Fee based Banking Products/ Services [Fee based | Fund based A CONMDOFEE Banking Conporatie neta ~ ~ (amare) \ me Ces x : schon Serves r | Corporate Fee Based i aa Retalfee Based = (ep oo Discounting Basra " (Gerrans sin) Z S \ Lem J <Fund based Banking Products/ Services (=) < ‘aa } (oasis) i \ INTRODUCTION TO BANKING FRODUCTS + To be successful in banking, any bank has to understand diferent segments and develop appropriate products to be offered to ‘eustomers as per thelr requirement and need. + Protuts are often customized by the banks to creat dierentiation {tom competitors and create postion in customer's mind, however the core products offered are simost same catering to basic need of ‘eustomere ia tems of financial rancactions. + We can broadly categorize banking products ae deposit products, ‘rest products and third party products excluding the services provided by bank through remitance and augmented proucts, DEWIEGH ANANGS BANKING PRODUCTS ee) &) Ce) Ce) =) BANKING SYSTEM MODULE & DEPOSIT PRODUCTS: ‘epost products ar oten stored as ait products as crate Hail on banc in fom of fund ty owe to Tier customers! depositors. When banks ‘sccept depos ble nereore as hae to pay Ire othe eutomet, [DEMAND DEPOSIT ~ Demand deposits ate defined as deposi payable on mand tcugh cheque or oferwise. Demand dopost comprises of cure coun saving ses. ‘Saving account or saving deposit i primary meant for developing he habit of ‘saving among th publ enables depositors to eam terest on amount held in the account fctes varus online fancial tansacton, Wansler mney, ‘withdraw money fom ATM, emt barking ete. Saving acount passbook even ‘esas an eentty and reside prot te account oe.DEPOSIT PRODUCTS: GREED FRODUCTS: Curent account or curent deposits farm of demand depest general for business purpose wher theres no resticton on the no of withdraws ne ‘ezoun Banks do nt pay eny treat en euent epost. Overra fcy Is ported and cheque books a sued al cuent accounts + TERM DEPOSIT =A Term deposit a depos recahved by the Bank for 3 {ed period, afer which heen be withcravm:lferest rates on term-cepoee ‘ae ual gher anon savings depois, Tem depos coe Fired depos stem dopost on which axe rat of nares pal at eed, reguritowas. Fed deposits are generally for T2menths or mae. Recuring depssis ls deposit under which fixed amount is deposted at fegulr inteslsfor_a fed term and the repayment of pind and ‘Sezumated Wrest sae a he end of he arm. THIRD PARTY PRODUCTS + Cre product ae en tft ot asset products 8 i create income for bank inform of tret they cargo to tel customers berrowers. When banks provid ans fs eesel increase se eam itrest ough El om the boraners + RETALLOANS ~ Banks fer arang of real asset produts,inling home Toans, sutomobio loans, persona loans (or marago, medial expenses ec). ‘eal cards, consumer loans (or purchase of consumer goods such 2s TV, Lplop, AC et) and leans apn! tne depose and ons egant shares. + BUSINESS LOANS ~ Barks ctr business Term lean wih longer repayment od ond set payment schedule. Nermaiy these loans ae extended "3 to 20 yars and sod for bushoss expansion, merpers, machinery purchase ‘Wening opt oan snater typeof business lan garted to compares for shot term to moot tee operational actu. Cah eed and overrt are ‘300 ypes of business oan, NATIONAL ELECTRONIC FUNDS TRANSFER + Disttulon of thi party products the mutual fads and surance has muted as a hay ver of revenue Inform of cormisin and feo fr the tank nose tes. + This cencpt of sesing products cer tha banking products is cao “Para Barking” and Reserve Bank ina has pescbed nies and fepulaens or caring cu these ates. ‘+ Ban mul and snd insurece Is ofered by bak ether by seting separate apartment or eving a suber + Various mutual und schemes tke equity fund, det fund, hybid und and so tn ate fred by banks Io customers Io make tem eam market Inked Inorest and bo fe as wel gs general Insurance pois are oered a loss over apa ik 5 * National Elecronie Funds Transfer (NEFT) fan elotonis funds ansor ‘Stam established and marianed by Insti fr Develpmant ard Research InBonking Technelogy (ORBT) and Reserve Berk ein). “+ NEFT enables bank customers to tansfr finde between any two NEFT trated tan acoanis ons onetoone bas 2 custome ls an appizaton frm proving deals ofthe besfiay (he name, bank, ranch name, FSC, estunt ype and account numba) an the ‘Srunt to bo romile. The reer auharze hier bank branch 6 debt Szceunt and remt the spocfed ameunt tothe Benalla. Ths fol ‘svalble Uvough elne baring, and some barks aso ofr the NEFT Toy rough AT + There fro eter minimum of masimum on the aunt of funds at eas bo Wanefored wang NEFT apa topratos on a Defored Ht SetlomentDNS) Dan neh ses tanetoe Inte,REAL TIME GROSS SETTLEMENT + Real Time Gross Setlement (RTGS) enables electron und vanser system from on bank secon o snot el ine en an doko ss + The minimum amount o be renited vough RTGS ie Re, 2 lh, however ore tea mim tnt + The remiting customer neods 10 film dts ko Amount to be tense, Nama of beneelary bank and branch, own eccount number, se rumbor of anally tran, account noe binary custome +The funds lo RTGS can be translared tough bank branch and itamet tanking, Gnine RTGS vansactene can be done re-tcha + Tis money transfer tecnique i primary rant fr large vale vansactons that can bo felted on a ays wut ay fos or charg. NATIONAL AUTOMATED GLEARING MOUSE + NPCI Qiatnat Payments Comoran of Ins) has implemented ‘Natenat ‘udomsted Clearing House for Garks, Fanci Insisons Carporste and vermont a web bane ston fait rebar, high volme econ ansacans wich ae repetine an peo nnsire {etre ring aos ee " + NACH can bo ured for mating buk wansactins toads detibuton of sides, conde, tees san pension + can aso be uted fr buk wnsecions towards calocton of payments peraning fo lone ise bi, wor Bib, sirens prem, RAO GARIE NABEEDIBAYMENIESY SIEM (Goin of Sala Niro AT) trough bark ceraspondonts of ay Bank using ho Racasr suena, + Fortis customers roqured te have & KY compan bank acount Inkod with + Sarco offers by AoPS =~ 2) Cash Wink 1) Cash Depost 6) Balance Enquiy 6) Fura Tanste 6) Mi Sstmert cayCh. 4 Business Services ‘Banking Services arth Commerce Academy 4. Bank draft/Demand draft - It is used to transfer funds - Anybody can obtain by depositing amount in bank = —Instrumen Re arth Commerce Academy 2 Banking Services - Bank draft . - Bank overdraft + cash credit + Pay-Order_ SS -‘Loans & 4. Bank draft/Demand draft It is drawn by a Bank branch onanother Branch or some other bank at the place of destination- = Parth Commerce Academy1. Bank draft/Demand draft |i. Bank draft/Demand draft Eersonis Namejto whomyou - Person who receive this draft want to pay & Place is mention can present in bank. ~ Bank charges Commission - Once document is verified - The amount is credited.in bank account of individual ..., , ns Parth commerce Academy + Parth Commerce Academy 2. Bank overdraft 2. Bank overdrait - Bank allows the customer to ~- Available trustworthy — withdraw more than balance customers for short period in his a/c - Interest is charged on - This extra-amountiis.called a ‘amount.withdrawn overdraft aN Be © ZX ge Sa Rene Sn arth Commerce Academy ~~2, Bank overdraft 3. Cash Credit -Some Asseéts/Personal | - Short term-cash'loan security is requied against security - Temporary fac - Borrower can withdraw ry ae upto credit limit — t ath Commerce Academy y 3. Cash Credit 4. Pay Order/Banker's cheque - Interest is charged on It is financial instrument actually withdrawn amount issued by bank on behalf of - Not on the entire amount customer stating order to granted—__ == gy pay a specified amount toa - specified person within the Out same city “opt4. Pay Order/Banker's cheque 4, Pay Order/Banker's cheque - It is issued by bank & Commission‘charged.on Pay — honoured by bank Order‘is less than demand draft - Provides guarantee that the —- Within City , payment will be made é - Bank charges Commission , a. arth Commerce Academy 5. Loans 5. Loans -Short/Medium/Longterm :_|- The loan may be paid back - Lumsum advance to borrower by borrower in instalment - Rebayable on expiry of a Q specified perio __ fF - — -Secured 7 Unsecured CC). Ne Shy . 2 a. SAN2, Current Account Businessmen, Companies, Institutions Like Schools, Colleges, ‘Hospitals Ete. Can Open This Account. Since You Cannot Mako ‘Multiple Withdrawals Through A Savings Account, It Is, Mandatory For Such Large Account Holders To Open A Current Deposit Account, Because This Typ’ Of People Neod Money Many ‘Times A Day, So These Poople Liko To Open This Type Of Account. On Current Deposit Account, The Bank Gives The Account Holder Bither Very Little Or No Interest On His Deposit. Rather, Some Banks Also Charge Service Charges From Their Customers. i L.SavingAccount__—_—_—ii Any Person Can Open A Savings Account In Bank. Savings ‘Account Is Made For Saving And javings Account Earns Interest. Savings Account Holders Can Withdraw And Deposit Their ‘Deposits From The Bank At Any Timo. There Is No Restriction On Depositing Money. Any Number Of Times You Can Deposit Money But Thero Is A Restriction On How Many Times You Can Withdraw Money. You Can Withdraw Money From The Savings ‘Account Only Within The Limit Fixed By The Bank. A Feo Is. Loviod For Withdrawing Money Over And Above That Limit. Fixed Deposit Account (FD) & Term Deposit Account (TD) The Fixed Deposit Account | Ys For Those Individuals Who Want To Use The Surplus Money FOR Investment. ‘These Individuals Do Not Require That Money And To Get More Interest, These People Open Fixed Deposit Accounts. Money Can Be Deposited In This Account Only Once And Can Be Withdrawn Only Once.