WHO IS THE PAYING BANKER, DUTIES OF PAYING BANKER,MATERIAL ALLTERATION ,STATUTORY PROTECTION TO THE PAYING BANKER ARE STATED.

1. F. JOSEPHINE LENTA
ASSISTANT PROFESSOR,
DEPARTMENT OF COMMERCE,
COLLEGE OF SCIENCE AND HUMANITIES,
SRM IST,
RAMAPURAM.
BANKING THEORY LAW AND PRACTICE
UNIT 4
PAYING AND COLLECTING BANKER

2. PAYING BANKER:
Payingbanker can be definedas follows “The bank on
which a cheque is drawn (the bank whose name isprinted
on the cheque) and which paysthe amount for which the
cheque is written and deducts that sum from the
customer’s account.” The payingbanker should use due
care and diligencein payinga chequeso as to refrain from
any action potential enough to damagehis customer’s
credit.

3. DUTIES OF PAYING BANKER
 A proper form of the cheque
 Date of the cheque
 Amount of the cheque
Material Alteration
 Mutilated cheque
 Drawerssignature
 Balancein customer’s account
 Type of cheque
Balancein customer account

4. Material alteration:
Alteration in material when it affects the fundamental characters of a
cheque. In other words material alteration means , “ any cheque in an
instrument which cause to speak a different language is legal effect
from what it spoke originally therefore, an alteration is material if it
alter the following
EXAMPLE: Alteration in date, Alteration in signature.

5. STATUTORY PROTECTION TO THE
PAYING BANKER
 Protection in case of order cheque
 Protection in case of Bearer Cheque
 Protection in case of crossed Cheque

6. PAYMENT IN DUE – COURSE:
A banker’spayment should alwaysbe a payment in due
course. Payment in due course has been clearly definedin
see.10 of the Negotiable Instrument Act, 1881. It is the
mannerin which a paying banker should makepayment to
a cheque presentedto him.
The paying banker has to fulfil before making payment of
any cheque. If he fulfils the same, the paying banker gets
the statutory or legalprotection under NI Act (Negotiable
Instruments Act)

7. COLLECTING BANKER:
Collecting banker is one, who undertakes the
collection of cheques for his customer. Now-adays
banks undertake to collect even other instruments
like bankdrafts, bills of exchange,dividend
warrants etc.

8. A HOLDER FOR VALUE:
Collecting Banker becomesthe holder for value, if he
pays the value of the chequeto the customer before the
cheque is actually collected. In this, the collecting
banker initially pays the amount to the customer, and
then presents the cheque for collection to the
Drawee/Payingbanker as though, he himself isa
customer.

9. Dishonour of Cheques:
Section 92 of the Negotiable Instruments Act states that –
“A promissory note, bill of exchangeor cheque is saidto be
dishonoured by non-payment when the makerof the note
and acceptorof the bill makesdefault in payment.”
Typesof Dishonourof Cheque:
 Rightful Dishonour
 Wrongful dishonour