LEGAL DEFINITION OF A CHEQUE

According to the Bills of Exchange Act 1882 in England, a cheque is defined as follows;

"An unconditional order in writing addressed by one person to another signed by the person giving it requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to or to the order of a specified person or to bearer"

According to the section 73 of the Bills of Exchange Ordinance a cheque is defined as follows;

"A cheque is a bill of exchange drawn on a banker payable on demand"

Hence, a valid cheque should satisfy the following requirements;

A CHEQUE

(1) must be an unconditional order in writing,

(2) must be signed by the drawer,

(3) must be drawn on a banker,

(4) must order the banker to pay a certain sum of money on demand,

(5) must be drawn in favour of a specified person or to his order or in favour of the bearer.

HISTORY OF THE BANKING IN SRI LANKA

We do not find any banking or money lending system in the ancient Sri Lanka. The first commercial bank established in Sri Lanka was Bank of Ceylon which was opened on 1st June1841 with a capital of Sterling Pounds 125,000/-. However due to the crisis which is known as "coffee boom" the Sri Lanka's first commercial bank was closed down in 1847 and the Oriental Bank took over its business.

The bank of Western India was the second bank which was established in 1843, whose mother bank was established in India.

In 1854 the Mercantile Bank of India, London and China was established and later became Charted Mercantile Bank of India, London and China.

We find the Asiatic banking Corporation, The Hindustan, China and Japan, The Royal Bank of India, The Bank Of Madras, The National Bank of India, Comptoir D' Escompte de Paris in Sri Lanka banking history.

Under the Bank of Ceylon Ordinance NO. 53 Of 1938, the Bank of Ceylon was established. Under the People's Bank Act No.29 of 1961, the People's Bank was established. these two was the first Sri Lankan own Banks.

The first private bank Commercial Bank of Ceylon Ltd, was established in 1969. In 1970 the second private bank, Hatton National Bank Ltd wsa established.

The Sampath Bank Ltd was established in 1987 while Seylan Bank Ltd established in 1988.

The two last domestic banks were Union bank and Pan Asia Bank Ltd.

At present there are many local and foreign banks are operating in Sri Lanka.