Paying Banker: Duties and Statutory Protection , Duties of Paying Banker, Liability of Payment Banker on Crossed Cheque

1. Paying Banker: Duties and
Statutory Protection
Prepared by-
Dr Ramandeep
Assistant Professor
Deptt. of Commerce
GCW, Sirsa (Haryana)

2. Paying Banker: Meaning
The banker on whom the cheque is drawn
or the banker who is required to pay the
cheque drawn on him by a customer is
called the “Payment Banker”.

3. Duties of Paying Banker
1. Proper form
2. Physical condition
3. Crossing
4. Office of drawing
5. Date of the cheque
6. Time of presentation
7. Amount
8. Material alteration
9. Signature of the drawer
10. Endorsement

4. Circumstances under which a Banker can refuse
payment
• Not having Sufficient funds
• Not in proper form
• Post dated cheque presented
before the due date
• Stale cheque
• Not presented in banking
hours
• In case of material alteration
• Signature does not match
• In case of insolvency
• In case the customer has
countermanded the cheque
• In case of death of customer
• In case of receiving the
Garnishee order from the
court

5. Statutory Protection to Paying Banker
The Paying bank must satisfy the following conditions to get
the statutory protection under Negotiable Instrument Act-
1. Protection in case of order cheques
(a) Endorsement must be regular
(b) Payment made in due course
2. Protection in case of Bearer Cheque
3. Protection in case of Crossed Cheque

6. Liability of Payment Banker on Crossed Cheque
1. In the case of general crossing, the banker shall not
pay it otherwise than to the banker and in case of
special crossing, the banker shall not pay it otherwise
than to the banker to whom it is crossed.
2. If any banker pay a crossed cheque otherwise than to
the banker, the banker shall be liable to the true
owner of the cheque for any loss he may sustain
owing to the cheque having been so paid.

7. Liability of the Paying Banker
• Liability to the true owner of the cheque
• Liability to the Drawer

8. Thank You