Banker-Customer Relationship
Debtor-Creditor relationship
Banks as a trustee
Anti-money laundering
Deposit products or services
Payment and collection of cheques and other negotiable instruments
Books referred - Dr.Nirmala Prasad, K. Chandrasass j (Banking and financial system)& Mithani, Gordan (Banking and financial systems)
Unit 2 (different means of remittance) (As per syllabus 2017-18)Dr Isha Jaiswal
The document discusses different means of remittance, including internal and international transfers. It describes various instruments used for remitting funds such as demand drafts, mail transfers, traveler's cheques, and letters of credit. Letters of credit are defined as documents from a bank guaranteeing payment to a seller if delivery conditions are met. The key parties in a letter of credit are identified as the applicant, issuing bank, beneficiary, advising bank, confirming bank, negotiating bank, and reimbursing bank. Specific types of letters of credit are also outlined like travelers' letters of credit and letters of credit for commercial transactions.
This document discusses negotiable instruments under Indian law. It defines key terms like negotiable instruments, promissory notes, bills of exchange, cheques and holders in due course. It explains the criteria for someone to be considered a holder in due course and the privileges this status provides. It also covers special rules for cheques, including types of crossings and endorsements. Finally, it outlines various ways in which a negotiable instrument can be discharged, such as through payment, cancellation, release or material alteration.
Law Relating to Negotiable Instruments with Special reference to cheques in S...Maxwell Ranasinghe
The document discusses various aspects of cheques, including:
1. The key elements that define a cheque under Sri Lankan law.
2. The roles and responsibilities of customers and banks regarding cheque usage and payments.
3. Common reasons for cheque returns and the recourse available to holders of returned cheques.
There are two types of bank instruments: negotiable and non-negotiable. Negotiable instruments include cheques, bank drafts, bills of exchange, and promissory notes. Cheques can be open, bearer, order, or crossed for safety. Crossed cheques are not cashed over the counter and can only be deposited into the payee's account. Cheques can be dishonored for reasons like insufficient funds, discrepancies in amounts, or if reported lost or stolen. Bank drafts are similar to cheques but issued by a bank, guaranteeing payment from the drawer bank.
1) Section 131 of the Negotiable Instruments Act provides protection to bankers who receive payment for crossed cheques in good faith and without negligence.
2) Even if the title to the cheque later proves defective, the banker will not be liable to the true owner as long as they received payment without negligence.
3) This section protects bankers who act as both paying bankers and collecting bankers, allowing them to deposit funds from a collected cheque into an account before receiving final payment.
This document defines banking terms and explains the process of opening a bank account. It discusses the types of bank accounts, loans and advances provided by banks, different types of cheques, and reasons for cheque dishonour. Important banking terms are also defined, including postal order, bank draft, treasury order, and standing order.
This document provides definitions and explanations of key concepts related to cheques and cheque crossing in India. It begins by introducing cheques and their importance as a negotiable instrument. It then defines a cheque and outlines its essential elements. The document discusses different types of cheques such as bearer, ordered, uncrossed, crossed, antedated, postdated and stale cheques. It also covers other instruments like bank drafts and travelers cheques. Key points of crossing cheques and distinguishing features between cheques and bills of exchange are presented. Advantages of printed cheque books and permissible alterations are summarized. Overall, the document serves as a comprehensive reference on cheques and related topics under Indian laws.
Unit 2 (different means of remittance) (As per syllabus 2017-18)Dr Isha Jaiswal
The document discusses different means of remittance, including internal and international transfers. It describes various instruments used for remitting funds such as demand drafts, mail transfers, traveler's cheques, and letters of credit. Letters of credit are defined as documents from a bank guaranteeing payment to a seller if delivery conditions are met. The key parties in a letter of credit are identified as the applicant, issuing bank, beneficiary, advising bank, confirming bank, negotiating bank, and reimbursing bank. Specific types of letters of credit are also outlined like travelers' letters of credit and letters of credit for commercial transactions.
This document discusses negotiable instruments under Indian law. It defines key terms like negotiable instruments, promissory notes, bills of exchange, cheques and holders in due course. It explains the criteria for someone to be considered a holder in due course and the privileges this status provides. It also covers special rules for cheques, including types of crossings and endorsements. Finally, it outlines various ways in which a negotiable instrument can be discharged, such as through payment, cancellation, release or material alteration.
Law Relating to Negotiable Instruments with Special reference to cheques in S...Maxwell Ranasinghe
The document discusses various aspects of cheques, including:
1. The key elements that define a cheque under Sri Lankan law.
2. The roles and responsibilities of customers and banks regarding cheque usage and payments.
3. Common reasons for cheque returns and the recourse available to holders of returned cheques.
There are two types of bank instruments: negotiable and non-negotiable. Negotiable instruments include cheques, bank drafts, bills of exchange, and promissory notes. Cheques can be open, bearer, order, or crossed for safety. Crossed cheques are not cashed over the counter and can only be deposited into the payee's account. Cheques can be dishonored for reasons like insufficient funds, discrepancies in amounts, or if reported lost or stolen. Bank drafts are similar to cheques but issued by a bank, guaranteeing payment from the drawer bank.
1) Section 131 of the Negotiable Instruments Act provides protection to bankers who receive payment for crossed cheques in good faith and without negligence.
2) Even if the title to the cheque later proves defective, the banker will not be liable to the true owner as long as they received payment without negligence.
3) This section protects bankers who act as both paying bankers and collecting bankers, allowing them to deposit funds from a collected cheque into an account before receiving final payment.
This document defines banking terms and explains the process of opening a bank account. It discusses the types of bank accounts, loans and advances provided by banks, different types of cheques, and reasons for cheque dishonour. Important banking terms are also defined, including postal order, bank draft, treasury order, and standing order.
This document provides definitions and explanations of key concepts related to cheques and cheque crossing in India. It begins by introducing cheques and their importance as a negotiable instrument. It then defines a cheque and outlines its essential elements. The document discusses different types of cheques such as bearer, ordered, uncrossed, crossed, antedated, postdated and stale cheques. It also covers other instruments like bank drafts and travelers cheques. Key points of crossing cheques and distinguishing features between cheques and bills of exchange are presented. Advantages of printed cheque books and permissible alterations are summarized. Overall, the document serves as a comprehensive reference on cheques and related topics under Indian laws.
Paying Banker and Collecting Banker-B.V.RaghunandanSVS College
The document discusses the precautions a paying banker must take when processing cheques as well as the circumstances under which a cheque may be dishonored. It also outlines the statutory protections provided to paying bankers if payment is made in due course. Additionally, it defines a collecting banker and their duties which include prompt presentation, crediting of customer accounts, and notice of dishonour. Collecting bankers are provided statutory protection if they act in good faith and without negligence when collecting cheques for customers.
