The three parties of a cheque are the drawer (issuer), payee (recipient), and drawee (bank or financial institution). There are various types of bank cheques, but they commonly fall under categories like cashier’s cheques, traveler’s cheques, and certified cheques. Generally, a cheque’s validity is up to three months starting from the date mentioned.
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. Each cheque has its own unique features and characteristics and may be used for different purposes.
They differ from personal cheques in terms of reliability and processing. Personal cheques are widely used in India for everyday financial transactions. They draw directly from an individual’s bank account, making them dependent on available funds. A blank cheque, as the name suggests, is a cheque that has no details filled in except the signature of the issuer.
In the following article, we shall learn more about the types of cheques along with the meaning of cheques, their legal definition, features, and more. Banking and finance aspirants are advised to read through the below sections to understand all about cheques in one place. A cheque leaf is an instrument utilized to transfer funds from one account to another.
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The cheque remains non-negotiable, and the title of the transfer is not superior to the title of the transferor. Investments in securities markets are subject to market risks. Please read all related documents carefully before investing. Investing in Equity Shares,Derivatives, Mutual Funds, or other instruments carry inherent risks, including potential loss of capital. Elearnmarkets (Kredent InfoEdge Pvt. Ltd.) does not provide any guarantee or assurance of returns on any investments.
- Always double-check your details and consult your bank if unsure.
- Types of Cheque is an important and commonly asked topic as far as the banking exams are concerned.
- The amount specified in the cheque to the self bank account or someone else’s by signing on the back side of the cheque.
Differences between depositing and cashing a cheque
Individuals and organisations can use different types of cheque books based on their unique needs. The most common include personal cheque book, business cheque book, and customised cheque book. Keep in mind that a check is always drawn on a specific banker. A mutilated cheque is a cheque that has been subject to damage or alteration. Damage is recorded if the cheque presented is torn or altered due to liquids and food elements.
Traveller’s cheques serve as a safe payment option for individuals travelling domestically or internationally. They provide a reliable means to access funds without the risk of carrying large amounts of cash. The cheque is negotiable from the date of issue up to three months. It turns stale after the completion of three months and needs to be revalidated before presenting to the bank. • Several bank digital kiosks also process cheque transactions digitally so, you don’t require to visit the bank always. Include your full name and account number, bank branch details, cheque amount and number.
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- In this article, we shall discuss in detail what is a cheque, various types of cheques that are issued in the Indian banking system and what are the features of each of them.
- It turns stale after the completion of three months and needs to be revalidated before presenting to the bank.
- Business cheques, primarily used for commercial transactions, facilitate payments between companies and individuals.
- It is one of the most secured and most commonly used cheque that enable the payee that they get the amount in any matter that it is displayed in the leaf.
Only if the cheque is ordered through the bank specified in the crossing can the paying banker honor it. However, in this case, crossing two parallel crosswise lines does not appear to be necessary, but the name of the banker is crucial. In a special crossing, the cheque bears an addition of the banker’s name, with or without whiles, rather than the words ‘not negotiable. The stocks, securities, and investment instruments mentioned herein are not recommendations under SEBI (Research Analysts) Regulations, 2014.
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The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially.
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. If the drawer mentions a date prior to the current date on the cheque, it is called ante dated cheque. Mutilated Cheque is a damaged or defaced cheque that requires bank assessment and validation for payment. In simple words, a cheque that is toned or damaged is known a Mutilated Cheque. The bank will not process the payment of the cheque unless they get a conformation from the drawer of the cheque. Now, let’s know about the different types of cheques with images in detail in the section below.
ELM constantly experiments with new education methodologies and technologies to make financial education effective, affordable and accessible to all. 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. Here are some notable advantages and disadvantages of using cheques. • Similarly, the amount mentioned on the cheque cannot be altered. For any further information regarding the banking terms or the government exam syllabus or information regarding the same, candidates can turn to BYJU’S for assistance.
A bearer cheque becomes an account payee cheque by writing “Account Payee” or crossing it twice with two parallel lines on the left-hand side top corner. No, only the account holders receive cheque book which they can use to transfer money or make payments. However, you can encash a cheque drawn in your name even without a bank account. An order cheque is the one that has the words “or bearer” cancelled out.
Banker’s cheques are issued by a bank on behalf of the account holder to transfer a specified amount to a payee within the same city. The amount is directly debited from the customer’s bank account. It is a non-negotiable type of cheque and hence banks cannot dishonour them.
By mentioning a date in the future, Post-Dated Cheque is a cheque written by the drawer to the payee. Carries types of cheque in india a future date, indicating when the payment becomes valid, used for future transactions or as a security measure. A payee can only issue for the amount on the date mentioned in the cheque.