‘The Bank Gives Very Low Interest On Savings Accounts ‘8% To 5% Per Annum But In A Fixed Deposit Account, Recurring Deposit Account (RD) Interest Is Available At More Than 5% Generally. The 5 3; i Specialty OfA Fixed Deposit Account Is That The A Recurring Deposit (@RD) Is A Special ‘Money Is Deposited In It For A Fixet Time. It Goes Like Kind Of Term Deposit Which Help People ‘From 1 Year ‘To 10 Years. If An Account Holder Wants To With Regular Incomes To Deposit A Certain Withdraw The Amount Deposited In His Fixed Deposit ‘Amount Every Month Into Their RD ‘Account At The Time Of Any Special Neod, Then The Bank Returns His Balance Money By Imposing Some Account And Earn Interest At The Rate ‘Penalty On Him. Applicable To Fixed Deposits. What is a Cashless Transaction? While Opening This Type Of Account, A Person Has To + cashless ransactionis an automatedor online operation Fab Gales Twine OF 40 toaea Ta a he Dap orpntctions-Aigtal vansacon ga ceshlesseonsactich Period (Like 1 Year Or 10 Years). In This, The Depositor ‘organizations. A digital transaction 3 cashless tran Ts Returned The Principal Amount Along With Interest hich specifically involves no paper for completion of the tion. Purchasing goods from e-commerce websites, signing of business contracts online, or even buying movie ickets through your smartphone app fall under the On The Entire Deposit After The Completion Of The Period. If The Depositor Closes His Account Before ‘Maturity, Then Interest Is Paid Only On The Period For umbrella of digital transactions. Such operations are * Which The Money Was Deposited, accurate, quicker, convenient, and certainly easier. Many praia A eee gaia are unwilling to accept that there are benefits toa cashless Interest Rate Conclusion :- FD > RD > Saving Account > transaction simply because they cannot navigate their way Current Account around digital devices, or are just happier to transact using. cash, Read on about an array of cashless transactions that simplify day-to-day trading.What are the Benefits of Cashless Transactions’ * There are numerous benefits to having a cashes economy. Although it wil {ake al afew mere years tobe a completely cashless economy, estos {Mansatons nina have seen a steep upsugesince the fst quoter of 2017 1 Benga cashless econogy furthers the cause of gation and takes us one Sep cose to liingtecnology ats Fest 2. ysl thets and robberies wl reduce with 2 eduction In cash relation 3. Fakecurency issues wl asoreduce. 4 Cards and Mobile Wallets are handler to cary around and take up ess space fhancaah 5. Itbecomes easier to folow your expenditure because everythings wacked 6, _iscountsand cash backs are being ofered for making olne payments, Reward point are ao being oer by mobile wallets and UP appetins 7. Service tarthas en valved on card transaction up toe 2000 8 Tanscting online can help you wth exact amounts. Ths means that theres to fghing or snl ehange or paying an entra rupee because youate hort 9. Incasectossor theft f cards, tcan be blocked within minutsto prevent mute Types of digital payrnents 1 Electronic funds transfer - * EFT are electronic transfer of money from one bank account to another, either within a single financial institution or across multiple institutions, via computer-based systems, without the direct intervention of bank staff. am st lal * e-banking or internet banking is @ part of virtual banking and another delivery channel for customers. * Internet banking means any user with a pc anda. browser can get connected to the banks website to perform any of the virtual banking functions and avail o| any of the bank’s services. * e-banking is electronic banking or banking using electronic media. * The two ways in which EFT can be done : NEFT( National Electronic Fund Transfer) and RTGS ( Real Time Gross Settlement). + NEFT refers to a nationwide system that facilitates individuals and firms to electronically transfer funds from any bank branch to any other individual having an account with any other bank branch in the country. { + RTGS is the fastest possible money transfer system through banks. fund may be transferred to the RTGSUsing the Internet facility provided by banks. the ‘minimum transaction value for RTGYis &2 Lakh However, there is no maximum limit for RTGS transactions. 