TOPIC ONE
THE ORIGIN OF MONEY
AT THE EARLY STAGES OF DEVELOPMENT OF MONEY,
GOLD AND SILVER WERE USED AS MONEY ALMOST
THROUGHOUT THE WORLD:
DURING
THOSE
TIMES,
INTERNATIONAL
TRANSACTIONS DID NOT PRESENT ANY PROBLEM
BECAUSE THE CURRENCY (GOLD) WAS UNIFORM.
THE GOLDSMITHS, BECAUSE OF THEIR TRADE, HAD
EXCELLENT STRONG ROOMS, SO THEY BECAME AN
OBVIOUS CHOICE TO BE USED AS A PUBLIC SAFE
AS AN ACKNOWLEDGEMENT FOR DEPOSITS THE GOLDSMITHS ISSUED
RECEIPTS AND SOON FOUND THEIR RECEIPTS WERE BEING PASSED
FROM ONE TRADER TO ANOTHER IN THE SETTLEMENT OF DEBTS.
THIS SAVED A TRADER WITH A DEBT TO PAY FROM HAVING TO GO TO
IT WAS MUCH SIMPLER JUST TO TRANSFER THE RECEIPT:
TO HELP IN THIS, THE GOLDSMITHS BEGAN TO ISSUE RECEIPTS IN
CONVENIENT DENOMINATIONS AND TO MAKE THEM PAYABLE TO
BEARER SO THAT TITLE TO THE RECEIPT WOULD PASS BY DELIVERY”
PRESENT-DAY BANK NOTES ARE PAYABLE TO BEARER.
IN THE SAME WAY AND WHOEVER IS IN POSSESSION OF A NOTE,
THE GOLDSMITHS BEGAN TO CONCENTRATE ON THE BANKING SIDE OF THEIR BUSINESS AND SOON FOUND THAT, AT ANY ONE TIME, ONLY A SMALL PROPORTION OF THE COINS THEY WERE HOLDING FOR SAFE- KEEPING WOULD BE REQUIRED TO MEET DEMANDS FOR REPAYMENT OF THEIR RECEIPTS.
THEY BEGUN TO LEND THE SURPLUS MONEY AND TO CHARGE INTEREST FOR DOING
SO, OTHER SERVICES WERE DEVELOPED SUCH AS DEPOSIT ACCOUNTS, DISCOUNTING (OR CASHING) BILLS OF EXCHANGE BEFORE THE DAY FOR PAYMENT AND DEALING IN BULLION AND FOREIGN CURRENCIES.
WITH THE DEVELOPMENT OF BANKS AND THAT MONEY, EACH COUNTRY HAD
ITS OWN CURRENCY.
TO FACILITATE INTERNATIONAL PAYMENTS, STANDARD HAD TO BE
ESTABLISHED FOR COMPARISON OF THE DIFFERENT NATIONAL CURRENCIES.
THE SOLUTION WAS TO MAKE ALL CURRENCIES CONVERTIBLE INTO GOLD,
HENCE, THE CONCEPT OF GOLD STANDARD.
ACCORDING TO THE GOLD STANDARD ALL NATIONAL CURRENCIES WERE
IMPORTERS HAVE TO CONVERT NATIONAL CURRENCY INTO FOREIGN CURRENCY AND
EXPORTER MUST CONVERT FOREIGN CURRENCY INTO DOMESTIC CURRENCY. HENCE THERE IS A MARKET FOR FOREIGN CURRENCY
IMPORTERS ARE THE DEMANDERS OF FOREIGN CURRENCY BECAUSE THEY NEED IT TO PAY FOR
THEIR PURCHASES ABROAD:
EXPORTERS ARE THE SUPPLIERS OF FOREIGN EXCHANGE BECAUSE THEY TRANSFORM THEIR
The business of Banking
THE BUSINESS OF BANKING IS MAINLY
ABOUT BORROWING FROM THE PUBLIC
AND LENDING TO THE PUBLIC
BORROWING FROM THE PUBLIC IS DONE
THROUGH DEPOSIT MOBILIZATION
DEPOSITS ARE MOBILISED THROUGH
FOR
EXAMPLE
SAVINGS
ACCOUNT,CURRENT
ACCOUNT AND OTHER TYPES OF DEPOSIT
ACCOUNTS.
