endorsement definition in banking: Endorsements: Signatures, Insurance Riders, and Public Approvals


Keep in mind that the check writer may see a copy of the check through their bank. If you’re uncomfortable with someone else seeing your bank account number, you can write, “For Deposit Only” and then sign the check. In the field of marketing, supporters or promoters of products are sometimes called “influencers.” Often times influencers leverage social media to market the objects of their support.

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  • If a check is made out to multiple people (i.e. multiple payees), look for “and” or “or” in the pay-to line.
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  • It is now the penalty points rather than the endorsements themselves that are of importance.
  • You may need an endorsement if you have items of value, or if you’ve experienced a change to your home or business.

It prevents the risk of the drawer losing their money owing to fraud or forgery. For example, it can also mean a public declaration of support for something or someone. The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.

An endorsement has different meanings, but most have to do with the concept of approval or authorization. Facultative Endorsement is an underwriting where the endorser defers some privilege to which he is entitled. For instance, the endorsee is subject to pull out of disrespect to the endorser, and typically inability to pull out will vindicate the endorser from his risk. In the following section, we are going to discuss each endorsement in detail.

Insurance Endorsements

Specific types include insurance, signature, and license endorsements. For example, when an employer issues a payroll check, it authorizes or endorses the transfer of money from the business account to the employee. The act of signing the check is considered an endorsement, which serves as proof of the payer’s intent to transfer funds to the payee. A pre-inked stamp allows individuals to endorse bank deposit slips or checks without needing to handwrite the details, thus saving time and effort. Note that endorsement stamps must have a bank account number for both business and personal checking accounts. Endorsing negotiable instruments is not always necessary for their transfer.

Your agent can assist you in assessing whether you need an endorsement or a different type of policy. It can be issued during your policy term, at the time of purchase, or at renewal. Sectional endorsement by its name only suggests that it is an endorsement for the particular segment or portion of the document.

The agreement is typically between a buyer and a seller who do not have a previous working relationship. In this case, the seller wants to guarantee that they will receive payment from a buyer they do not know. Essentially, a banker’s acceptance or time draft is a negotiable document where a bank unconditionally agrees to fulfill a payment obligation on behalf of the customer that created it. A banker’s acceptance is like a post-dated check, but a bank rather than an account holder guarantees payment. For example, an American wine importing business may issue a banker’s acceptance with a date beyond when the South African wine cases are expected to be delivered. A check endorsement also includes the signature that the account holder provides at the front of the check form.


For example, one does not need to https://1investing.in/ commercial paper if it is bearer paper. Therefore, in this case, the voidable and involuntary transfer can constitute negotiation. A bank endorsement works when a customer creates a negotiable instrument, such as a check. Then the customer gets the bank to guarantee that the funds will be paid to the recipient when the check is presented. Types of bank endorsements include banker’s acceptance, letters of credit, or endorsement stamps. A special endorsement is the signature of the endorser, as well as the name of the person to whom the instrument is to be paid (such as “Pay David Andrews”).

As famous above, bank endorsements accompany specific negotiable instruments. Negotiable instruments, together with payments of exchange, promissory notes, drafts, and certificates of deposit, symbolize cost guarantees to a specified person . Checks are widespread types of negotiable instruments however the commonest forms of bank endorsements are a banker’s acceptance, also called a time draft, and a letter of credit score. This signature is written before the check is transferred to the payee’s bank. For example, a “for deposit only” endorsement ensures that the payee’s bank must deposit the funds into the payee’s account.

It does not provide protection for the endorser in the event of a dispute. • The endorsement must be of the entire bill, the partial endorsement is not operated as a valid endorsement. • The endorsement must be done in ink, any endorsement done in pencil or rubber stamp is considered to be invalid. Your deductible is the amount you pay for covered losses before your policy begins coverage. The party deterred most candidates who failed to win the endorsement from running as conservative independents.

Methods of endorsement

If a cheque is payable to “Z” or order and “Z” merely signs on its back, such endorsement is known as an endorsement in blank. Riders can be additional documents added to your policy, or they can replace your previous policy documents. A partial endorsement is a type of endorsement in which purports to transfer to the endorsee a part only of the amount payable on the instrument. Such an endorsement does not operate as a negotiation of the instrument. Thus, an endorsement is signing a negotiable instrument for the purpose of negotiation. In accordance with the Act, the endorsee may act as an agent of the endorser to endorse the instrument to another person or to get sum on behalf of the endorser.

