WELCOME

1. WELCOME

2. TOPIC: BANKING DATE: PRESENTED BY: Dr. S. K. KANNAN, M.B.A., M.Com., M.Phil., Ph.D., Head Of The Department.

3. Introduction • Banking is an institution which accepts deposits from public and who lends money to the public and which perform banking functions, it has changed something various aspects in our life the world at large is rapidly entering into the NET AGE

4. Defintion • According to sec5(b) of banking Regulation act. “Accepting for the purpose of lending and investment of deposits of money order or otherwise and withdraw ably by cheque, draft order or otherwise.

5. Relationship between a banker and customer • Any dispute between the two parties can be settled only on the basic of the nature of the existing relationship between the two. Hence it is imiperative that one should know the exact relationship between the banker and the customer. This relationships falls down under tow broad categories, namely: I General relationship II Special relationship.

6. The general relationship between the bank and customer • Debtor & creditor when a customer (debtor) deposits money with a bank (creditor), the customer becomes a lender and the banker becomes borrowers. As such the relationship is that a debtor and creditor. In is general relationship between a banker and his customer some important are, I The banker is the debtor of the customer with obligation to honour a cheque his customer’s cheque drawn upon his balance. II When the banker lends money to his customer the customer becomes the debtor and the banker ,the creditor

7. Principal and agent In some situations the banker serves as agent of the customer(principal). Some of the agency activities of a banker are specified I collecting cheques on behalf of the customer II collecting dividends and bills of exchange III acting as an attorney, representative or executor of a customer. IV Buying and Selling securities on behalf of his customer.

8. Bailor and bailee • Bailment is the delivery of goods by one person to another for some purpose upon his a contract that they shall when the purpose is fulfilled be returned or disposed of according to the directions of the person delivering them. The person delivering the goods is called the bailor and the person to whom these are delivered is called the bailee.

9. Special relationship between the banker and his customer • Banker’s obligation to honor the cheques • Baker’s lien • Banker’s duty to maintain secrecy of customer’s accounts • His right in respect of combining accounts • Banker’s right to set-off

10. Obligation to honor cheques • According to sec 31 of the negotiable instruments act 1881, every banker must honor the cheques drawn on it by a customer provided: • The customer has sufficient amount of balance to his account with the banker • The funds are properly applicable to the payment of such cheque. • The banker has been duly required to pay; • The cheque has been presented to the baker with a reasonable time • No prohibition order of the court or any other competent authority is standing against the account of the customer.

11. Banker lien • A lien may be defined as the right to retain property belonging to debtor until he is discharged of his debt due to the retainer (creator) of the property. • The banker’s lien refers to the right of banker over such of his customer’s securities as may come into his possession in the ordinary course of business. • According to Sec.171 of the Contract Act a banker has a general lien on cash, cheques, bills of exchange and securities deposited with him

12. Secrecy of customer’s accounts • It is an obligation on the part of banker to maintain secrecy about the customer’s accounts. The banker must not disclose any information pertaining to the customer to any one. But there are certain exceptions. they are;  where such disclosure is required by law.  where such disclosure is in publics interest to disclosure  where disclosure is made by the express or implied consent of the customer and  where such disclosure is permissible on account of banking practices

13. Banker’s right to combine accounts • The banker has right to combine several accounts kept by the customer at the same branch or different branch of the bank. The banker however, cannot combine in the personal account of a customer with a join account of a customer and some other person. Customer has no right to treat tow accounts as one.

14. Right to Set-Off • The banker can adjust a debit balance to a customer account with any balance standing to the customer’s credit. While doing so the banker give due notice to the customer. To exercise the right of set-off the following condition should be fulfilled; the debts are certain and are due. The right cannot be exercised against future debt\or contingent debts. there should not be any express or implied agreement to the contrary. the debit and credit balances are of the same person in the same capacity.

15. Negotiable instrument Act,1881 • Transferred from person to person towards settlement of monetary dues without a physical cash is called “Negotiability” • The paper used for such transaction is called a “Negotiable instrument”

16. Types of negotiable instruments • As stated earlier the Negotiable Instrument can be broadly can be broadly classified into two types, (I) Instrument Negotiable by law, and (II) Instrument Negotiable by custom or usage of trade.  In India law recognises only three instruments as negotiable and they are; • Promissory Note, • Bill of exchanges, and • Cheques.

17. Definition of Cheque • “Cheque is an written instrument containing an unconditional order, addressed to a banker, signed by the person who has deposited money with the banker, requiring him to pay a certain amount of money on demand or to the order of certain person or to the bearer of instrument.”

18. Parts of cheque

19. Features • It is an order of the customer without any condition • It is drawn upon a certain bank in writing • The bank has to always pay it demand • A cheque is not required to be stamped to all • It is payable to a certain person • A cheque is a convenient and safe methods • Facilitate transfer of funds • The use of cheques provides safety to money deposited into bank

20. Types of cheques

21. Open cheques A)Bearer cheques • if a drawer order the bank pay a stated a sum of money to the bearer it is called a bearer cheques. • Any person who lawfully possesses a bearer cheque is entitled to receive payment of that cheque. B) Order cheques • If a cheques is to the order of a person is whose from the cheques is drawn it is called order cheque • The order cheque is paid by the bank only when the bank is satisfied about the identify of the payee.

22. crossed cheques • If a cheque is crossed by a drawing two parallel lines across the face of the cheque with or without the words and co or A\C payee only it is called a crossed cheques. • The crossed cheques cannot be a paid on the counter of the drawee bank. • It will be depoisted in the account of a person in whose order of favour it is drawn

23. Types of crossing cheques • They are two types of crossing cheques general crossing  special crossing • General crossing  The drawing up two simple parallel lines on the face of the cheque at the top left hand corner with or without the words &co not negotiable or account payee only is know as general crossing

24. Special crossing • A cheque is deemed to be crossed especially when it bears across its face the name of the banker either with or without the words ‘Not Negotiable’ • In case of special crossing the payment can only be made to the banker named there in the cheque.

25. Objectives of crossing • It prevents the payment of the cheque to a wrongful holder, • It ensure safe payment • It facilitates in tracing the recipient of the payment • Further it is a guard against any cheating or theft.

26. THANK YOU