A collecting banker may be defined as a banker who accepts the cheques, bills, drafts, pay orders, letters of credit, traveler cheques, brochures such as lottery chits, debenture interest, dividend warrants, etc., on behalf of the client. To undertake this type of collection, the collecting banker used to charge the commission.
The ability to collect bankers during the collection on behalf of the client, the role of collecting banker is as follows:
- As a holder of value: One of the roles of collecting bankers is defined and named as the holder of value in which collecting bankers progress money to the client afore the comprehension of the cheques provided for collection. Collecting bankers relaxes the loan total unpaid from the client with the amount of collection and even before its comprehension. A portion of the amount is served to the client by the collecting banker even before the comprehension of the cheque. Permitting the client to draw the complete amount of the cheque before the realization.
- As an agent of collection: The agent of the collection is known as the important role of the collecting banker. The banker undertakes and gathers the cheques and credits the client’s account only on comprehension. Thus, there is less risk for the collection and no danger for the collecting banker. However, in the case of a holder of value, the collecting banker has massive dangers, particularly when the cheque is defiled or the wrongful transactions or payment to the cheque owner. Constitutional shield for the collecting banker under the Section 131 of Negotiable Instrument Act in this particular Section, a Banker with good faith received payments for the clients of a cheque is passed specially to himself, and in case the heading of the cheque attests faulty experience any liabilities of collecting banker to the accurate holder of the cheque by the aim of having accepted payment.
Liabilities of Collecting Banker
- Due Care and Diligence in the Collection of Cheques: The liabilities of the collecting banker are assured to display due care and attentiveness in the cheque of the collection which is offered to him. In any case, if a cheque is not trusted for collection with the banker, the collecting banker is likely to display it to the other (drawee) banker within a reasonable time. The cheque is not accessible for payment which is within a sensible time of its matter, and the person or drawer in which account it is transferred has rights, as between the person and the banker has to pay the cheques and suffers genuine damage, through the postponement. In case a collecting banker does not present the cheque for collection through the proper channel within a reasonable time, the customer may suffer a loss.
- Agent for Collection: Agent for collection is one of the liabilities of collecting bankers as in case any cheque is strained on a domicile where the banker is not the associate of ‘clearing-house.’ The new member may hire another banker who is an associate of the clearing-house for the reason of assembling the cheque. In this type of case, the banker converts as a substituted agent. Agent, who holds an implied or express specialist to name additional people to participate in the business of the organization, has consequently named an extra person like the person is a replacement agent. Such a mediator will be chosen as the manager of a principal.
- Serving Notice of Dishonor: Notice of dishonor is also considered the liability of collecting bankers, which states that if the cheque is dishonored or declined, then the collecting banker is assured of serving the notice for the same to their clients within a sensible time. It may also be noted that when the cheque is reimbursed for authorization of ratification, notice should be referred to their customer, and if they fail to provide the notice, then the collecting banker is liable or accountable to the client for any damages.
- Allowance of Proceeds to the Customer: In any situation, if the collecting banker has understood the cheque, they will pay the proceeds to the client as per their (customer’s) permission. Commonly, the expense is attributed to the account of the client on the written request of the client; the income may be forwarded to him with the help of the demand draft. In such conditions, if the client serves the commands to his banker, then the draft gets forwarded, and by doing the same, the connection between principal and agent approaches the end. Then the novel connection between the creditor and debtor will start.
Conclusion
In this article, the major search is for the collecting banker examples and additionally discussing the role of collecting bankers and the liabilities of the collecting bankers. Collecting bankers is the authority or banker who receives the bills, cheques, drafts, pay orders, etc., on behalf of the clients.
