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BILLS PURCHASED/DISCOUNTED
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1) As the bills purchased/discounted are unsecured in nature, the Bank, has to observe the guidelines issued by RBI from time to regarding unsecured advances. The Bank shall purchase or discount only clean business cheques, cheques issued by government and semi government offices, LIC of India government undertakings, demand drafts issued by the banks, banker cheques etc., The Bank will have to establish the following in order to get title as a holder for value.
i) The Bank should have given value for cheque in goodfaith
ii) The Bank should not have notice of any previous dishonour of the Cheque or any defect in the title of the customer
iii) The cheque should not have become overdue/outdated or post dated for negotiation.
iv) The Bank should strictly observe the points in the Negotiable Instrument Act 1881 while discounting or purchasing the cheques crossed specially.
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2) Depending upon the size and nature of business of the members, the Board of Directors of the Bank should sanction a suitable limits to each member. Usually, at the end of the previous year, the limits of the ensuing year should be sanctioned.
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3) Discounting /Purchasing of cheques should be routed from Manager/Branch Manager/authorized Officer to the concerned Staff. Cheques should be scrutinized as to its date, amount in words and figures, signature of the drawer, endorsement of the payee etc.,
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4) The cheques drawn by the party of his branch or allied concerns should not be purchased/discounted. Any cheques of accommodation nature should not be purchased.
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5) Cheques purchased/discounted should be entered in the register prescribed therefore.
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6) Cheques purchased/discounted should be sent to the paying bank on the same day. Cheques should be sent by registered post or courier service where acknowledgement of receipts is provided.
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7) Cheques discounted/purchased should be encashed/realized on presentation. Otherwise there should be returned with ‘Return Memo’ . On return of cheques, Bank should charge interest from the date of discount/purchase upto the date of payment of amount of cheque returned.
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8) If the cheques purchased/discounted which have been sent for collection to paying banker are lost in transit or misplaced, the same has to be brought to the notice of the borrower and the borrowers should immediately repay the amount of the cheque for the loss in transit or misplace of cheque, the Bank will not hold any responsibility.
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9) Documents : The following documents should be obtained from the borrowers.
i. Annual Limit application from borrowers.
ii. Two guarantors
iii. Demand Promissory Note
iv. Letter of lien and Set Off
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