Law:

Section:

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)-------S. 9---BSD Circular No.16 of 2004 dated 6-11-2004 issued by State Bank pertaining to "Reporting To Credit Bureaus"---Duty of State Bank and financial institution---Scope---Financial institution would be bound to ensure meticulous compliance of directions contained in such Circular as directions (ii) & (iii) thereof were mandatory in nature on account of use of word "shall" therein---­Duty of State Bank would be to ensure and verify as to whether advice/information given by financial institution was correct or not, and whether financial institution had made meticulous compliance of such Circular or not. (b) Banker and customer--- ----Credit Card and cheque---Duties and liabilities of financial institution and merchant stated. All credit cards bear a specimen signature of the card holder. This is because of security reasons to enable the merchant to compare and verify the card holder's signature when the credit is presented to the merchant for swiping the same for clearance of payment of the transaction at the time of the transaction. By issuing credit card, the financial institution allows the customer to enjoy/use the facility through merchants all over the world upto the limit sanctioned to him. Under the banking practice, there is an agreement between the financial institution and the merchant, whereby the merchant agrees to honour payments on behalf of the financial institution, and in consideration of such services, the financial institution agrees to pay a fixed commission to the merchant on every transaction. The interest of both the parties and the risk of fraudulent transactions are duly secured through insurance. The merchant acts on behalf of the financial institution as he accepts and honours the payments of transactions carried out through him. Thus, it is the duty of the merchant to compare and verify the card holder's signature when the credit card is presented to him for swiping and clearance at the time of the transaction. If the merchant fails or neglects in discharging his said duty, the liability of the transaction would fall on the financial institution. The…

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