Paying Banker

Paying Banker

Paying Banker (PB):

The banker, who is liable to pay the value of a cheque of a customer as per the contract, when the amount is due from him to the customer, is called “Paying Banker” or “Drawee Bank”. The payment to be made by him has arisen due to the contractual obligation. He is also called drawee bank as the cheque is drawn to him.

PB is a banking institution who is a trustee receiving money that it is instructed to pay to a third party subject to certain conditions being met. The paying banker is the drawee of a cheque, and therefore a party to it, but he is not a party to a bill which is Merely domiciled with him. According to this provision, the drawee of a cheque, i.e., paying banker has a legal obligation to honor the demand of the drawer or customer. If he fails to pay the money held, he is responsible for damages. Thus paying banker has definite obligations to discharge.

The paying banker is at the constitutional compulsion to pay cheque amount out the balance obtainable to his customer and aspen the path of the customer. The paying banker ought to use logical care and assiduousness in paying a cheque, so as to, refrain from any action likely to damage his customer’s credit. lf the paying banker wrongfully dishonors a cheque, he will be asked to pay heavy damages.