Banks play a crucial role in international trade by providing financial services and advice. They facilitate various payment methods between importers and exporters, including letters of credit, wire transfers, and banker's drafts. Letters of credit are one of the most widely used payment mechanisms, where the importer's bank provides a letter of credit to the exporter guaranteeing payment upon presentation of shipping documents. The key parties involved in a letter of credit transaction are the applicant/importer, issuing bank, beneficiary/exporter, advising bank, confirming bank, negotiating bank, and reimbursing bank. Banks help reduce risk and ensure secure payment for both parties in international trade transactions.
This document summarizes a seminar presentation on cheques. It defines a cheque, outlines the essential features of a valid cheque, and describes different types of cheques such as bearer, order, crossed, and post-dated cheques. It also discusses endorsement of cheques, the roles and responsibilities of a paying banker, circumstances under which cheques may be dishonored, and legal protections for paying bankers. The presentation covered key concepts relating to cheques under Indian law.
Traveller's cheques are a safe way to carry money when traveling abroad. They can be exchanged for cash at local banks and used to pay for hotels, restaurants, and shops. Unused cheques can be kept for a future trip as they do not expire. Traveller's cheques are insured against loss or theft and can be replaced if lost by providing the cheque numbers and receipt. Pounds sterling is generally the best currency to purchase traveller's cheques in for trips to Europe since it is widely accepted and avoids paying exchange rates twice if changing between currencies.
The paying banker is responsible for honoring customer checks when sufficient funds are available. However, the banker must take precautions and ensure checks are valid before payment by verifying details like the form, date, amount, signatures, endorsements and for any alterations. The banker should also consider legal restrictions or orders to stop payment from the customer. Some key duties of the paying banker include verifying funds availability, checking for proper formatting of checks and adhering to the order of received checks when funds are insufficient.
The document defines a letter of credit as a document issued by a financial institution on behalf of a buyer stating the amount of credit available to honor drafts written by the buyer. It describes the key parties in a letter of credit transaction including the applicant, beneficiary, issuing bank, advising bank, paying bank, and confirming bank. It then outlines the basic process of a commercial letter of credit transaction and discusses types of letters of credit and methods of settlement.
This document discusses cheques and encashment. It defines what a cheque is and outlines the key parties and requisites of a cheque, including that it must be in writing, drawn on a specified banker, for a sum certain, signed by the drawer, and payable on demand. The document also covers types of cheques, essentials for cheque payment such as sufficient funds and proper form, and circumstances where a bank may pay money by mistake and attempt recovery.
A banker is defined as someone who receives money and collects checks and drafts for customers, with an obligation to honor checks drawn by customers subject to available balances. A banker must pay valid checks presented for payment from a customer's account per banking regulations. However, a banker may refuse payment if a garnishee order from a court is served, instructing the banker not to pay the customer. Key obligations of bankers include maintaining secrecy of customer accounts except as required by law, and appropriately paying or refusing payment of checks based on banking rules and regulations.
Payment in due course refers to making payment according to the terms of a negotiable instrument, such as a check or promissory note, in good faith and without negligence to the person in possession of the instrument. It is defined in Section 10 of the Negotiable Instruments Act as payment made in accordance with the apparent terms of the instrument and satisfies conditions like being made in good faith, without negligence, and to the person in possession. A bank or other party making payment in due course according to this definition will be protected and obtain a valid discharge against the holder of the instrument.
Types of letter of credits on 11 09 2012Sanjeev Patel
This document discusses different types of letters of credit (LCs). It begins by defining an LC as a written instrument issued by a bank at a customer's request to pay an exporter for goods or services provided the exporter presents the required documents.
The document then outlines various types of LCs: revocable LCs can be amended or cancelled at any time; irrevocable LCs constitute a definite undertaking by the issuing bank to pay provided documents are presented; confirmed LCs add the confirmation of the confirming bank; LCs can be with or without recourse for the bank; acceptance credits require drafts to be accepted; transferable LCs allow transfer of payments to other parties; back-to-back L
This document provides an overview of letters of credit. It defines letters of credit, discusses the parties involved, and explains why they are used. It outlines basic types of letters of credit including sight/term, revocable/irrevocable, and unconfirmed/confirmed. It discusses benefits to exporters/sellers and importers/buyers. It also covers special types like red clause, transferable, back-to-back, and deferred payment letters of credit. Finally, it outlines the key steps in import and export letter of credit transactions and common documents required.
Negotiable instruments include promissory notes, bills of exchange, and cheques. These are documents used in commercial transactions to transfer money from one party to another. A negotiable instrument must be in writing, signed by the maker, contain an unconditional promise to pay a certain sum to a specific person or entity, and be payable on demand or on a specific date. The key parties involved are the maker, drawer, drawee, acceptor, payee, and holder. For an instrument to be negotiated, it must be delivered to a new holder by endorsement and delivery.
"Cheque is an instrument in writing containing an unconditional order, addressed to a banker, sign by the person who has deposited money with the banker, requiring him to pay on demand a certain sum of money only to or to the order of certain person or to the bearer of instrument."
A pass book is a record of a customer's bank account that is maintained by the bank. It displays deposits credited to the account on the right side and debits for payments from the account on the left side. According to case law, the pass book constitutes the official record of transactions between the bank and customer if it is examined regularly by the customer. A wrong entry favorable to the customer only constitutes a settled account if the customer believes it is true and acts on it in good faith, such as by writing checks based on the incorrect higher balance. However, a customer cannot rely on entries made by a bank employee that are fictional.
Collecting Banker: Duties, Statutory Protection and Concept of Negligence, Position of a Collecting Banker, Duties and Responsibilities of Collecting Banker,Statutory Protection to Collecting Banker, Holder
and
Holder in Due Course
Letter of Credit / LC / Trade Law / What is LC, Letter of Credit/ How LC work...Asif Mohammad ALFAYED
1.What is Letter of Credit and how many Kinds of Letter of Credit are there?
2 . Critically analys The principles of letter of credit including how Letter of Credit Perform in Bangladesh?
This document discusses the roles and responsibilities of paying bankers and collecting bankers. It defines a paying banker as the banker who holds the account of the drawer of a cheque and is obligated to make payment if funds are sufficient. The key duties of a paying banker are to honor valid customer cheques in a timely manner according to law. A collecting banker undertakes to collect payment on cheques and other instruments from the paying banker on behalf of customers, and has duties to exercise care during collection and notify customers of dishonored cheques. The document also outlines circumstances where bankers may rightfully dishonor cheques and their liabilities for wrongful dishonor.
This document contains information about UCP 600, which are the latest revision of the Uniform Customs and Practice that govern letters of credit. Some key points:
- UCP 600 came into effect on July 1, 2007 and contain 39 comprehensive articles that apply to documentary credits.
