Cheque & Its Types In the Indian Banking System

Cheque & Its Types In the Indian Banking System: A Cheque is a document you can give to your bank that instructs the bank to pay a specific amount in both numbers and words to the person whose name is on the Cheque.

Cheque in the Indian Banking System

Anatomy of Cheque

Cheque & Its Types in the Indian Banking System

1. Bearer or Open Cheque
2. Order Cheque
3. Crossed Cheque
4. Account Payee Cheque
5. Post Dated Cheque
6. Stale Cheque
7. Ante Dated Cheque
8. Truncated Cheque
9. Traveler’s Cheque
10. Mutilated Cheque
11. Banker’s Cheque

Bearer or Open Cheque

• A Cheque is called open or bearer if it is not crossed and can be drawn at a bank counter.
• The holder of a bearer Cheque can do the following:
• receive this payment over the counter at the bank
• deposit the Cheque into his account
• Forward it to someone else by signing the back of the Cheque.

Crossed Cheque

• Cheques that are crossed are called crossed cheques.
• Unlike open or bearer cheques, Crossed Cheques cannot be cashed at a bank counter.
• Thus, the risk of theft or misuse of open Cheques can be avoided by using crossed checks
• Crossed Cheque are automatically credited to the payee's bank account
• A Cheque can be crossed by drawing two horizontal parallel lines on the Cheque, or without the words "Paid" or "Non-negotiable".

Order Cheque

• Order Cheque is a check payable only to the named person
• Such a Cheque may cross or cross out the word "chest" and write the word "order"
• The payee may transfer the order Cheque to someone else by writing his name on the back from such a Cheque down.

Ante-Dated Cheque

• A Cheque with a date in the box that is earlier than the date it was presented for payment is called an Ante-Dated Cheque
• For example, an Ante-Dated Cheque issued on May 20, 2015, may contain the date 05th May 2025.

Postdated Cheque

• A Cheque issued today must be presented to the bank within the prescribed time limit
• After this time limit, no payment will be made. Such a Cheque is called a Postdated Cheque.
• All cheques valid in India are valid for 3 months. A Cheque presented is called a Postdated Cheque.
• For example, a Cheque presented on 5/8/2015 is dated 24/05/2015, it is a postdated Cheque. The bank will not pay until 25/05/2015 or later.

Mutilated Cheque

• If a Cheque is torn into two or more parts and presented for payment, it is called a Mutilated Cheque.
• The bank is not allowed to cash such a Cheque without the drawer's approval.
• But if the Cheque is torn at the corners and nothing important seems to be removed or cancelled then the bank can pay against such a Cheque.

Truncated Cheque

• A Truncated Cheque is a Cheque that is cut during the clearing period by either the clearing house or the bank, regardless of whether they pay or receive payments, immediately after creating a sendable electronic image that replaces the additional physical written transmission of the Cheque
• The expression "clearing house" means a clearing house operated by the Reserve Bank of India or a clearing house recognized as such by the RBI

Banker's Cheque

• It is an instrument issued by a bank. in the name of a bank customer, containing an order to pay a certain amount to a certain person in the city
• A bank Cheque is valid for 3 months from the date of issue, but can be reconfirmed under certain conditions, legal requirements
• A bank Cheque cannot be dishonored because it is always paid in advance
• It is always pre-printed with the words "non-tradeable", meaning it is not tradeable.

Traveler's Cheque

• This is a pre-printed fixed-sum Cheque designed to enable the signer to make an unconditional payment to someone else for having paid the issuer for the privilege.
• Traveler's Cheques are accepted worldwide in more than 4,00,000 locations in 200 countries
• They can be redeemed or used at currency exchange offices, banks, shops, restaurants, hotels, etc.
• The non-expiration allows the cheque holder to cash the remaining Cheques or keep them for the next trip
• The use of such Cheques has declined since the 1990s as digital banking options such as credit cards, debit cards, and ATMs increased affordable much easier, and more convenient for travelers.

Features of Cheque

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