2. Credit or debit cards i.e. ‘plastic money’ - * The customer can make digital payments for online transaction through credit or debit cards. + In fact, about 95% of online transactions are executed with a credit card. 4. Aadhaar enabled payment systern (Aeps)- * It.ean be used for payment transactions. this service an only be availed if your Aadhaar number is, registered with the bank where you hold an account. s. Mobile wallets — + A Mobile wallet is a type of virtual wallet service that can be used by downloading an app. 3. Digital cash} * Digital cards (also known as e-currency, e-money, electronic cash, electronic currency, digital money, digital currency, cyber current) refers to a system in which a person can securely pay for goods and services electronically without necessarily involving = bank to meditate the transaction. * The digital or mobile wallet store bank account or debit card information or bank account information in an encoded format who allows secure payments, 6. Point of Sales (POS) Terminals © There are different types of PoS terminals such as physical PoS, Mobile PoS and Virtual PoS. © Physical terminals are kept at shop and stores. ‘© Mobile PoS terminals work through a tablet of smartphone.TYPES OF CUSTOMERS AND ACCOUNT HOLDERS 2. Joint Account:- A joint account is a bank account that two or more individuals share, Joint account holders have_equal_access to all funds. Signatures of one or all account holders may be required for transactions carried out through a joint account. 1. Minor Account:- Any person below the age of 18 years is considered a minor. These days, many banks offer the facility of opening accounts, often called 'minor' accounts, specifically designed for children. 3. Partnership Account:- ~~“Anaccount at a brokerage held by two or more people in which each person is equally liable. The account holders may or may not have a written agreement on the rights and obligations each one has in the partnership account.4. Company Accoun’ A Company bank account is a bank account that's_used_only for company transactions rather than personal finances. It_can be oj in the name of the compa ing payments to be made and received using the company’s name. PROCEDURE AND PRACTICE IN OPENING AND OPERATING MINOR ACCOUNT +A minor is any person below the age of 18 years. +For accounts of minors below 10 years of age, the guardian must operate the account. + For minoTs over 10 years of age can operate the account on their own. + Documents required to open a bank| account for a minor:- + Proof of a minor’s date of birth + KYC documents of the parents/guardian. + Aadhaar card of a minor. + Specimen signature of a guardian. The minor’ specimen signature if he/she is 10 years old or above.+ How to open a bank account for minors? Step 1:-Decide the type of bank account you Want to open. Different banks offer different types of accounts for the customers to choose from, depending on the requirement. The most common type of account is the savings bank account. + How to open a bank account for minors? Step 3:- Then, prepare to apply. Gather all the required documents ahead of time. + How to open a bank account for minors? Step 2;- Based.on-theaccounttype, start comparing your options among the available banks based on interest rates, facilities, accessibility and so on. + How to open a bank account for minors? Step 4:- Fill in the application form. You can either apply online or by visiting a vank’s branch. —_+ How to open a -a bank account nt for minors? Step 5:- Inmany cases, you'll need-to fund the account during the final stage of the application process, You will be required to deposit funds into your child's account. PROCEDURE AND PRACTICE OF OPENING AND OPERATING JOINT ACCOUNT + How to open a bank account for minors? Step 6:- Once the process is complete and the documents are verified, you will be will be giver-adebit oF bank card. You need to. activate it online or by calling a toll-free nuinber. + Joint Account:- = A joint account is a type of bank account which allows more than one person to own, operate and manage it. * With a joint account; alt aecounF folders are allowed to view transactions, carry out transactions, hold a debit card, and pay money in, * Lt is very easy to open a Joint Account,+ Joint Account:- Generally, married couples, partners, roommates, senior citizens and parents with their children op senlor eitzens and parents with thelr children ope a joint account, 2 joint accour + Procedure for opening Joint Account:- Stop 1:- Visit fill_up the Opening Form of Indian Bank Account Saving Account Document Required with Mode of Holding as "Joint", + Documents required for opening Joint. Account:- = PAN * 2 Passport size photographs * Proof of Identity such as PAN, Aadhaar card, passport or driving licence * Address Proof such as passport, Aadhaar card, utility bill or other bank's passbook + Procedure for opening Joint Account:- Step 2:- Submit Required Documents of all the Joint Account Holders+ Procedure for opening Joint Account:- Procedure for opening Joint Account:- Step 3:- Submit Account Opening