revise lecture 24. cheques cheques generally contain; 1.place of issue 2.cheque number 3.date of...
TRANSCRIPT
Revise Lecture 24
Cheques
• Cheques generally contain;1. Place of issue2. Cheque number3. Date of issue4. Payee5. Amount of currency
Cheques
6. Signature of the drawer7. Routing / account number8. Fractional routing numberA 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 of a Cheque
Cheques
Features of a Cheque• Some important features of a cheque are
given below;1. A cheque must be in writing and duly signed
by the drawer.2. It contains an unconditional order.3. It is issued on a specified banker only.
• Types of Cheques
Cheques
Types of cheques• A cheque used to pay wages due is referref to as
a payroll cheque.
• A traveller’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 be replaced if lost or stolen.
Cheques
Types of a Cheque• A cheque issued by a bank on its own account
for a customer for payment to a third party is called a Cashier’s cheque. A Treasure’s cheque, a Bank cheque, or a Bank draft.
• A cheque 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
• Broadly speaking, cheques are of four types;1. Open cheque2. Crossed cheque3. Bearer cheque4. Order cheque
Cheques
Open Cheque:• A cheque 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.• Pass it to someone else by signing on the back
of a cheque
Cheques
Crossed Cheque:• The risk from an open cheque can be avoided
by issuing a crossed cheque. • The payment of such a cheque is not made
over the counter at the bank. It is only credited to the bank account of the payee.
• Cheques are usually crossed as a measure of safety.
Cheques
Crossed Cheque:Crossing is made by drawing two parallel
transverse lines across the face of the cheque with or without writing ‘Account payee’ or
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.
• A cash cheque or a bearer cheque or a self cheque does not bear the name of the payee.
• It simply states that payable to ‘bearer’ or to ‘self’ or to ‘cash’.
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 of 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
Cheques
Stale Cheque• A cheque which is issued today must be
presented at bank for payment within a stipulated period.
• After 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 and no material fact is erased or cancelled.
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
• The important parties to negotiable instruments are;
Promissory note: 1. Maker2. Payee3. Endorser4. Endorsee
Negotiable Instrument
Bill of Exchange:1. Drawer2. Drawee or acceptor3. Endorser4. Endorsee
Negotiable Instrument
Valid Acceptance:• The essential requirements of a valid
acceptance are that it;1. Must be written2. Must be signed3. Must be completed by delivery
Negotiable Instrument
• Holder in Due Course
Negotiable Instrument
Holder in Due CourseHolder in due course means any person who for
consideration becomes the possessor of a promissory note, bill 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 received the title.
Negotiable Instrument
Holder in Due CourseThe definition specifies that:1. 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 in good faith and with reasonable care.
Negotiable Instrument
Holder in Due Course4. 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 Banker• Each banker has his own set agenda in his role
as a banker. • A banker is an individual (or an institution) who
advises his clients with regard to financial matter.
• The duties concerning saving, loans, taxes, investment and securities are all within the job realm of a banker.
Banker and Customer
• The BankerHe 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 CustomerAll 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
Duties of a Customer
1. Communication of important information and changes.
2. Unambiguous information in orders and instructions
3. Care in transmission of particular orders
Banker and Customer
• Duties of a Customer4. Use of forms5. Express notification of any special instruction6. Notification of time limits and dates7. Complaints to be made immediately8. Checking of confirmation of the bank9. Liability arising from neglect of duty