Page 176 - DCOM208_BANKING_THEORY_AND_PRACTICE

Unit 10: Negotiable Instruments

(b) Bankers intention to close the account Notes
i. The banker can close the account of the customer when he finds
ii. The account is not remunerative
iii. When the customer is not a desirable one.

(c) Customer’s death-as soon as the bank gets notice of the death of the customer, he
should immediately stop the operations of the account. It is because death puts an
end to the contract.
(d) Customers insanity-the banker should stop the operation of his account .the banker
should apply for the official copy of Lunacy Order.

(e) Customers insolvency-when the banker comes to know that the customer is insolvent
than the bank will close the account of the customer.
4. Right to appropriate payments: The banker has the right to appropriate the money
deposited by a customer to any one of the loan account due by him. The appropriation
arises when the customer has more than one account one showing the debit balance and
the other with a credit balance. The customer is given the first option to decide the account
to which the amount should be credited. If the customer fails to indicate his choice then the
banker has every legal right to credit the amount in any one account of that customer.

Liabilities of Paying Bankers

Following are the liabilities of paying bankers:
Checking the signature of the drawer.

Verification of the genuineness of the instrument.
Payment not stopped by the A/c holder
Holder’s title on the cheque is valid.
A/c is not dormant one.

A/c holder is not bankrupt or deceased.
A/c is not under subject of liquidation process.
No ‘Guernsey Order’ is issued by court.
Properly endorsed.

Cheque is not drawn beyond limit fixed by the drawer is respect of amount.
Instrument being presented is crossed.
Instrument is not state or post dated.
No material adjustment is made.

Sufficient balance in the A/c
Liabilities of Collecting Bankers

Following are the liabilities of collecting bankers:

1. Acting as agent: While collecting an instrument, the Bankers works as agent of his
customer. As an agent he has to take some steps & precautions to protect the interest or his
customer as a man of ordinary discretion would take to safeguard his own interest.

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