Procedures of issuance of Cheque Book/Duplicate cheque Book

Md. Mahfuzur Rahman

AVP, TI, SIBL

Cheque:

“A cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand” (section 6).A cheque is a bill of exchange which is always (i) drawn on a banker specified theirin, and (ii) payable on demand.

M.I.C.R. Cheque:
Magnetic Ink Character Recognition (M.I.C.R.) is a character recognition system that uses special ink and characters. When a document that contains this ink is to be read it is passed through a machine with a magnetic field that recognizes the characters. It is mostly used by banks to facilitate processing of cheques. The main purpose is to enhance security and avoid losses caused by fraudulent cheques or coloured photocopied cheques , because when a coloured photocopied cheques is scanned the magnetic field will not be able to read the ink.
With a view to speeding up the cheque clearing process, the Bangladesh Bank is working towards introducing mechanized cheque processing system using MICR(Magnetic Ink Character Recognition). Under this system, the cheques are processed at high speed on machines. Banks issue cheque draft and other payment instruments in MICR format using the special quality paper and printing specifications. On MICR instruments, there is code line at the bottom containing information printed in magnetic ink, which is required for mechanical processing.

Obligation to honour the cheques:

By accepting deposits payable on demand or otherwise the Banker is under a statutory obligation to honour his customer’s cheques in the usual course. Saction 31 of the Negotiable Instruments Act, 1881

Procedure of issuance of cheque Book

Fresh checkbook is issued to the account holder only against requisition on the prescribed requisition slip attached with the checkbook issued earlier, after proper verification of the signature of the account holder personally or to his duly authorized representative against proper acknowledgment.

  1. On receipt of the request / requisition from the accountholder to issue cheque book, the concerned officer entrusted with the task of issuing Cheque Book will first verify the signature of the Account holder given in the requisition Slip. If the Account holder’s signature is found correct, he will examine where there is adequate balance in the account & there is any shortfall of requisite Papers/ documents or shortfall required information or not.
  1. Thereafter the detailed information of account such as account name, account number, Branch name, number of Book, number of leaf, etc is posted in the computer and then we transmit all these information to Head Office.
  1. Within 4.00 pm each day the requisition related information is sent for printing MICR cheque to Head Office through mail.
  1. The concerned Officer will also confirm over telephone whether the mail received and matched with delivery report by Head Office or not.
  1. If the information is sent properly, then the printed copy of delivery report is to be maintained properly.
  1. Persuasion to be continued to get the delivery of the printed cheque books within 3 (Three) days.
  1. After receipt cheque books, the officer will count each and every leaf of the printed cheque books with the delivery report sent by Head Office.
  1. Thereafter officer will ensure whether the customer’s name and account number is entered in the security register.
  1. The officer concerned then informs the client for collecting the cheque Book.
  1. Before delivering the Cheque Book to the client / account holder, the concerned officer will write the new cheque series in the requisition slip, make posting in computer and preserve the requisition Slip properly.
  1. Finally, the concerned officer makes an inventory of stock in the computer at the day end.

Procedure of issuance of duplicate cheque Book

1)Primarily, the client shall inform the bank about the lost Cheque Book with a request to mark stop Payment against the lost leaves of the cheque Book . Then he will request for issuance duplicate cheque book.

2)Ensure GD entry from respective Police Station and submit the copy to the branch.

3)The client will sign the new requisition Slip and the concerned officer mail with the details of the client to Head Office to get the cheque book.

4)After getting cheque Book the concerned officer will write the cheque series on the requisition Slip, make posting in computer and preserve the same properly.

Custody and Maintenance Procedure Cheque book.

 What is Custody and Maintenance ?

Custody means keeping under control. In a banking Institution, branch custody means taking care, supervision and control of the banking related important affairs by the In-charge officials of the branch, as assigned by the management & set rules of the bank and maintenance meansutmost care, supervision and handling as per procedures.

