DUTIES OF PAYING BANKER You know that a banker has the obligation to return the money to the customer, when it is demanded by the customer. The banker receives the money from the customer as deposit. Therefore, the banker must make the payment of the cheques drawn by the customer. The banker, who is under obligation to pay customers’ cheques, is known as paying banker. While making payment, the paying banker must be cautious. This is because he is legally liable if he pays a cheque when the customer have insufficient fund in his account. At the same time, if he does not pay a cheque when the customer has sufficient funds in the account, he will be held responsible for any loss suffered by the customer for the wrongful act of the banker. Thus, the paying banker must be careful in honouring the cheques of the customer. In this connection, let us discuss the duties of the paying banker. The duties include the precautions that the paying banker must take at the time of honouring the customers’ cheques. Duties or precautions of paying banker- On receiving the cheque, the paying banker must see that the cheque must be in the proper form as supplied by the banker. The cheque should not be torn or mutilated. The paying banker must see the account against which the cheque has been drawn is maintained in the same branch. If the cheque is drawn against an account which is maintained in some other branch of the bank, the paying banker should refuse to pay the amount. The paying banker must be cautious regarding the time of presentation and payment date of the cheque. A cheque must be presented for payment within the normal business hours of the bank. Moreover, the banker must see the date for payment. Because a cheque can be honoured only on the date of payment as mentioned on the cheque or within six months from that date. At the same time, a cheque without date or a post- dated cheque before the due date can not be paid. Another aspect that the paying banker must observe is that the amount of the cheque must be written both in figures and in words and they must be similar. The paying banker must be cautious about the material alteration of the cheque. Material alteration means altering the contents of the cheque to make it invalid. If such material alteration is visible, the banker can make the payment of the cheque only after getting full signature of the customer at the places of material alteration. Signature of the customer is another important aspect where the banker must exercise due care. The signature of the customer on the cheque must be similar with the specimen signature that he has given at the time of opening the account. The paying banker must also see whether the cheque is an open cheque or a crossed cheque and accordingly make the payment. The paying banker must also be careful about the validity of the endorsement, if any, on the cheque.
Posted on: Wed, 09 Oct 2013 02:53:51 +0000