BANKING OPERATIONSDAY-1 SESSION 2A

BASIC TERMINOLOGIES

BASIC TERMINOLOGIES

Bank Account

Drawing Officer (DO) and Drawing &

Disbursing Officer (DDO)

Authorized Signatories (SS Card)

Schedule/Advice

Cheque book intimation/Series

Stop payment

Non-Payment Certificate (NPC)

INSTRUMENTS USED

Cheques (Samples)

Payment Order

Bills

Refund vouchers

Advices /Authorities

Travel Vouchers

Challans

Govt . Draft / Bank Draft

FORGERY & ALTERATION IN CHEQUES

FORGED. Use of legitimate cheques that are stolen and then presented for encashment.

COUNTERFIET. Use completely fake cheques.

ALTERED. Altering a legitimate check to change the payee or inflate the amount.

OTHER CATEGORIZATION OF CHEQUES

There is which is discussed below:Ante-dated cheques:-

Cheque in which the drawer mentions the date earlier to the date of presenting it for payment. For example, a cheque issued on 20th May 2011 may bear a date 5th May 2011.

Post-dated Cheque:- Cheque on which drawer mentions a date which is

subsequent to the date on which it is presented, is called post-dated cheque. For example, if a cheque presented on 8th May 2003 bears a date of 25th May 2003, it is a post-dated cheque. The bank will make payment only on or after 25th May 2003

OTHER CATEGORIZATION OF CHEQUES Stale Cheque:-

A cheque which is issued today must be presented before at bank for payment within a stipulated period. After expiry of that period, no payment will be made and it is then called ‘stale cheque’.

Mutilated Cheque:- In case a cheque is torn into two or more pieces and presented for payment ,such a cheque is called a mutilated cheque.

CROSSING OF CHEQUE

Crossing:

This is a device adopted and sanctioned by law, which has the effect of making cheques payable to a bank only or to a particular bank in an account with such bank.

Types of Crossing

123-General crossing: which consists of drawing two parallel transverse lines, across the fact of cheque, either with or without the words “not negotiable” and/or the words “and Co” in between.

124-Special crossing: If in addition to general crossing, the name of specified banker to whom the cheque is to be payable, is also written on the face of the instrument, with or without the words “not negotiable”, it is called special crossing”.

CROSSING OF CHEQUE -TYPES

Specimen of Special Crossing

ESSENTIALS OF GENERAL CROSSING

Two lines are of paramount importance in crossing.

The lines must be drawn parallel and transverse. It means that they should be arranged in a crosswise direction. They should not be straight lines.

The lines are generally drawn on the left hand side .

The words ‘not negotiable’ may be added to a crossing.

The words ‘and Company’ may be written in between the lines.

ESSENTIALS OF SPECIAL CROSSING

Two parallel transverse lines are not at all essential for a special crossing.

The name of a banker must be necessarily specified across the face of the cheque. The name of the banker itself constitutes special crossing.

It must appear on the left hand side, preferably on the corner.

The two parallel transverse lines and the words ‘not negotiable be added to a special crossing

ENDORSEMENT

A legal term that refers to the signing of a document which allows for the legal transfer of a negotiable from one party to another

OVERDRAFT

An extension of credit from a lending institution when an account reaches zero. An overdraft allows the individual to continue withdrawing money even if the account has no funds in it. Basically the bank allows people to borrow a set amount of money.