What are The Various Types of Cheques Used in Organizations and Banking?

The Cross Cheque system is designed to safeguard citizens’ deposits. As a result, it protects depositors from fraud and embezzlement while at the same time allowing banks to safely hold these funds. Order cheques are the cheques which are withdrawn for the payee. Before making payment to that payee,cross-checks check the identity of the payee. Bearer cheques are the cheques which withdrawn to the cheque’s owner.

The drawer is the person or organisation that issues the cheque, the drawee is the financial institution, and the payee is the person or organisation that receives the cheque. With the growing popularity of net banking and ATM usage, types of crossed cheques are gradually becoming obsolete. The Cheque Books issued for both type of accounts are for payments in Indian rupees only and are payable at par.

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• Check presented at the paying bank after a certain period of its payment date.
• Crossing a Cheque gives precise instructions to a financial organization about the handling of funds.
• No, the bank will not accept the cheque in that case.
• Such cheques are issued by the bank itself and guarantee payment.
• You can use such cheques for the withdrawal of money while traveling.

If the drawer wishes the payee to ask for a withdrawal or transfer of funds after the current date, he or she can fill out a post-dated check. For example, if the drawer is completing the cheque on May 10, 2021, but wishes to make the payment later, he/she might enter the cheque dates as May 30, 2021. A bearer check is one in which the bearer is authorized to have the cheque cashed. This indicates that the individual who delivers the cheque to the bank has the power to request encashment. The bearer of the cheque does not need to provide any identification.

Antedated cheque means the date mentioned on the cheque is earlier than the actual date of withdrawing the money. An antedated cheque is a regularchequethat can be encashed without delay. So any cheque can be presented to the bank for clearance, however the date should not exceed 3 months. Ante-dated cheques can be used when the contract is delayed, to avoid unnecessary trouble to a party. When a cheque is torn into two or more pieces and presented for payment, such a cheque is called a mutilated cheque. The bank will not make payment against such a cheque without getting confirmation from the person who has written the cheque.

Due to the fact that Crossed Cheques can only be paid through a bank account, the transaction records can be traced in case of any discrepancies. This is one that has been torn or otherwise destroyed before being delivered to the bank. If the necessary information on a cheque is torn or not visible, the cheque becomes void.

Cross cheque system operates in India by using the bank drafts drawn on different banks. The draft is a written order from one bank to another for the payment of money. The drawer of the draft is the bank that makes the payment, and the drawee is the bank to which the draft is drawn. Cross Cheques are the most commonly used instrument of payment in India.

Ante Dated Cheque

General crossing and special crossing are the types of cheque crossing. A cheque is a document that orders a bank to pay a certain sum of money from a person’s account to another person or company’s account in whose name the cheque has been issued. Is a document that orders a bank to pay a certain sum of money from a person’s account to another person or company’s account in whose name the cheque has been issued.

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. A demand draft is a type of cheque that is payable on demand when drawn on a bank. A demand draft is usually used for immediate payments and has a higher cost than a regular cheque because it requires additional processing time. In cases where a cheque is payable to a person whose name is mentioned in the cheque or to his order, is called an Order Cheque.

Penalty for Dishonour of Cheque

These types of cheques normally used for a cash transaction. Some banks may honour cheques in their other branches than the account holder branch. Gift cheque, it is a cheque forirted in decorative form issued for a small extra charge by the banks for use by customers who wish to give presents of money on special occasions. A crossed cheque is one which has two short parallel lines marked across its face. Should not be struck off and the person issuing the cheque should sign on the reverse of the cheque also before giving it to another person; otherwise the bank may refuse payment.

Simply put, a cheque is a bill of exchange drawn on a bank payable always on demand. Hence, a cheque can also be regarded as a bill of exchange, with the only difference that the bank is always the drawee in the case of a cheque. Section 6 of the Negotiable Instruments Act of 1881 provides that a cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand. A cheque is used to make safe, secured, and hassle-free payments.

Before signing, you need to check all the information. Check if you have put the date or the amount correctly. A cheque is basically drawn on the bank and is called the ‘drawee’. Now, let’s know about the types of cheques in detail in the section below. The dishonor of cheques may happen due to multiple reasons. However, the insufficiency of funds in the account of the drawer of the cheque is the key reason if your cheque has been dishonored.

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The cheque issued is in favor of another person/institution, thereby directing the bank to pay the specified amount to the person named in the cheque. A cheque is a financial instrument issued by the bank to an account holder to make certain payments to an individual or company. A customer can use a cheque instead of hard cash to make payments. It is a trusted form of making payments, as only the recipient named is able to withdraw money by encashing the cheque at the bank, provided he/she proves their identity. On the Account payee cheque, two lines are made with the word «account payee» on the top right of the cheque. Amount mentioned on the cheque is only transferred to the bank account of the payee whose name is mentioned on the cheque.

Should mention the amount of money in figures and words. Mutilated Cheque refers to the cheque which is torn into two pieces. No, the bank will not accept https://1investing.in/ the cheque in that case. 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.

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General crossing of cheques refers to the inclusion of some words between the two lines drawn symbolizing a crossed cheque. This simply shows that the bank on which it was drawn should not allow the amount of payment in any other banks. Therefore, the payment can be done only in the collecting bank. 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. A ‘cheque Return Memo,’ which outlines the reasons for the cheque being dishonoured, is normally issued to the payee’s bank. The payee’s bank presents the dishonoured cheque and memo to the payee.

Stale cheques

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Self Cheque is the cheque where the drawer usually issues a self-cheque to his or her self. Any person can issue a self cheque when the drawer wishes to withdraw money from the bank in cash for his use. A self cheque can only be encashed in the account types of cheques in india holder’s or the drawer’s bank. It is important to take precautions with this cheque as if it is lost, another person may easily get it encashed by visiting the drawer’s bank. If the cheque is torn into two parts, it is called the mutilated cheque.

Such cheques are issued through mutual consent between two parties. A post-dated cheque cannot be honoured earlier than the date mentioned on the cheque. Such cheques are commonly used in businesses as they can be used as collateral or security. A bearer cheque is the one where the words “or bearer” written on the cheque is not cancelled or marked.