THE MOBILISED DEPOSITS ARE PARTLY EXTENDED
THE OTHER PART OF THE MOBILISED
DEPOSITS IS PUT IN OTHER INVESTMENT
OPPORTUNITIES
IT IS IMPORTANT TO NOTE THAT MORE
THAN 60% OF THE BANKS PROFIT IS
GENERATED FROM LOANS EXTENDED TO
VARIOUS CUSTOMERS
IT IS THROUGH THIS AMOUNT THAT DAY
FUNCTIONS OF THE BANKS
THE PRIMARY FUNCTIONS OF ANY BANK
INCLUDE;
(i) DEPOSIT MOBILIZATION
(ii) LENDING TO THE PUBLIC AND
AGENCY FUNCTIONS
THE BANKS HAVE OTHER FUNCTIONS
WHICH ARE CONSIDERED AS AGENCY
FUNCTIONS OR ACTIVITIES;THEY
INCLUDE THE FOLLOWING;
a)
COLLECTION AND PAYMENT OF
CHEQUES,BILLS OF EXCHANGE AND
PROMISORY NOTES
b)
TRANSFER OF FUNDS
The Meaning of Money
MONEY IS A CLAIM TO GOODS AND SERVICES.
MONEY CAN BE EXCHANGED FOR THE GOODS AND
SERVICES WE NEED. IN ITSELF, CONTEMPORARY
MONEY IS PRACTICALLY WORTHLESS:
THE STARVING MAN CANNOT EAT IT NOR THE
Definition
:
MONEY IS SOMETHING WHICH IS READILY
ACCEPTABLE AS A MEDIUM OF EXCHANGE.
BEFORE MONEY CAME INTO USE AS MEDIUM
The economic importance of money
MODERN ECONOMIES ARE BASED ON THE PRINCIPLE OF SPECIALIZATION AND DIVISION OF
LABOUR.
THE TYPICAL INDIVIDUAL DEPENDS UPON THE PRODUCTION OF GOODS AND SERVICES BY
OTHER PEOPLE.
WITHOUT THIS SPECIALIZATION LIVING STANDARDS WOULD BE EXTREMELY LOW, AS
INDIVIDUALS WOULD BE UNABLE TO DEVELOP SPECIFIC SKILLS, INSTEAD HAVING TO SPREAD THEIR EFFORTS OVER THE PRODUCTION OF BASIC ITEMS, SUCH AS FOOD, SHELTER AND CLOTHING REQUIRED FOR SURVIVAL. ALSO, THE SIGNIFICANT ECONOMIES OF SCALE, SO VITAL TO THE EFFICIENCY OF MODERN PRODUCTION PROCESSES, WOULD BE LOST.
IN GENERAL, SPECIALIZATION WILL ONLY BE UNDERTAKEN IF THERE IS SOME PROSPECT
Historical Development of Money
MONEY CONSISTS OF ALL THOSE THINGS THAT ARE
GENERALLY ACCEPTABLE AS A MEDIUM OF EXCHANGE.
AN ALTERNATIVE DEFINITION OF MONEY IS THAT IT IS
ANYTHING THAT IS GENERALLY ACCEPTED AS PAYMENT
FOR GOODS AND SERVICES OR MONEY IS ANYTHING
THAT IS GENERALLY ACCEPTED BY THE SOCIETY TO ACT
Barter System
IN THE COURSE OF HISTORY MANY DIFFERENT COMMODITIES HAVE
BEEN USED AS MEANS OF EXCHANGE.
IN THAT PERIOD THERE WAS NO COMMON MEDIUM OF EXCHANGE.
GOODS WERE EXCHANGED FOR GOODS.
THE SYSTEM IN WHICH GOODS ARE USED TO BUY OTHER GOODS IS
CALLED
BARTER SYSTEM.
THIS SYSTEM OCCURS WHERE GOODS OR SERVICES ARE TRADED
Barter System Continue…
THE SUCCESSFUL OPERATION OF THIS FORM OF TRADE REQUIRES A
DOUBLE COINCIDENCE OF WANTS.
THE POTENTIAL PROBLEMS INVOLVED IN COMPLETING A TRANSACTION
MAY BE GREAT, ESPECIALLY AS MANY GOODS ARE VARIABLE IN
QUALITY, NOT EASILY DIVISIBLE, AND POSSIBLY PERISHABLE.
