i. When the cheque is uncrossed, the holder may cross it generally or specially. ii. When a cheque is crossed generally the holder may cross it specially. iii. Where a chque is crossed generally or specially the holder may add the word “Not negotiable”. iv. Where a cheque is crossed specially, the banker to whom it is crossed, may again cross it specially to another Banker his agent for collection. v. When an uncrossed cheque or a cheque crossed generally is sent to a banker for collection it may cross the same specially to itself. vi. No one is authorized to change/alter the crossing except the above cases covered by NI. Act.
BILLS OF EXCHANGE & PROMISSORY NOTES
Kinds of Bills of Exchange:
The bills of exchange may be classified as follows:
1) Inland & Foreign Bills
2) Time & Demand Bills
3) Trade Bills & Accommodation Bills
4) Clean Bills & Documentary Bills
(1) Inland & Foreign Bills:
Inland Instrument: A negotiable instrument drawn or made in bangladesh and made payable in or drawn upon any person resident in bangladesh shall be deemed to be an inland instrument. Thus an inland instrument must satisfy the following conditions: - It must be drawn or made in bangladesh
- It must be payable in bangladesh, not necessarily by a person resident on Bangladesh. - It must be drawn on a person resident on bangladesh although it is payable outside bangladesh. Foreign Bills: A negotiable instrument which is not drawn, made or made payable in bangladesh. A bill of exchange is called a foreign bill. - If it is drawn in bangladesh but is payable outside bangladesh or is drawn on a person residing outside bangladesh. - If it is drawn outside bangladesh & is payable in bangladesh or is drawn on a person residing outside bangladesh and is payable in bangladesh. - If it is drawn in bangladesh and is payable outside bangladesh or drawn on a person residing outside bangladesh and is payable outside bangladesh.
(2) Time & Demand Bills:
A bill of exchange and a promissory note may be payable either on demand or after a fixed time. It is payable on demand when: (i) It is expressed to be payable on demand or at sight or on presentment. (ii) No time for payment is not specified in it.
The maturity of a promissory note or bill of exchange is the date at which it falls due. Every promissory note or bill of exchange which is not expressed to be payable on demand, at sight or on presentment is at maturity on the third day after the day on which it is expressed to be payable.
(3) Trade Bill & Accommodation Bill:
Generally the bills of exchange are drawn by the seller (creditor) on the buyer (debtor) in respect of genuine trade transactions. Such bills are drawn for consideration and are called trade bills. Sometimes bills of exchange are drawn not for consideration but to accommodate (to provide financial assistance) a known party. Such bills are called accommodation bills.
(4) Clean Bill & Documentary Bill:
When the drawer of a bill of exchange encloses with it a document of title to goods or any other document , it is called a documentary bill. If no such document is attached with the bill, it is called a clean bill.
The Liquid Asset
Sources of Bank Funds:
The funds of a banking institution fall into two categories. i) The owned funds consisting of paid up capital, reserve fund, other reserves, etc. ii) The owned funds consisting of deposits of various types and borrowings from other banks and other apex banking institutions
Significance of Liquidity in Banking:
Liquidity means ability to satisfy demand for cash in exchange for deposits. The banker should safeguard his position by maintaining sufficient cash with himself or with other banks or in the form of assets which can be readily converted into...