Crossing of Cheques & Its Types

Normally, crossing a check is done to promote safety. It’s done by tracing two parallel transverse lines over the top left corner, either with or without particular words.

The purpose of crossing is to prevent a cheque from being paid to the wrong party by telling the drawee banker to only pay the check amount to a banker.

What is Crossing of Cheques?

Cheques are crossed when two parallel lines are drawn on their faces, usually in the top left corner of each side, with or without words. Only the mode of payment is changed when a cheque is crossed.

Money are made into the holder’s account rather than at the counter. It has no effect on its negotiability, however. Uncrossed or open checks are still negotiable, as are crossed checks.

These might be delivered to the bearer or endorsed and delivered to the receiver.

A person who does not have a bank account but has a crossed cheque must open a bank account and deposit the cheque there so that the banker can collect the payment from the drawee banker and credit his account accordingly.

Another alternative is to endorse the check in the name of a known individual who has a bank account, allow him to receive the funds in his bank account, and then retrieve the cash from him.

Also Read: What is a Cancel Cheque and Why Do We Require It?

Types of Crossing of Cheques

The crossing of Cheque outlines how currency should be handled to protect payments from fraud and forgeries. It assures that funds must be sent to a bank account only after receiving a check, rather than cashing it right away. The following are the various types of cheque crossing.

General Crossing Cheque

On the face of a check (usually at the top left-hand corner), general crossings are lines that connect two parallel lines without any words or with terms like and company, & Co., or not negotiable in between them.

Restrictive Crossing Cheque

Account payee crossings are identified by writing A/C payee between two parallel lines across the cheque’s face. The cheque can only be credited to the stated person’s account in this circumstance, hence it is not negotiable.

Special Crossing Cheque

The banker’s name and the words “not negotiable” are printed across the face of a special crossing cheque. A paying banker will only pay a cheque’s amount to the paying banker or the banker indicated in the crossing. As a result, the paying bank will only honor a cheque if it is ordered through the crossing bank or its representative bank. In special crossings, the banker’s name is more essential than the parallel transverse lines.

Double Crossing Cheque

When a bank to which a cheque was crossed specifically sends a copy of it to another bank for collection as its agent, the second bank crossing should state that it is acting as the earlier banker’s agent.

The payment is more secure when the cheque is crossed. This is a well-known means of protecting the parties to a cheque by ensuring that the compensation is paid to the correct individual. As a result, fraud and incorrect payments are reduced, and the instrument is protected from theft or encashment by unscrupulous individuals.

Also Read: Duplicate Checks: What Are They?

Advantages of Crossing a Cheque

Negotiation is not limited by the crossing of checks, and it has numerous benefits.

  • The risks associated with the Cheque’s loss or forging are minimized.
  • The proceeds of a crossed check must be remitted solely to a banker by the paying banker.
  • Since the law requires a collector banker to collect only from the customer and not from a third party, the collector is expected to collect solely from the customer.
  • As a result, fraudsters are unable to get funds without revealing their genuine names.

Disadvantages of Crossed Cheque?

Cheques must be deposited as soon as possible. If crossed checks are deposited, it may cause problems for non-bank customers. Checkbooks are also charged fees, and banks levy dishonored check penalties.

How do Cross Cheques differ from Account Payee Cheques?

They are both referring to the same thing. An account payee cheque is also referred to as a crossed cheque. Cheques of this type can only be deposited into an individual’s bank account and cannot be cashed over the counter. The purpose of this is to prevent misuse of the instruments in the event of loss or theft.

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Frequently Asked Questions

How does a cheque counterfoil work?

Customers receive checks as a return on their investment from businesses. To prevent bargaining, crossed cheques are always sent. Instead of containing the business’s trades, the counterfoil is a document that reveals the company’s profits and losses.

How important is the Cheque?

A cheque is essentially a document that instructs the bank to transfer a specific amount of money from one individual’s account to another individual’s or company’s account. With a cheque, payments can be made swiftly, securely, and conveniently.

Does Cheque refer to money?

A cheque is not a form of payment. Rather, the Cheque tells the bank to transfer a particular amount from the individual’s account to the person in whose name it was drawn.

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