- The articles define terms like applicant, beneficiary, issuing bank, confirming bank, nominated bank, and outline the undertakings and obligations of these parties.
- The articles also cover topics like the application and interpretation of credits, the relationship between credits and contracts, documents versus goods, credit requirements, amendments, advising and more.
- The goal of UCP 600 is to provide clear, practical rules for the operation
This document discusses key definitions and concepts related to banking law and the banker-customer relationship in India. It defines a banker according to Sir John Paget and defines a customer based on the "duration theory". It outlines general characteristics of the banker-customer relationship including that the banker is a privileged debtor, has the right of set-off, and can lend deposited funds. It also discusses special characteristics such as the banker's obligation to honor checks, maintain account secrecy, exercise lien, and charge incidental fees. The document provides context and examples for understanding these important banking law concepts in India.
The document discusses the roles and responsibilities of collecting bankers and paying bankers when dealing with cheques. It outlines two options a customer has when receiving a cheque - depositing it directly or sending it to their banker for collection. It explains that a collecting banker can act as a holder for value or as an agent, and describes the conditions under which they are considered a holder for value. The duties of paying bankers to verify cheque details and ensure sufficient funds are also reviewed. Statutory protections for collecting and paying bankers are discussed if they act in good faith and without negligence.
Negotiable instruments are legal documents that can be transferred between parties as a form of payment. Common examples include cheques, promissory notes, and bills of exchange. Cheques allow parties to transfer money from a bank account, while promissory notes and bills of exchange facilitate credit transactions. Negotiable instruments must meet certain legal requirements to be enforceable, such as being in writing, containing an unconditional order of payment, and specifying the amount to be paid. Misusing these instruments by forgery, fraud, or bouncing payments can result in legal penalties like fines and imprisonment according to Nepali law. Proper use of negotiable instruments is important for commercial and financial transactions.
This document provides information on negotiable instruments under Indian law. It defines negotiable instruments as documents that can be freely transferred through endorsement and delivery, including promissory notes, bills of exchange, and cheques. The three main types recognized are cheques, bills of exchange, and promissory notes. Over time, additional instruments like bank drafts and traveller's cheques have emerged. Key features of negotiable instruments are their free transferability, the ability to transfer free of defects, and the holder's right to sue. The document then provides details on cheques, bills of exchange, and compares the two. It outlines the essential elements of a cheque and provides examples of different cheque types.
Paying Banker and Collecting Banker-B.V.RaghunandanSVS College
The document discusses the precautions a paying banker must take when processing cheques as well as the circumstances under which a cheque may be dishonored. It also outlines the statutory protections provided to paying bankers if payment is made in due course. Additionally, it defines a collecting banker and their duties which include prompt presentation, crediting of customer accounts, and notice of dishonour. Collecting bankers are provided statutory protection if they act in good faith and without negligence when collecting cheques for customers.
Banks play a crucial role in international trade by providing financial services and advice. They facilitate various payment methods between importers and exporters, including letters of credit, wire transfers, and banker's drafts. Letters of credit are one of the most widely used payment mechanisms, where the importer's bank provides a letter of credit to the exporter guaranteeing payment upon presentation of shipping documents. The key parties involved in a letter of credit transaction are the applicant/importer, issuing bank, beneficiary/exporter, advising bank, confirming bank, negotiating bank, and reimbursing bank. Banks help reduce risk and ensure secure payment for both parties in international trade transactions.
This document summarizes a seminar presentation on cheques. It defines a cheque, outlines the essential features of a valid cheque, and describes different types of cheques such as bearer, order, crossed, and post-dated cheques. It also discusses endorsement of cheques, the roles and responsibilities of a paying banker, circumstances under which cheques may be dishonored, and legal protections for paying bankers. The presentation covered key concepts relating to cheques under Indian law.
Traveller's cheques are a safe way to carry money when traveling abroad. They can be exchanged for cash at local banks and used to pay for hotels, restaurants, and shops. Unused cheques can be kept for a future trip as they do not expire. Traveller's cheques are insured against loss or theft and can be replaced if lost by providing the cheque numbers and receipt. Pounds sterling is generally the best currency to purchase traveller's cheques in for trips to Europe since it is widely accepted and avoids paying exchange rates twice if changing between currencies.
The paying banker is responsible for honoring customer checks when sufficient funds are available. However, the banker must take precautions and ensure checks are valid before payment by verifying details like the form, date, amount, signatures, endorsements and for any alterations. The banker should also consider legal restrictions or orders to stop payment from the customer. Some key duties of the paying banker include verifying funds availability, checking for proper formatting of checks and adhering to the order of received checks when funds are insufficient.
The document defines a letter of credit as a document issued by a financial institution on behalf of a buyer stating the amount of credit available to honor drafts written by the buyer. It describes the key parties in a letter of credit transaction including the applicant, beneficiary, issuing bank, advising bank, paying bank, and confirming bank. It then outlines the basic process of a commercial letter of credit transaction and discusses types of letters of credit and methods of settlement.
This document discusses cheques and encashment. It defines what a cheque is and outlines the key parties and requisites of a cheque, including that it must be in writing, drawn on a specified banker, for a sum certain, signed by the drawer, and payable on demand. The document also covers types of cheques, essentials for cheque payment such as sufficient funds and proper form, and circumstances where a bank may pay money by mistake and attempt recovery.
A banker is defined as someone who receives money and collects checks and drafts for customers, with an obligation to honor checks drawn by customers subject to available balances. A banker must pay valid checks presented for payment from a customer's account per banking regulations. However, a banker may refuse payment if a garnishee order from a court is served, instructing the banker not to pay the customer. Key obligations of bankers include maintaining secrecy of customer accounts except as required by law, and appropriately paying or refusing payment of checks based on banking rules and regulations.
Payment in due course refers to making payment according to the terms of a negotiable instrument, such as a check or promissory note, in good faith and without negligence to the person in possession of the instrument. It is defined in Section 10 of the Negotiable Instruments Act as payment made in accordance with the apparent terms of the instrument and satisfies conditions like being made in good faith, without negligence, and to the person in possession. A bank or other party making payment in due course according to this definition will be protected and obtain a valid discharge against the holder of the instrument.
Types of letter of credits on 11 09 2012Sanjeev Patel
This document discusses different types of letters of credit (LCs). It begins by defining an LC as a written instrument issued by a bank at a customer's request to pay an exporter for goods or services provided the exporter presents the required documents.
