Order cheques are commonly used for personal, business, and other financial transactions. They are considered as the standard type of cheques in most countries. A cheque can be defined as a financial instrument that allows for the transfer of money from one person/ institution to the designated recipient.
- You can make secure, safe, and convenient cheque payments without handling cash.
- It’s important to note that these types of cheques can be subject to specific conditions and regulations imposed by individual banks or the Reserve Bank of India (RBI).
- You can also avoid any confusion in how to write a cheque due to forgetting the cheque details just in case you need to stop the cheque’s payment or issue a duplicate cheque.
- When you make a new checkbook request, it typically takes at least five business days before you receive it.
- Traveller’s cheques can usually be replaced if lost or stolen, and people frequently used them on holiday instead of cash as many businesses used to accept traveller’s cheques as currency.
The format and wording varies from country to country, but generally two parallel lines may be placed either vertically across the cheque or in the top left hand corner. In addition the words ‘or bearer’ must not be used, or if pre-printed on the cheque must be crossed out on the payee line. If the cheque is crossed with the words ‘Account Payee’ or similar then the cheque can only be paid into the bank account of the person initially named as the payee, thus it cannot be endorsed to a different payee. The information provided at the bottom of the cheque is country-specific and standards are set by each country’s cheque clearing system. It’s a bearer’s cheque with the words “account payee” inscribed in two parallel lines on the top left-hand corner. It’s the safest type of cheque to write because only the person whose name appears on the cheque will have money sent to their account.
• Bank branch – Alternatively, you can visit the bank branch during active hours and apply for a new chequebook. Yes, you can get your cheque cashed at the branch it belongs to. In November, there’s going to be a long weekend holiday from the 11th to the 14th in many Indian states.
This often involves trying to convince a merchant or other recipient, hoping the recipient will not suspect that the cheque will not clear, giving time for the fraudster to disappear. In Japan, cheques are called Kogitte (小切手), and are governed by Kogitte Law [ja]. Cheques can be lost or go astray within the cycle, or be delayed if further verification is needed in the case of suspected fraud. In some countries, such as the US, cheques may contain a memo line where the purpose of the cheque can be indicated as a convenience without affecting the official parts of the cheque.
Nature of a cheque
Try not to leave spaces in the name, amount or figures denoting the amount, as this allows any other person to alter the cheque. For example, here is how to write cheque amount in words in India. 1000 can become with just the addition of a 0 next to it, or Nagaraj KP can become Nagaraja KP when it is written as Nagaraj KP with sufficient space to insert the alphabet “a”. Hope you now know about the various types of Cheques and their uses. Although, you may not use all types of cheques, however it is a good to know information.
Those who have important work related to the bank in November, should see the list of holidays and plan their work in advance. In the 13th century the bill of exchange was developed in Venice as a legal device to allow international trade without the need to carry large amounts of gold and silver. Follow Khatabook for the latest updates, news blogs, and articles related to micro, small and medium businesses (MSMEs), business tips, income tax, GST, salary, and accounting. Now that we know the various fields of a cheque let us move to how to write this the right way or the correct way. A Cheque which is used for gifting money to loved ones is known as a gift cheque. Before discussing any further, it is important to know that cheques are classified into various categories based on different classification criteria.
- Even entering the year or month incorrectly can cause your cheque to bounce.
- There are several types of financial instruments that can be used for payment, including cash, checks, credit and debit cards, electronic transfers, and digital currencies.
- This is considered as the safest cheque because the person cannot withdraw the cash given his name is not indicated on the cheque.
- In India, a cheque is good for three months from the date of issue.
- Try not to leave spaces in the name, amount or figures denoting the amount, as this allows any other person to alter the cheque.
- The post-dated cheque can be valid after the mentioned date but not before it.
Also, the unique feature of this cheque is that it comes without an expiry date. If you regularly deal with cheques, you must have observed two parallel lines drawn on the top left side of the cheque with the text’ a/c payee’. Some cheques may not have this text; in such cases, two parallel lines are drawn across or on the backside of the cheque. Cheques that are dated for enchantment/deposit on a future date are called post-dated cheques. Commonly, these cheques are used for recurring payments, like rent etc. In an order cheque, the words’ OR ORDER’/‘OR BEARER’ is cancelled or struck out.
Advantages and disadvantages of a cheque
You must never scribble, cancel a word etc., on the cheque as the bank is at liberty to refuse to accept the cheque. If you make a mistake in the cheque writing format, you can always write out a new cheque. A cheque is a paper method to access your bank account and pay a specific amount to a person, company, or firm.
Ante Dated Cheque
Banks take utmost care when processing cheque transactions for security reasons. The following are the important things to keep in mind while writing a cheque. • Signed cheques without any amounts mentioned in them are known as blank cheques.
Regional holidays are decided by the respective state governments; they are not mentioned on RBI’s official website. Bank holidays in India come in a variety of flavours — it’s a mix of mandated holidays by the banking sector, plus a whole set of festive and commemorative holidays authorised by various states. Most Indian banks’ functions are regulated https://1investing.in/ by the Reserve Bank of India, and banking schedules and holidays are also governed by the Reserve Bank of India (RBI) regulations. Public sector banks and private sector banks both are not working on Sundays and on second and fourth Saturdays. Taking advantage of the float period (cheque kiting) to delay the notice of non-existent funds.
Different Types of Cheques
Here are some notable advantages and disadvantages of using cheques. • Similarly, the amount mentioned on the cheque cannot be altered.
How many types of cheques are in use depends on elements like who is the issuer and who is the drawee. Based on these essentials, we explore the different types of cheques in India. The contents of this article/infographic/picture/video are meant solely for information purposes. 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.
It is an unconditional grant of mandate, in which the person making the payment is signed and orders the payment of a certain amount written in it, to any person or institution. To deposit a banker’s cheque, the payee needs to visit the issue branch, i.e. the branch at which the cheque was initially issued. Then present the cheque at the counter and present your ID as well. Once your ID is checked by the banker, you are required to sign a declaration in the bank’s register that you have received the amount. Just like any other type of cheque, a banker’s cheque is also valid for 3 months from the date of issued. However, the validity of a banker’s cheque may be increased upon providing the same in writing at the issuing branch.
Of the list above, there are those which are less risky and safer to use. This cheque only has the drawer’s signature and the other columns are left blank. On the cheque leaf, the word “Bearer’ or “a stroke”, it means that anyone holding this cheque can withdraw the amount indicated provided the cheque is signed. If your cheque is slightly damaged or torn, it may still remain valid. However, if you have torn your cheque into two halves, then you cannot deposit or encash it. In this case, the paying banker only pays the amount of the cheque to the banker whose name appears on the crossing or his assembling agent.
The payee should not deposit the cheque before the date written on the cheque. Post-dated cheques are considered to be less secure than other types of cheques because they can be lost or stolen and cashed before the due date. An open cheque is a type of cheque that can be cashed or deposited by anyone who has possession of it. Unlike crossed cheques, open cheques do not have any special markings, and do not indicate the account to which the funds should be credited. Open cheques are considered to be less secure than crossed cheques, as they can easily be lost or stolen and cashed by someone other than the intended recipient. Open cheques are less common in use and most of the time banks discourage using them.
Traveller’s Cheques
Not entering the date means your cheque can be drawn on any date as per the person holding the cheque wills. Your cheque can bounce, or you can face other penalties when the cheque is encashed, and you do not have sufficient funds in the account. Also, note that the bank does not accept cheques with a future date or no date. Even entering the year or month incorrectly can cause your cheque to bounce. With an open cheque, the cheque holder can get cash by presenting the cheque at the cash counter of the bank.
