Opening of account with account payee cheque.

akash deep (Querist) 17 October 2012 This query is : Resolved
Sir,
If a prospective customer(beneficiary),visits bank premises supposedly on 16.10.12 with a cheque in his possession dated 01.8.2012 and wish to open his account for encashment of cheque. Can a banker open the account with such a cheque ? What are the risks associated with it and what protection a banker will get under law if some fraud happens. ?

Kindly guide me.

With regards

Akash deep

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Tajobsindia (Expert) 18 October 2012
1. As per Banking Rules no a/c payee cheque(s) will be accepted for collection in newly opened accounts till the confirmation of introducer is received by the Branch, in accounts where the introducer has not come in person to the Branch for introducing the account.
2. Back dated cheque also cannot be accepted in a new opened account as this instrument being the very first transaction thereto. As per recent RBI guidelines validity of instruments is no doubt 3 months but for a new Account the past dated instrument honor is left at discretion of the Branch Manager after necessary due deligence.
3. In case of fraud the introducer will be held liable of a newly openned Account.

malipeddi jaggarao (Expert) 18 October 2012
Banks can not open account with a pre-dated account payee cheque as initial deposit. Initial deposit should be always in cash. First the banker-customer relationship should be established. Then only the bank can undertake collection of cheques on behalf of its customers. If bank opens an account with account payee cheque it violates the provisions of NI Act. The banker will not get the protection extended for the Collecting Bank under NI Act in such cases. In the absence of such protection, the bank would become a party in case the transaction turns fraudulent.

Guest (Expert) 18 October 2012
Dear Akash Deep,

As a branch manager of the bank, you were supposed to know the rules of opening of an account, which is an elementary type of knowledge, I suppose, is given to all the entrants of the banking service.

Even as a matter of commonsense, an account of n individual can be opened only on his deposit of some amount, not on some one other's instrument, the credit of which is yet to be realised on some future date and which is still not sure to be honoured by the concerned party.

akash deep (Querist) 18 October 2012
Respected Jaggrao sir,
Thanks for your reply.
But question still remains there that if customers opens account with his own deposit in form of cash or any other valid form, then deposits a pre-dated cheque on the very next day for collection in his new account.
Then what are the implications for the banker.
Kindly provide me the documentary proof for it also.
It is really important and urgent too.

Thank you

With regards
akash deep

akash deep (Querist) 18 October 2012
Dear Dhingra Sahab,
Thank you so much for your critical expert comment.
But i would like to ask you that even if a customer opens an account with his own deposits and then can he use his newly open account for collection of a cheque dated prior to his date of account opening.

Thank you
With regards
akash deep

malipeddi jaggarao (Expert) 19 October 2012
1. Yes, after opening the account he can deposit a pre-dated for collection if the instrument is not more than 3 months old.

2. Banker will definitely exercise caution in collecting such instruments in new accounts. He will review whether he had adhered to the norms of KYC fully. He may question the depositor about the transaction under the instrument. He may contact the drawer of the instrument to satisfy the identification of payee.

3. Instead of asking for documentary proof, you should come out with your real problem. Are you the payee, the drawer, the bankman who collected such instrument etc., so that we can give you a better solution.

Guest (Expert) 19 October 2012
Dear Akash Deep,

Shri Jaggarao has advised you rightly on your point of doubt raised in your supplementary query. The first and foremost condition is for establishment of relation with the bank whom you expect to provide service to you, which is by opening of account with the bank with proper identification and fulfilling other cnditions of opening of account. Rest all are secondary things. There is no ban on deposit of a cheque with date prior to opening of the account, but that should be within the maturity period.

akash deep (Querist) 19 October 2012
Respected Rao Sir,
Again thank you very much.
I am a banker to whom a person approached on 16.10.12 with a cheque dated 8.8.12 valid for three months.
Now normally bankers have apprehension in collection of such cheques so they ask the holder of the cheque to get the date rectified i.e to get the date after the date of account opening.
This is actual scenario, which i want to clear so that i can have right knowledge about this problem.

thank you

With regards
Branch Manager

Guest (Expert) 19 October 2012
Dear Akash Dep,

For your kind information. Mr. Jaggarao is also a retired banker. He has rightly advied you.

malipeddi jaggarao (Expert) 20 October 2012
Thanks Mr.Dhingra for your comments.
Mr.Akash, being a professional banker, you do not have right to direct the customer to get date altered in the cheque if the cheque date is within 3 months. You can definitely ascertain the details from the party as advised by me above and satisfy yourself before opening the account and collecting the cheque especially if the amount of cheque is sizeable.

Arun Kumar Bhagat (Expert) 11 November 2012
I will advise you to search for the guidelines on this issue by Reserve Bank of India.

prabhakar singh (Expert) 11 November 2012
Mr. Jaggarao has a right approach towards your problem.The care banker is to take that there is no impersonation.

Opening of account with account payee cheque.

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