Paying Banker : Duties and Rights of Paying Banker

Paying Banker

What is a Paying Banker ?

As we already know that a bank is known to hold the money that it receives from its customer. But, the work of the bank isn’t just limited to it. There are many other functions of the bank. These banks are also responsible for paying at the place of its customer.

Now, you might think why will the bank pay for its customer? The bank will pay for its customer when the customer will write a cheque and submit it to the bank.

 The money that the bank pays is withdrawn from the customer’s account in the bank. The cheque is like an order which instructs the bank to pay the amount written on the cheque. Now, the paying banker is the person who receives this cheque in the bank. He or she has to check whether the check is valid or not.

They will verify signatures, dates, amounts etc and then took any further steps. They may also cancel the check if the amount written on the cheque isn’t available in the customer’s account.

Consider a situation where you wrote a check of 2 lakhs and submitted it to the bank. This check will be passed to paying banker. Now the paying banker will verify that whether the details written on the cheque are valid or not.

If the details are correct then, your transaction can be processed. But, for the withdrawal of 2 lakhs as written on the cheque, the balance of your bank account must be 2 lakhs or more than 2 lakhs. If the balance of your account is less than the amount written on the cheque,  the cheque will get cancelled.

What are the duties and rights of Paying banker ?

A paying banker has to check various things before the final transaction takes place. He or she will be responsible if there is any wrong thing found about the check after the final transaction. Therefore, he/she needs to be very careful while verifying the cheques. Here, we will discuss the duties of a paying banker.

•    The paying banker has to verify whether the signature on the cheque is done by the account holder or not. The signature on the check must be done by the person who has an account in the bank, only then the check is considered valid. If the signature is fake, the paying banker can take strict action against it.

•    The paying banker has to verify that the account holder’s name written on the cheque is still valid. It means his account must be active. For, this they may check the documents available in the bank related to the account holder. If the account is not valid, the transaction cannot be processed.

 

•    The amount written on the check must be available in the account holder’s account. If the amount isn’t available then, the paying banker can stop the transaction. Therefore the account of account holder’s account must have enough balance for the transaction.

There are many other such duties of a paying banker.

 

What are the functions of Paying banker?

The work of a paying banker is never easy. He /she has to be very active while checking the cheques they receive from their customer. For example, suppose a paying banker get a cheque signed by one of its customers.

The duty of the paying banker is to verify all details properly and then take any further steps. If the details written on the cheque are correct then,  the paying banker will stop the transaction. But if the details are correct and the account holder has sufficient balance,  then the transaction will be processed.

Source: https://exactend.com/paying-banker-duties-rights.html