Negotiable Instruments: A Banking Awareness Primer
by Yuvi K - December 16, 2023
Introduction & Definition of Negotiable Instruments (परिवर्तयोग्य उत्पादन)
A Negotiable Instrument is an instrument which is signed by someone as an acknowledgement of an obligation, and which can be transferred from one party to another. It can be used as evidence of debt or for making payments. Negotiable Instruments are regulated by the Negotiable Instruments Act (1881), which defines them as “any written instrument which provides for the transfer of property or for the payment of money either upon the face of or as endorsed or otherwise upon the back thereof”. The most common examples of Negotiable Instruments include cheques, money orders, drafts, bills of exchange and promissory notes.
Types of Negotiable Instruments (परिवर्तयोग्य उत्पादन के प्रकार )
1. Cheque (चेक)
A cheque is a type of Negotiable Instrument which can be used for making payments. It is drawn on a bank, and can be used for withdrawing funds from a bank account. A cheque may be crossed, namely marked as ‘not negotiable’, to prevent it from being cashed by anyone other than the intended recipient.
2. Money Order (मुद्रा आदेश)
A money order is a type of Negotiable Instrument which is used for making payments. It is drawn on a post office, and can be used for making payments or for transmitting funds to another person. Money orders are generally issued for an amount of up to a certain limit.
3. Draft (धर्मंच)
A draft is a type of Negotiable Instrument that is often used for making international payments. It is drawn on a bank, and can be used for withdrawing funds from a bank account. A draft can be ‘open’ or ‘order’ type, meaning it can be paid to the bearer or to a specific person/institution.
4. Bill of Exchange ( कागज का वितरण)
A bill of exchange is a type of Negotiable Instrument which is often used for making international payments. It is an agreement between two parties, with one party agreeing to pay a certain amount of money to the other party at a specified future date.
5. Promissory Note (वाद की प्रमाणपत्र)
A promissory note is a type of Negotiable Instrument which is often used for making loans. It is an unconditional promise by one party to pay a certain amount of money to the other party at a specified future date.
Features of Negotiable Instruments (परिवर्तयोग्य उत्पादन की विशेषताएं)
1. Transferable (हस्तांतरण योग्य)
Negotiable Instruments are designed to be easily transferable from one party to another. This means that the holder of the instrument can transfer their rights in the instrument to someone else, who then becomes the new holder.
2. Payable On Demand (मांग पर देना योग्य)
Most Negotiable Instruments are payable on demand, meaning they can be presented at any time and the payment must be made immediately.
3. Presumptive Payment (अपेक्षात्मक भुगतान)
The holder of a Negotiable Instrument is presumed to be the rightful owner, and the payer is not allowed to make any enquiries or investigate the instrument’s validity.
Advantages of Negotiable Instruments (परिवर्तयोग्य उत्पादन के लाभ)
Negotiable Instruments have several advantages, including:
1. Security (सुरक्षा)
Negotiable Instruments provide a secure method of payment, as banks are legally obligated to honour them.
2. Convenience (सुविधा)
Negotiable Instruments are a convenient way of paying for goods and services, as they can be easily transferred from one party to another.
3. Cost Effectiveness (लागत प्रभावी)
Negotiable Instruments are generally cheaper than traditional methods of payment, such as cash or cheques.
Conclusion (निष्कर्ष)
Negotiable Instruments are a convenient and secure way of making payments, and are regulated by the Negotiable Instruments Act (1881). They are widely used for making payments, and are a cost effective alternative to traditional methods of payment such as cash or cheques.
