Paying Banker : Duties and Rights of Paying Banker

There is another popular term known as Paying banker related to bank. In this article, we will know more about it.

Banks were introduced to us years ago. Today we cannot imagine our life without banks. If you focus on the surveys, many people are having a bank account today. Although, there are still many people who don’t have any bank account. These people are mainly labourers and other such workers. The working of the bank has changed over time. There are many policies that a bank offers to its customer. Now, what does it mean when we say a customer or client of a bank.

A bank can be defined as an arrangement that is responsible for holding the money that it receives from its customer. A customer is a person who opens an account in that bank or who already has an account in it.

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For example, imagine a situation where you have some money and you want to keep it safe in the bank. Now, first, you have to open an account in the bank. Every bank will need some documents and after some paperwork, you can get your account opened in the bank. Since now you are having an account in the bank, you are a customer of the bank.

There can be many possible relationships between the customer and the bank. Like there can be a debtor-creditor relationship or bailer-bailee relationship. In a bailer and bailee relationship, the customer is the bailer and the bank is the bailee. In this relationship,  the customer keeps his articles or things in the custody of the bank.

Now, the bank will be responsible for keeping the articles of their customer safe. If any damage is caused to the articles during this period, the bank will be responsible for it.

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Similarly,  in a creditor and debtor relationship, the debitor is the customer who takes a loan from the bank. Here, the bank is the creditor. Now, the debtor has to pay the credited amount to the bank in instalments. These instalments should be paid on time and there shouldn’t be any delay in it. In case of delay, the bank can take some action against the debtor. Any bank gives a loan to a customer only after some contract.

The contract contains all details of the loan and instalment amounts. It also contains information regarding what might happen in case the instalment amount isn’t paid on time.

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. 

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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.