Riaz Academy
Q. No.1: Define Commercial banks.
Ans. : Professor G Crowther has defined commercial banks in his book “An outline of money” in the following words:
“A bank is a firm which collects money from those who have it spare. It lends to those who require it.”
Q. No. 2: Define Customer of a bank.
Ans. : A customer of a bank is that person who has an account with the bank.
Sir John Paget has defined the term customer as under:
“To constitute a customer there must be some recognizable course or habit of dealing in the nature of regular banking business.”
Q. No. 3: Define a banker.
Ans. : According to Sir John Paget, “No one and no body, corporate or otherwise can be a banker, who does not:
i. Take current accounts
ii. Pay cheque drawn on himself
iii. Collects cheques for his customers.”
Q. No. 4: Define Negotiable Instrument.
Ans.: Negotiable means transferable from one person to another. Negotiable instruments are those documents which are transferable from one person to another by simple delivery or by endorsement and delivery. Promissory note, bills of exchange, cheque is the negotiable instruments.
Q. No. 5: Define Bills of Exchange.
Ans. : According to Section 4 of the Negotiable Instrument Act 1981, “An instrument in writing, containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to or to the order of a certain person or to the bearer of the instrument.”
Q. No. 6: Define Order Cheque.
Ans. : An order cheque is one which is payable to a certain person as specified in the cheque or to his order. It must contain the name of a certain person as the payee.
Q. No. 7: Define Crossing of the cheque.
Ans. : Crossing of the cheque means to draw two parallel transverse lines at the top left corner of the cheque. Some words, such as “& Co.”, “Payee’s Account only”, etc., may be inserted between the said two lines.
Q. No. 8: Define a Bank Draft.
Ans. : A bank draft is an order by one branch of a bank to another branch of the same bank to pay a certain some of money on demand to the person named therein.
