Banking · Negotiable Instruments Act & Collecting Banker Liabilities

Statement 1: A collecting banker is expected to scrutinize the instruments presented for collection to ensure they are regular in appearance, which includes checking for material alterations, checking that the endorsements are regular and follow a logical sequence, and ensuring that the crossing is appropriate for the account to which the funds are being credited. Statement 2: The duty of a collecting banker to act without negligence is not limited to the physical verification of the cheque but extends to the overall circumstances of the transaction, such as the social and financial status of the customer relative to the amount being collected, especially in cases where a high-value cheque is deposited into a low-activity savings account. Statement 3: When a bank collects a cheque which has a special crossing to another bank, and the collecting bank is not the agent for the bank to whom the cheque is specially crossed, it is considered a clear case of negligence, and the collecting bank will be held liable for conversion if the title of the customer is found to be defective. Which of the following statements accurately summarizes the standard of care required from a collecting banker to avoid the charge of negligence?