Responsibility of Paying banker

A paying banker should not act in a casual manner. To get appropriate protection under the provisions of NI Act,1881, he should act in good faith. He should not have any doubt that the payment is being made to the incorrect person. He should act without negligence.
The drawee of a cheque having sufficient funds of the drawer in his hands properly applicable to the payment of such cheque must pay the cheque when duly required to do so, and, in default of such payment, must compensate the drawer for any loss or damage caused by such default.
When the customeru2019s signature on the cheque is forged there is no mandate to the bank to pay. As such a banker is not entitled to debit the customeru2019s account on such forged cheque.
u201cPayment in due courseu201d means payment in accordance with the apparent tenor of the instrument in good faith and without negligence to any person in possession thereof under circumstances which does not afford a reasonable ground for believing that he is not entitled to receive payment of the amount therein mentioned.

Accounting & Finance for Banking

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