BANKING AFFAIRS

Detailed explanation-1: -A restrictive endorsement includes not only the signature of the endorser but also the words “For Deposit Only” and the bank account number in which it is to be deposited.

Detailed explanation-2: -A restrictive endorsement is a conditional guaranty of a transfer of a negotiable instrument. That is, an endorsement that takes effect only on the occurrence or non-occurrence of another act or event.

Detailed explanation-3: -If you write “for deposit only” on the back of a check made out to you and then sign your name, the check can only be deposited in your account. This is called a “restrictive indorsement, ” and it should prevent you or any other person from cashing the check.

Detailed explanation-4: -An example of a restrictive endorsement is the “For Deposit Only” stamp used by most companies on the back of a received check. This stamp effectively limits further action on the check by the stated payee to only being able to deposit it.

Detailed explanation-5: -A restrictive endorsement or restricted endorsement places a limitation on the use of a check or other negotiable financial instrument. Using a restrictive endorsement is one of many actions that a company can take in order to improve the internal control of its assets.