Module: | Continuous Clearing (CCSR) & Penalties
Q26: Which of the following statements regarding the grounds and procedure for the dishonour of cheques are correct?
1. Even if funds are sufficient, a bank is legally prohibited from honouring a cheque if a "Garnishee Order" or Court Freeze order is active against the account.
2. Technical defects in the electronic image, such as unreadable data or markings covering key fields, are valid grounds for return.
3. When returning a cheque unpaid, the bank must legally provide a "Cheque Return Memo" specifying the exact reason code.
2. Technical defects in the electronic image, such as unreadable data or markings covering key fields, are valid grounds for return.
3. When returning a cheque unpaid, the bank must legally provide a "Cheque Return Memo" specifying the exact reason code.
✅ Correct Answer: D
All statements are correct.
A bank's duty to pay is overridden by legal prohibitions like Garnishee Orders (Statement 1). In an image-based clearing environment, image quality defects that hinder verification are valid grounds for refusal (Statement 2). Finally, a Cheque Return Memo citing the specific reason is a mandatory accompaniment to any dishonoured instrument (Statement 3).
A bank's duty to pay is overridden by legal prohibitions like Garnishee Orders (Statement 1). In an image-based clearing environment, image quality defects that hinder verification are valid grounds for refusal (Statement 2). Finally, a Cheque Return Memo citing the specific reason is a mandatory accompaniment to any dishonoured instrument (Statement 3).