence of planned economy, the Chinese people could not easily get rid of the traditional thought that a bank or a credit cooperative was a place where the government kept the money in safety. When customers dealt with banks, they regarded themselves were dealing with a government agency rather than a merchant. Since the public had not accepted the widening of banking business and the legislators had not offered powerful legal framework to control financial services, the Chinese financial chaos was unavoidable. Therefore, it was understandable that the Chinese banking business was restricted to the usual characteristics, close to the definition of Kirkwood case. This statutory restriction might be one of the reasons that the Chinese financial system, including stock market and foreign exchange trade, was less influenced by the Asian Financial Crisis of 1997.
3. Customers and the Nature of Their Relationship between Banks
Both jurisdictions realized that once a person became a bank’s customer, certain obligations and duties between them emerged. Precedents of common law have ascertained that where a person became a customer, he should have an account maintained by a bank; without opening account, a casual service for a given person could not make the person becoming a customer; a person became a customer from the moment when a bank agreed to open an account in his name. The term of ‘a customer’ of a bank has never been defined by statute in the UK.
In China, statutes always use the term of ‘depositor’ rather than ‘customer’. A personal customer shall carry some cash (in practice, at least ten RMB Yuan) to open an account. A corporate body is necessary open a principal account for purpose of depositing the primary capital and cash withdrawal thereafter. Therefore, only a depositor may be given an account and a customer of a bank amount to a depositor of a bank. From a personal customer’s perspective, his relationship with a bank starts from the time when a passbook is issued. Opening an account is as same as requiring a passbook because they are happened at the same moment. Whatever the current or savings account, the bank must issue a passbook to the customer. The fundamental features of passbook are: it is a receipt of a sum of cash; it is an recorder of transactions; it is an instrument of case withdrawal (for current account) in any branch of the same bank or from any ATM provided by those branches; it is a contract on which basic obligations of the bank and the main terms including interest rate, term of deposit, and credit of account were printed; it is an evidence for dispute solution. In a word, the passbook makes the bank account and its day-to-day management into the customer’s hand. I still remember that when I opened my first account in Clydesdale Bank, I worried: ‘did they forget giving me the passbook?’
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