The document discusses crossing and endorsement of cheques. It defines crossing as drawing two parallel lines on a cheque to restrict how it can be cashed. There are two types of crossing - general crossing allows collection through any bank, while special crossing specifies a particular bank. Endorsement involves signing the back of a cheque to transfer it, with different types like blank, special, restrictive, and conditional endorsements. The document outlines the key features, significance and processes for crossing and endorsement of cheques under banking regulations.

1. • Crossing Of Cheques.
• Endorsement.
Branch Banking
Group # 03

3. • Endorsement
• What is Endorsement.
• Essentials of valid endorsement.
• Types of Endorsement.
• Liability of Endorser.
Crossing Of cheques
• Crossing of cheques.
• Collection process.
• Types of crossing.
• Difference between them.
• Double Crossing
• Why Crossing is done.
• Who crosses a cheque.
• Cancellation of Crossing.
What You will learn from this:

4. Kanwal Khan
Roll No.07

5. • A crossed cheque is any cheque that is crossed with two
parallel lines, either across the whole cheque or through the
top left hand corner of the cheque.
Purpose:
• Such a cheque cannot be cashed for money directly.
• If the cheque has been stolen, it is easily traced by locating
the account it was deposited into.
What Is a cross Cheque?

6. For Instance;
• Hamad deposits cheque to his bank.
• Haider’s bank processes the cheque and sends a request to Hamad's
bank for payment
• If Haider’s bank has funds in his account, his bank will process the
payment and release the funds to Hamad's Bank
• Hamad's Bank will processes the payment and credits the funds into his
bank account.
Collection Of Cross Cheque.

7. MCB
(Receiving Bank)
HBL
(Paying Bank)
Payment Done
Asks for
payment
Submits
Cheque
Credit
Payment
Debits
Payment
Issues Cheque
Hamad Haider

8. • General Crossing
• Special Crossing
Types Of Crossing

9. • In a general crossing, simply two parallel transverse lines,
with or without the words 'not negotiable' in between, may
be drawn.
• The effect of general crossing is that the payment of the
cheque will not be made at the counter, it can be collected
only through a banker.
General Crossing

10. 1) That a cheque is said to be crossed generally when it has these
properties:
a) The lines must be drawn parallel and transverse. They should not be
straight lines. The lines are generally drawn on the left hand side.
b) The words ‘not negotiable’ may be added to a crossing.
c) .The words ‘and Company’ may be written in between the lines.
d) Two transverse parallel lines with the words “Account Payee Only”.
2) The cheque crossed generally does not cease to be negotiable further.
3) The collecting banker can collect the proceeds of the cheque in the
account of that person mentioned on the cheque.
Features of General Crossing

12. • It gives direction to the banker, that is payment is made through an
account and not at the counter.
• The intention of crossing a cheque is to give protection to it.
• If a crossed cheque is paid at the counter in contravention of the crossing,
the banker will suffer as:
• a) The payment does not amount to payment in due course.
• b) He has not right to debit his customer’s account.
• c) He will be liable to the drawer for any loss, which he may suffer.
Significance of General Crossing:

13. Ammar Nazir
Roll No.36

14. “A special crossing is used in order to further restrict the
negotiability of the cheque. If two parallel lines are drawn
across the cheque with the name of the bank, the lines are
called special/restrictive crossing.”
Special Crossing

16. • When a particular bank's name is written in between the two
parallel lines.
• The bank makes payment only to the banker whose name is
written in the crossing.
• In addition to the word Bank, the words “A/c. Payee Only“,
“Not Negotiable” may also be written.
• Drawing of two transverse and parallel lines is not necessary
in case of a special crossing.
• The banker upon whom it has been drawn will make the
payment only to that banker in whose favor it has been
crossed.
Features Of Special Crossing.

17. • It gives a direction to the paying banker, that paying banker
should pay the cheque only to the banker, whose name
appears in the crossing or to his agent.
• If a cheque specially crossed to a bank is presented by
another bank, not in the capacity of its agent, the paying
banker is justified in returning the cheque.
• A special crossing gives more protection to the cheque than a
general crossing. It makes a cheque still safer because a
person, who does not have a real claim for it, would find it
difficult to obtain payment.
• In special crossing, the cheque is specially crossed to the
payee’s banker.
Significance of Special Crossing.

18. Hence, the banker, in whose favor the cheque has been
crossed, knows the payee and his specimen signature
well. So, he will not collect if for any person other than
the payee. If there is any forgery, it can be easily
detected by the banker.

19. Sayed Jaffer Kazmi
Roll No.62

20. • Drawing of two parallel
transverse lines is not essential.
• Inclusion of the name of a
banker is essential.
• Paying banker to honor the
cheque only when it is presented
through the bank mentioned in
the crossing and no other bank.
• Special Crossing can never be
converted to General Crossing.
• The words “And Company” or
“Account Payee Only” or “Not
Negotiable” the inclusion of
these words has become
customary.
Special crossing
• Drawing of two parallel
transverse lines is a must.
• Inclusion of the name of a banker
is not essential.
• In General Crossing paying
banker to honor the cheque from
any bank A/C.
• General Crossing can be
converted into a Special
Crossing.
• the words “And Company” or “&
Company” or “Not Negotiable”
highlight the crossing does not
carry special significance.
General Crossing
Difference between Both Crossings

21. Double Crossing
When a cheque bears two separate special crossing, it is said
to have been doubly crossed.
As per section-127:
“Where a cheque is crossed specially to more than one banker
except when crossed to an agent for the purpose of collection,
the banker on whom it is drawn shall refuse payment
thereof.”