The document then outlines various types of LCs: revocable LCs can be amended or cancelled at any time; irrevocable LCs constitute a definite undertaking by the issuing bank to pay provided documents are presented; confirmed LCs add the confirmation of the confirming bank; LCs can be with or without recourse for the bank; acceptance credits require drafts to be accepted; transferable LCs allow transfer of payments to other parties; back-to-back L
This document provides an overview of letters of credit. It defines letters of credit, discusses the parties involved, and explains why they are used. It outlines basic types of letters of credit including sight/term, revocable/irrevocable, and unconfirmed/confirmed. It discusses benefits to exporters/sellers and importers/buyers. It also covers special types like red clause, transferable, back-to-back, and deferred payment letters of credit. Finally, it outlines the key steps in import and export letter of credit transactions and common documents required.
Negotiable instruments include promissory notes, bills of exchange, and cheques. These are documents used in commercial transactions to transfer money from one party to another. A negotiable instrument must be in writing, signed by the maker, contain an unconditional promise to pay a certain sum to a specific person or entity, and be payable on demand or on a specific date. The key parties involved are the maker, drawer, drawee, acceptor, payee, and holder. For an instrument to be negotiated, it must be delivered to a new holder by endorsement and delivery.
"Cheque is an instrument in writing containing an unconditional order, addressed to a banker, sign by the person who has deposited money with the banker, requiring him to pay on demand a certain sum of money only to or to the order of certain person or to the bearer of instrument."
A pass book is a record of a customer's bank account that is maintained by the bank. It displays deposits credited to the account on the right side and debits for payments from the account on the left side. According to case law, the pass book constitutes the official record of transactions between the bank and customer if it is examined regularly by the customer. A wrong entry favorable to the customer only constitutes a settled account if the customer believes it is true and acts on it in good faith, such as by writing checks based on the incorrect higher balance. However, a customer cannot rely on entries made by a bank employee that are fictional.
Collecting Banker: Duties, Statutory Protection and Concept of Negligence, Position of a Collecting Banker, Duties and Responsibilities of Collecting Banker,Statutory Protection to Collecting Banker, Holder
and
Holder in Due Course
Letter of Credit / LC / Trade Law / What is LC, Letter of Credit/ How LC work...Asif Mohammad ALFAYED
1.What is Letter of Credit and how many Kinds of Letter of Credit are there?
2 . Critically analys The principles of letter of credit including how Letter of Credit Perform in Bangladesh?
This document discusses the roles and responsibilities of paying bankers and collecting bankers. It defines a paying banker as the banker who holds the account of the drawer of a cheque and is obligated to make payment if funds are sufficient. The key duties of a paying banker are to honor valid customer cheques in a timely manner according to law. A collecting banker undertakes to collect payment on cheques and other instruments from the paying banker on behalf of customers, and has duties to exercise care during collection and notify customers of dishonored cheques. The document also outlines circumstances where bankers may rightfully dishonor cheques and their liabilities for wrongful dishonor.
This document contains information about UCP 600, which are the latest revision of the Uniform Customs and Practice that govern letters of credit. Some key points:
- UCP 600 came into effect on July 1, 2007 and contain 39 comprehensive articles that apply to documentary credits.
- The articles define terms like applicant, beneficiary, issuing bank, confirming bank, nominated bank, and outline the undertakings and obligations of these parties.
- The articles also cover topics like the application and interpretation of credits, the relationship between credits and contracts, documents versus goods, credit requirements, amendments, advising and more.
- The goal of UCP 600 is to provide clear, practical rules for the operation
This document discusses key definitions and concepts related to banking law and the banker-customer relationship in India. It defines a banker according to Sir John Paget and defines a customer based on the "duration theory". It outlines general characteristics of the banker-customer relationship including that the banker is a privileged debtor, has the right of set-off, and can lend deposited funds. It also discusses special characteristics such as the banker's obligation to honor checks, maintain account secrecy, exercise lien, and charge incidental fees. The document provides context and examples for understanding these important banking law concepts in India.
The document discusses the roles and responsibilities of collecting bankers and paying bankers when dealing with cheques. It outlines two options a customer has when receiving a cheque - depositing it directly or sending it to their banker for collection. It explains that a collecting banker can act as a holder for value or as an agent, and describes the conditions under which they are considered a holder for value. The duties of paying bankers to verify cheque details and ensure sufficient funds are also reviewed. Statutory protections for collecting and paying bankers are discussed if they act in good faith and without negligence.
Negotiable instruments are legal documents that can be transferred between parties as a form of payment. Common examples include cheques, promissory notes, and bills of exchange. Cheques allow parties to transfer money from a bank account, while promissory notes and bills of exchange facilitate credit transactions. Negotiable instruments must meet certain legal requirements to be enforceable, such as being in writing, containing an unconditional order of payment, and specifying the amount to be paid. Misusing these instruments by forgery, fraud, or bouncing payments can result in legal penalties like fines and imprisonment according to Nepali law. Proper use of negotiable instruments is important for commercial and financial transactions.
This document provides information on negotiable instruments under Indian law. It defines negotiable instruments as documents that can be freely transferred through endorsement and delivery, including promissory notes, bills of exchange, and cheques. The three main types recognized are cheques, bills of exchange, and promissory notes. Over time, additional instruments like bank drafts and traveller's cheques have emerged. Key features of negotiable instruments are their free transferability, the ability to transfer free of defects, and the holder's right to sue. The document then provides details on cheques, bills of exchange, and compares the two. It outlines the essential elements of a cheque and provides examples of different cheque types.
The document discusses various types of negotiable instruments including promissory notes, bills of exchange, and cheques.
[1] A promissory note is a written promise by a maker to pay a specified sum of money to the payee. A bill of exchange contains an unconditional order by the drawer for the drawee to pay a specified sum to the payee. A cheque is a type of bill of exchange that is drawn on a bank and payable on demand.
[2] The key parties for each instrument are identified - maker and payee for promissory notes, drawer, drawee, and payee for bills of exchange. Cheques have a drawer, specified bank
This document discusses various payment methods including cheques, credit cards, debit cards, and cash cards. It describes the key characteristics of cheques such as being drawn on a banker, payable on demand, and containing a certain money amount. It also discusses crossed and open cheques, components of a bill of exchange, protections provided to paying and collecting bankers, negotiation of cheques, dishonor of cheques due to insufficient funds, and the different types of cards including their distinguishing features.
This document summarizes a seminar on cheques given by five students. It defines a cheque, outlines the essential features of a valid cheque, and describes the different types of cheques. It also discusses endorsement of cheques, the roles and responsibilities of a paying banker and collecting banker, circumstances for dishonoring a cheque, and the protections provided to paying and collecting bankers under Indian law.
The document discusses the obligations and precautions of banks when honoring customer cheques under the Negotiable Instruments Act. It explains that banks must honor cheques drawn by customers if there are sufficient funds, and outlines various precautions banks must take regarding genuineness of cheques, customer accounts and balances, and legal restrictions. Precautions include verifying signatures, dates, amounts, endorsements, checking for stops on payments or legal orders, and only making payments that constitute "payment-in-due-course".
