LAWLIGHTS:
WHAT IS A CHEQUE? HOW MANY TYPES ARE THERE IN A CHEQUE?
|
W |
HAT IS A CHEQUE?
Features
of Indian Banking system emphasis various types of cheque for various purposes
based on the work. According to section
6 of the negotiable instrument act 1881 a cheque
is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand”.
A
cheque is paper or written document which orders the bank to draw the quoted
amount from drawer’s account to another account.
“ALL CHEQUES ARE BILLS OF
EXCHANGE BUT ALL THE BILLS OF EXCHANGES ARE NOT CONSIDERED TO BE CHEQUE.”
DEFINITIONS:
A
cheque is defined under the national provincial bank circa 1968 as“an
unconditional order in writing drawn on a banker, signed by the drawer,
instructing the banker to pay on demand a sum certain in money to or to the
order of a specified person or to bearer and which does not order any act to be
done in addition to the payment of money”
ESSENTIAL INGREDIENTS OF A CHEQUE:
1. Should be in written not as oral.
2. Cheque can only be demand.
3. Drawee must be any certain bank.
4. Drawer should sign in the check, the holder of the account.
5. Order of payment should present without any condition.
VARIOUS
TYPES OF CHEQUES IN INDIAN BANKING SYSTEM:
1. Bearer cheque
2. Order cheque
3. Crossed cheque
4. Account payee cheque
5. Stale cheque
6. Postdated cheque
7. Ante dated cheque
8. Self cheque
9. Traveler’s cheque
10. Mutilated cheque
11. Blank cheque
From
the above types the first four are main and mostly used types among all. There are
some main points to be remember while issuing the cheque,
a. Issued only in savings or current bank account.
b. Proper filling on cheque is mandatory.
c. Cheque without date is not valid.
d. Payee alone can encash it.
e. Validity of a cheque is to be noted(3 months from the date of issue)
TYPES OF CHEQUES AND ITS PURPOSES:
1. BEARER CHEQUE:
a. The
person who is bearing the cheque to the bank is the bearer and he is entitled to
ask the bank for encashment.
Requirements:
a.
No
identification needed
b.
Endorsable
c.
Used
mainly for cash withdrawal.
[Note: person not seeking for endorsable, can strike or cut off
the OR BEARER mark in the cheque.]
2. ORDER CHEQUE:
a. This cheque is not endorsable.
b. This means that the person, whose name is
mentioned in the cheque alone can entitled for getting the cash from the bank.
c. So the person (drawer) wants to strike off the
OR BEARER option in the cheque.
Requirements:
a.
Person
needs to identify before encashment.
b.
Not
endorsable
c.
Payee’s
identity may or may not be cross checked.
3. Crossed cheque:
a.
This
type of cheque follows a digital mode.
b.
Crossed
cheque is only a transfer of amount from one bank account to another account.
c.
No
cash withdrawal can be done in this.
Requirements:
a.
Any
third party can submit the cheque in the bank.
b.
Amount
transferred from drawer’s account to payee’s account.
c. The drawer needs to draw 2 lines at the left top corner of the cheque unless it is not valid.
4. Account payee cheque:
a. This is also same as crossed cheque and considered as the safest type of transferring.
b. This does not need any third party.
c. Amount directly transferred to the payee’s account number, whose name is written in the cheque.
Requirements:
a. No third party needed
b. Directly transferrable
c. Make two lines at the left corner of the cheque like in crossed cheque but also need to select “A/C PAYEE” option in the cheque.
5. STALE CHEQUE:
a. This cheque is valid up to 3 months in India
b. Payee should go for bank before the expiry of the period.
Requirements:
a. If a check is dated January, the validity is closes by April.
b. Payee visiting bank in May month the bank will deny the request.
c. The check is declared stale.
The remaining types of
cheques and its purposes to be continued……………………
No comments:
Post a Comment