JAIIB PPB Paper-2 Module-A Unit 13: Responsibility Of paying

05/03/2023

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JAIIB Paper 2 (PPB) Module A Unit 13: Responsibility Of paying (New Syllabus)

The Institute of Indian Banking and Finance (IIBF) recently announced the updated syllabus and exam pattern for the JAIIB Exam 2023. The JAIIB 2023 will include four papers, with Paper 2 (Principles & Practices of Banking) covering Unit 13: Responsibility Of paying. This unit is crucial for candidates to understand thoroughly as it will impact their performance in the exam.

To aid candidates in comprehending the topic, we will provide all necessary details related to Unit 13: Responsibility Of paying of JAIIB Paper 2 (PPB) Module A: General Banking Operations. We highly recommend candidates refer to this article and use our Online Mock Test Series to improve their knowledge of Foreign Currency Accounts for Residents and Other Aspects.

For JAIIB Certification Examination 2023 candidates, understanding each unit in the syllabus, including the Marketing unit, is critical. This unit is essential in the banking industry, and candidates must prepare adequately to excel in the exam and establish a successful career in the banking sector.

Negotiable Instruments Act and Paying Bank

‘The drawee of a cheque having sufficient funds of the drawer in his hands properly applicable to the payment of such cheque must pay the cheque when duly required to do so, and, in default of such payment, must compensate the drawer for any loss or damage caused by such default.’ (Sec.31)

Section 31 Applies Only to Bankers: This is because as per Sec. 6 ‘cheque’ is a bill of exchange drawn on a specified banker.
Sufficient Funds: The banker should have sufficient funds of the drawer.
Properly Available: The funds available in the customer’s account should also be properly available for the payment of the cheque.
When Duly Required to Do So: It means that the cheque must be properly drawn and signed by the drawer.
Compensate the Drawer: In case the banker refuses payment wrongfully, then he is liable only to the drawer of the cheque and not to any endorsee or holder, except when

(a) The bank is wound up, in which case the holder becomes a creditor entitled to make a claim

(b) if cheque is paid disregarding the crossing, the true owner can hold the banker liable.

Loss or Damage Caused by Default: A banker is liable to the drawer for any loss or damage, due to the wrongful dishonour of the customer’s cheque.
85 grants protection to a banker on his making payment of a cheque.
89 states the effect of paying an instrument on which alteration is not apparent.

Liability Of Paying Banker When Customer’s Signature On The Cheque Is Forged

When the customer’s signature on the cheque is forged: there is no mandate to the bank to pay. Banker is not entitled to debit the customer’s account on such forged cheque.
In a joint account if one of the signatures is forged: there is no mandate and banker cannot make payment.

Payment To Be In Due Course For Bank To Seek Protection

Banker can seek protection under Sec. 85 only where payment has been made to the holder, his servant or agent, i.e. payment must be made in due course. firm. Payment to a person who had nothing to do with the firm or a payment to an agent of the bank would not be a payment to the firm.
Payment in due course has been defined in Section 10 of the Negotiable Instruments Act to mean payment in accordance with the apparent tenor of the instrument in good faith and without negligence to any person in possession thereof, under circumstances which do not afford reasonable ground for believing that he is not entitled to receive payment of the amount therein .
Payment to a liquidator against the cheque presented across the counter was not a payment in due course and the bank was not entitled to seek protection under Sec. 85. that under Sec. 244A of the Indian Companies Act, 1913, an official liquidator was required to open an account with a bank and pay therein moneys received by him in the course of the liquidation.

Payment In Good Faith Without Negligence Of An Instrument On Which Alteration Is Not Apparent

Sec. 89 gives protection to the paying banker of a cheque which has been materially altered but does not appear to have been so altered, if payment is made according to the apparent tenor at the time of payment and otherwise in due course.

Payment By Bank Under Mistake Whether Recoverable

When there is no question of unjust enrichment of the payee by reaping the benefit of an accidental windfall he should not be made to suffer, for he would be as innocent as the payer who paid the money acting under a mistake.

JAIIB PPB Module A Unit 13 Responsibility Of paying (Ambitious Baba) PDF