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Standing Credits

cheques, branch, customer and banker

STANDING CREDITS. A customer may, as a rule, arrange to have his cheques cashed at another bank or at some other branch. The request should be in writing and be signed by the customer. The letter advising the hank or branch to honour his cheques should be signed by the manager and state precisely what cheques are to be paid, to what extent and for how long the credit is to continue, and a specimen signature should accompany the advice.

A common form of advice is to honour cheques drawn by John Brown to the extent of 1,10 in any one day. An advice to honour cheques to the extent of i,60 in any one week is not a good form, if the customer giving the order intends the money to be drawn at the rate of so much a day, as it is clear that the full amount may be drawn on one day and still comply with the letter of advice.

When a bank receives from another hank or branch a request to pay certain cheques, the greatest care should be taken to ascertain that the letter of advice is genuine. If there is any doubt, a confirmation could he asked for by wire.

Credits opened between different banks are, as a rule, arranged through the head offices of the respective banks.

Particulars of all credits opened should be recorded at the heading of the customer's account. The amount of such credits should of course be justified by the nature of the account.

The customer is sometimes given a special form of cheque book, the cheques being drawn upon the banker who is to pay the cheques and an indication is given upon the cheques of the name of the bank where the drawer's account is kept.

The mere fact that a banker pays a cheque under a standing order does not release him from liability if he pays one beating a forged indorsement. It is reasonable, however, to .expect that a customer wishing his cheques so paid should state in writing that the banker shall not incur any greater liability than if the cheques were paid by the branch , on which they are drawn. The banker who rays a cheque under authority usually cancels it before remitting to the drawee banker.

A register should be kept of all standing orders given by a branch and also of all received by a branch. If a credit, without any time limit, has not been operated upon for a considerable time, it is desirable to inquire if it is still to continue, or if it should be cancelled.

When a customer gives an order to stop payment of a cheque, notice should be given to each branch or bank which has authority to cash his cheques.