Form to the Banker Step 4:- Verification of Account Opening Form (AOF) & Other Documents by the Banker + Procedure for opening Joint Account:- Step 5: Collect acknowledgement slip of Account PROCEDURE AND PRACTICE OF OPENING AND OPERATING PARTNERSHIP FIRM ACCOUNT Opening Form from Bank+ Partnership Fir Partnership Firm is a joint business venture between tworor more partners. In-simpie words, partnership firm registration allows entrepreneurs to come together and operate their business under a separate legal entity + Documents required for opening Partnership firm Account:- * Latest Electricity Bills or Water Bills or Telephone (Latest three months = Ruthorization Letter for authorizing a partner as an| authorized signatory for the Partnership Firm Bank Account. + Documents required for opening Partnership firm Account:- * PAN Card_of Partnership Firm * Partnership Deed = Identity Proof and Address Proof of all the partners} = Address Proof of all the Partnership Firm * Registration Certificate of Partnership Firm if you have PROCEDURE AND PRACTICE OF OPENING AND OPERATING JOINT STOCK COMPANIES ACCOUNT* Once the Company is formed, it is best to get the basic requirements in place. * One such requirement is opening a current bank account for your private timited- company. Tarmust ope a bai-semn for aempeny within 60 days from the date of commencement of business, + Documents required for opening Company Account * Proof of appointment of directors + Proof of resignation oF airecta + Shareholding pattern ofthe Gompany * PAN Card of the company or PAN Card Application Acknouledgement + Documents required for opening Company Account:- * Certificate of Incorporation = Memorandum of Assoctation (MOA) * Article of Association (AOA) = Board Resolution to identify the authorized board member} * List of directors * Address proof of registered office address * Director's identity proof and authorized signatories + How to open a bank account? Opening a bank account is as simple as it gets, There are 2 ways you can open a bank account for your company, You can visit the nearest bank or you can open a bank account for a company online,BANKING OMBUDSMAN SCHEME 2006 — — | Banking Ombudsman Scheme Common issues faced at Banks Pres a Banks covered under the +The Banking Ombudsman Scheme is an inexpensive forum for bank customers for resolution of complaints relating to certain services rendered by banks. +Created under section 35 of BR act 1949. +The complaint should be in writing or through electronic means. Banking Ombudsman Scheme, 2006 +All Scheduled Commercial Banks, + Regional Rural Banks + Scheduled Primary Co-operative Banks[Awards Passed by Banking Ombudsman + Compensation or 20 lakh whichever is lower in case of credit card related issues where customer suffered mental harassment or there is loss of his time,expenses etc. - 4 lakh (maximum) Bank PROMOTION Study Material _ i et Topic Covered in this video anking Ombudsman v v v ve (On Dated - Nov 12,2021. The scheme integrated the existing three Ombudsman schemes of RBI namely The Banking Ombudsman Scheme, 2006. ‘The Ombudsman Scheme for Non-anking financial Companies, 2018, ‘The Ombudsman Scheme for Digital Transactions, 2019, ‘The Scheme, framed by the Reserve Bank in exercise of the power conferred on it under Section 35A of the Banking Regulation Act, 1949.BAG so OonkingOntomimenséhomTD Apply scheme in All Bank & NBFC, Bankit 1g Ombudsman appoint by RBI ” Period appointed for 3 year by RBI It can be RBI- GM & CGM. Role of Ombudsman is like an Arbitrator. ” The Expenses of BO will borne By RBI. gars vo wrnangenmarns [ype of Complaint "Not" Entertained: Procedure. ¥- Complaint to be made first to bank, customer does not get any reply for one month or Customer not satisfied with reply of bank or complaint rejected by bank. Complaint can be made to Banking Ombudsman with in One Year. ¥ Credit card complaint according to Billing Address (jurisdiction) fags a= Eatingoaieetan Complaint Rejection by Ombudsman : 7 Matter already settle by Ombudsman. 7 Matter settled by Court or pending in a Court. 7 Complait is fake, vexatious, malafide, without sufficient cause. 