22. Thus a paying banker shall pay a cheque doubly crossed
only when the second banker is acting only as the agent of
the first collecting banker and this has been made clear on
the instrument.
Such crossing may be done in those cases where that banker
in whose favor the cheque is to be paid.

23. M. Bilal Jaffer
Roll No.47

24. As cheque is a negotiable instrument, during the process of
circulation, a cheque may be lost, stolen or the signature of
payee may be done by some other person for endorsing it.
Under these circumstances the cheque may go into wrong
hands, So we make a cheque safer to be processed.
Why cheque is crossed:

25. • Drawer – drawer may cross the cheque generally or
specially.
• Holder – holder can also cross the cheque generally or
specially.
• Banker – when cheque is crossed specially the collecting
banker may again crossed it specially to another banker as its
agent for collection.
Who can cross a cheque?

26. • Only the Drawer can cancel the crossing of a cheque.
• After cancelling the crossing the drawer needs to put his
signature and write the words ‘pay cash‘ on the cheque.
• The banker is under an obligation to pay the cheque
according to the direction of the drawer conveyed through
the crossing on the cheque.
Opening of crossing/cancellation of
crossing

27. • If drawer’s signature (already on the cheque) is forged by the
holder in order to open the crossing and the payment is
obtained at the counter, the banker will remain liable to the
true owner of the cheque.
Continued…

28. By cancelling the parallel lines
and writing in words - Crossing
Cancelled and Signing below it!

30. Fareeha Malik.
Roll No.59

31. Endorsement
• The word ‘endorsement’ is derived from the Latin word
“Indorum” which means, a writing on the back of an
instrument.
• The signature of the payee or holder on the back of a
cheque/draft is called an Endorsement.

32. Continued…
According to Section 14 of Negotiable instruments act, 1881,
Negotiation means:
“The transfer of a negotiable instrument to a third party in such a
way that the third party is constituted the holder of the instrument
who is entitled to the possession of the same and sue thereon in his
own name.”
Endorser: Person or firm who, by signing a negotiable
instrument, transfers the title of the instrument (or the
property named therein) to another.
Endorsee: Person or firm to whom a negotiable
instrument (bill of exchange, bill of lading, delivery order, or
other document of title) is transferred by endorsement.
Also called a transferee or payee.

35. Essentials of a valid endorsement
• It must be on the instrument.
• It must be signed by the holder.
• In case of illiterate, a thumb impression should be fixed.
• It must be on the back of the cheque or bill or on an along of
them.

36. • It may be in ink, print or with a stamp.
• Partial endorsement is not valid legally it must be of the
entire value of the cheque or bill.
• If the number of payee are more then one then all the payees
will sign or that person who is authorized.
• The endorsee can also add, the proper signatures if the
endorse is not clear.
Continued…

37. • If the payee are more than two the endorsement should be in
the same order which is opened down on the back of the bill.
• It should be completed by the delivery.
• The intention must be clearly expressed.
Continued…

38. Zuha Azfar
Roll No.45

39. i. Blank Endorsement.
ii. Endorsement In full/ Special Endorsement.
iii. Restrictive Endorsement.
iv. Conditional Endorsement.
v. Partial Endorsement.
vi. Sans Recourse Endorsement.
vii. Facultative Endorsement.
Types of Endorsement.

40. • If the endorser(The Transferor) signs his name only and does
not specify the name of the endorsee(the receiver).
• The effect of this is that it is payable only to the bearer –
legally, it transforms an order instrument (pay to the order)
of (the payee) into a bearer instrument(pay to the bearer).
Blank Endorsement.

41. • If the endorser, in addition to his signature, also adds name
of the person in whose favor the endorsement is made.
• After this procedure, Only endorsee is entitled to receive the
payment of the instrument.
• A blank Endorsement is easily converted into Special.
Special Endorsement.

42. • An endorsement which restricts the endorsee for further
negotiating the instrument.
• Example:
If A Endorses a cheque to B and restricts it by writing “Pay B
Only”. B cannot negotiate the cheque further.
Restrictive Endorsement.

43. • A partial endorsement which transfers the rights to receive
only a part payment of the amount due on the instrument is
invalid.
• Example:
A holds a bill for Rs.2,000 and endorses it in favor of B for Rs.
1,000 and in favor of C for the remaining Rs.1,000, the
endorsement is partial and invalid.
Partial Endorsement

44. • If the endorser of a negotiable instrument, by express words
in the endorsement, makes his liability, dependent on the
happening of a specified event, although such event may
never happen, such endorsement is called a ‘conditional’
endorsement.
Example:
• (i) “Pay B or order on his marriage;”
• (ii) “Pay B on the arrival of Pearless ship at Bombay.”
Conditional Endorsement.

45. • When the endorser expressly excludes his own liability on
the negotiable instrument to the endorsee in case of dishonor
of the instrument.
• Such an endorsement is generally made by adding the
words ‘sans recourse’ or ‘without recourse.’
Example:
Pay A or order Sans recourse.
Pay X or order at his own risk.
Sans recourse Endorsement.

46. • When the endorser expressly gives up some of his rights
under the negotiable instrument.
• Example:
• “Pay X or order, notice of dishonor waived”
Facultative Endorsement.

47. Every Endorser is liable before the maturity of the instrument
to the parties that are subsequent to him.
His Liability only arises if there is a default by the party who
is primary liable to pay the instrument on maturity.
Every endorser after dishonor is liable as upon an instrument
payable on demand.
Liability of Endorser