Types Of Cheques
A cheque is a document you can issue to your bank, directing it to pay the specified sum mentioned in digits as well as words to the person whose name is borne on the cheque.
Cheques are also called negotiable instruments. In banking terms, a negotiable instrument is a document that promises its bearer a payment of the specified amount either on furnishing the document to the banker or by a given date.
We offer a variety of current/chequeaccounts, fixed deposits andsavings accountdesigned to suit your perso
nal banking needs.
The issuing party is called the drawer of the cheque, and the one it is issued to or put simply, whose name is mentioned on the cheque is the drawee.
What are the types of cheques?
How many types of cheques are in use depends on elements like who is the issuer and who is the drawee. Based on these essentials, we explore the different types of cheques in India.
1. Bearer Cheque
A bearer cheque is the one in which the payment is made to the person bearing or carrying the cheque. These cheques are transferable by delivery, that is, if you are carrying the cheque to the bank, you can be issued the payment to. The banks need no other authorisation from the issuer to be allowed to make the payment.
How can you identify a bearer cheque? You know it is a bearer cheque when you see the words ‘or bearer’ printed on them.
2. Order Cheque
In these cheques, the words ‘or bearer’ is cancelled. Such cheques can only be issued to the person whose name is mentioned on the cheque, and the bank will do its background check to authenticate the cheque bearer’s identity before releasing the payment.
3.Crossed Cheque
You may have observed cheques with two sloping parallel lines with the words ‘a/c payee’ written on the top left. That is a crossed cheque. The lines ensure that irrespective of who presents the cheque, the payment will only be made to the individual whose name is written on the cheque, in other words, the a/c payee along with his/her account number. These cheques are relatively safe because they can be encashed only at the drawee’s bank.
4.Open cheque
An open cheque is basically an uncrossed cheque. This cheque can be encashed at any bank, and the payment can be made to the person bearing the cheque. This cheque is transferable from the original payee (the original recipient of the payment) to another payee too. The issuer needs to put his signature on both the front and back of the cheque.
5.Post-Dated 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.
6.Stale Cheque
A cheque past its validity, three months after the date of being issued, is called a stale cheque.
7.Traveller’s Cheque
Foreigners on vacations carry traveller’s cheques instead of carrying hard cash, which can be cumbersome. These cheques are issued to them by one bank and can be encashed in the form of currency at a bank located in another location or country. Traveller’s cheques do not expire and can be used for future trips.
8.Self Cheque
You can identify self cheques by the word ‘self’ written in the drawee column. Self cheques can only be drawn at the issuer’s bank.
Click here for Online Saving Account Opening process in secure and simple way.
9.Banker’s Cheque
A bank is the issuer of these types of cheques. The bank issues these cheques on behalf of an account holder to make a remittance to another person in the same city. Here the specified amount is debited from the account of the customer, and then, the cheque is issued by the bank. This is the reason banker’s cheques are called non-negotiable instruments as there is no room for banks to dishonour these cheques. They are valid for three months. They can be revalidated provided specific conditions are met.
FAQs
A cheque is a financial instrument used to make payments to people and entities. Cheques can be of different types, but bearer and payee cheques are the most common. You should be careful while writing a cheque, as overwriting can cause banks to reject cheques.
What is a cheque and different types of cheques are there? ›
A cheque can be defined as a financial instrument that allows for the transfer of money from one person/ institution to the designated recipient. There are several types of cheques, like bearer cheques, blank cheques, traveller cheques, crossed cheques and more.
What is a bank Cheque short answer? ›
A written instruction to a bank or financial institution to pay a given amount from the cheque holder's account to the bearer is known as a cheque. The individual who instructs their bank to transfer funds and writes the cheque is referred to as the drawer.
What is the meaning of a cheque? ›
A cheque (British English) or check (American English); is a document that orders a bank, building society (or credit union) to pay a specific amount of money from a person's account to the person in whose name the cheque has been issued.
What is the difference between a bank Cheque and a cheque? ›
A 'bank cheque' is a cheque issued by a bank. The law generally treats bank cheques in the same manner as ordinary cheques. Bank cheques are usually requested because of the higher likelihood that they will be paid.
Are there different types of bank checks? ›
Cashier's Check vs Certified Check
The key difference between them is who signs them and how they are prepaid. Certified checks are signed by you, the person giving the check, and paid by your own account.
Can I cash a cheque at any bank? ›
Not every bank will cash a check from a noncustomer, but many do. You'll have the best luck visiting the bank the check was issued from. Other banks may still agree to cash your check, as long as they can verify the account holder has enough funds to cover the check amount.
How much cash can I withdraw from a bank through a cheque? ›
Withdrawal limit on cheque transactions
Most banks usually set a cash limit of Rs 1-2 lakhs by cheque per day. This limit applies generally for the self-use of cheques. Usually, you tend to receive all withdrawal limit conditions and fees and charges while you hit on the offline or online saving account opening option.
What is a cheque without date called? ›
The term “blank cheque” frequently refers to a cheque that has been signed by an authorised cheque signer but does not include any additional information like date, payee or amount.
Who can cross a cheque? ›
The holder of a cheque is authorized to cross a cheque, either in general or in particular if the cheque is not crossed. He is also entitled to cross a cheque, especially if the same is generally crossed. He can also add the words “non- negotiable” to crossed cheques in general and in particular.
Cheques are also called negotiable instruments. In banking terms, a negotiable instrument is a document that promises its bearer a payment of the specified amount either on furnishing the document to the banker or by a given date.
Can I deposit a cheque in any bank? ›
Can I deposit my check at any bank branch? Yes. Can someone deposit a check to my account? Yes, if he/she knows your account number and if the check is made out to you, or you have endorsed the check.
How to withdraw money from a cheque? ›
Write your name on the "Pay" or "Pay to the order of" line. You can write "Self" or your name as mentioned on your bank account. In the box provided on the right side of the cheque, write the amount you want to withdraw in numbers. Write the exact amount you wrote in figures in words below the "Pay" line.
What is a cheque simple? ›
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.
Is it safe to take a bank cheque? ›
You could take a bank cheque; however these are not entirely secure and can be cancelled. Personal cheques can be cancelled too, but in addition there is no way to know if it will be honoured when deposited in your account.
Are cheques safer than cash? ›
Cheques are more secure than cash
Carrying a large amount of cash with you makes you vulnerable to theft. On the other hand, having a chequebook around is hassle-free. Moreover, it is not easy to forge a signature and issue unauthorised cheques.
What is considered a cheque? ›
A cheque is a written "order to pay", which you sign and give to another party as payment. When you pay using a cheque, you are instructing your financial institution to give money from your account to the person (or organization) that is depositing the cheque.
What is the legal definition of a cheque? ›
1. [A cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form.
What is a cheque in Negotiable Instrument Act? ›
Cheques are some of the most important and common forms of negotiable instruments. The Negotiable Instruments Act, 1881 defines and regulates cheques. Almost all large business transactions these days make use of cheques instead of cash.
What is the difference between a cash cheque and a normal cheque? ›
Cash cheque is one which can be presented across the counter of the drawee bank for payment by the bearer of the cheque. Cash cheque does not bear crossing. A crossed cheque can be paid only when presented through clearing.