This document provides an overview of negotiable instruments under the Negotiable Instruments Act 1881. It defines key terms like promissory note, bill of exchange, cheque, inland and foreign instruments. It describes the essential elements and parties involved in promissory notes, bills of exchange and cheques. It also discusses negotiation, crossing of cheques, presumptions related to negotiable instruments and endorsement.
Negotiable Instruments Act 1881
Significance of negotiable instruments
Features of negotiable instruments
Cheque Meaning
Types of Cheque
MICR – Meaning
Crossing
Crossing of Cheque
Holder in due course
Payment in due course
Endorsement
Paying Banker
Dishonour of Cheque
Statutory protection to a paying Banker
Material Alteration
Statutory protection in case of a Materially altered Cheque
Collecting Banker
Duties and Liabilities of Collecting Banker
Protection of Collection Banker
This document summarizes the key aspects of negotiable instruments under Indian law. It defines negotiable instruments as documents transferable by delivery that create rights, including promissory notes, bills of exchange, and cheques. It outlines the essential elements and parties involved in promissory notes, bills of exchange, and cheques. It also discusses negotiation, endorsement, liability of parties, and other important concepts regarding negotiable instruments.
Banking instruments include cheques, demand drafts, letters of credit, and debit/credit cards. Cheques are orders to a bank to pay a specified amount to a payee and come in various types like bearer, order, crossed, and post-dated cheques. Demand drafts are similar but always payable to order and issued by a bank with charges. Electronic funds transfer systems like NEFT and RTGS facilitate domestic transfers in batches or real-time respectively, identified by IFSC or MICR codes. Core banking solutions allow banks to store customer information centrally for real-time access across branches.
A document or a piece of paper that guarantees payment of a certain amount of money to a specified person (payee) either immediately upon demand or at a predetermined period is known as a negotiable instrument. It is a document made up of a contract that ensures unconditional payment of money that can be paid now or later. In other words, any document that grants ownership over a quantum of money as well as can be transferred by delivery is addressed as a negotiable instrument. To govern the use of negotiable instruments in India, the Negotiable Instrument Act of 1881 was defined. On March 1, 1881, the Act of 1881, came into force and extends to the whole of India. It is “An Act to define and amend the law relating to Promissory Notes, Bills of Exchange and Cheques.” The Negotiable Instrument Act consists of a total of 147 Sections that are spread over 17 chapters. As per the Negotiable Instrument Act of 1881, no phrase appropriately defines ‘negotiable instrument’ whereas Section 13 of the Act states that “A negotiable instrument means a promissory note, bill of exchange or cheque payable either to order or to bearer.”
Bill of exhange and promissery notes and cheques by tahseen ullah- 01Tahseen Ullah Shah
There are two main types of financial instruments discussed in the document: promissory notes and bills of exchange.
A promissory note contains an unconditional promise by the maker to pay a certain sum of money to the payee. It must be in writing, signed by the maker, and include an unambiguous promise to pay a definite amount of money in legal tender.
A bill of exchange is an unconditional order by the drawer for the drawee to pay a certain sum of money to the payee. It involves three parties: the drawer, drawee, and payee. While a promissory note only requires two parties: the maker and payee.
The document also discusses cheques
This document defines and describes different types of negotiable instruments such as promissory notes, bills of exchange, and cheques. It explains that negotiable instruments are documents guaranteeing payment of a specific amount of money on demand or at a set time. Common types include promissory notes, bills of exchange, and different kinds of cheques like bearer cheques, order cheques, crossed cheques, and post-dated cheques. The document also outlines key characteristics of negotiable instruments, such as being in writing, specifying an amount and date, and allowing free transfer of rights to the holder.
Banking instrument is an instrument in composing containing an unqualified request, tended to a financier, sign by the individual who has kept cash with the investor.
Negotiable instruments are written documents that entitle the holder to a sum of money. There are three main types: promissory notes, bills of exchange, and checks. A promissory note contains an unconditional written promise by the maker to pay a specified sum to the payee. A bill of exchange is an unconditional order in writing from the drawer to the drawee to pay a specified sum to the payee. A check is a written order from a depositor to their bank to pay a specified sum to the payee or bearer on demand.
Negotiable instruments are written documents that entitle the holder to a sum of money. There are three main types: promissory notes, bills of exchange, and checks. A promissory note contains an unconditional written promise by the maker to pay a specified sum of money. A bill of exchange is an unconditional order in writing from a drawer to a drawee requiring payment to a payee. A check is a written order from a depositor to a bank to pay a specified sum to a payee on demand.
The document discusses negotiable instruments under Indian law. It defines negotiable instruments as written and signed documents that entitle the holder to a specified sum of money and are freely transferable. The three main types of negotiable instruments are promissory notes, bills of exchange, and cheques. Promissory notes contain an unconditional promise to pay, bills of exchange contain an order to pay, and cheques are drawn on a bank and payable on demand. Key characteristics include being in writing, containing an unconditional obligation, and specifying a certain sum payable. Negotiable instruments can be transferred between parties either through negotiation (delivery or endorsement) or assignment.
The document provides information on negotiable instruments under Indian law, specifically comparing bills of exchange and cheques. It defines bills of exchange and cheques, outlines the key parties involved for each (drawer, drawee, payee), and describes some of the distinguishing characteristics between the two types of negotiable instruments such as bills of exchange can be drawn on anyone while cheques must be drawn on a specified banker, and cheques are always payable on demand.
These future transaction (credit) done with help of documents called as Negotiable Instruments. The word Negotiable means ‘transferable by delivery’ & the word Instrument means ‘written document’. types of negotiable instruments like cheque and its types, promissory notes and its features and bill of exchange. endorsement and it types. crossing of cheque.
The document discusses key concepts related to negotiable instruments under Indian law, including definitions of holder, holder in due course, and payment in due course. It also covers the different types of cheque crossing - general crossing, special crossing, restrictive crossing, and non-negotiable crossing. Students are assigned questions to differentiate between a holder and holder in due course, and between payment and payment in due course. They are instructed to email their responses with identifying details.
Similar to Principles and Practices of Banking module 2 (20)
Employee Welfare
EMPLOYEE WELFARE
Introduction
Types of Welfare Facilities and Statutory Provisions
EMPLOYEE GRIEVANCES
Employee Grievance procedure
Grievances Management in Indian Industry
DISCIPLINE
Meaning approaches to discipline
Essential of a good disciplinary system
Managing difficult employees.
