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What Is Cheque? | Types Of Cheque In India | How To Write Cheque?

Cheque Is An Important Negotiable Instrument Which Can Be Transferred By Mere Hand Delivery. Cheque Is Used To Make Safe And Convenient Payment. It Is Less Risky And The Danger Of Loss Is Minimised.

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.

It is a type of document issued by the bank. If you have an account in the bank then you will get a Cheque Book from the bank. The Cheque Book contains some pages and that pages depend upon the type of Cheque book you are requesting. It is certified by the bank with the bank account of the account holder. Only that person can use the Cheque who has an account in the bank.

Here it is very necessary to describe the different types of Cheques issued by the bank. The Cheque contains all the important things such as the Date, Amount, Payee name, Signature of the Account holder. It has been in use since 19th century. But in the 20th century, it is becoming popular. The Cheque is issued on the request of the bank account holders.

The following details are necessary in a cheque –
  • 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 recipient (Payee) of the cheque.
  • A cheque must mention the amount of money in words and figures.
  • A cheque must be dated.
Different Kinds Of Cheque | Types Of Cheque In India

#01 Bearer Cheque:
When the words "or bearer" appearing on the face of the cheque are not cancelled, the cheque is called a bearer cheque. The bearer cheque is payable to the person specified therein or to any other else who presents it to the bank for payment. However, such cheques are risky, this is because if such cheques are lost, the finder of the cheque can collect payment from the bank.

#02 Order Cheque:
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).

#03 Uncrossed / Open Cheque:
When a cheque is not crossed, it is known as an "Open Cheque" or an "Uncrossed Cheque". The payment of such a cheque can be obtained at the counter of the bank. An open cheque may be a bearer cheque or an order one.

#04 Crossed Cheque:
Crossing of cheque means drawing two parallel lines on the face of the cheque with or without additional words like "& CO." or "Account Payee" or "Not Negotiable". A crossed cheque cannot be encashed at the cash counter of a bank but it can only be credited to the payee's account.

#05 Anti-Dated Cheque:
If a cheque bears a date earlier than the date on which it is presented to the bank, it is called as "anti-dated cheque". Such a cheque is valid upto three months from the date of the cheque.

#06 Post-Dated Cheque:
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.

#07 Stale Cheque:
If a cheque is presented for payment after three months from the date of the cheque it is called stale cheque. A stale cheque is not honoured by the bank.

#08 Banker’s Cheque:
A banker’s cheque is issued by a bank drawing money from its own funds rather than that from an account holder’s. Banker’s cheque is issued after the bank verifies the account status of the requestor and the amount is immediately deducted from the customer’s account.  A banker’s cheque cannot be dishonored as in the case of a normal cheque, when an account holder has insufficient funds in his/her account. Though different from a normal cheque it requires clearing too.

#09 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.

#10 Gift Cheque:
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 Bank.

Gift cheques may be used to give presents of money as
  • Birthday Gift
  • Wedding Gift
  • Honour Gift
#11 Mutilated Cheque:
If a cheque is torn into two or more pieces such cheque is Mutilated Cheque. If it presented for payment, such a cheque the bank will not make payment against such a cheque without getting confirmation of the drawer. In case, if a cheque is torn at the corners and no material fact is erased or cancelled, the bank may make payment against such a cheque.
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