7 Complaint lodge by - Post, Email. By Online Portal - httos://ems.rbi.ore.in ‘7 Customer can goto against ground of rejection to Deputy Governor RBI with in 30 days ‘Action By Ombudsman: After accepted complaint: Y Ombudsman to settle complaint with in one month, if not possible ombudsman have to Announce his Award. Y Copy of Award is sent to customer & Bank both.kh as Compensation: For actual loss, Wax belng 20 lakh in all cases (including creat card). }Y Additionally Rs 1 Lakh for time expenses and mental agony. ‘Ration by Customer Customer can give acceptance with in 30 days. Award is binding on Bank, if customer accept award. Customer can go to appeal within 30 days when Award received - to Deputy Governor RB. Period can be extended 30 davs by Appellate Authority, Reserve Bank of India ‘+ Reserve Bank of nda (RDI ithe Cantal Banko fi “+ RBI was essed on 1 Api 1935 bythe RB Act 1934, “Int cet oice wae Kota at tr in 1937 pemanely shied o Mumba ‘+ RBIs fly Owned by GOL. ‘+ seo now athe banks ask Ge f= Caiigoaimsaane 7 ‘Action by Bank: After receiving acceptance from customer : * Bank to implement the Award with in 30 days and conformation send to Ombudsman, + Bank can appeal within 30 days to Deputy Governor with permission of Bank CMD/ED/CEO. + Ifnot implemented for 3 month report to Customer Service Committee of Board of Director. + Bank will Disclose unimplemented Award to his Balance sheet & Website Management of RBI ‘he whole management of RBIs managed by! “© Central Board & Local Board rat Hoard Appoincdby GOI ‘One Goverar & 4 Deptyapointed for Yeas 1O other Directs, nomited by GO om various fells for tems of 4 Year 4 Dieors ominted by Local Boards forthe tem of Yeas "offi te goverment atendmectng, etre ino ed ands no voing right themecting . ° ‘Central Board is requited to meet at st times ina yar ‘Governor ean call he mesing whenever thnks necessaryManagement of RBI 1 Setup for regions of the country= © Mumba © Chena © New Dali ‘+ Eachboad eons S members, “Appoined by Cental Goverment Forth tm of 4 year “Tee nin fonction st avice Cent! Bordon Lal mats and ls withthe management of epi commercl tasacon Organisational Setup of RBI 7B I —— I =a rasan : a cee Cage ee Fe MEANING AND DEFINITION OF | NEGOTIABLE INSTRUMENT + Meaning of Negotiable Instrument:- A negotiable instrument is a document, a written order, with the payer named on it - it guara s thé payment of a specified amount of money, either immediately (on demand) or at a future date, instrument promises the payment without condition,+ Defination of Negotiable Instrument:- As per section 13 of the Negotiable Instrunfents Act "A Tegotiable instrument FEATURES OF THERE a promissory note, bil of exchange or check payable either to the order or NEGOTIABLE INSTRUMENT to the bearer.” tothe bearer. + Meaning of Negotiable Instrument:- A negotiable instrument is a document, a written order, with the payer named on it - it guarantees the payment of a specified amount of money, either rules relating to Promissory Notes, Bills of immediately (on demand) or at a future date. Exchange and Cheques. A negotiable instrument promises the payment without condition. 1, Writing and Signature:- Negotiable Instruments must be written and signed by the parties according to the2. Money:- Negotiable instruments are payable by legal tender money of India. The liabilities of the parties of Negotiable Instruments are fixed and determined in terms of legal tender money. 3. Negotiability:- Negotiable Instruments can be transferred from one person to another by a simple process. Any instrument may be made non-transferable by using suitable words, eg, “pay to X only.” 4. Title: ‘The transferee of a negotiable instrument, when he fulfils certain conditions, is called the! holder in due course. The holder in due course! gets a good title to the instrument even in cases where the title of the transferrer is defective. 5. Notice:- It is not necessary to give notice of transfer of a negotiable instrument to the party liable to pay. The transferee can sue in his own name.6. Presumptions:- Certain presumptions apply to all negotiable instruments. 7. Popularity:- Example: It is presumed that there is consideration, It is Negotiable instruments are popular in commercial transactions because of their easy negotiability and quick remedies. ‘not necessary to write in a promissory note the words “for value received” or similar expressions because the payment of consideration is presumed, The words are usually included to create additional evidence of consideration, 8. Evidence:- A document which fails to qualify as a KINDS OF negotiable instrament may nevertheless be used as evidence of the fact of indebtedness. NEGOTIABLE INSTRUMENTS1, Bills Of Exchange:- + Abill of exchange is a written order binding one party to pay a fixed sum of money to another party on demand or at some point in the future. +A bill ofexchange often includes three parties the drawee is the party that pays the sum, the payee receives that sum, and the drawer is the one that obliges the drawee to pay the payee. 