INDUSTRIAL RELATIONS
Overview of industrial relations and industrial conflict
INDUSTRIAL DISPUTES
Preventive and settlement machinery
Collective bargaining
Industrial relations scenario: current issues and future challenges
Books referred - P. Subba Rao (Personnel and Human Resource Management), K. Ashwathappa (Human Resource Management)
Principles and Practices of Banking Module 5ARUNKUMAR7358
Banking Technology
Concept of universal banking
Home banking
ATM’s
Internet banking
Mobile banking
Core banking solutions
Debit, credit and smart cards
Electronic payment system
MICR
Cheque truncation
ECS
EFT
NEFT
RTGS
Books referred - Dr.Nirmala Prasad, K. Chandrasass j (Banking and financial system)& Mithani, Gordan (Banking and financial systems)
Principles and Practices of Banking Module 4ARUNKUMAR7358
Rural Banking
An introduction to rural banking
Rural banking system(RRB) in India
RBI policy & functions in rural banking
Financial inclusion and its current perspective
Microfinance
Trends
Issues & challenges
Microfinance institutions in India
Role of self-help groups
Books referred - Dr.Nirmala Prasad, K. Chandrasass j (Banking and financial system)& Mithani, Gordan (Banking and financial systems)
Principles and Practices of Banking module 3ARUNKUMAR7358
Accounts
Types of customer accounts
Procedure for opening an account
Risks in account opening
Closure loans and advances
Principle of lending
Different types of loans
Credit appraisal techniques
Credit management and credit monitoring
Books referred - Dr.Nirmala Prasad, K. Chandrasass j (Banking and financial system)& Mithani, Gordan (Banking and financial systems)
Principles & Practices of Banking module 1ARUNKUMAR7358
The document provides an overview of the banking system in India. It discusses the historical aspects of banking in India dating back to the 18th century. It then covers various topics related to the modern banking system such as the role and functions of the Reserve Bank of India, types of banks including public sector and regional banks, commercial banking, financial markets, debt and equity markets, and recent developments in the Indian financial system.
Employee Welfare
EMPLOYEE WELFARE
Introduction
Types of Welfare Facilities and Statutory Provisions
EMPLOYEE GRIEVANCES
Employee Grievance procedure
Grievances Management in Indian Industry
DISCIPLINE
Meaning approaches to discipline
Essential of a good disciplinary system
Managing difficult employees.
INDUSTRIAL RELATIONS
Overview of industrial relations and industrial conflict
INDUSTRIAL DISPUTES
Preventive and settlement machinery
Collective bargaining
Industrial relations scenario: current issues and future challenges
Books referred - P. Subba Rao (Personnel & Human Resource Managment) & K. Ashwathappa (Human Resource Management)
Training & Development
Training v/s development
Training v/s Education
Systematic Approach to Training
Training Methods
Executive Development
Methods and Development of Management Development
Career and Succession Planning
Performance Appraisal & Compensation
Performance Appraisal
Concept of Performance Appraisal
The Performance Appraisal Process
Methods of performance Appraisal
Essential Characteristic of an Effective Appraisal System.
Compensation
Objectives of compensation Planning
Job Evaluation
Compensation Pay Structure in India
Wage and Salary Administration
Factors Influencing Compensation Levels
Executive Compensation
Books referred - P. Subba Rao (Personnel & Human Resource Managment) & K. Ashwathappa (Human Resource Management)
Recruitment, Selection, Socialization & Retention
RECRUITMENT
Definition
Constraints and Challenges
Sources and Methods of Recruitment
New Approaches to recruitment.
SELECTION
Definition and Process of Selection.
PLACEMENT
Meaning
Induction/Orientation
Internal Mobility
Transfer
Promotion
Demotion and Employee Separation.
Books referred - P. Subba Rao (Personnel & Human Resource Managment) & K. Ashwathappa (Human Resource Management)
Human Resource Planning, Job analysis and design
Meaning
Process of Job Analysis
Methods of collecting job analysis data
Job Description and Job Specification
Role Analysis.
Human Resource Planning
Objectives
Importance and process of Human Resource Planning
Effective HRP
Books referred - P. Subba Rao (Personnel & Human Resource Managment) & K. Ashwathappa (Human Resource Management)
Human Resource Management
Introduction
Meaning
Nature
Scope
Major functions of HRM
Models of HRM
Importance and Evolution of the concept of HRM
HRM Vs. Personnel Management
Role of HR Manager
Skills and competencies of HR professionals
HRM’s evolving role in the 21st century
Books referred - P. Subba Rao (Personnel & Human Resource Managment) & K. Ashwathappa (Human Resource Management)
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
Independent Study - College of Wooster Research (2023-2024) FDI, Culture, Glo...AntoniaOwensDetwiler
"Does Foreign Direct Investment Negatively Affect Preservation of Culture in the Global South? Case Studies in Thailand and Cambodia."
Do elements of globalization, such as Foreign Direct Investment (FDI), negatively affect the ability of countries in the Global South to preserve their culture? This research aims to answer this question by employing a cross-sectional comparative case study analysis utilizing methods of difference. Thailand and Cambodia are compared as they are in the same region and have a similar culture. The metric of difference between Thailand and Cambodia is their ability to preserve their culture. This ability is operationalized by their respective attitudes towards FDI; Thailand imposes stringent regulations and limitations on FDI while Cambodia does not hesitate to accept most FDI and imposes fewer limitations. The evidence from this study suggests that FDI from globally influential countries with high gross domestic products (GDPs) (e.g. China, U.S.) challenges the ability of countries with lower GDPs (e.g. Cambodia) to protect their culture. Furthermore, the ability, or lack thereof, of the receiving countries to protect their culture is amplified by the existence and implementation of restrictive FDI policies imposed by their governments.
My study abroad in Bali, Indonesia, inspired this research topic as I noticed how globalization is changing the culture of its people. I learned their language and way of life which helped me understand the beauty and importance of cultural preservation. I believe we could all benefit from learning new perspectives as they could help us ideate solutions to contemporary issues and empathize with others.
STREETONOMICS: Exploring the Uncharted Territories of Informal Markets throug...sameer shah
Delve into the world of STREETONOMICS, where a team of 7 enthusiasts embarks on a journey to understand unorganized markets. By engaging with a coffee street vendor and crafting questionnaires, this project uncovers valuable insights into consumer behavior and market dynamics in informal settings."
In a tight labour market, job-seekers gain bargaining power and leverage it into greater job quality—at least, that’s the conventional wisdom.
Michael, LMIC Economist, presented findings that reveal a weakened relationship between labour market tightness and job quality indicators following the pandemic. Labour market tightness coincided with growth in real wages for only a portion of workers: those in low-wage jobs requiring little education. Several factors—including labour market composition, worker and employer behaviour, and labour market practices—have contributed to the absence of worker benefits. These will be investigated further in future work.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
Understanding how timely GST payments influence a lender's decision to approve loans, this topic explores the correlation between GST compliance and creditworthiness. It highlights how consistent GST payments can enhance a business's financial credibility, potentially leading to higher chances of loan approval.
