Paying Banker and Collecting Banker-B.V.Raghunandan

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duties of paying banker and collecting banker

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Paying Banker and Collecting Banker-B.V.Raghunandan

  1. 1. Paying Banker and Collecting Banker Chapter 6
  2. 2. Precautions to be Taken by a Paying Banker <ul><li>Meaning of a Paying Banker </li></ul><ul><li>Precautions: Nature of the Cheque, Branch, Reference to the Account, Working Hours, Unmutilated, Dating, Amount of the Cheque, Material Alteration, Balance in the Account, Signature of the Drawer, Printed Forms, Regularity of Endorsement </li></ul>
  3. 3. Circumstances of Dishonour <ul><li>Countermanding </li></ul><ul><li>Notice of Death </li></ul><ul><li>Notice of Insolvency </li></ul><ul><li>Notice of Assignment </li></ul><ul><li>Garnishee Order </li></ul><ul><li>Prohibitive Order from Govt. Department </li></ul><ul><li>Trust Account </li></ul><ul><li>Signature Difference </li></ul><ul><li>Other Conditions: condition,stale,post-dated,damaged,presentation after cash hours,forgery of signature, irregular endorsement </li></ul>
  4. 4. Statutory Protection to the Paying Banker <ul><li>Sec 85 (1)- order cheques- payment in due course[Sec 10] </li></ul><ul><li>Sec 85 (2)- bearer cheque-payment in due course </li></ul><ul><li>Payment in due course: apparent tenor,good faith, without negligence, person in possession </li></ul>
  5. 5. Holder in Due Course (Sec 9) <ul><li>Consideration </li></ul><ul><li>Possessor of bearer cheque or payee or endorsee of order cheque </li></ul><ul><li>Before the amount became payable </li></ul><ul><li>No reason to suspect the title of the endorser </li></ul><ul><li>Privilege : Good title, claim on parties, transfer good title </li></ul>
  6. 6. Collecting Banker <ul><li>Meaning </li></ul><ul><li>Holder for Value </li></ul><ul><li>Agent of the customer </li></ul><ul><li>Rights of a collecting banker as a holder for value </li></ul><ul><li>Liabilities of a banker as a holder for value </li></ul>
  7. 7. Duties of a Collecting Banker <ul><li>Prompt presentation </li></ul><ul><li>Prompt Credit to Customer’s Account </li></ul><ul><li>Prompt Notice of Dishonour </li></ul><ul><li>GENERAL DUTIES: Proper opening , collection for customer only, regularity of endorsement,title of the customer, multiple accounts, crossing, no suspicious circumstances </li></ul>
  8. 8. Conversion <ul><li>Lack of good faith </li></ul><ul><li>Forged cheque </li></ul><ul><li>Has full knowledge of a defective title of the customer </li></ul><ul><li>Cheque has ‘not negotiable’ crossing </li></ul><ul><li>An account payee cheque is collected to a third party </li></ul>
  9. 9. Statutory Protection to Collecting Banker <ul><li>Sec 131: </li></ul><ul><li>-Goodfaith & without negligence </li></ul><ul><li>-Payment for a customer </li></ul><ul><li>-Crossed cheques </li></ul><ul><li>-agent for collection </li></ul><ul><li>-Prior crossing </li></ul>

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