Types of Cheques and its Important terms – Banking Awareness
Types of Cheques and its Important terms : A cheque is a bill of exchange drawn by a customer of a bank on a specified bank & (c) not expressed to be payable otherwise than on demand. It includes an electronic image of a truncated cheque & also an electronic cheque.
AMOUNT OF A CHEQUE
Where the amount of a cheque differs in words&figures, as per Section 18, the amount written in words should be paid irrespective of the fact, which amount is less or more.
Types of Cheque
- Bearer Cheque or open Cheque
When the words “or bearer” appearing on the face of the cheque are not canceled, the cheque is called a bearer cheque. The bearer cheque is payable to the person specified therein or to any other else who presents it to the bank for payment.
- Order Cheque
When the word “bearer” appearing on the face of a cheque is canceled & when in its place the word “or order” is written on the face of the cheque, the cheque is called an order cheque. Such a cheque is payable to the person specified therein as the payee, or to anyone else to whom it is endorsed (transferred).
- Crossed Cheque
Crossing of cheque means drawing two parallel lines on the face of the cheque with or without additional words like “& CO.” or “Account Payee” or “Not Negotiable”. A crossed cheque cannot be encashed at the cash counter of a bank but it can only be credited to the payee’s account.
- Ante-Dated Cheque
If a cheque bears a date earlier than the date on which it is presented to the bank, it is called as “ante-dated cheque”.
Such a cheque is valid up to 3 months from the date of the cheque.
- Post-Dated Cheque
If a cheque bears a date which is yet to come (future date)then it is known as a post-dated cheque. A post dated cheque cannot be honored earlier than the date on the cheque.
- Stale Cheque
If a cheque is presented for payment after 3 months from the date of the cheque it is called stale cheque. A stale cheque is not honored by the bank.
- A self-cheque
A self-cheque is written by the account holder as pay self to receive the money in the physical form from the branch where he holds his account.
- ―A truncated cheque‖ means a cheque which is truncated during the course of a clearing cycle, either by the clearing house or by the bank whether paying or receiving payment, immediately on generation of an electronic image for transmission.
The expression ―clearing house‖ means the clearinghouse managed by the RBI or a clearinghouse recognized as such by the RBI.
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Parties of a Cheque:
There are three parties to the cheque
- Drawer or Maker
- The bank – on whom the cheque is drawn
General crossing (sec 123)
General crossing is where a cheque bears across its face two parallel transverse lines (with or without words.
Special crossing (sec 124)
Where a cheque bears across its face, name of the bank, either with or without the words not-negotiable (lines are not important, the addition of the name of the bank is important), that addition shall be deemed as special crossing & the cheque be considered to be crossed specially to the banker.
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