THUS BARTER TRADE IS EXTREMELY INEFFICIENT, INVOLVES HIGH
Disadvantage of Barter System
THE PROBLEM OF DOUBLE COINCIDENCE OF WANTS:
THIS MEANS THAT UNDER BARTER SYSTEM THERE SHOULD BE A POSSIBILITY OF FINDING SOMEONE WHO IS WILLING TO BUY WHAT YOU ARE SELLING AND AT THE SAME TIME TO SELL TO YOU WHAT YOU WANT TO BUY. THIS PROCESS WAS VERY DIFFICULT AND A LOT OF TIME WAS WASTED DURING THE EXCHANGE PROCESS. THE PROBLEM OF PORTABILITY:
THE VALUE/WEIGHT RATIO OF THE COMMODITY WAS TOO BULKY THAT INDIVIDUAL CANNOT CARRY REASONABLY HIGH SUM OF MONEY AT A LONG DISTANCE.
THE PROBLEM OF DIVISIBILITY:
TO ACT AS MONEY OTHER COMMODITY WAS NOT EASILY DIVISIBLE INTO UNITS LIKE GRAINS OR SALT. THE PROBLEM OF DURABILITY:
Characteristics/Quality of Good Money.
ANY COMMODITY CAN PERFORM THE ROLE OF MONEY PROVIDED THAT IT
POSSES CERTAIN KEY QUALITIES SUCH AS THE FOLLOWING.
BY DEFINITION A SUBSTANCE MUST BE GENERALLY ACCEPTABLE IF IT IS TO BE
REGARDED AS MONEY. THE EXTENT OF THIS ACCEPTABILITY AND THE
WILLINGNESS OF PEOPLE TO ACCEPT SOME FORMS OF MONEY IN
PREFERENCE TO OTHERS, ARE IMPORTANT INDICATORS OF QUALITY OF GOOD
Characteristics/Quality of Good Money.
MONEY SHOULD BE EASY TO TRANSPORT OR TO CARRY
REASONABLY. ALSO IT SHOULD BE PHYSICALLY CONVENIENT FOR
THE USER.
Characteristics/Quality of Good Money.
MONEY SHOULD STAY LONG IN TERMS OF VALUE, THAT IS, PEOPLE WILL ONLY ACCEPT MONEY IN EXCHANGE FOR THEIR OWN PRODUCTS IF THEY BELIEVE THAT THE MONEY WILL MAINTAIN ITS KEY PHYSICAL CHARACTERISTICS AT LEAST UNTIL AFTER A TIME AT WHICH THEY HAVE PLANNED TO SPEND THE MONEY.
Characteristics/Quality of Good Money.
RECOGNIZABILITY- MONEY SHOULD BE EASILY RECOGNIZED BY THE PEOPLE; OTHER THINGS
BEING EQUAL THE BETTER WILL BE ITS QUALITY AS MONEY. ALSO MONEY SHOULD NOT BE EASILY FORGEABLE.
SCARCITY- THE VALUE OF MONEY, LIKE ECONOMIC VALUE OF ANY ASSET IS A SUPPLY AND DEMAND PHENOMENON. THIS GIVES APPEARANCE OF VALUE EVEN IF THE COMMODITY HAS NO INTRINSIC VALUE. MONEY DERIVES ITS VALUE FROM ITS SCARCITY.
STABILITY OF VALUE- MONEY, DESPITE THE INFLUENCES OF INFLATION AND DEFLATION REMAINS
FAIRLY STABLE IN VALUE. MONEY IS NOT SUBJECT TO THE NATURAL FORCES OF WEATHER AS MUCH EARLY COMMODITY MONIES WERE.
The Functions of Money
THERE ARE FOUR BASIC FUNCTIONS OF MONEY
NAMELY:-MEDIUM OF EXCHANGE
MONEY’S PRIME FUNCTION IS TO ACT AS A MEDIUM OF EXCHANGE. THE EXISTENCE OF MONEY ENABLES ALL GOODS AND SERVICES TO BE EXCHANGED AGAINST IT.
WITHOUT MONEY THE MODERN ECONOMIC SOCIETY WHICH IS BASED ON SPECIALIZATION AND DIVISION OF LABOUR COULD NEVER HAVE DEVELOPED.
