This document discusses the roles and responsibilities of paying bankers and collecting bankers. It outlines various precautions paying bankers must take, such as verifying the nature of the cheque, branches, references, signatures, and balances. It also describes circumstances where cheques may be dishonored, such as countermanding, notice of death or insolvency. The document provides statutory protections for paying bankers and outlines duties of collecting bankers, such as prompt presentation, crediting, and noticing of dishonors. It defines holder in due course and describes potential liability for collecting bankers in cases of conversion, defective titles, or violating crossing restrictions.

1. Chapter 6
Paying Banker
&
Collecting Banker

2. Precautions to be Taken by a Paying Banker
• Meaning of a Paying Banker
• 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

3. Circumstances of Dishonour
• Countermanding • Trust Account
• Notice of Death • Signature Difference
• Notice of Insolvency • Other Conditions:
• Notice of Assignment condition,stale,post-
• dated,damaged,prese
Garnishee Order
ntation after cash
• Prohibitive Order from hours,forgery of
Govt. Department signature, irregular
endorsement

4. Statutory Protection to the
Paying Banker
• Sec 85 (1)- order cheques- payment in
due course[Sec 10]
• Sec 85 (2)- bearer cheque-payment in due
course
• Payment in due course: apparent
tenor,good faith, without negligence,
person in possession

5. Holder in Due Course (Sec 9)
• Consideration
• Possessor of bearer cheque or payee or
endorsee of order cheque
• Before the amount became payable
• No reason to suspect the title of the
endorser
Privilege: Good title, claim on parties,
transfer good title

6. Collecting Banker
• Meaning
• Holder for Value
• Agent of the customer
• Rights of a collecting banker as a holder
for value
• Liabilities of a banker as a holder for value

7. Duties of a Collecting Banker
• Prompt presentation
• Prompt Credit to Customer’s Account
• Prompt Notice of Dishonour
GENERAL DUTIES: Proper opening,
collection for customer only, regularity of
endorsement,title of the customer, multiple
accounts, crossing, no suspicious
circumstances

8. Conversion
• Lack of good faith
• Forged cheque
• Has full knowledge of a defective title of
the customer
• Cheque has ‘not negotiable’ crossing
• An account payee cheque is collected to a
third party

9. Statutory Protection to Collecting
Banker
• Sec 131:
-Goodfaith & without negligence
-Payment for a customer
-Crossed cheques
-agent for collection
-Prior crossing

10. THANK YOU