Lecture Retail and merchant banking – Lecture 24

After studying this chapter you will be able to understand: features of a cheque, types of cheques, bearer cheque, order cheque, anted – dated cheque, stale chequ, mutilated cheque, post-dated cheque,...

Revise Lecture 24

Cheques

6 Signature of the drawer

7 Routing / account number

8 Fractional routing number

A cheque Is generally valid indefinitely or for six months after the date of issue unless

otherwise indicated, this varies depending

on where the cheque Is drawn

Cheques

‘Features ofa

Cheque

Cheques

Features of a Cheque

* Some important features of a cheque are given below;

1 ACheque must be In writing and duly

Signed by the drawer

2 It contains an unconditional order

3, Itis Issued on a specified banker only

‘ Types of Cheques

Cheques

Types of cheques

- Acheque used to pay wages due Is

referref to as a payroll cheque

- Atraveller’s cheque Is designed to allow

the person signing It to make an

unconditional payment to someone else

as a result of paying the account holder for that privilege These cheques can usually

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Cheques

Types of a Cheque

- Acheque issued by a bank on Its own

account for a customer for payment toa

third party is called a Cashier’s cheque A Treasure’s cheque, a Bank cheque, ora

Bank draft

- Acheque issued by a bank, but drawn on

an account with another bank, Is a teller’s

cheque In addition banks often sell money orders

Cheques

Open Cheque:

- Acheque Is called ‘open’ when it Is

possible to get cash over the counter at the bank The holder of an open cheque can do the following;

- Receive its payment over the counter at the bank

- Deposit the cheque In the bearer’s

account

- Cheques are usually crossed as a

measure of safety

Cheques

Bearer Cheque

Cheques

Bearer Cheque

- A bearer cheque Is payable to any person who presents It for payment at the bank

counter It can be transferred by mere

delivery and requires no endorsement

- Acash cheque or a bearer cheque ora

self cheque does not bear the name of the payee

* It simply states that payable to ‘bearer’ or

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Cheques

Order Cheque

Cheques

Order cheque

- An order cheque Is a cheque that Is

payable to a particular person

* In such a cheque, the word ‘bearer’ may

be cut out or cancelled and the word

‘order’ may be written

- The payee can transfer an order cheque to someone else by signing his or her name

on the back ot It

Anted — dated Cheque

Cheques

Ante -— dated Cheque

- This is a cheque in which the drawer

mentions the date earlier to the date of

presenting It for payment

- For example, a cheque issued on May 20,

2007 may bear a date May 5, 2007

Cheques

- Stale Cheque

- Ajter expiry of that period, no payment will

be made and It is then called a stale

cheque

* Find out from your nearest bank the

validity period of a cheque

Cheques

‘ Mutilated Cheque

Cheques

Mutilated Cheque

- In case a cheque Is torn into two or more pieces and presented for payment, such a cheque Is called mutilated cheque

* The bank will not make payment against such a cheque without getting confirmation

of the drawer

- The bank may make payment against

such a cheque if Its is torn at the corners

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Cheques

- Post-dated Cheque

Cheques

Post-dated cheque

* This is a cheque on which the drawer mentions a date which is subsequent to the date on which it is presented

- For example, if a cheque presented on May 8, 2007 bears a date of May 25,

2007, it is a post-dated cheque

* The bank will make payment only on or after May 25, 2007

- Parties to a Negotiable

Instruments

Negotiable Instrument

- Holder in Due Course

Negotiable Instrument

Holder in Due Course

Holder in due course means any person

who for consideration becomes the

possessor of a promissory note, Dill of

exchange or cheque payable to bearer or the payee or endorser thereof if payable to order, before the amount mentioned therein becomes payable and without sufficient

cause to believe that any defect existed In the title of the person from whom he

Negotiable Instrument

Holder in Due Course

The definition specifies that:

The holder has to possess the instrument

In due course and before the date of

maturity

2 The consideration must be legal and

adequate

3 There should be sufficient cause to

believe that he possessed the instrument

Negotiable Instrument

Holder in Due Course

4 The holder should not become the holder

in due course even if he received the

Instrument without any suspicion or

knowledge about such defects

5 Notice of any defect in the title

Subsequent to the date of acquisition should not affect the rights of the holder in due

course

Lecture 25

- Banker and

Customer

Banker and Customer

The Banker

- The role of a banker is one filled with

multiple duties and responsibilities

- There are different types of bankers and each one Is unique In his own way

- Some of these individuals work for large corporate conglomerates while others

work for small town financial institutions

Banker and Customer

- The duties concerning saving, loans,

taxes, Investment and securities are all

within the job realm of a banker

Banker and Customer

- The Banker

He will provide financial assistance to the client In accordance with their needs

Banker and Customer

- The Customer

Banker and Customer

The Customer

* In banking, a customer is Someone who

makes use of or receive the services of

the bank

- The word customer historically derives

‘custom’ meaning habbit, so a customer was someone who frequented a particular shop, who made it a habbit to purchase

goods there

Banker and Customer

Duties of a Customer

All banks carry out the customer’s

instructions in a business-like manner

In return, the customer has special duties of cooperation and other duties of care

A customer Is bound to the following;

Banker and Customer

Banker and Customer

- Duties of a Customer

4 Use of forms

5 Express notification of any special

Instruction

6 Notification of time limits and dates

7 Complaints to be made immediately

8 Checking of confirmation of the bank

9 Liability arising from neglect of duty