LIQUID STORE OF VALUE
MONEY HAS THE ADVANTAGE THAT IT CAN BE STORED TODAY WITHOUT COMMITMENT AS TO HOW IT WILL BE ALLOCATED IN FUTURE.
The Functions of Money
UNIT OF ACCOUNT OR MEASURE OF VALUE
MONEY SIMPLIFIES THE PROCESS OF CALCULATING THE
RATE OF EXCHANGE BETWEEN COMMODITIES.
THAT IS IN ALL FORMS OF TRADE IT IS USEFUL TO BE ABLE TO
COMPARE DIRECTLY THE VALUE OF ONE TYPE OF COMMODITY
OR SERVICES AGAINST ANOTHER.
THEREFORE MONEY CAN BE USED FOR SUCH A COMPARISON.
MONEY BEING A UNIT OF ACCOUNT ENABLES ASSETS TO BE
The Functions of Money
STANDARD OF DEFERRED PAYMENTS
MONEY ENABLES LOANS AND CREDIT TO
CHEQUES
INTRODUCTION:
THE USE OF CHEQUES AS A MEANS OF PAYMENT IS PROBABLY BECOMING MORE
POPULAR IN TANZANIA AS PEOPLE, ESPECIALLY INDIGENOUS AFRICANS GET
ACCESS TO BANKING SERVICES.
FOR INSTANCE THERE ARE SOME WHO WANT TO EXPAND THEIR BUSINESSES
THUS APPROACH THE BANKS FOR LOANS WHICH ULTIMATELY WILL HAVE TO USE
CURRENT ACCOUNTS AND HENCE THE USE OF CHEQUES.
ALSO SOME OTHER GROUPS SUCH AS CBOS, RETIRED OFFICERS WHO RECEIVE
CHEQUES
AS ONE MAY SEE THE CHEQUES BECOME MORE POPULAR IT IS IMPORTANT TO MAKE SURE THAT THE USE OF CHEQUE AND THE FACTORS AFFECTING ITS VALIDITY ARE WELL KNOWN BY AT LEAST EVERY
A CHEQUE IS A COMMON FORM OF NEGOTIABLE INSTRUMENT USED THROUGH OUT THE WORLD.
IT OPERATES AS MANDATE OR ORDER OF THE DRAWER, AUTHORIZING OR DIRECTING THE DRAWEE TO MAKE PAYMENT TO THE HOLDER OF IT. USUALLY THE DRAWER IS A BANKER.
A CHEQUE IS A FORM OF A CONTRACTUAL DOCUMENT, AND THE CONTRACT IN IT FALLS UNDER THE
CHEQUES CONT….
WHEN WRITING OUT A CHEQUE, CARE SHOULD ALWAYS BE
EXERCISED TO ENSURE THAT ALL DETAILS ARE
COMPLETED:--DATE
-NAME OF PAYEE
-AMOUNT IN WORDS AND IN FIGURES AND
-DRAWER’S SIGNATURE
CHEQUES MUST BE WRITTEN IN INK AND NO ROOM SHOULD
CHEQUES CONT….
WHEN AN OPEN CHEQUE BOOK IS IN USE, CHEQUE SHOULD BE CROSSED, PREFERABLY NOT NEGOTIABLE, WHENEVER THEY ARE TO BE SENT THROUGH THE POST.
IF THERE IS ANY ALTERATIONS THE DRAWERS MUST SIGN AGAINST SUCH ALTERNATION.
FOR THE CHEQUES TO BE USED EFFECTIVELY SUFFICIENT FUNDS SHOULD BE
AVAILABLE IN THE DRAW
A CHEQUE IS A COMMON FORM OF NEGOTIABLE INSTRUMENT USED THROUGH OUT THE
WORLD.
CHEQUES CONT….
IT OPERATES AS MANDATE OR ORDER OF THE DRAWER,
AUTHORIZING OR DIRECTING THE DRAWEE TO MAKE
PAYMENT TO THE HOLDER OF IT. USUALLY THE DRAWER IS A
BANKER.
BANKERS ACCOUNT TO MEET CHEQUES WHEN THEY ARE
PRESENTED FOR PAYMENT AND CHEQUES DRAWN SHOULD
ADVANTAGES OF USING
CHEQUE PAYMENT METHOD
CHEQUES ARE WIDELY USED BECAUSE THEY ARE EASIER FOR TRADERS TO TRANSPORT
THAN CASH.
