What Is The Duties And Responsibilities Of Paying And Collecting Banker?


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The paying banker is the bank whose name is printed on a given cheque. This bank pays the specified amount by the cheque to the collecting banker and withdraws that amount from the customer's account. This is only done if the customer has sufficient funds within their account in order to enable the transaction. It is also the duty of the paying banker to examine the cheque and ensure that it has been properly signed, the endorsements are correct and that the cheque is generally in order. In the case of bills, it is part of the paying banker's duty from instruction by the customer to pay them. Otherwise the banker is not legally required to do so. The paying banker is considered a party to a given cheque as they are considered the drawee; however a bill is merely left with the banker to take care of and has no part in it.

The responsibility of a collecting banker is to collect the amount specified on a cheque and/or bill from a paying banker. This amount is then deposited into the customer's account. No banker is under any legal obligation to collect money from other banks via cheques given by the customer, however most modern banks do perform this service.

It is part of both bankers' duties to act with vigilence and in good faith in order to gain the protection of Section 82 of the Bills of Exchange Act.

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