Bearer Cheque -Details you should know

September 23, 2022CHEQUE RETURN-REASONS

Bearer Cheque-Normally, It is seen that a Cheque book issued by the bank is having the bearer cheques. Because you will see a word written on the cheque “or Bearer”. And this word defines a cheque as a bearer check which can be converted into other types of cheques by striking out the word ” or Bearer“.

But you will see a word written on the cheque ” or order” in some other Cheque books. In this case, you can make these cheques as bearers by striking out the word “order” and by writing the word “bearer” at the place of order.

Contents of this post

What is the bearer cheque?

A bearer cheque is the one in which the payment is made to the person bearing or carrying the cheques. These cheques are transferable by delivery, that is, if you are carrying the cheque to the bank, you can be issued the payment. The banks need no other authorization from the issuer to be allowed to make the payment.

Images of a bearer check

How can you identify a bearer check?

You can identify a check as a bearer check when you see the words ‘or bearer’ printed on cheques.

What are the features of a bearer cheque?

These are the feature of the bearer cheques-

1. It is a negotiable instrument.
2. Must mention the word “or bearer”
3. It can be encashed by the named person or anyone who presents a cheque.
4. Can be passed onto another person by mere delivery.
5. It is risky to provide a bearer check.
6. Generally, Identification is not required in a bearer check.
7. Endorsement is not required.
8. It can be deposited into the named bank account or can be cashed.
9. A bearer check is also called an open check.

What are the remember point while issuing a bearer cheque?

1. Though there is no rule of taking the signature of the holder of the cheque at the time of its encashment. But for safety purposes, the bank asks the bearer to sign at the back of the check in the presence of the cashier. This is to confirm the receipt of the funds from the bank.
2. Further, the paying cashier does not need to take many precautions to decide the faithfulness of the payee’s ownership. Nevertheless, the bank doesn’t ask for identification proof of the bearer, but when the amount is substantial, the bank may ask for identification proof.
3. The transfer of such cheques takes place through simple delivery. This means that if you take the cheque to the bank, the bank issues payment to you against the cheque. Further, no additional authorization from the issuer is necessary in this case.
4. If a person with a bearer check of an amount of ₹ 50,000, the bank has to authenticate the identity of the person and ask for proof of address. The bank has every right to first check the details, and once verified, it can make the payment to the person.
5. In case a bank finds something amiss, the bank can demand that the account holder, i.e. the issuer of the said cheque, visits the bank in person as well.
6. A Know Your Customer (KYC) verification process becomes mandatory if the amount on a bearer check is more than ₹ 50,000
7. If a bank suspects the bearer of the cheque who may consistently request immediate cash payment, the bank manager can intervene. The bank manager can contact the account holder and describe the situation. If the account holder sanctions authority, the bank manager asks the concerned bank personnel to clear the bearer cheque.
8. A bank cannot deny the payment of the amount on a bearer cheque to the person who presents it. If required, the bank can ask the bearer of the cheque to sign on the rear side of the cheque

How do you fill a bearer cheque?