The paying bank, which is the bank on which the cheque is drawn and responsible for making the payment to the payee, has certain rights and duties in relation to the payment of cheques. These rights and duties are outlined below:
Rights of Paying Banker:
-
Right to charge fees: The paying bank has the right to charge fees for processing and clearing cheques.
-
Right of set-off: The paying bank has the right of set-off, which means it can deduct any outstanding debts or loans from the payee’s account before making the payment.
-
Right to verify a signature: The paying bank has the right to verify the signature of the drawer on the cheque to ensure that it is genuine.
-
Right to refuse payment: The paying bank has the right to refuse payment if there are insufficient funds in the drawer’s account, if the cheque is stale, post-dated or has been altered, or if there are other discrepancies or irregularities with the cheque.
Duties of Paying Banker:
-
Duty to verify the authenticity of the cheque: The paying bank has a duty to verify the authenticity of the cheque, including verifying the signature of the drawer and checking that the cheque has not been altered or tampered with.
-
Duty to make payment promptly: Once the paying bank has verified the authenticity of the cheque and determined that there are sufficient funds in the drawer’s account, it has a duty to make payment promptly to the payee.
-
Duty to maintain confidentiality: The paying bank has a duty to maintain confidentiality and protect the privacy of its customers’ account information.
-
Duty to report suspicious activity: The paying bank has a duty to report any suspicious activity or transactions to the relevant authorities, such as cases of fraud, money laundering or terrorist financing.
By fulfilling these rights and duties, the paying bank can ensure that it is processing and honoring cheques in a responsible and legal manner, while protecting the interests of its customers and the bank itself.
