Paying banker refers to the banker who holds the cheques of the drawer and is obliged to make payment if the funds of the customer are sufficient to cover the amount of his cheque drawn.
The paying banker is the banker who cancels the signature of the drawer on payment of the cheque either by the usual means of authorizing a drawer’s signature or by any method that the bank takes, which also reflects the point of payment. In some cases, cheques are paid by stamping the cheques “Paid”, usually with the date being included in the stamped crossing, or by perforating the payment date onto the cheque.
As paying banker, the banker is obligated to accept the customer’s check if it is valid and if it is issued by the holder in its original form within a reasonable period of time and before the banker has provided orders to stop paying or receiving notice of the death of the customer, etc., and if sufficient funds are available to the customer’s account and that balance is available to the banker.
Responsibility of Paying Banker
01. Cheques drawn on Branch :
The paying banker shall honour only those cheques which are drawn against the account maintained at a branch of the bank where the cheques are presented.
02.Presentation within validity needed :
The paying banker is legally bound to pay only such cheques which are presented to him for payment within a reasonable time. Reasonable time is 6 months from the date of issue of the cheque.
03. Presentation within banking hours:
Cheque must be presented within the banking hours. Any cheque presented after thebanking hours has no legal effect and therefore banker cannot be held liable for refusing payment on such cheques.
04. Sufficient balance :
Funds in tha a/c must be sufficient and available to honour the cheques. For dishonour of cheque due to shortage of funds banks are not held responsible. Rather, if cheques are drawn without funds, drawers by punishable under Section -138.
05. Must be valid instrument :
Cheques not drawn in the proper form are refused by the paying banker. Section -5 & 6 of the N.I. Act provide that the bank should examine the contents of the cheque to ensure taht it is perfectly a valid instrument containing an unconditional order to pay a certain sum of money.