What do you mean by Cheque?
- What do you mean by Cheque?
- Types of Cheque
- Frequently Asked Questions
Cheques are pieces of paper or paperwork that instruct the bank to move money from one person’s or organization’s account to another. The drawer is the individual who writes the check, and the payee is the person to whom the check is written. Cheques include information such as the amount of money, the name of the payee, and the signature of the drawer.
Among the many different types of negotiable instruments, a cheque is very common banking instrument. A a current account or a savings account in a bank is needed to write a cheque in one’s name or on behalf of others.
The bank is instructed to pay the specified amount to the person identified on the check. To avoid fraud, this transaction must be handled with extreme caution.
A cheque allows an individual or business to obtain a certain amount of money on demand. This printed form, for example, can be used to make a payment from a bank account.
The person to whom you’re transferring money signs and gives you the check, which contains the amount you’re sending. The funds are subsequently taken from your account and sent to the Payee.
Types of Cheque
There are various types of checks that can be issued. Each type is described as follows:
Bearer cheques are those that are paid to the person who is holding or carrying the check. The cheques are deliverable, which means that if you submit the cheque to the bank, you will be paid. Bearer cheques are these types of checks.
Bearer cheques are checks that can only be cashed by the bearer. As a result, whoever takes the check to the bank has the right to have it cashed. This type of check can be used to withdraw cash. Also available for withdrawal are endorsable statements. This cheque does not require the bearer to produce identification.
If the check is signed by Arjun (the drawer) and paid to Varun (the Payee), for example. Varun’s cheque can be cashed by a third party either going to the bank or being sent by Varun. As a result, there is no requirement to identify the check’s bearer. If a person does not want their cheque to be endorsable, they can remove the option OR BEARER from it.
An order cheque has the bearer’s name canceled on it. When the word bearer is canceled, the check automatically becomes an order cheque. The bank issues the order cheque, which is then paid to the payee. The payee must be identified when presenting an order cheque to the bank. An order cheque is a type of check like this.
The only individual who receives cash for that amount is the Payee, whose name appears on the cheque. As a result, this kind of check cannot be endorsed. The drawer must strike the OR BEARER mark on the cheque to ensure that the Payee can only cash the check.
If the cheque must be signed with Varun’s name in order for the Payee to cash the order cheque at the bank, for example. Before the money is withdrawn, the bank can verify the Payee’s identification.
Crossed cheques are cheques that have two parallel lines drawn across them, either across the entire cheque or through the left-hand corner. This type of cheque is known as crossed cheque.
This type of check does not allow for cash withdrawal. Money can only be transferred from one account to another from the drawer to the Payee. The cheque can be submitted by anyone at the bank. Two lines should be drawn in the top left corner of a crossed check.
Account Payee Cheque
An account payee check is one that permits the payee to deposit funds straight into his or her bank account. An account payee cheque is one such type of check.
A similar cheque, such as an account payee cheque, can be issued without the involvement of a third party. The funds will be transferred immediately to the Payee’s account number.
Two lines in the left top corner of an account payee cheque are labeled A/C PAYEE.
Also Read: Duplicate Checks: What Are They?
In India, cheques are only good for three months from the date of issue. As a result, if the Payee goes to the bank to withdraw a cheque signed three months ago, it will be declared stale.
Payees who go to the bank on May 1, 2021, to withdraw a January 1, 2020 cheque will be rejected, and the cheque would be considered stale.
Post Dated Cheque
Post-dated cheques are a form of a cheque whose date of issuance has been written in the future. This type of cheque is called a post-dated cheque. Payees can request withdrawals and transfers after the current date by filling out a postdated cheque.
For instance, when writing out the cheque, the drawer can write May 30, 2021 as the payment date, thinking the money would be paid after May 10, 2021. Postdated checks are what they’re called.
Ante Dated Cheque
Cheques that are written by the drawer and dated afterwards are known as antidated checks. Antidated checks are the name for this sort of check. An antedated cheque is one on which the drawer has written a date preceding the cheque’s current date.
If the current date is January 30, 2021, a cheque with the date January 1, 2021 will be issued. As a result, the statement is deemed old.
A self-cheque is a cheque that is issued by the drawer to himself or herself. It can be collected from the bank from which it was drawn. This type of cheque is called a self-cheque.
Individuals who want to receive cash in person can write checks with SELF as the Payee name and get payment at the location where they have an account.
Instead of a cheque for Rs.1,00,00/-, the person could write a self-cheque and take it to the bank branch where he has an account for encashment.
A travelers cheque is a type of payment that financial institutions offer. When traveling abroad, vacationers frequently utilize paper cheques. They are available for a set price and can be exchanged for cash or used to buy goods and services. A Travelers Cheque is the name for this sort of check.
Wherever Indian currency is not accepted, the Travelers Cheque can be used. If the traveler is going abroad, travelers cheques can be cashed in foreign countries.
A mutilated cheque is one that has been torn into two or more pieces. A mangled cheque is one that has been tampered with.
A blank cheque is a signed check on which the amount payable has not been specified. A blank cheque is another name for this type of check.
Except for the drawer’s signature, a blank cheque has all of the other areas left blank. The above-mentioned cheques are the most widely used in Indian banking.
Frequently Asked Questions
How much time does it take to clear a cheque?
The bank clears the check within two business days, but no longer than five.
Can I withdraw cash from any bank by cheque?
Without a bank account, cheques can be cashed at any bank.
Are bank cheques safe?
The only issue is that bank checks aren’t completely safe and are frequently canceled. Hence, save from balancing personal checks, there’s no way of knowing if they’ll be honored once they’re put in your account.
Why cheques are not legal tender?
Money that is supported by a legal sanction from the government is defined as legitimate currency. Cheques are not considered legal tender because they can be rejected for transaction settlement. Nonetheless, trust in the cheque issuer continues to be a role in why individuals accept cheques.
What is the safest cheque?
A cashiers check is considered a safer option because the funds are drawn from the bank account rather than the individual or business account.