A collecting banker undertakes to collect amounts from cheques and bills for customers by presenting them to the paying banker. As an agent of the customer, the collecting banker has duties to exercise reasonable care and diligence in the collection process. They must present cheques and bills promptly to avoid losses from insolvency, provide timely notice if an item is dishonored, and present bills for acceptance at an early date to fix the maturity date. If the collecting banker fails in these duties and a loss occurs, they are responsible to the customer.

1. Duties of Collecting
Banker
L. PRAKASH KANNAN, M.COM., M.PHIL., (PH.D.), ASSISTANT
PROFESSOR,
S. J. MONISHA III B.COM.,

2. Collecting Banker
⊳ A collecting banker is one who undertakes to collect amount
of a cheque for his customer from the paying banker.
⊳ A banker is under no legal obligation to collect cheques,
drawn upon other banks for a customer.
⊳ But every modern banker performs this duty, because, no
customer will be satisfied merely with the function of
payment of cheques alone.
⊳ In the case of crossed cheques, there is no other alternative
to collect the cheques except through some banker.
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3. Duties of collecting banker

4. Exercise of reasonable care and diligence
⊳ When a banker collects a cheque for his customer, he acts
only as an agent of the customer.
⊳ As an agent, he should exercise reasonable care, diligence
and skill in collection work.
⊳ He should observe utmost care when presenting a cheque or
a bill for payment.
⊳ Reasonable care and diligence depends upon the
circumstance of each case.

5. Present the cheque for collection without
any delay
⊳ The banker must present the cheque for payment without
any delay.
⊳ If there is delay in presentment, the customer may suffer
losses due to the insolvency of the drawer of insufficiency of
funds in the account of the drawer or insolvency of the
banker himself.
⊳ In all such cases, the banker should bear the loss.

6. Notice of dishonour
⊳ If the cheque, he collects, has been dishonoured, he should
inform his customer without delay.
⊳ The Negotiable Instrument Act has prescribed a reasonable
time for giving the notice of dishonour. If he fails to do so,
and consequences, any loss arises to the customer, the
banker has to bear the loss.

7. Present the bill for acceptance at an
early date
⊳ As per Sec. 61 of the NI Act, a bill of exchange must be
accepted. Acceptance gives an additional currency to the bill,
because, the drawee becomes liable thereon from the date of
acceptance.
⊳ Moreover, in the case of a bill of exchange payable after sight,
acceptance is absolutely essential to fix the date of maturity.
⊳ If a banker undertakes o collect bills, it is his duty to present
them for acceptance at any early date. Sooner a bull is
presented and got accepted earlier is its maturity.

8. Present the bill for payment
⊳ The banker should present the bills for payment in proper time and at
report proper place.
⊳ If he fails to do so and if any loss occurs to the customer, then the
banker will be liable. According to Section 66 of the Negotiable
Instrument Act, a bill must be presented for payment on maturity.
⊳ As per Section21, sign bills are payable on demand.
⊳ Section 22 lays down that the maturity of the bills is the date on which
it is due for payment, to which, 3 days of grace are added.
⊳ Thus, the rules for calculating the maturity dates are given in secs.
23,24,and 26 of the NI Act.

9. Present the bill for acceptance at an
early date
⊳ In case of dishonour of a bill by non-acceptance or non-payment, it is
the duty of the collecting banker to inform the customer immediately.
Generally, he returns the bill to the customer.
⊳ In the absence of specific instructions, collecting bankers to be foreign
bill, the banker should have it protested and noted by a Notary Public
and then forwarded it to the customer.

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