A RESPONSIBILITY OF PAYING BANK
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Principles and Practices of Banking — JAIIB.
One-liners from this chapter
Free sample — 8 of 66 rapid-fire Q&A cards.
What is the primary responsibility of a paying bank when a cheque is presented for payment?
The paying bank must verify the genuineness of the cheque, ensure the drawer's signature matches, and confirm sufficient funds exist before making payment.
What is the effect of a court order of injunction on the paying bank's authority to pay a cheque?
Bank must stop payment immediately upon receiving injunction order.
Under which section of the Negotiable Instruments Act is a paying bank protected when it pays a crossed cheque in due course?
Section 128 of the Negotiable Instruments Act, 1881 protects the paying bank when it pays a crossed cheque in good faith and without negligence.
What is the paying bank's duty when a cheque is presented with two different crossing instructions?
Bank must follow the more restrictive crossing and pay accordingly.
What does 'payment in due course' mean under the Negotiable Instruments Act?
Payment in due course means payment made in accordance with the apparent tenor of the instrument, in good faith and without negligence, to the person in possession under circumstances that do not afford reasonable grounds for believing such person is not entitled to receive payment.
Under which section of the Negotiable Instruments Act can a paying bank claim protection for paying a crossed cheque to a banker?
Section 128 of the Negotiable Instruments Act, 1881 provides protection.
What is the liability of a paying bank if it honours a forged cheque?
The paying bank bears full liability for paying a forged cheque as the forgery is treated as a nullity and the bank cannot debit the customer's account for such payment.
What is the paying bank's obligation when a cheque is presented outside banking hours?
Bank is entitled to refuse payment if presented outside banking hours.
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