1. Elemental Economics - Introduction to mining.pdfNeal Brewster
After this first you should: Understand the nature of mining; have an awareness of the industry’s boundaries, corporate structure and size; appreciation the complex motivations and objectives of the industries’ various participants; know how mineral reserves are defined and estimated, and how they evolve over time.
OJP data from firms like Vicinity Jobs have emerged as a complement to traditional sources of labour demand data, such as the Job Vacancy and Wages Survey (JVWS). Ibrahim Abuallail, PhD Candidate, University of Ottawa, presented research relating to bias in OJPs and a proposed approach to effectively adjust OJP data to complement existing official data (such as from the JVWS) and improve the measurement of labour demand.
How Does CRISIL Evaluate Lenders in India for Credit RatingsShaheen Kumar
CRISIL evaluates lenders in India by analyzing financial performance, loan portfolio quality, risk management practices, capital adequacy, market position, and adherence to regulatory requirements. This comprehensive assessment ensures a thorough evaluation of creditworthiness and financial strength. Each criterion is meticulously examined to provide credible and reliable ratings.
[4:55 p.m.] Bryan Oates
OJPs are becoming a critical resource for policy-makers and researchers who study the labour market. LMIC continues to work with Vicinity Jobs’ data on OJPs, which can be explored in our Canadian Job Trends Dashboard. Valuable insights have been gained through our analysis of OJP data, including LMIC research lead
Suzanne Spiteri’s recent report on improving the quality and accessibility of job postings to reduce employment barriers for neurodivergent people.
Decoding job postings: Improving accessibility for neurodivergent job seekers
Improving the quality and accessibility of job postings is one way to reduce employment barriers for neurodivergent people.
2. Banker-Customer Relationship
Debtor-Creditor relationship
Banks as a trustee
Anti-money laundering
Deposit products or services
Payment and collection of cheques and other negotiable instruments
2
Synopsis – Module 2
3. “Cheque is an instrument in writing containing an unconditional order,
addressed to a banker, sign by the person who has deposited money with
the banker, requiring him to pay on demand a certain sum of money only to
or to the order of certain person or to the bearer of instrument.”
Section 5 of the Indian Negotiable Instrument Act of 1881 defines the
cheque as “A bill of exchange drawn specially on a specified banker and
not on expressed to be payable otherwise than on demand”.
3
Cheques
5. 1. Bearer cheque - When the words "or bearer" printed on the cheque is not
cancelled, the cheque is called a bearer cheque. A bearer cheque is made
payable to the bearer i.e. it is payable to the person who presents it to the
bank for encashment.
However, such cheques are risky, this is because if such cheques are lost,
the finder of the cheque can collect payment from the bank. Bearer cheque
can be transferred by mere delivery; they need no endorsement.
5
6. Order cheque – The word ‘or order’ is written on the face of the cheque,
the cheque is called an order cheque.
Such a cheque is payable to the person specified their in as the payee, or
to any one else to whom it is endorsed (transferred), sign back on cheque.
6
7. Crossed cheque - A crossed cheque is a cheque that has been marked
specifying an instruction on the way it is to be redeemed. A common
instruction is for the cheque to be deposited directly to an account with a
bank and not to be immediately cashed by the holder over the bank
counter.
General crossing – No cash, only a/c, to named, or an endorsee
Special crossing - No cash, named bank,
Not negotiable crossing – Owner has highest authority
A/c payee crossing - A/c payee in any bank or Special crossing at bank
Negotiable instrument act 1881
7
8. Post-dated cheque - A post-dated check (or post-dated cheque) is a check
written with a future date. In other words, the date that appears on the
check is after the date when the check was written. Even with a future
date appearing on the check, the check could clear (be paid from) the
bank account prior to that date.
Anti-dated cheque – A cheque in which the drawer mentions the date
earlier than the date on which it is presented to the bank.
8
9. Stale cheque (Expired) - Check presented at the paying bank after a
certain period (typically six months) of its payment date.
Mutilated cheque - A cheque is said to be mutilated if it is torn into two
or more pieces. Such a cheque, if it presented for payment, will not be
paid by the banker unless the mutilation is confirmed by the drawer of
the cheque
Gift cheque - Gift Cheque is an instrument after duly purchasing the
same from a bank, payable to a person named therein.
These cheques can be encashed by the named person and got credited
to the named person's account. A small fee is generally collected by the
issuing banker.
9
10. Traveler cheque – It is secure money while travelling. They can be
exchanged into cash in any local bank of the country you visit and can be
used while paying in the shopping or expenses.
Blank cheque - a cheque that has been signed but does not yet have
the amount of money written on it. Eg banks use on giving loans.
Truncated cheque - Cheque truncation is a cheque clearance system that
involves the digitalization of a physical paper cheque into a substitute
electronic form for transmission to the paying bank. The process of
cheque clearance, involving data matching and verification, is done using
digital images instead of paper copies
10
11. The paying banker should take the following precautions before honoring a cheque
1. Proper form of cheque
2. Date of the cheque
3. Language
4. Crossing
5. Amount of check should be clearly in words & numbers
6. Sufficient funds
7. signature
8. Banking hours
9. Mutilated cheque
10. Countermanding order
11. Material alteration
11
Payment & collection of cheques
Source of info : Banking & Financial systems by ‘Dr.Nirmala Prasad & K.Chandrasdass J.Part-B’ PgNo 69
Material Alteration
Date
Amount
Place
Number of parties
Removal of crossing
Converting an order cheque in
to bearer cheque
12. Circumstances in which a banker should refuse payment:
1. Defective title
2. Notice of death, insanity or insolvency
3. Countermanding order
4. Garnishee order
5. By injunction
6. Notice of closure of accounts
12
Source of info : Banking & Financial systems by ‘Dr.Nirmala Prasad & K.Chandrasdass J.Part-B’ PgNo 73
13. Negotiable Instrument Act of 1881 Section 13 of N.I Act simply states that, “negotiable
instrument means promissory note, bill of exchange or cheque payable either to order or to
bearer.”
NI are documents that guarantee the payment of a specific sum of money, either on demand or
at a set time to a specific person. It is transferrable, the signed document can be transferred
from one person to another. The person who receives the payment, must be named or
otherwise indicated on the document.