  1. Cheque books received from Central store Department/ Head Office generally by the authorized officer who will initial the cover of each book as token of having counted and checked.
  1. Cheque book shall be kept in safe in the Strong Room under dual control after necessary entry in the Cheque Book Stock Register
  1. A few cheque books duly verified for current consumption of the deposit section shall be taken out from the main stock after necessary entry by the Officer In- Charge deposit section against his acknowledgment.
  1. The first and last serial numbers of each book shall be entered in the cheque book issue register.
  1. Separate folios in the cheque book issue register shall be allotted for Al-Wadeah Current A/C. Mudaraba Savings A/c. & Mudaraba Short Notice Deposit A/c.
  1. Stocks of Cheque books are to be kept under lock and key in security box by the in- charge of deposit section.
  1. The customer may at the time of opening of A/c shall sign a requisition slip requesting the manager to issue a cheque book of required denomination of the respective A/c. If formalities for opening of A/c are fully completed the cheque book may be issued.
  2. All subsequent cheque books shall be issued against the cheque requisition slip extracted from previous cheque book and the following procedures will be adopted.

a)The requisition slip shall be sent to passing official of the concerned section to ascertain the number, the average balance maintained the manner in which the A/c is operated on, whether previous issued cheque book have been properly consumed, cheques are returned frequently for want of fund, payment of cheque is not frequently stopped it is not dormant A/c etc. over & above signature of the A/c holder has been agreed for assessing the correctness the requirement as per requisition.

b)If any defect is found by the passing official he shall may remark to that effect on the requisition slip and forward it to the section in-charge/ manager for decision.

  1. In other cases the passing officer shall verify the signature on the slip, cancel it and send it to the cheque book issued section.
  1. Fresh cheque book shall be issued to dormant A/c. holder only when he calls on personally and the manager is fully satisfied.
  1. In case of slightest suspicion arisen, proper enquiries shall be made by contracting the drawer.
  1. In case, where a requisition slip extracted from previous cheque book is not presented every possible care shall be exercised to establish the genuineness of the case particularly when the address of the constituent is recently changed and or a simultaneous request to change the address is made.
  1. If the cheque book requisition slip is reported lost then ascertaining co-operation position explained earlier a cheque book may be issued on obtaining a fresh requisition slip.

Principles of Deposit

Shariah principles for receiving deposit

Islamic Banks receive deposits under two principles :

i)Al-Wadeeah principle.

ii)Muderaba principle.

Al-Wadeeah:

Fund which is deposited with banks by the depositors with clear permission to utilize/ invest the same is called Al- Wadeeah. Islamic Banks receive deposits in Current Accounts on the basis of this Al-Wadeeah Principle. Islamic banks obtain permission from the Al-Wadeeah depositors to utilize the Funds at its own responsibility and the depositors would not share any profit or loss earned/ incurred out of using of this funds by the bank. The banks have to pay back the deposit received on the principle of Al-Wadeeah on demand of the holders. The depositors have to pay govt. taxes and other charges, if any.

Muderaba:

Muderaba is a partnership of labour and capital, where one partner provides full capital and the other one manages the business. The capital provider is called Sahib –Al- Maal and the user of the capital is called Muderib. As per Shariah principles, The Muderib will conduct the Business independently following Shariah principles. The Shahib Al- Maal may provide services, if he deems fit but he cannot impose any decision over the Muderib. Profit, if any, is divisible between the Sahib- Al- Maal and the Muderib at a predetermined ratio, while loss, if any, is borne by the Sahib- Al- Maal. Muderib cannot avail of any salary or remuneration against his labour as a manager or conductor of the enterprise/ business. The deposits, received by Islamic Banks under this principle are called Mudaraba Deposits. Here, the Depositors are called Sahib –Al- Maal and the bank is called Muderib. The Mudaraba deposits include:

i)Mudaraba Savings Deposits (MSD)

ii)Mudaraba Notice Deposits (MND)

iii)Mudaraba Term Deposits MTD).

Different Islamic Banks have developed various deposit schemes on the basis of this Mudaraba principle such as monthly deposit – based Hajj Scheme, Monthly one time deposit based Term deposit scheme, Monthly Mudaraba profit deposit scheme, Monthly Mudaraba Marriage Savings Scheme etc.