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Tuesday, 23 August 2011

On which grounds a banker can terminate the payment of a cheque



On the following grounds a banker can terminate the payment of a cheque :

1. Countermand Of Payment :-
The drawer of a cheque can stop the payment of a cheque by informing the banker either on the telephone or through message. The banker will suspend the payment.


2. Customers :-
The banker can refuse to make the payment of a cheque if his balance is not sufficient to cover the cheque. While over draft facility case is different.


3. Payment In Due Course :-
The banker can refuse to make the payment of the cheque which bank is not according the instructions of the drawer or it is presented after the office hours.


4. Marking Cheques :-
A drawer may get a particular cheque marked from his banker. The banker will retain the amount in order to honour the marked cheques. Bankers always honours these cheques first and other cheques at the end.


5. Forgery Of the Drawer's :-
If the bank is doubtful about the signature of the cheque then he will refuse the payment.


6. Notice of the Customer's Death :-
The banker will terminate the payment of a cheque if he receives the notice of the customer's death.


7. Making or Receiving Order :-
If the court is satisfied that the customer appears to be insolvent. It will issue a receiving order and banker will refuse to make the payment.


8. Insolvency :-
If the court is satisfied that the customer appears to be insolvent. It will issue a receiving order and banker will refuse to make the payment.


9. Trust Funds :-
If the banker is satisfied that his customer by breach of trust is crediting the trust funds to his account the banker may refused to make the payment.


10. Torn or Cancelled Cheque :-
If the cheque is torn or cancelled the banker may refuse the payment for a cheque.


11. Out-Dated :-
If the cheque is post-dated the bank will honour the cheque.


12. Difference in Words and Figures :-
If the amount stated on cheque differs from the amount expressed in figures, the banker will refuse the payment of a cheque.


13. Lost or Stolen :-
If a cheque is lost or stolen and drawer informs the bank well in time, the bank will refuse to honour the cheque.


14. Irregular Endorsement :-
If the endorsement in the cheque is irregular the bank will not make the payment of the cheque.


15. Joint Account :-
If the cheque is not drawn according to the account holders instructions, or at the death of one party, the banker can refuse to make the payment, and he will decide about the payment according the instructions.


16. Partnership Account :-
The banker will not make the payment unless the cheque is signed by all the partners. The death of partner dissolves the partnership.


17. Company Account :-
At the time of opening an account company provides a copy of resolution passed by the directors. According to the resolution authorized person can operate the account. If unauthorized person draws a cheque the banker will dishonour the cheque.

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