CLEARED AND BEFORE IT IS APPLIED TO A BANK ACCOUNT.
A CHEQUE ALSO PROVIDES EVIDENCE OF RECEIPT AND EVIDENCE ON NON PAYMENT
DEFINITION OF A CHEQUE
A CHEQUE IS AN UNCONDITIONAL ORDER IN WRITING
DRAWN ON A BANKER,SIGNED BY THE DRAWER
REQUIRING THE BANKER TO PAY ON DEMAND,A SUM
CERTAIN IN MONEY TO ORDER OF SPECIFIED PERSON
OR TO BEARER AND WHICH DOES NOT ORDER ANY
ANALYSIS OF THE DEFINITION
UNCONDITIONAL ORDER
THE ORDER TO PAY COMING IN A FORM OF
A CHEQUE MUST NOT BE ATTACHED WITH
CONDITIONS AS FAR AS THE BANKER IS
CONCERNED.
THE ORDER MUST BE IN WRITING
ANALYSIS OF THE DEFINITION
THE ORDER MUST BE SIGNED BY THE
DRAWER OR HIS AUTHORISED AGENT
THE SIGNING BY THE DRAWER OR HIS/HER
AUTHORISED AGENT IS WHAT BRINGS
VALIDITY TO A CHEQUE
THE ORDER TO PAY MUST BE ADDRESSED
BY ONE PERSON TO ANOTHER
.
ANALYSIS OF THE DEFINITION
THE SUM WRITTEN IN THE CHEQUE MUST BE CERTAIN
THE AMOUNT WRITTEN IN THE CHEQUE SHOULD BE CLEARLY STATED BOTH IN WORDS AND FIGURES
THE ORDER MUST BE PAYABLE ON DEMAND
IN ORDER FOR THE INSTRUMENT TO BE CALLED A CHEQUE,IT MUST BE DRAWN PAYABLE ON DEMAND
PAYEE MUST BE A SPECIFIED PERSON
IF THE CHEQUE IS NOT PAYABLE TO BEARER,THE NAME OF PAYEE
PARTIES TO A CHEQUE
DRAWER
THE PERSON WHO GIVES THE ORDER TO PAY THE CHEQUE
TYPES OF A CHEQUE
WHEN ONE TALKS OF DIFFERENT TYPES OF CHEQUES, ONE REFERS TO THE NATURE
OF THE CONTENTS OF CHEQUES AND NOT TO FORMS. IN THIS RESPECT, WE MAY DISTINGUISH BETWEEN VARIOUS TYPES OF CHEQUES SUCH AS;
A BEARER CHEQUE:
THIS IS ONE WHICH CAN BE NEGOTIATED BY A MERE DELIVERY.
WHEN THE HOLDER OF A BEARER CHEQUE TRANSFERS IT WITHOUT ENDORSEMENT
IN EXCHANGE OF GOODS, HE IS NOT LIABLE ON IT IF IT IS DISHONOURED.
AN ORDER CHEQUE
THIS IS NEGOTIATED BY ENDORSEMENT AND DELIVERY.
WHERE THE HOLDER OF A CHEQUE PAYABLE TO HIS
A CROSSED CHEQUE
THIS IS ONE WHICH CANNOT BE ENCASHED ACROSS THE
COUNTER.
IT HAS TO BE PAID (DEPOSITED) INTO THE BANK ACCOUNT OF
HE HOLDER.
ANTE-DATED CHEQUE
ANTE-DATED CHEQUE IS ONE THAT HAS A DATE ON IT
EARLIER THAN THE DATE IT WAS ISSUED. SUCH A
POST-DATED CHEQUE.
THIS IS A CHEQUE WHICH POSTPONES THE CHEQUE UNTIL
THAT DATE IT ARRIVES.
A POST-DATED CHEQUE IS THEREFORE FREELY NEGOTIABLE.
A BANKER WHO PAYS A POST-DATED CHEQUE DISOBEYS THE
ORDER BY THE CUSTOMER AND ACCORDINGLY SUFFERS THE
POST-DATED CHEQUE CONT…
THE BANKER MAY ALSO BE HELD LIABLE FOR INJURING HIS
CUSTOMERS’ CREDIBILITY.
