BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The payment can be obtained by anyone as it has been converted into a bearer cheque
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The payment can be obtained by drawer only
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The payment can be obtained by payee only
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The payment can be obtained by a person in whose hand it falls, in his own right
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Detailed explanation-1: -Blank endorsement is a kind of signature on a financial instrument. It has no designated payee, so the person who possesses it can demand payment, for example, a check made payable to cash and endorsed on the back with the signature of the account held.
Detailed explanation-2: -A bearer cheque is payable to anyone who holds it, hence it is as good as cash. An order cheque is payable only to a particular person whose name is mentioned in the cheque. An bearer cheque is converted into an order cheque when the words “or bearer” are cancelled and the word “order” is written.
Detailed explanation-3: -Blank Endorsement – Where the endorser signs his name only, and it becomes payable to bearer.
Detailed explanation-4: -Blank endorsement of a financial instrument, such as a cheque, is only a signature, not indicating the payee. 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").