necessary inquiries mentioned above he may enable dishonest persons topossess cheque books for fraudulent purposes. If any such personhappens to be an undercharged bankrupt, the banker might be placed inan awkward position for having allowed such a person to open and open abank account.
Safeguard against unintended overdrafts:
Sometimes due to a mistakean account may be given an overdraft, For instance, the ledger keeper,misreading the balance of an account honors a cheque for an amountlarger than the balance. Similarly a credit entry belonging to a customer may be made by mistake in another customer’s account. In suchsituations the excess amount withdrawn by the customer can only berealized if the customer is a respectable person.
In Allied Bank of Pakistan I also observed, When a banker does not make the necessary investigation, he may be deprived of thestatutory protection provided to a clearing banker under section 131 of theNegligence Instrument Act 1881. This is because I such a case the banker will be deemed to have acted negligently.
Inquiries about clients:
Being a banker I think Allied Bank of Pakistanhas a business obligation to respond to inquiries from other banks etc.about his customer’s financial position. Though the banker gives only ageneral ideal about the financial standing of his customer, it shouldnevertheless have the necessary information available with him.
When an account is opened with Allied Bank of Pakistan customer provides to the bank a specimen of the form of signature which wouldappear on all his cheques to express his authority for the payment of cheques drawn on his banker. This specimen is taken generally on a cardspecially designed for this purpose, and rule for the customers, full name,and account number are entered on it.If the bank has reasons to doubt the genuineness of a signature, heshould either get it confirmed for his satisfaction or return the cheque withthe remark ‘Signature differs’. If the signature of the customer is forged thebanker cannot escape his liability because he has actually acted on hiscustomer’s mandate.
Signature other than in English
If a customer signs in a language other than English or Urdu, he isrequested to fill a Vernacular Form. This is a type of indemnity wherebythe customer relieves the bank of any responsibility in case there is anymis-verification of signatures by the bank and the cheque is paid. Thevernacular Form is obtained because the bank officers are not used toverification of signatures other than in English or Urdu; hence there is
Hailey College of Commerce, University of the Punjab