This document provides an overview of basic banking terminology and concepts related to day-to-day banking operations. It defines key terms like bank accounts, authorized signatories, checks, payment orders, bills, and government drafts. It also discusses check forgery and alterations, different types of checks including post-dated and stale checks, check crossing including general and special crossing, check endorsements, and overdrafts. The document is intended to familiarize new banking staff with common instruments and processes used in banking transactions.
3. INSTRUMENTS USED
Cheques (Samples)
Payment Order
Bills
Refund vouchers
Advices /Authorities
Travel Vouchers
Challans
Govt . Draft / Bank Draft
4. FORGERY & ALTERATION IN CHEQUES
FORGED. Use of legitimate cheques that are
stolen and then presented for encashment.
COUNTERFIET. Use completely fake cheques.
ALTERED. Altering a legitimate check to change
the payee or inflate the amount.
5. OTHER CATEGORIZATION OF CHEQUES
There is which is discussed below:
Ante-dated cheques:-
Cheque in which the drawer mentions the date earlier to
the date of presenting it for payment. For example, a
cheque issued on 20th May 2011 may bear a date 5th
May 2011.
Post-dated Cheque:-
Cheque on which drawer mentions a date which is
subsequent to the date on which it is presented, is called
post-dated cheque.
For example, if a cheque presented on 8th May 2003
bears a date of 25th May 2003, it is a post-dated
cheque. The bank will make payment only on or after
6. OTHER CATEGORIZATION OF CHEQUES
Stale Cheque:-
A cheque which is issued today must be presented
before at bank for payment within a stipulated
period. After expiry of that period, no payment will
be made and it is then called ‘stale cheque’.
Mutilated Cheque:-
In case a cheque is torn into two or more pieces
and presented for payment ,such a cheque is called
a mutilated cheque.
7. CROSSING OF CHEQUE
Crossing:
This is a device adopted and sanctioned by law, which
has the effect of making cheques payable to a bank only
or to a particular bank in an account with such bank.
Types of Crossing
123-General crossing: which consists of drawing two parallel
transverse lines, across the fact of cheque, either with or
without the words “not negotiable” and/or the words “and
Co” in between.
124-Special crossing: If in addition to general crossing, the
name of specified banker to whom the cheque is to be
payable, is also written on the face of the instrument, with
or without the words “not negotiable”, it is called special
crossing”.
9. ESSENTIALS OF GENERAL CROSSING
Two lines are of paramount importance in
crossing.
The lines must be drawn parallel and transverse.
It means that they should be arranged in a
crosswise direction. They should not be straight
lines.
The lines are generally drawn on the left hand
side .
The words ‘not negotiable’ may be added to a
crossing.
The words ‘and Company’ may be written in
10. ESSENTIALS OF SPECIAL CROSSING
Two parallel transverse lines are not at all
essential for a special crossing.
The name of a banker must be necessarily
specified across the face of the cheque. The
name of the banker itself constitutes special
crossing.
It must appear on the left hand side, preferably
on the corner.
The two parallel transverse lines and the words
‘not negotiable be added to a special crossing
11. ENDORSEMENT
A legal term that refers to the signing of a
document which allows for the legal transfer
of a negotiable from one party to another
12. OVERDRAFT
An extension of credit from a lending
institution when an account reaches zero. An
overdraft allows the individual to continue
withdrawing money even if the account has
no funds in it. Basically the bank allows
people to borrow a set amount of money.