NEGOTIABLE INSTRUMENTS

Q&A

1. Validity period of the cheques is restricted to 3 months. Why?

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2. Crossing of an uncrossed cheque by the bearer is not considered as a material alteration.

Why?
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3. Fixed deposit or term deposit receipt is not a N.I. Why?

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4. Cheques favouring companies are not paid in cash across the counter. Why?
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5. Drafts are not issued payable at Extension Counters. Why?

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6. Payment can be made to a minor (payee) in the cheque. Why?

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7. Cheques favouring third parties are not collected in Savings Bank account. Why?

8. An endorsement by an illiterate person by affixation of thumb impression is not

accepted. Why?
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9. Cheques crossed to two banks are not paid. Why?

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10. Cheque where crossing has been opened should be paid only to the drawer. Why?
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11. A Cheque endorsed for part amount is not paid even for the amount so endorsed. Why?
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12. When a duplicate and the original DD are presented simultaneously, the original is
returned with the reason Reported lost. Duplicate issued. Why?
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13. Banks do not `generally entertain customers after business hours. Why?
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14. Minors who have completed 10 years of age are allowed to open and operate the
accounts with their own signatures. Why the age is kept as 10?
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15. Before returning a dishonoured cheque, all the bank stamps are cancelled. Why?
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16. Where the stop payment instructions are received by way of telegram or telephone, we
insist for confirmation in writing. Why?
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17. When amount written in words and figures differs, the amount in words to be paid.
Why?
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18. Payment of crossed cheque cannot be made across the counter. Why?
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19. Payment of a cheque can be stopped by the drawer but the payment of DD cannot be
stopped by its purchaser/ bank. Why?
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20. Even Not negotiable cheques are transferable. Why?

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21. Banks insist on signing of a cheque by partner for and on behalf of the firm. Why?
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22. Payment of a forged cheque does not protect the bank howsoever real the forged
signature may appear. Why?
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23. Banks cannot return the DD on the plea that the signatures do not tally. Why?
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24. Sizes of cheques/ drafts of all the banks are uniform. Why?
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RV/2013