Presentations text content in Collection of cheques
Collection of chequesSlide2
A collecting banker is one who has assumed duty of collecting the proceeds of a cheque for the customer or himself.
When he collects the proceeds for the customer, he acts as his agent.Slide3
Duties of a collecting banker
as his customer’s agent in the matter, the banker is bound to use reasonable skill, care and diligence in presenting and securing payments of
entrusted to him for collection and placing the proceeds to his customer’s account, or taking such other steps as may be proper to secure the customer’s interest.
It is therefore the duty of the collecting banker to collect and place the proceeds of both
and drafts for his customer’s account.Slide4
Establish the bona fides of the account holder.
The banker must make enquiry to ascertain the bona fides of the person who desire to become his customer. If the banker omits to do so or does not take proper introduction or reliable reference from the proposed customer he will be committing the breach of duty.Slide5
Examination of crossings: the collecting banker must examine minutely all the crossings and
handed over to him for collection.
If the customer gives him a
crossed specially to any banker, he should not accept it for collection.
crossed “account payee only” should be collected only for the payee named in the
and for no one else.Slide6
Examination of indorsements:while making payment the paying banker normally relies on the collecting banker’s discharge. Therefore, it is very important duty of the collecting banker to examine all the indorsements and other material parts of all cheques and drafts before presenting them for collection, and giving the discharge on the instruments.Slide7
: if a
is dishonored on presentation, it is the duty of the collecting banker to inform his customer accordingly.
If the banker fails to do so the customer may ask him for compensation for any loss which he would have suffered because of not being informed of dishonor of the
Moreover, the banker is entitled to debit a dishonored
to his customer’s account in case he has already credited it.Slide8
should be specially crossed when it is received for collection by the collecting banker. If a
received by the banker is not crossed generally, he must ask the customer to cross it. Special crossing is also necessary and is done by the banker himself. The collecting banker is not protected in case of open
The collection must be done in good faith and without negligence. ’Good faith’ for a banker means acting honestly as a collecting banker; and it is assumed to be operative unless proved otherwise. In order to prove having collected without negligence, a banker should take all such steps which a prudent businessman would take to guard himself against adverse effects.Slide10
If a banker ignores the stop-payment instructions received from his customer; accepts irregular indorsements on the instruments; opens a current or saving account without proper documentation; or ignores the “account payee” crossing to collect proceeds for a person otherwise than a payee, he will be acting with negligence.Slide11
In the big towns of Pakistan many commercial banks operate.
As there are various banks so are there customers. The use of cheques has become very convenient for making payments.
These cheques are drawn on different banks by different customers of the banks.Slide12
Mr Saeed has his account at MCB. He gives a crossed cheque to Mr Nadeem who deposits it at HBL where he has the account and the amount is credited after the cheque is cleared.
The question of how the HBL gets the funds from MCB is the essence of “clearing system”.Slide13
The bankers clearing house therefore is an institution set up for the purpose of settling quickly the claims by one bank against the others.
Representatives from each bank which operates in the same town will meet once daily. They will exchange instruments drawn on them by their various customers.Slide14
The banking function in which cheques of other banks are collected in to our customers accounts
SBP or NBP(where SBP is not available) acts as the clearing agent between the banks.
All banks have their account with the SBP/NBP for clearing the balances.
Function completes in 2 days.Slide15
Each bank after collection of all the cheques send them to their respective branches for clearance.
The net difference of cheques received and sent to each bank are settled on the same date between the banks after settling the returned and paid cheques.Slide16
Cheques issued by our branch’s account holders to others who are maintaining their account in some other banks/branches.
These cheques are presented to our branch for collection.Slide17
Cheques issued by other banks/ branches account holders to our branch’s account holders.
These cheques are presented to other banks/ branches for collection.Slide18
is to be checked for its validity.
is crossed but not specially crossed to any other bank.
is drawn on a local bank.
is not mutilated or torn.
There is no unauthorized alterations in the
is not post dated or stale.
The amount in words and figures is the same.
should not bear crossing or clearing stamp of another bank/branch.
In case of heavy amount
care must be exercised if the account is new or not satisfactorily maintained or if average balance is not satisfactory.Slide19
After verification the collecting bank will cross the instrument specially in its own name.
The cheque will be stamped with clearing stamp.
The clearing date will be the next working date.
A confirmation stamp for payee’s account credited will be affixed on the reverse of the cheque.
Outward clearing are the funds deposited by our customers in their accounts.
Customer accounts are given provisional credit i-e funds cannot be drawn.
Clearing returns are received late in the evening or in the morning of next day.
First thing is to debit the accounts in which instruments have been returned unpaid.Slide20
Instruments drawn on our branch are presented at our counters in the morning before the start of the public dealings.
Instruments are to be cleared on priority basis.
All instruments are payments from our branch, these have to be debited to customers accounts against the credit to main branch’s principle account.(HO account).Slide21
The branch does not initiate separate entries for inward/outward clearing but the difference of outward and inward clearing is vouched as per schedule received along with the clearing.
If outward clearing is excess than inward principle office debit voucher is vouched and vice versa.Slide22
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