2. Promissory Note:- [A promissory note is a financial instrament that contains a written promise by one party (the note's issuer or maker) to pay another lparty (the note's payee) a definite sum of lmoney, either on demand or at a specified [future date. Speciman of Bills of Exchange Tamta ‘New Delhi Fecrooto Apri UT, 2074 Thee months after date pay to me or my ordef, THE Sum of ‘Samp Accepted (signed) (Signed) Jot ‘Mamta 1.4.2014 196, Karol Bagh 73-B, Mahipalpur ‘New Delhi New Delhi 110037 To Jyoti 73-B, Mahipalpur ‘New Delhi 110 037 Speciman of Promisory Note ‘Ashok Kumar New Delhi Rs. 30,000 01 April, 2014 ‘Three months after date I promise to pay Sh. Harish Chander cororder a sum of Rupees Thirty Thousand only for value receive, Stamp To Harish Chander 24, Ansari Road Darya Ganj New Delhi 110002 Ashok Kumar 2, Dariba Kalan Candani Chowk Delhi 110.0063. Cheques:- A cheque is a document that orders a bank to pay a specific amount of money from a person's account to the person in whose name the cheque has been issued. The person writing the cheque, known as the drawer, has a transaction banking account where their money is held. a fT + Crossing Of Cheques:- Hence, it is not instantly encashed by the holder presenting the cheque at the bank counter. If any cheque contains such an instruction, it is called a crossed cheque. n__ OO + Crossing Of Cheques:- Crossing ofa cheque is instructing the banker to pay the specified sum through the banker only, ie. the amount on the cheque has to be deposited directly to the bank account of the payee. SON + Crossing Of Cheques:- The crossing of a cheque is done by making two transverse parallel lines at the top left corner across the face of the cheque. XN1. General Crossing: When across the face of a cheque two transverse parallel lines are drawn at the top left corner, along with the words & Co., between the two lines, with or without using the words not negotiable. When a cheque is crossed in this way, itis called a general crossing. 2. Restrictive Crossing: ‘When in between the two transverse parallel lines, the words ‘A/c payee’ is written across the face of the cheque, then such a crossing is called restrictive crossing or account payee crossing. In this case, the cheque can be credited to the account of the stated person only, 3. Special Crossing: In_a special crossing, the paying banker will pay the sum only to the banker whose name is stated in_the cheque or to his agent. Hence, the cheque will_be honoured only when the bank mentioned in the crossing orders the same, 4. Non Negotiable Crossing:- When the words not negotiable is mentioned in_between the two transverse parallel lines, indicating that the cheque can be transferred but the transferee will not be able to have a better title to the cheque,5. Double Crossing:- Double crossing is when a bank to whom the chogui- cased specially, Tucker suns The sams ENDORSEMENT to another bank, for the purpose of collection as its agent, in this situation the second crossing should ME 'ANING indicate that_If_is serving as an agent of the prior banker, to whom the cheque was specially crossed. + Endorsement Meaning:- B ® The act of a person who is holder of a negotiable Bills Of Exchange i in signing his or her name on the back Electronic Shop of that instrument, thereby transferring title or we ‘ownership ‘Wholesaler[DefinitionfofjEndorsement((Section}15)} + When the holder of a negotiable instrument (cheque, bill of exchange or promissory note) who is entitled to get. payment on the instrument, puts his signature on the back of it or on face thereof, or on a slip of paper annexed thereto, with the object of transferring his right ‘y to get the money, it is called endorsement. * The endorsement is normally made on the backside of the negotiable instrument and, in case there is no space on the backside of, the instrument for the endorsement, .a: separate sheet known as ‘allonge' is, attached to the negotiable instrument for. the purpose of making endorsements, ¢ {))"" + Abearer instrument can be transferred merely by delivery,’ whereas to transfer an instrument ‘payable to order, endorsement along with delivery is necessary. Mirena ci Gresser * When a negotiable instrument is signed and transferred by one person to another in such a manner that the right to receive the payment on the basis of the negotiable’ instrument is transferred to the other person, it is known as endorsement.; », ‘>’ + The person who so signs the instrument is called \) the Endorser and the person in whose favour the instrument is endorsed is called the Endorse. TYPES / KINDS OF ENDORSEMENT[kindsfofEndorsementy (1) Blank or general endorsement (Section 16) BE an Ob tera Endorse, (2) fomplets gr Special or Full endorsement ,° + An endorsement is blank or general (Section 16) yoke at . where the endorser signs his name only, (3) Restrictive endorsement (Section 50) s (4) Partial endorsement (Section 56) (5) Conditional or Qualified endorsement (Section 52) and it becomes payable to bearer. 