THE BANKER MAY BE AT LOSS IF PAYMENT IS MADE IN A POST
DATED CHEQUE IF THE CUSTOMER DIES OR A GARNISHEE
ORDER IS ISSUED BEFORE THE DATE SHOWN ON THE CHEQUE.
USUALLY IF THE BANKER PAYS A POST-DATED CHEQUE IT DOES
OVER DUE CHEQUE
AN OVER DUE CHEQUE IS ONE THAT APPEARS
ON THE FACE OF IT TO HAVE BEEN IN
CIRCULATION FOR AN UNREASONABLE LENGTH
OF TIME IS REASONABLE OR UNREASONABLE.
IN THIS RESPECT, EVERY CASE HAS TO BE
A STALE CHEQUE
A STALE CHEQUE IS ONE WHICH HAS BEEN IN CIRCULATION FOR MORE
THAN SIX MONTHS.
WHEN THE PAYING BANKER RETURNS THE STALE CHEQUE, HE PREFERS
TO CONFIRM WITH THEN DRAWER WHETHER IT IS STILL VALID OR NOT.
CHEQUE CROSSINGS
A CROSSING MAY BE DEFINED AS AN INSTRUCTION TO THE BANK BY THE
CUSTOMER TO PAY THE CHEQUE ONLY INTO A BANK ACCOUNT, NOT ACROSS THE
COUNTER.
THERE ARE TWO TYPES OF CROSSINGS ON CHEQUES. THESE ARE GENERAL
CROSSINGS AND SPECIAL CROSSINGS.
CROSSING FACILITATES IN TRACING THE RECIPIENT OF PAYMENT IF
SUBSEQUENTLY DEFECTED.
IT ASSURES SAFETY IN CIRCULATION AND PREVENTS PAYMENT TO A WRONGFUL
GENERAL CROSSINGS:
GENERAL CROSSING PERMITS PAYMENT OF A CHEQUE INTO ANY BANK ACCOUNT. THE PAYING BANKER MUST PAY THE VALUE OF THE CHEQUE TO THE OTHER BANK
WHERE THE CUSTOMER HAS THE ACCOUNT.
THE CUSTOMER’S BANKER HAS AN OBLIGATION TO MAKE COLLECTION OF THE
PROCEEDS OF THE CHEQUE FROM THE PAYING BANKER.
THE BASIS OF THIS CROSSING IS THAT IT PROTECTS THE HOLDER BECAUSE IF
THE CHEQUE IS STOLEN, IT CANNOT BE ENCASHED ACROSS THE COUNTER.
GENERAL CROSSINGS CONSIST OF TWO
PARALLEL TRANSVERSE LINES TO WHICH MAY
BE ADDED THE WORD SUCH AS “& CO” “NOT
SPECIAL CROSSING
A SPECIAL CROSSING INCLUDES THE NAME OF A
PARTICULAR BANK ON THE FACE OF THE CHEQUE AND
HENCE THE CHEQUE IS CROSSED SPECIALLY TO THE NAMED
BANK.
SPECIAL CROSSING MAY BE ILLUSTRATED BY SUCH WORDS
NOT NEGOTIABLE
THE WORD NOT NEGOTIABLE DENIES A CHEQUE OF ITS STATUS OF BEING A NEGOTIABLE
INSTRUMENT.
THE WORDS PERSE DO NOT ADD ANY RESPONSIBILITY ON THE PART OF THE PAYING
BANKER.
WHAT THEY PRACTICALLY MEAN IS THAT THE TRANSFEREE OF A CHEQUE MARKED NOT
NEGOTIABLE SHALL NOT BE CAPABLE OF ACQUIRING A BETTER TITLE TO IT THAN THAT IS
TRANSFEROR HAD.
THE PAYING BANKER IS NOT OBLIGED TO INQUIRE ABOUT THE TITLE OF THE HOLDER.
AGAIN, THE HOLDER OF SUCH A CHEQUE IS NOT, AND CANNOT CLAIM TO BE, A HOLDER IN
NOT TRANSFERABLE
THESE WORDS HAVE AN IMPLICATION THAT A CHEQUE HAS BEEN RESTRICTIVELY INDORSED.
IT CANNOT BE TRANSFERRED AT ALL IN SUCH MANNER AS TO CONSTITUTE THE
TRANSFEREE /THE HOLDER OF IT.
