Types Of Cheques in India, Benefits and Uses
Aspirants can check the linked article for the latest government exams in India. At your request, you are being redirected to a third party site. Please read and agree with the disclaimer before proceeding further. Verify all your entries and sign at the bottom of the cheque to authorise the cheque. Fill out the space provided for entering the date and payee’s name. Applying for a new chequebook has now become convenient as you can get it through various online and offline channels.
Travelers’ Cheques are considered or are equivalent to a universally accepted currency. This cheque is available almost everywhere and comes in various denominations. This cheque acts as an instrument issued by the bank itself to make payments from one place to another. A cheque is a bill of exchange where the drawer instructs his/ her bank to pay a specified sum to the payee or anyone holding the cheque. The customers use cheques for different needs or purposes.
Truncation is a medium of stopping a paper cheque from going all the way to the bank that would disburse the money. Through this, a digital picture of it is sent to the bank, in place of the paper cheque. This digital process happens through a system that banks use to exchange cheques. By doing this, there’s no need to move the paper cheque around. Also, it speeds up the time it takes for the cheque to get processed.
Traveller’s Cheque
When travelling, a traveller’s cheque is used to prevent carrying large quantities of cash and to ensure more safety and security. It can be used to purchase foreign currency when travelling overseas. This page covers information on different types of cheques, the key elements of cheques and the importance of cheque numbers. If a person is travelling abroad, he can carry the traveller’s cheque and get encashment for the same in abroad countries.
A post-dated cheque bears a date later than the date it was issued on. It can only be cashed after the date specified by the payer. The post-dated cheque can be valid after the mentioned date but not before it. Hence, even if it is presented to the bank, the bank will not process it until the mentioned date. Lately, for a direct account to account transaction, we have credit cards and debit cards. Each type of payment has a specific negotiable instrument attached to it.
Types Of Cheques in India, Benefits and Uses
Bearer cheques are considered to be less secure than other types of cheques because they can be easily lost or stolen and cashed by anyone who has possession of them. Bearer cheques are now phased out in many countries and are not in common use. They are only used in some cases for the movement of funds between the banks. A crossed cheque is a type of cheque that has been marked with two parallel lines, usually across the top left corner of the cheque.
The person having this cheque can further transfer it to another person and can easily make him the drawee. This cheque can only be opened by not cutting the word open. Also, the person who is issuing the cheque must ensure his/her signatures on both the front and the back of the cheque. The bank also makes the payee sign at the back of the cheque while receiving the amount. A cheque can be issued for a current account or a savings account and can be used to deposit or pay money to other people through the bank account.
Blank Cheque
- A self-cheque is a cheque written in one’s own name, with the drawer and payee being the same person.
- A cheque is a paper instrument that orders the bank to transfer money from the sender’s account to another account.
- A cheque is a common method of money transfer among merchants and small businesses.
- This feature of this cheque is that it can be presented over the counter of the drawee bank and is payable to the one giving it.
- If the drawer mentions a date prior to the current date on the cheque, it is called ante dated cheque.
To ensure that it is an account payee cheque, two lines are made on the left top corner of the cheque, labelling it for “A/C PAYEE”. Banker’s chequeA banker’s cheque is issued by the bank itself, guaranteeing the payment. It is typically used for high-value transactions and payments where certainty is required.
Yes, a cheque can be used instead of cash payment if the merchant or the shop accepts cheque payments. Endorser – If the payment rights are transferred to a third party, the payee, in this case, becomes the endorser. Every cheque carries a unique 6-digit number inscribed on the bottom of the cheque leaf. This number is known as the cheque number, and it is used to identify the status of the cheque. The cheque number is followed by a MICR number and a portion of the account number with which the account number is linked. • Bank branch – Alternatively, you can visit the bank branch during active hours and apply for a new chequebook.
It can only be credited to the payee’s account and cannot be encashed at the cash counter of a bank. Traveller’s cheques are a form of pre-printed, negotiable cheques that can be used for travel expenses. They are issued by banks and financial institutions and can be replaced if lost or stolen. Traveller’s cheques are a popular form of payment for travellers because they offer a level of security and convenience.
Things to know before writing a cheque
This marking indicates that the cheque can only be deposited into a bank account and cannot be cashed. Crossing of cheques are also useful when the cheque is lost or stolen, as it can only be deposited in the payee’s account. In some countries, Banks may allow the depositing of cheques in other banks with the same clearing network. An order cheque is a type of cheque in which the payment is made to a specific person or entity. The person or entity named on the cheque, also known as the payee, is the only one who has the right to receive the payment.
Endorsee – The endorsee is the party to whom the payment rights are passed from the payee (the endorser). Cheque payment includes multiple parties, and the payment processing takes place in chronological order. One must follow all the steps precisely when filling it out.
A crossed cheque is a type of cheque where the issuer makes two slanted parallel lines on the top left corner of the cheque, with the word ‘a/c payee’ written. A crossed cheque is also safer because it can be cashed only at the payee’s bank. An account payee cheque is another name for a crossed cheque.
When a cheque only has a drawer’s signature and all the other fields are left empty, then such a type of a cheque is called a blank cheque. Traveller’s chequeA traveller’s cheque is a pre-printed, fixed-amount cheque designed for travellers to exchange for local currency without the risk of carrying cash. Traveller’s cheques do not expire and can be used for future trips. Order chequeAn order cheque is payable only to the person whose name is mentioned on the cheque or to anyone endorsed by that person. This type of cheque provides an added layer of security since it cannot be cashed by just anyone. The payee is the person who receives the payment from the cheque-holder through the drawee bank.
A post-dated cheque is a cheque that is written for a future date. The cheque can be deposited or cashed only on or after the date types of cheque in india written on the cheque. This type of cheque is commonly used when the payer wants to ensure that the funds will be available on a specific date, such as a rent payment or a loan repayment. It is also used when the payer wants to make a payment on a future date but wants to issue the cheque now. The payee should not deposit the cheque before the date written on the cheque.