Types of cheques-There are different types of cheques that can be explored in India on the basis of the relation between the cheque drawer, drawee, and the payee. Today in this post, we are going to describe all types of cheques. And this post will help to understand the different names and types of cheques in different types of situations.
First of all, You should know what is cheque if you are a beginner or student to understand more.
Contents of this post
What is a cheque?
A “cheque” is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form.
For the explanation of the cheque according to the negotiable instrument act.
(a) “a cheque in the electronic form” means a cheque drawn in electronic form by using any computer resource and signed in a secure system with a digital signature (with or without biometrics signature) and asymmetric crypto system or with an electronic signature, as the case may be;
(b) “a truncated cheque” means a cheque that is truncated during the course of a clearing cycle, either by the clearing house or by the bank whether paying or receiving payment, immediately on the generation of an electronic image for transmission, substituting the further physical movement of the cheque in writing.
In simple words, A cheque is a type of negotiable instrument. You will need a bank account, either a savings or a current account, to write a cheque in your own name or in the name of someone else, instructing the bank to pay the specified amount to the person mentioned on the cheque.
How many types of cheques can be seen?
These are the types of cheques that can be seen according to the negotiable instrument act-
- Blank Cheque
- Bearer Cheque
- Order Cheque
- Crossed Cheque
- Open Cheque
- Post Dated Cheque
- Ante-Dated Cheque
- Stale Cheque
- Cancelled cheque
- Self Cheque
- Traveller’s cheque
- Bankers Cheque
- Normal Value Cheque
- High-Value Cheque
- Gift cheque
- At par cheque
- Local Cheque
- Outstation Cheque
List of different types of cheques with specimen
1. Blank Cheque
A Blank cheque is a cheque which is not filled means. blank cheque may or may not have a date and payee name. It can be made A/c Payee. A cheque can be signed without a mentioned name and also can define the amount limit. Overall it is very risky to give a black cheque.
A bearer cheque is one in which the payment is made to the person bearing or carrying the cheque. 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 authorisation from the issuer to be allowed to make the payment.
How can you identify a bearer cheque? You know it is a bearer cheque when you see the words ‘or bearer’ printed on them.
3. Order Cheque
In these cheques, the words ‘or bearer’ is cancelled. Such cheques can only be issued to the person whose name is mentioned on the cheque, and the bank will do its background check to authenticate the cheque bearer’s identity before releasing the payment.
You may have observed cheques with two sloping parallel lines with the words ‘a/c payee’ written on the top left. That is a crossed cheque. The lines ensure that irrespective of who presents the cheque, the payment will only be made to the individual whose name is written on the cheque, in other words, the a/c payee along with his/her account number. These cheques are relatively safe because they can be encashed only at the drawee’s bank.
5. Open cheque
An open cheque is basically an uncrossed cheque. This cheque can be encashed at any bank, and the payment can be made to the person bearing the cheque. This cheque is transferable from the original payee (the original recipient of the payment) to another payee too. The issuer needs to put his signature on both the front and back of the cheque.
These types of cheques bear a later date of being encashed. Even if the bearer presents this cheque to the bank immediately after getting it, the bank will only process the payment on the date mentioned in the cheque. This cheque stands valid past the mentioned date, but not before.
This cheque has a date before it is presented in the bank. This cheque can be encashed till the completion of three months from the last date.
8. Stale Cheque
A cheque past its validity, three months after the date of being issued, is called a stale cheque.
A cancelled cheque is a cheque which has been crossed with two lines and the word “cancelled” is written across. It’s proof that the individual maintains an account with the bank. Except for this, you do not need to sign or write anything on the cheque.
10. Self Cheque
You can identify self-cheques by the word ‘self’ written in the drawee column. Self-cheques can only be drawn at the issuer’s bank.
11. Traveller’s Cheque
Foreigners on vacations carry traveller’s cheques instead of carrying hard cash, which can be cumbersome. These cheques are issued to them by one bank and can be encashed in the form of currency at a bank located in another location or country. Traveller’s cheques do not expire and can be used for future trips.
12. Banker’s Cheque
A bank is the issuer of these types of cheques. The bank issues these cheques on behalf of an account holder to make a remittance to another person in the same city. Here the specified amount is debited from the account of the customer, and then, the cheque is issued by the bank. This is the reason banker’s cheques are called non-negotiable instruments as there is no room for banks to dishonour these cheques. They are valid for three months. They can be revalidated provided specific conditions are met.
13. Normal Value Cheque
A cheque which has a value of less than 100000 Rs.
14. High-Value Cheque
A cheque which has a value greater than 100000 Rs.
15. Gift cheque
Cheques given as gifts to loved ones are called gift cheques. And the range of gift cheques can be 100 and up to 10000.
16. At par cheque
A cheque is acceptable at all branches of the concerned bank across the country. And the special thing is that while clearing it in outside branches, there is no additional charge (no additional charges).
17. Local Cheque
If the cheque of Delhi is cleared in Delhi itself, then it is called a local check. Like if I gave you a cheque in your name, then you will have to go to the relevant branch of the city with that cheque, if you take it out of the city and get it cleared, then you will be charged separately (fixed banking charges).
18. Outstation Cheque
If the local cheque is cleared by taking it out of the city, then that cheque will be called an outstation cheque for which the bank charges fixed charges.
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