What are the Different types of Cheques issued in India. In the previous articles, we have given Differences Between PAN, TAN, DSC, DIN and TIN and List of Gazetted Holidays 2017 For Central Government Employees. Today we are discussing what are the different types of cheques used in India. A Cheque is an unconditional order addressed to a banker,signed by the person who has deposited money with a banker,requesting him to pay on demand a certain sum of money only to the order of certain person or to the bearer of the instrument.
Definition of a Cheque
“Cheque is an instrument in writing containing an unconditional order, addressed to a banker, sign by the person who has deposited money with the banker, requiring him to pay on demand a certain sum of money only to or to the order of certain person or to the bearer of instrument.”\
The following details are necessary in cheques –
- A cheque must be drawn upon a specified bank (Drawee).
- A cheque must be signed by the person (Drawer) issuing the cheque.
- A cheque must have the name of the recepient (Payee) of the cheque.
- A cheque must mention the amount of money in words and figures.
- A cheque must be dated.
Classification of Cheques:
A cheque is one of the safest modes of making payment as there is an entry against the cheque honoured by the bank that can be traced back if needed.
Based on the location, cheques are classified as :-
If issued by a bank in the same city as the payee.
If a given city’s local cheque is presented elsewhere it becomes an outstation cheque and may attract some nominal but fixed banking charges.
At par cheque:
is a cheque which is accepted at par at all its branches across the country. Unlike local cheque it can be present across the country without attracting additional banking charges.
Based on its value, cheques are classified as :-
Normal Value cheques:
Cheques below the amount of Rs. 1 lakh are called normal value cheques.
High Value cheques:
Cheque bearing an amount higher than Rs. 1 lakh is a high value cheque.
Cheques used for gifting money to loved ones are gift cheques. The value may vary from Rs. 100 to Rs. 10,000.
Types of Cheques
Bearer Cheque :
A cheque which is payable to a person whosoever bears, is called bearer cheque.
- The cheque sometimes can be made payable to “Cash” or bearer or made payable to a specific name.
- This cheque is payable by the drawee bank over the counter to the Bearer or presenter of the cheque.
- A Bearer cheque can be negotiated or pass to another person by mere delivery. In other words, the holder (or the Transferer), when giving it to another person need not endorse the cheque.
- No identification is needed when a bearer cheque is presented for encashment. However, in normal banking practice, where the amount of the cheque is substantial, the identity of the encasher is insisted on.
- A bearer cheque can be collected by the bank for the credit of anyone’s account
- In banking practice, the need for the encasher’s signature on the back of the cheque is merely to evidence that the encasher has received the money from the bank.
When the word “bearer” appearing on the face of a cheque is cancelled and 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 any one else to whom it is endorsed (transferred).
An order cheque can be paid to the named payee across the bank’s account if so presented.Identification must be insisted on by the bank when encashing the order cheque for the presenter. The ID number and the named payee’s signature will be asked for on the back of the cheque.
A cheque is called open when it is possible to get cash over the counter at the bank. The holder of an open cheque can receive payment over the counter at the bank, deposit the cheque in his own account or pass it to someone else by signing on the back of a cheque.
The words ‘OPEN’ should not be struck off and the person issuing the cheque should sign on the reverse of the cheque also before giving it to another person; otherwise the bank may refuse payment. The latter can collect the money from any branch of the bank nowadays, depending on the bank. S/he should also sign at the back of the cheque while receiving the amount.
On that type of cheques two parallel line made on the upper part of the cheques,then that cheques formed to crossed cheques.This type of cheques payment does not formed in cash while the payment of that type pf cheques transferred to the payee account and the normal person’s account who recommend by the holder on the cheque.
A crossed cheque cannot be encashed at the cash counter of a bank but it can only be credited to the payee’s account.
A cheque on which the drawer puts his signature and leaves all other columns blank is called a blank cheque.
- A check that is signed by the payer but with no specific amount indicated, leaving this determination up to the drawee.
- More generally, a term used for any situation in which an usually high level of trust is afforded by one party to another.
If a cheque bears a date which is yet to come (future date) then it is known as post-dated cheque. A post dated cheque cannot be honoured earlier than the date on the cheque.
Check presented at the paying bank after a certain period (typically six months) of its payment date. A stale check is not an invalid check, but it may be deemed an ‘irregular’ bill of exchange. A bank may refuse to honor it unless its drawer reconfirms it payment either by inserting a new payment date or by issuing a new check. Also called stale dated check.The cheque which is more than three months old is a stale cheque.
Anti Dated Cheque:
If any cheque issue for the upcoming withdrawn date but it withdraw before the date printed on the cheque,then that type of cheques are called anti dated cheques.
Gift cheque, it is a cheque forirted in decorative form issued for a small extra charge by the banks for use by customers who wish to give presents of money on special occasions.
Gift cheques may be purchased in unlimited numbers from every branch of the ‘X’ Bank.
Gift cheques may be used to give presents of money as
- Birthday Gift
- Wedding Gift
- Honour Gift
- EASI SMART Gift
Gift cheques are used for offering presentations on occasions like birthday, weddings and such other situations. It is available in various denominations.
The banker’s cheque is an instrument issued by the bank on behalf of customer containing an order to pay a certain sum to a specified person within the city. The validity period of the Banker’s cheque is 3 months, however it can be re-validated subject to some legal formalities.
- In Banker’s cheque the chances of dishonor is not possible because it is always prepaid. It is always pre-printed with the words ‘not negotiable’ which means it cannot be further negotiated.
- Banker’s Cheque or Payment Order is a cheque issued for making payments within the same city.
- Banker’s cheque is valid up to 3 months from the date of issue.
- All banker’s cheque are pre-printed with “NOT NEGOTIABLE”.
It can be cleared in any branch of the same city.
A Traveller’s cheque:
It is a printed open type cheque issued as an alternate for carrying around cash while travelling abroad or on a vacation to a foreign country as they come with a replacement guarantee and lifelong validity. Traveler’s cheques are widely accepted by merchants, restaurants and other recreational organizations. The unused cheques from the recent trip can be used for your next trip.
- Convenience : Easy to use. Secured to protect your money when on the move.
- Choice : Available in United States Dollars (USD), Great Britain Pounds (GBP), EURO, Japanese Yen (JPY), Australian Dollars (AUD) and Canadian dollars (CAD).
- Acceptance : Accepted worldwide in over 400,000 locations spread across 200 countries. TCs can be encashed or used at Exchange bureaus, Banks, Hotels Shops, Restaurants and other establishments.
- Security : Signature based security. If your cheques are lost or stolen, the 24 hour Call Centre is just a phone call away. Replacement of lost TCs is attended to on priority across the world.
- Buy-Back : When you return back to India, you can encash any unused TCs issued by us, at any of the Axis Bank Branches.
- Expiry : Valid forever! You can save any unused Travellers Cheques for future trips.
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