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Supple term used to describe activities or chat that is playful, intelligent and original. Banter is something you either posses or lack, there is no middle ground. It is also something inherently English, stemming as it does from traditional hi-jinks and tomfoolery of British yesteryear.
"You, sir, are drunk"

"Maybe so but you are ugly and I will be sober in the morning"

"Good banter sir"
banter by Zach_banter February 16, 2006
A word used to describe the teasing and pisstaking which occurs between mates, usually harmless.

However, the past couple of years the word has been hijacked by Justin Bieber lookalike student "LAD" twats who use it to describe anything humorous that occurs. These people are also known as chino wankers, annoying morons and people who need to use a dictionary now and again.
What banter is:

"You alright Mike? You seem miles away, you're not busy thinking of Tanya are you? Don't even lie, you proper fancy her, you div!"

What banter isn't:

"LOL LAST NIGHT DAVE WALKED INTO A LAMPPOST! EPIC BANTER LOL! WHAT A LAD!"
Banter by chinosareugly March 15, 2013
Verbal sparring that's fundamentally friendly, especially needed to deflate the egos of gloating friends
A banterous initiation to said friend:

"I wonder if your ass gets jealous of all the shit coming out of your mouth"
Banter by bobzilla November 1, 2012
Playful joke among friends not taken seriously
- Your dick is so small!
- Your mom didn't seem to mind last night!
- M..my mom's dead! ;-(
- Exactly!

LOL Banter!
banter by rekt_suspekt July 26, 2015
Conversation that is witty and at the same time abusive. Formerly an "in" word, but no longer cool due to it being used excessively by children.
Parent: So what did you do at school today Timmy?

Child: BANTER LOL

Parent: Shut up
banter by DO NOTWANT September 19, 2010
A humerous and witty conversation, statement or remark. Coming back into fashion due to today's youth using it to mean anything remotely humorous, even to the most crude sense of humour.
What an excellent bit of banter!-div after beating a deer to death with a spoon
Banter by Choc761 December 19, 2014