2. Special or Full Endorsement: An endorsement “in full’ or a special An endorsement is restrictive which endorsement is one where the endorser restricts the further negotiation of puts his signature on the instrument as an instrume! 3. Restrictive Endorsement:- well as writes the name ofa person to whom order the payment is to be made. “Pay to Mr. Mohan only”4, Partial Endorsement:- An endorsement partial is one which allows_transferring to the endorsee a part only of the amount payable on the instrument. This does not operate as a negotiation of the instrument. a negotiation of the instrument. [a CITT Easitmsey + When the endorser inserts a condition in. his endorsement it is called a conditional endorsement. For example, an endorsement which; says that the amount will become payable,jf, the: endorse attains majority . 5 + The endorser can, while making the endorsement, limit his, lability ‘on the instrument or make his liability «conditional in the following ways: + When a person recelves a negotiable instrument in blank , he may without signing his own name convert the blank endorsement into an endorsement in full by writing above the endorser’s signature, a direction to pay to or to the order of some other person . In such a case the person is not liable as an endorser on the bill, + For example, if'A writes above the signature of B in a general endorsement. Pay C or to his order, then A does not incur any liability as the endorser and it merely amounts to a special endorsement by B in favour of C. (a) sans recourse endorsement: When the person making the endorsement makes it clear that he shall not be liable to the endorsee or the subsequent holders of the instrument. jin case the instrument is dishonoured, such an endorsement is known as a sans recourse endorsement. In such an endorsement, the words "sans recourse’ or ‘without recourse’ must be used in the endorsement. 'Pay A or ‘order sans recourse’ or 'Pay A without recourse to me' are examples of sans recourse endorsement. For example , an agent-signing a negotiable instrument may exclude’ his ‘V Spersona Tablty by using words to Indicate that he is ing as an agent only.(2) Facultative endorsement: When the endorser, at the ‘ime of making the endorsement clearly states that in the event of the instrument being dishonoured, no notice of dishonour needs to be served upon him, such an endorsement is known as a facultative endorsement... ¢-()\ ‘Pay A or order, ‘Notice of dishonour waived’ is a facultative endorsement and the endorse continues to. be liable on the instrument even if notice of “ dishonour is not served upon him. (4) 'Sans Frais' endorsement: When an endorser does not want the endorsee or any subsequent holder to incur any expense.on his account on the instrument, the endorsement is ‘sans frais’. Move In such a case, the endorser usually add words "San Frais’ or without expenses to the ;/ endorsement. (3) Liability of endorser dependent upon a cor When an endorser, endorse an instrument way that his liability depends on the happening of a specified event which may or may not happen. He may endorse in following ways: CAE? ede (i) "Pay A or order on arrival of consignment at Mumbai." + In such cases'the endorser will not be liable until the sRappehing of the event and if the happening of the ‘’ event becomes impossible, his liability is extinguished. 5. Conditional or Qualified Endorsement: ‘Where the endorser puts his signature under_such writing which makes the transfer of title subject to fulfilment of some conditions of the happening of some events, it is a conditional endorsement.ESSENTIALS OF A VALID ENDORSEMENT 1, Must be on Instrument:- It must be on the instrument. The endorsement may be on the back or face of the instrument and if no space is Teit on the instrument, itmay be made" on a separate paper attached to it called allonage. 2. Endorsement by Maker or Holder:- It must be made by the maker or holder of the instrument. A tranger cannot endorse it. 3. Signature of Endorser:- It_must be signed by the endorser, Full name is not essential. Initials may suffice. Thumb-impression should be attested. Signature may be made on any part of the4. No Specific Form:- It may be made either by the endorser merely signing his name on the instrument or by any words showing an intention to endorse or transfer the instrument to a specified person. 6. Endorsement of Entire Bill:- Itmust be an endorsement of the entire bill. A partial endorsement i.e. which supports to transfer to the endorse a part only of the amount payable does not operate as a valid endorsement, a 5. Delivery:- It_must be completed by delivery of the i The delivery must _be made by the endorser himself or by somebody on his behalf with the intention of passing property therein.