A bank endorsement is a guarantee given by a bank or credit union. It ensures that the bank will fully back a negotiable instrument made by one of its customers in a third-party transaction. Endorsement basically provides a transfer of property to the other individual or the legal entity. The person to whom the instrument is endorsed is known as an endorsee. It’s often done by adding documents to your policy when an endorsement adds something, when it lists extra conditions, or when it adds restrictions or limits after underwriting by the insurance company. This is because the policy wording or contract isn’t changed, only these new terms.


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Examples of endorsement

For example, a signature authorizing the legal transfer of a negotiable instrument between parties is an endorsement. Endorsements can be amendments to contracts or documents such as life insurance policies or driver’s licenses. It is an instrument from a financial institution that promises to pay the holder a specified amount at a specified date, usually between 30 to 180 days. A company issues a banker’s acceptance, which a commercial bank guarantees. Certain paperwork are required before a financial institution guarantees a bankers acceptance. Bank endorsements are common in worldwide trade, where the business events are usually unknown to one one other.

A person or entity may make a public declaration of support for a person, product, or service. Most commonly, such an endorsement occurs when a government official, an influential person, or an organization expresses their support for a political candidate. Insurance endorsements are amendments in the form of modifications–or additions–to the original policy. For example, a policy provision continuing monthly income to a beneficiary after the death of the insured is an example of an endorsement and is also known as a rider. Typically, this type of endorsement increases the policy premium due to the added benefits to the policyholder and beneficiary and the increased risk to the insurer.

endorsement definition in banking

Thus, to give sign on or back side of bearer or ordered cheque for transferred is called Negotiation or endorsement of Cheques. If last endorsement on instrument is a blank endorsement, any holder may convert that bearer paper into order paper by writing “Pay to X”, above that blank endorsement. This endorsement is also known as an endorsement in full or direct endorsement. An insurance endorsement is a change or addition to an insurance contract that alters the terms or scope of the original policy.

India Dictionary

Restrictive Endorsement tries to end the chief qualities of a Negotiable Instrument and seals its further debatability. This may sound somewhat unordinary, yet the endorsee is especially inside his privileges on the off chance that he so signs that its resulting move is limited. This forestalls the danger of unapproved individuals acquiring installment through misrepresentation or falsification and losing their cash. The person to whom the instrument is being endorsed is known as the endorsee. While the person who is making the endorsement is known as the endorser.

What is an Endorsement in Accounting?

Letters of credit are typically irrevocable unless all parties consent to cancel the agreement.

Endorsement Meaning

The importer would need to pay the bank back before the maturity date. Due to the perceived safety of banker’s acceptances, these instruments commonly facilitate international institutions to complete transactions; at times, banker’s acceptances can eliminate the need to extend credit. Common bank endorsements include banker’s acceptances and letters of credit.

The consensus achieved is, therefore, not an accident of compromise or a fortuitous coincidence but a genuine endorsement definition in banking from all involved. Nowhere was his endorsement of female culture more visible, or more spectacular, than in his attire. Yet it was more than an endorsement for these patrons of southern renewal and progressive thinking. Federal regulators gave their official endorsement to a technology standard for digital TV broadcasts, clearing the way for the next-generation of TV sets.

In such cases ask the payee to endorse the check, then stamp immediately below the signature the restrictive endorsement “For Deposit Only”. Restrictive endorsement an endorsement restricting further transfer of a check’s ownership. A restrictive endorsement limits use of the check to whatever purpose is stated in the endorsement. Many business have a stamp prepared with a restrictive endorsement.

An endorsement may be a signature authorizing the legal transfer of a negotiable instrument between parties, or it can be an amendment to a contract or document, such as a life insurance policy or a driver’s license. A public declaration of support for a person, product, or service is also called an endorsement. There is course added by endorse to the particular person specified called the endorsee, of the instrument who now becomes its payee entitled to sue for the money due on the instrument.