Banking · Negotiable Instruments Act & Cheque Truncation System

Statement 1: A banker is said to receive payment for a customer under Section 131 if the banker acts as a mere conduit to collect the funds and place them at the disposal of the customer, but the protection is potentially lost if the banker treats the instrument as their own property by using it to set off the customer's existing overdrawn balance without the customer's prior consent. Statement 2: The introduction of the Cheque Truncation System (CTS) has shifted the burden of physical verification of the instrument entirely to the paying banker, meaning the collecting banker is no longer liable for overlooking material alterations that are only visible on the original physical paper under UV light. Statement 3: If a collecting banker receives a cheque where the 'Account Payee' crossing has been cleverly obliterated or covered with a stamp, and the banker fails to detect this tampering which a person of ordinary prudence would have spotted, the banker is guilty of negligence and cannot claim statutory protection. Evaluate the accuracy of these statements regarding the limitations of the collecting banker's role and the impact of technology on their liability.