Hello Friends, here we are going to share Cheque
And Their Different Types. Cheque is an important
document that an individual, companies, governments and many others use to
transact their business.
What is a cheque:
A cheque is a document that orders
a bank to pay a specific amount of money to the person in whose name the cheque
has been issued. Cheque is used to make safe and convenient payment.
Cheque is a financial instrument which can be
transferred to another party by simply endorsing it.
After opening an account in a bank, with cheque
book facility, the bank you will provide you with a cheque book.
However, there are various kinds of chequebook you receive and it would depend
on the type of account you have. The number of cheques in a cheque
book also differs depending on the account. Charges also vary depending on
the type of account, like current account, where more cheque leaves
are provided as compared to individual savings account.
Parts of a Cheque:
The four main items on a cheque are:-
- Drawer, the person or entity who makes the cheque
- Payee, the recipient of the money
- Drawee, the bank or other financial institution where the cheque can be presented for payment
- Amount, the currency amount
History of Cheques in India:
The Cheque was introduced in India by the Bank of
Hindustan. In 1881, the Negotiable Instruments Act was
enacted in India. The NI Actprovided a legal framework for non-cash paper
payment instruments in India. In 1938, the Calcutta Clearing Banks’
Association, which was the largest bankers’ association at that time, adopted
clearing house.
Until 1 April 2012, cheques in India were valid for a
period of six months from the date of their issue, before the Reserve Bank of
India issued a notification reducing their validity to three months
from the date of issue.
Different Types Of Cheques:
1.) Open cheque or bearer cheque:
The issuer of the cheque would just fill the name of the
person to whom the cheque is issued, writes the amount and attaches his
signature and nothing else. This type of issuing a cheque is also called bearer
type cheque also known as open cheque or uncrossed cheque. In simple
words, Bearer cheque means the person who is holding the instrument can
withdraw money form the bank account. Issuing these types of
cheques are risky because if the payee misplace it than the finder can withdraw
money from the bank.
2.) A crossed cheque or an account payee
cheque:
It is written in the same as that of
bearer cheque but issuer can cross it by adding two parallel lines on
the right hand top corner.Only person name written on it can get the amount
transferred to his account. In no condition he can withdraw cash. It is
considered the safest kind of cheque, as we can find to which account the
money has been transferred.
3.) Order Cheque:
In case of order cheque the payee in whose name the cheque
has been issued can only withdraw the money. 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).
4.) Post Dated Cheque (PDCs):
PDCs are cheques issued with future date on it. The
cheque issued today will be vailed for three months from the date of issue.
It is used for business purposes or making of payment in future date. For
example ; on 11/1/2015 you are issuing it dated 15/4/2015 than it will
called post dated cheque and will be vailed for three months from 15/4/2015.
5.) 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 up to three months from the date of
the cheque. For example on 11/1/2015 you are issuing a cheque dated
1/1/2015 than it will called anti dated cheque and will be vailed for three
months form 1/1/2015.
6.) 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.