Is when the right to take the payment is transferred from the payee to another party, and the party to whom the right is transferred is called the endorsee. Is when the right of payment is transferred from the payee to another party, and then the payee is called an endorser. The cheques with a sign but no amount written are called blank cheques. These are the riskiest as they can be used by others or also misused. A cheque crossed generally will be paid to any bank through which it is presented.
Based on different factors we have different types of cheques. These include bearer, order, crossed, account payee, post-dated, ante-dated, stale, self, traveler’s, blank, and mutilated cheque. These types of cheques bear a later date of being encashed. Even if the bearer presents this cheque to the bank immediately after getting it, the bank will only process the payment on the date mentioned in the cheque. This cheque stands valid past the mentioned date, but not before.
What Are Cross Chequing and Its Types in India?
However, the insufficiency of funds in the account of the drawer of the cheque is the key reason if your cheque has been dishonored. You can use such cheques for the withdrawal of money while traveling. It is equal to carrying cash but you can travel safely without carrying a huge amount.
- A cheque refers to as Post Dated Cheque when it is bearing a later date than the one on which it is issued.
- A bearer cheque becomes an account payee cheque by writing “Account Payee” or crossing it twice with two parallel lines on the left-hand side top corner.
- If the necessary information on a cheque is torn or not visible, the cheque becomes void.
- Ram gave a cheque to Sham, writing his name on the cheque.
- When a cheque simply includes the drawer’s signature and all other areas are left blank, it is referred to as a blank cheque.
A cheque is a bill of exchange in which one party orders the bank to transfer the money to the bank account of another party. It is a negotiable instrument that is covered under the Negotiable Instruments Act, 1881. A cheque can be issued against a savings account or a current account. You may have observed cheques with two sloping parallel lines with the words ‘a/c payee’ written on the top left. These cheques are relatively safe because they can be encashed only at the drawee’s bank.
Various Types of Cheques
These cheques are safer as only the payee will get the payment from the bank. Crossed cheque refers to the cheque in which the drawer makes two parallel transverse lines at the top left corner of the cheque. By doing so, it makes sure that no matter who presents the cheque to the drawer bank, the transaction is made into the account of the person named in the cheque only. This type of cheque is considered to be safe as it reduces the risk of money being given to an unauthorized person because this type of cheque can only be cashed by the drawee’s bank.
The cheque is an unconditional order and not a request to the bank. An oral order to pay the money is not recognized as a cheque. Gift cheques are used for offering presentations on occasions like birthday, weddings and such other situations. The cancellation of the word “Bearer” automatically makes the cheque an “order” cheque. Should mention the amount of money in figures and words. Mutilated Cheque refers to the cheque which is torn into two pieces.
In case, if a cheque is torn at the corners and no material fact is erased or cancelled, the bank may make payment against such a cheque. No identification is needed when a bearer cheque is presented for encashment. However, in normal banking practice, where the amount of the cheque is substantial, the identity of the encasher is insisted on. A cheque which is payable to a person whosoever bears, is called bearer cheque. Further, the new cheque standard “CTS-2010” prescribes certain mandatory and optional security features to be available on cheques, which will also add to the uniqueness of the images. CTS in India mandates the use of prescribed image specifications only.
- Not only in this era, but Romans also used cheques as prescriptions.
- In some other cases, the payee can transfer the cash to another payee, and he can also get the cash from the bank.
- Please read the scheme information and other related documents carefully before investing.
- In cases where a cheque is payable to a person whose name is on the Cheque or to the bearer i.e., to the person who deposits the cheque to the bank for encashment, is known as bearer cheque.
A payee is a person or organization that receives the cheque, whereas a drawee is a person or organization that issues the cheque. A cheque is used to make safe, secured, and hassle-free payments. It serves as a convenient option as there is no involvement of hard cash during the transfer process. Yes, you can cash a cheque at any bank without being an account holder. Make sure your bank is compatible with the cross cheque system.
Crossing a Cheque gives precise instructions to a financial organization about the handling of funds. The number of parties participating in a cheque transaction. To get a cheque, you need to apply for it in your bank. You need to end the amount with ‘only’ when writing them in words. If you don’t know how to write a cheque, do not worry.
Cross Cheque – Types of Cheques and Crossing Cheque & Validity
With a cheque, there are three people involved.Drawer or Maker – The client or account holder who issues the cheque is known as the drawer. Varun can either go to the bank personally or send a third party to receive the cheque encashment. Only the payee, in whose name the cheque was issued, has the authority to cash it. For the latest updates, news blogs, and articles related to micro, small and medium businesses , business tips, income tax, GST, salary, and accounting.
This kind of cheque crossing shows that the amount cannot be paid in any other bank account besides the one mentioned in the cheque. This kind of crossing ensures that the money is transferred to the bank account only and is not given in the form of liquid cash. Only from the drawer’s account to the payee’s account can the money be moved. Any third person can go to the bank and deposit the check. When a cheque is crossed, the drawer must draw two lines in the left upper corner of the cheque. When a bank doesn’t deposit the payment that is written on the cheque into the payee’s account, it is known as cheque dishonour.
Under CTS the physical cheques are retained at the presenting bank and do not move to the paying banks. In case a customer desires, banks can provide images of cheques duly certified/authenticated. In case, however, a customer encumbrance accounting desires to see / get the physical cheque, it would need to be sourced from the presenting bank, for which a request has to be made to his/her bank. An element of cost / charge may also be involved for the purpose.
In some circumstances (such as when the drawer writes a self-check), the drawer and the payee might be the same person. This form of a cheque cannot be endorsed, which means that only the payee whose name appears on the cheque is eligible to receive cash for the amount specified. The drawer must strike the “OR BEARER” mark as specified on the check in order for the cheque to be encashed exclusively to the payee. For example, if a cheque is signed in the name of Varun, only the payee can visit the bank to obtain encashment for an order cheque. Starting with the letter as a cheque, it also evolved timely.
If any dishonest person gets the cheque, he can misuse it. As the name suggests, the one who bears the cheque to the bank will get the money. To identify the bearer cheques, you need to search for a word called ‘or bearer’, which will be cancelled. You can carry the cheque to the bank, https://1investing.in/ and the amount will be given to you without any investigation. You must have seen such a scene in a movie where a billionaire signed a blank cheque and asked others to put an amount there. Apart from that, cheques are important instruments as well with various financial uses.