NOT TRANSFERABLE CHEQUES INCLUDE
ARE:-(A)CHEQUES PAYABLE TO A NAMED PERSON (PAYEE) AND FOLLOWED BY THE WORD “ONLY”.
(B) CHEQUES PAYABLE TO A NAMED PAYEE AND MARKED “NOT TRANSFER
ACCOUNT- PAYEE CROSSINGS
THIS IS COMMON WITH GENERAL CROSSING.
THE CROSSING IMPLIES THAT THE BANKER WHO COLLECTS THE
PROCEEDS OF THE CHEQUE SO CROSSED IS REQUIRED TO
CREDIT THE PAYEE’S ACCOUNT;
HE WILL BE GUILTY OF NEGLIGENCE AND LIABLE TO THE TRUE
OWNER TO THE EXTENT OF THE AMOUNT OF THE CHEQUE.
THE WORD ALONE DOES PROHIBIT NEITHER TRANSFERABILITY
EFFECTS OF CROSSING A CHEQUE
THE CHEQUE IS NOT PAYABLE OVER THE
COUNTER
THE PROCEEDS ARE COLLECTED FROM
THE DRAWEE BANK
SPECIAL CROSSING SHOULD ONLY BE
ADVANTAGES OF CROSSING A CHEQUE
IT BECOMES DIFFICULT TO COMMIT
FRAUDS ON PAYMENT
IT PROVIDES MORE TIME FOR FRAUDS TO
BE DETECTED BEFORE PAYMENT IS
EFFECTED.
IT ALLOWS THE DRAWER TO PLACE A
PAYMENT OF CHEQUES
THIS IS A SERVICE DONE BY BANKS TO EFFECT
PAYMENTS TO THEIR CUSTOMERS WHEREBY THE PAYING
BANK IS THE ONE WHICH MAINTAINS THE DRAWER’S
ACCOUNT.
DEBITING THE DRAWER’S ACCOUNT EFFECTS THE
PAYMENT.
HOWEVER,BEFORE ANY CHEQUE IS PAID IT HAS TO BE
FUNDS
ARE THE FUNDS IN THE ACCOUNT
SUFFICIENT TO MEET THE AMOUNT OF
THE CHEQUE?
ARE THERE ANY UNCLEARED EFFECTS?
IS THE PAYMENT OF THE CHEQUE WITHIN
TECHNICAL ASPECTS
THE CHEQUE SHOULD NEITHER BE
POSTED NOR STALE
THE CHEQUE LEAF SHOULD COME FROM
A CHEQUE BOOK ISSUED TO HIM/HER.
IN ADDITION TO THAT IT IS IMPORTANT
TECHNICAL ASPECTS
THE PAYEE MUST BE IDENTIFIED BEYOND
ANY REASONABLE DOUBT BY THE BANK
THE AMOUNT IN WORDS AND IN FIGURES
SHOULD AGREE
THE DRAWER’S SIGNATURE SHOULD BE
SAME AS THE ONE HELD BY THE BANK AS
A SPECIMEN
IF THE CHEQUE IS CROSSED IT CANNOT
TECHNICAL ASPECTS
ANY ALTERATION THAT APPEARS ON THE
CHEQUE MUST BE ACCOMPANIED BY THE
FULL SIGNATURE OF THE DRAWER
ANY MULTILATION ON THE CHEQUE
MUST BE AUTHENTICATED BY THE BANK
IF THE CHEQUE IS TO BE PAID TO
SOMEONE OTHER THAN THE PAYEE IT
MUST HAVE AN APPROPRIATE
LEGAL ASPECTS
A CHEQUE SHOULD NOT BE PAID IF ANY OF
THE FOLLOWING IS INVOLVED
IF A NOTICE HAS BEEN SERVED TO THE
BANK ABOUT THE DEATH,INSANITY,OR
BANKRUPTCY OF THE DRAWER
IF THERE IS A STOP PAYMENT ORDER FOR
THE RESPECTIVE CHEQUE BY THE DRAWER
PRESENCY OF GARNISHEE ORDER FROM A
NON PAPER MONEY/PLASTIC MONEY
PAYMENTS THROUGH PLASTIC CARDS (MONEY)
-PLASTIC CARDS:
THESE INCLUDE CREDIT CARDS, DEBIT CARDS, CHEQUE GUARANTEE
CARDS, TRAVEL AND ENTERTAINMENT CARDS, SHOP CARDS AND SMART
CARD OR CHIP CARDS:
TECHNICALLY, PLASTIC CARDS DO NOT ACT THEMSELVES AS A
CREDIT CARD
THIS ENABLES THE HOLDER TO OBTAIN INSTANT CREDIT. THEY ARE VERY WIDESPREAD IN
DEVELOPED COUNTRIES.