The law recognizes only 3 kind of N.I namely
1. Promissory note
2. Bills of exchange
3. Cheque
Features of NI
1. Free transfer
2. Right to sue
3. No notice to transfer
4. Presumptions as to negotiable instruments
5. Credit of the party
13
Negotiable Instruments
Source of info : Banking theory law & practice by ‘Gordon & Natarajan’ PgNo 69
14. PROMISSORY NOTE
Section 4 of the Negotiable Instrument Act 1881 defines Promissory note as: “A promissory
note is an instrument in writing (not being a banker or a currency note) containing an
unconditional undertaking, signed by the maker, to pay a certain sum of money only to, or to
the order of, a certain person, or to the bearer of the instrument.”
14
Source of info : Banking & Financial systems by ‘Dr.Nirmala Prasad & K.Chandrasdass J.Part-B’ PgNo 47
Characteristics of promissory note
1. Instrument in writing
2. Unconditional undertaking
3. A certain sum of money only
4. Signed by the maker
5. The payer must be certain
6. Date of the promissory note
7. Rate of interest
8. Maturity
Parties of the promissory note
1. Drawer and Drawee
2. Holder
3. Payee
4. Acceptor
5. Endorser or Endorsee
15. BILL OF EXCHANGE
Section 5 of the Negotiable Instrument Act 1881 defines Bill of Exchange as: “An instrument
in writing containing an unconditional order, signed by the maker, directing a certain person
to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of
the instrument.”
15
Source of info : Banking & Financial systems by ‘Dr.Nirmala Prasad & K.Chandrasdass J.Part-B’ PgNo 50
Characteristics of Bill of Exchange
1. Instrument in writing
2. Unconditional undertaking
3. A certain sum of money only
4. Signed by the maker
5. The payer must be certain
6. Date of the bill of exchange
7. Rate of interest
8. Maturity
Parties of the Bill of Exchange
1. Debtor and Creditor
2. Drawer and Drawee
3. Acceptor
4. Holder
5. Endorser and Endorsee
16. CHEQUES
Section 5 of the Indian Negotiable Instrument Act of 1881 defines the cheque as “A bill of
exchange drawn specially on a specified banker and not on expressed to be payable otherwise
than on demand”.
16
Source of info : Banking & Financial systems by ‘Dr.Nirmala Prasad & K.Chandrasdass J.Part-B’ PgNo 52
Characteristics of cheques
1. Instrument in writing
2. Unconditional order
3. A certain sum of money only
4. Signed by the drawer
5. Payee must be certain
6. Date of the cheque
7. Amount
8. Specified banker
9. Payable on demand
Parties of the cheques
1. Drawee
2. Payee
3. Payee banker
4. National automated clearing
house. NPCI
17. 17
Deposit products or services
Retail Banking Product Portfolio
Deposit Loans & Adv Services
Fixed A/c
Savings A/c
Current A/c
Recurring A/c
NRI A/c
Corporate salary
A/c
Demat A/c
Minor A/c
Senior
citizenship A/c
Housing Loan
Personal Loan
Vehicle Loan
Educational
Loan
Professional
Loan
LAS &
Securities
Govt scheme
loans
Credit card
Debit card
Net banking
Mobile banking
Phone banking
ATM
Smart card’s
Cheque
18. Chart showing relationship b/w A Banker & A Customer
General Relationship Special Relationship
Not a
Depos
itory
Not a
Trustee
Not
an
Agent
Debtor
&
Creditor
Privileged Debtor Privileged Creditor
1.Express demand by the
credit necessary
2.Demand only at a
particular branch
3.Only during banking
hours
4.Get money from
customer without security
5.Law of limitation does
not apply
6.Can combine accounts
with the consent of the
customer
When the customer
acts as a creditor, he
acts as an unsecured
creditor. But, the
banker acts as a
secured creditor
Obligation
to honor
cheque
Banker’s
Lien
Duty to
maintain
secrecy of
his
customer
a/c
Right to
claim
incidental
charges
Right to
change
compou
nd
interest
Exemption
from law
of
limitation
act
Correct
Dishonor
Wrongful
Dishonor
No Liability
Nominal
Damage
Special
Damage
Loss of
Credit is less
Loss of credit
is greater
Particular General Conditions
(Banker’s lien is general)
1.No agreement inconsistent with
the right of lien
2.Property must be obtained
lawfully
3.Not for a specific purpose
Not an absolute one but
qualified
Grounds for disclosure
1.Under the compulsion
of law
2.Under the public
interest
3.Under bankers own
interest
4.Under the express or
implied consent of the
customer
Source of info : Banking & Financial systems by ‘Mithani & Gordan’ Part-B. PgNo 26
19. The word ‘Laundry’ literally means ‘Cleaning’. Metaphorically, money laundering
means “Cleaning of Money”. It is the process by which illegal funds and assets are
converted into legitimate funds and assets.
Money laundering as per section 3 of the Prevention Money Laundering Act
“Whosever directly or indirectly attempts to indulge or knowingly assists or
knowingly is a party indulge or knowingly assists or knowingly is a party or is
actually involved in any process or activity connected with the proceeds of crime
and projecting it as untainted property shall be guilty of offence of money
laundering.”
PROCESS OF MONEY LAUNDERING
Money laundering is a single process however, its cycle can be broken down into
three distinct stages namely
1. Placement stage
2. Layering stage
3. Integration stage
19
Anti-Money Laundering
Source: http://www.nja.nic.in/4.1.%20Paper-%20Money%20Laundering_1_%20Paridhi%20Saxena.pdf
21. Following are the various measures adopted all over the world for money laundering, even
though it is not exhaustive but it encompasses some of the most widely used methods:
1. Structuring deposits
2. Shell companies
3. Third-Party cheques
4. Bulk cash smuggling
Money Laundering generally refers to ‘Washing’ of the proceeds or profits generated from:
CRIMINALACTIVITIES
1. Kidnapping
2. Extortion
3. Bribery & corruption
4. Gambling, robbery, cheating
5. Counterfeiting & Forgery
6. Terrorist act
7. Smuggling (arms, people, goods)
8. Drug trafficking
9. Prostitution
21
Source: http://www.nja.nic.in/4.1.%20Paper-%20Money%20Laundering_1_%20Paridhi%20Saxena.pdf
22. Thus, the impact of money laundering can be summed up into the following points:
1. Potential damage to reputation of financial institutions and market
2. Weakens the “democratic institutions” of the society
3. Destabilizes economy of the country causing financial crisis
4. Give impetus to criminal activities
5. Policy distortion occurs because of measurement error and misallocation of resources
6. Discourages foreign investors
7. Causes financial crisis
8. Encourages tax evasion culture
9. Results in exchange and interest rates volatility
10. Provides opportunity to criminals to hijack the process of privatization Contaminates
legal transaction.
22
Source: http://www.nja.nic.in/4.1.%20Paper-%20Money%20Laundering_1_%20Paridhi%20Saxena.pdf