Provides that every banking institution which maintains checking accounts for customers shall pay checks in the order received within account balance; provides such banks may dishonor check for insufficient funds, but then must honor smaller checks within amounts on deposit in the subject account.
TITLE OF BILL: An act to amend the banking law, in relation to the order in which a payor bank shall pay checks
PURPOSE OR GENERAL IDEA OF BILL: Provides that every banking institution maintaining checking accounts for customers shall pay checks in the order received within account balances.
SUMMARY OF SPECIFIC PROVISIONS: A new section 9-V is added to the banking law to require that every banking institution maintaining checking accounts for customers shall pay checks in the order received; provided, however, that if a check is dishonored for insufficient funds and thereafter smaller checks which could be paid are received, the smaller checks shall be honored within the amounts on deposit in the subject account.
JUSTIFICATION: Under current law if a check is presented to a banking institution for a customer maintaining a checking account in that banking institution which exceeds the funds available in the account the check is dishonored and all subsequent checks received by that bank. This occurs, even if there is sufficient funds in the account to honor one or more of the subsequent checks. This would require the banks to honor subsequent checks if the customer's account has sufficient funds to cover those checks.
PRIOR LEGISLATIVE HISTORY: 2011-12: S.1195 Remained in the Senate Committee on Banks 2009-10: S.8146/A.6685 Remained in the Senate Committee on Banks/ Passed the Assembly
FISCAL IMPLICATIONS: None.
EFFECTIVE DATE: This act shall take effect on the first of January next succeeding the date on which it shall have become a law.
STATE OF NEW YORK ________________________________________________________________________ 1156 2013-2014 Regular Sessions IN SENATE (PREFILED) January 9, 2013 ___________Introduced by Sen. BRESLIN -- read twice and ordered printed, and when printed to be committed to the Committee on Banks AN ACT to amend the banking law, in relation to the order in which a payor bank shall pay checks THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. The banking law is amended by adding a new section 9-v to read as follows: S 9-V. BANKING INSTITUTIONS TO PAY CHECKS DRAWN THEREIN IN ORDER OF PRESENTATION. NOTWITHSTANDING ANY OTHER LAW, RULE OR REGULATION TO THE CONTRARY, EVERY BANKING INSTITUTION WHICH PROVIDES CHECKING ACCOUNTS FOR ITS CUSTOMERS SHALL, IN PAYING SUCH CHECKS AS ARE PRESENTED FOR PAYMENT, PAY THE CHECKS IN THE ORDER WHEREIN THEY ARE RECEIVED; PROVIDED, HOWEV- ER, IF A CHECK IS DISHONORED FOR INSUFFICIENT FUNDS AND THEREAFTER SMAL- LER CHECKS WHICH COULD BE PAID ARE RECEIVED, THE SMALLER CHECKS SHALL BE HONORED WITHIN AMOUNTS ON DEPOSIT IN THE SUBJECT ACCOUNT. S 2. This act shall take effect on the first of January next succeed- ing the date on which it shall have become a law.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD01720-01-3