THE TWO BEST KNOWN ARE BARCLAY’S CARD, WHICH IS RUN BY BARCLAY BANK, BUT IS
AVAILABLE TO PEOPLE HOLDING ACCOUNTS AT OTHER BANKS AS WELL.
THEY GAVE THE HOLDER AUTHORITY TO BUY GOODS, AT SHOPS/SUPERMARKET
DESIGNATED BY THE ISSUING ORGANIZATION FOR AMOUNTS UP TO AN AGREED MAXIMUM.
THE SELLING SHOP THEN PRESENTS THE BILL TO THE ORGANIZATION THAT ISSUED THE
CREDIT CARD AND IS PAID PROMPTLY: THE ISSUING ORGANIZATION THEN BILLS THE CARD
HOLDER AND EITHER ASKS FOR PROMPT CASH OR IN INSTALLMENTS IN WHICH CASE
DEBIT CARD
THESE ARE ISSUED DIRECTLY BY BANKS AND
ALLOW CUSTOMERS TO WITHDRAW MONEY FROM
THEIR ACCOUNTS.
THEY CAN ALSO BE USED TO OBTAIN CASH AND
CHEQUE GUARANTEE CARDS
THESE CARDS WERE INTRODUCED BECAUSE OF RETAILERS’
RELUCTANCE TO ACCEPT PERSONAL CHEQUES.
TYPICALLY,
WHEN
PAYING
BY
CHEQUES
FURTHER
TRAVEL AND ENTERTAINMENT CARDS(CHARGE
CARDS)
THESE PROVIDE PAYMENT FACILITIES AND ALLOW REPAYMENT TO BE
DEFERRED UNTIL THE END OF THE MONTH, BUT THEY DO NOT PROVIDE
INTEREST FREE CREDIT.
UNLIKE CREDIT CARDS, ALL BILLS HAVE TO BE REPAID AT THE END OF
THE MONTH AND NO ROLL OVER IS ALLOWED.
NORMALLY, UNPAID BALANCES ARE CHARGED AT A HIGHER INTEREST
RATE THAN FOR CREDIT CARDS, SO AS TO DISCOURAGE LATE PAYMENT.
THE MOST WIDELY USED CHARGE CARDS INCLUDE AMERICAN EXPRESS
SMART, MEMORY OR CHIP CARDS
THESE ARE CARDS WHICH INCORPORATE A MICROPROCESSOR OR A
MEMORY CHIP.
THE MICROPROCESSOR CARD CAN ADD, DELETE AND OTHERWISE
MANIPULATE INFORMATION ON THE CARD AND CAN UNDERTAKE A VARIETY
OF FUNCTIONS AND STORE A RANGE OF INFORMATION.
MEMORY CHIP CARDS (EG PAID PHONE CARDS) CAN UNDERTAKE A
PRE-DETERMINED OPERATION.
THE MAIN CHARACTERISTIC OF THE MICROPROCESSOR TECHNOLOGY IS TO
MONEY GRAM
IS A GLOBAL LEADER IN WORLDWIDE MONEY TRANSFER SERVICES, WORKING CLOSELY WITH SPECIALLY CHOSEN AGENTS IN 190,000 LOCATIONS ACROSS 190 COUNTRIES AND TERRITORIES?
IT PROVIDE A SECURE WAY TO SEND AND RECEIVE MONEY TO AND FROM YOUR LOVED ONES WORLDWIDE AND IT MAKES SURE THAT YOUR MONEY GETS TO WHERE IT IS NEEDED QUICKLY.
WHY MONEY GRAM ?
IT IS QUICK- YOUR MONEY IS WHERE IT’S NEEDE IN JUST TEN MINUTES
IT IS CONVENIENT- WITH 190,000 MONEY TRANSFER AGENTS AROUND THE WORLD, YOU’RE NEVER FAR AWAY FROM MONEY GRAM
